CAPPIELLO RUSHMORE TRUST
497, 1998-11-02
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                                                                     Rule 497(c)
                                                               File No. 33-46283

                            CAPPIELLO-RUSHMORE TRUST


                               UTILITY INCOME FUND
                                   GROWTH FUND
                              EMERGING GROWTH FUND



                                   Prospectus

                                November 1, 1998


The Cappiello-Rushmore Trust (the "Trust") is a no-load mutual fund complex with
four separate investment portfolios,  three of which (the "Funds") are described
in this Prospectus.  This Prospectus contains important  information about these
Funds.  Please read this Prospectus before investing and keep this Prospectus on
file for future reference.

Neither  the  securities  and  exchange  commission  nor  any  state  securities
commission has approved or  disapproved  of these  securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.




<PAGE>



                                TABLE OF CONTENTS



   
                                                                           Page

Risk and Return Summary.................................................
   Investments, Risks, and Performance..................................
   Risk/Return Bar Chart and Table......................................
   Performance Table....................................................

Fees and Expenses of the Funds..........................................

Investment Objectives, Principal Investment Strategies,
and Related Risks.......................................................
   Cappiello-Rushmore Utility Income Fund...............................
   Cappiello-Rushmore Growth Fund.......................................
   Cappiello-Rushmore Emerging Growth Fund..............................
   A Review of Risk Considerations......................................

Management's Discussion of Fund Performances............................
    Cappiello-Rushmore Utility Income Fund..............................
    Cappiello-Rushmore Growth Fund......................................
   Cappiello-Rushmore Emerging Growth Fund..............................
    Market Outlook......................................................
    Performance Comparison..............................................

Shareholder Information.................................................
   How to Invest In the Funds...........................................
   How to Redeem Your Investment........................................

Additional Information About the Funds..................................
   Exchanging Fund Shares...............................................
   Pricing of Fund Shares...............................................
   Dividends and Distributions..........................................
   Tax Consequences of Investing In the Funds...........................

Management, Organization, and Capital Structure.........................
   Investment Adviser...................................................
   Year 2000 Preparations...............................................

Financial Highlights....................................................
    




                                        2

<PAGE>



                             RISK and RETURN SUMMARY
                       Investments, Risks, and Performance

Cappiello-Rushmore Utility Income Fund

Fund Investment Objective
   
The Utility  Income  Fund's  investment  objective  is to provide  high  current
income, with capital appreciation a secondary consideration.

Principal Fund Investment Strategies

The Utility Income Fund seeks to achieve its objective by investing up to 65% of
its total assets in the equity  securities of public  utility  companies and may
also invest in the bonds of public utility companies. We invest primarily in the
equity  securities of electric utility companies and, to a lesser extent, in gas
utility companies. The Fund also may invest up to 35% of its total assets in the
securities of telecommunications  companies.  The Fund also may invest up to 20%
of its total assets in the  securities of foreign  issuers which are traded on a
recognized U.S. securities exchange or in dollar-denominated American Depository
Receipts ("ADRs").  The Fund's investments may include common stocks,  preferred
stocks, and convertible securities of both U.S. and foreign issuers.

Principal Risks of Investing In the Utility Income Fund

The main risks  that could  adversely  affect  the value of the  Utility  Income
Fund's shares and the total return on your investment in this Fund stem from the
Fund's  concentration  policies.  As with any stock-oriented  fund, the value of
your  investment in the Fund will rise or fall  depending on the  performance of
individual  securities  as well as  stock  market  movements.  Because  the Fund
concentrates its investments in the public utilities  industry,  and within that
industry  may focus on a single  sector,  the  electric  utilities  sector,  the
performance  of this  Fund is  subject  to the risk  that the  public  utilities
industry, and in particular the electric utilities sector of that industry, will
underperform  the  market as a whole.  Rising  interest  rates or  deteriorating
economic conditions may impair the performance of utility companies' securities.
Further,  adverse  rate  regulation  can result in a decline in utility  company
sales and earnings.  To the extent that the Fund may invest in the securities of
foreign issuers, the Fund also will be subject to foreign company risks, such as
changes  in  currency   exchange   rates,   inadequate   disclosure  of  company
information, and political instability.


Cappiello-Rushmore Growth Fund

Fund Investment Objective

The Growth Fund's investment objective is long-term capital appreciation.

Principal Fund Investment Strategies

The Growth Fund seeks to achieve its  objective by investing at least 65% of its
total  assets  in  stocks  of  larger-capitalization   growth  companies  (i.e.,
companies that have the potential to increase  earnings  faster than the overall
market   and  whose   total   market   value  is  more   than   $5.0   billion).
Larger-capitalization  companies usually are established  companies with a track
record of sales and  earnings.  From these large  capitalization  companies,  we
select companies that we believe have the potential to increase  earnings faster
than the overall market. The Fund's stock investments may include common stocks,
preferred stocks,  and convertible  securities of both U.S. and foreign issuers.
We invest primarily in the common stocks of U.S. companies,  but also may invest
up to 20% of the Fund's total assets in foreign securities which are traded on a
recognized U.S. securities exchange or in dollar-denominated ADRs.

                                        3

<PAGE>




Principal Risks of Investing In the Growth Fund

The main risks that could adversely affect the value of the Growth Fund's shares
and the total  return  on your  investment  in this Fund are that the  growth in
earnings  and the  rates of  return of the  growth  companies  in which the Fund
invests  suddenly  slow or stop so that the prices of these  companies  fall. In
addition,  while  larger-company  stocks tend to be less  volatile  than smaller
company  stocks,  the  value of your  investment  in the Fund  will rise or fall
depending on the  performance  of individual  securities as well as stock market
movements.  These larger  companies also may be slower to innovate or respond to
changing conditions than smaller companies.

Cappiello-Rushmore Emerging Growth Fund

Fund Investment Objective

The  Emerging   Growth  Fund's   investment   objective  is  long-term   capital
appreciation.

Principal Fund Investment Strategies

The  Emerging  Growth Fund seeks to achieve its  objective by investing at least
65% of its total  assets in the stocks and  convertible  securities  of emerging
growth companies (i.e.,  companies that have the potential to increase  earnings
faster than the overall  market and whose total  market  capitalization  is less
than  $750  million).  The Fund  invests  mainly  in the  common  stocks of U.S.
emerging  growth  companies,  but also may invest up to 20% of the Fund's  total
assets in foreign  emerging  growth  companies  which are traded on a recognized
U.S. securities exchange or in dollar-denominated ADRs. We may also invest up to
25% of the Fund's assets in stock and related  securities of  larger-capitalized
companies and up to 35% of the Fund's assets in investment-grade  corporate debt
securities  and preferred  stocks,  regardless of whether these  securities  are
issued by emerging growth companies.

Principal Risks of Investing In the Emerging Growth Fund

The main risks of  smaller-capitalization  emerging growth  companies that could
adversely  affect the value of the Emerging  Growth  Fund's shares and the total
return on your  investment  in this Fund are that the growth in earnings and the
rates of return  of the  emerging  growth  companies  in which the Fund  invests
suddenly slow or stop so that the prices of these companies fall and also that:

         o        Smaller-capitalization  companies are usually younger and less
                  established  with  a  relatively-short  record  of  sales  and
                  earnings.

         o        Because of their size, smaller companies may lack the depth of
                  financial  and  management  resources  to weather  economic or
                  financial turmoil.

         o        Smaller  companies tend to be more volatile in their sales and
                  earnings performance, as well as in their stock price.

         o        Because  stocks of smaller  companies  usually  trade in lower
                  volumes than stocks of larger  companies,  these stocks may be
                  more  vulnerable to market risk and may be harder to sell than
                  stocks of larger companies.

Loss of  money  is a risk  of  investing  in the  Cappiello-Rushmore  Funds.  An
investment  in the  Funds is not a  deposit  of any bank and is not  insured  or
guaranteed by the Federal Deposit Insurance  Corporation or any other government
agency.


                                        4

<PAGE>



                         Risk/Return Bar Chart and Table

The  chart  and  table  below  show the  annual  calendar-year  returns  and the
performance of the Funds. Each Fund commenced operations on October 6, 1992, and
has a fiscal  year-end of June 30th. The  information in the chart and the table
provides  some  indication  of the risks of  investing  in the Funds by  showing
changes in Fund  performance  from year to year and by showing  how each  Fund's
average  annual  returns for 1 year and 5 years compare with the  performance of
both the Standard & Poor's 500 IndexTM (a widely-recognized, broad-based measure
of stock market  performance) and the Russell 2000 Index (a more-narrowly  based
index of stock market performance).

The  chart  and the  table  below  assume  the  reinvestment  of  dividends  and
distributions.  How the Funds have  performed  in the past does not  necessarily
indicate how the Funds will perform in the future.

The chart immediately below shows the annual total return of the Funds for each
calendar year from 1993 through 1997.  The table that follows the chart compares
each Fund's  average  annual total  returns for 1 year and 5 years with those of
the  Standard & Poor's 500 Index and the Russell  2000 Index for  periods  ended
December 31, 1997, the  most-recently  completely  calendar year.

                            Annual Total Return Chart

                                [GRAPHIC OMITTED]

<TABLE>
<CAPTION>

       Year Ended           Utility Income           Growth                Emerging    
         (as of)                 Fund                 Fund                Growth Fund  
- --------------------        ---------------         ------------          ------------ 
<S>                         <C>                      <C>                  <C>          
December 31, 1993                 6%                   14%                    23%      
December 31, 1994               (13%)                   5%                    (7%)     
December 31, 1995                30%                   37%                    36%      
December 31, 1996                 4%                   7%                     2%       
December 31, 1997                25%                   22%                    5%       

</TABLE>

Notes to Annual Total Return Chart:

1.    The year-to-date total returns for the Trust's  most-recent fiscal quarter
      (ended  September 30, 1998) for the Utility  Income Fund, the Growth Fund,
      and  the   Emerging   Growth  Fund  are  3.00%,   -16.56%,   and  -25.66%,
      respectively.

2.    The highest  quarterly  returns of the three Funds since the  inception of
      the Trust on October 6, 1992,  are as follows:  the Utility  Income  Fund,
      14.73% (in the 4th Quarter of 1997);  the Growth Fund,  18.77% (in the 3rd
      Quarter of 1997); and the Emerging Growth Fund, 23.05% (in the 3rd Quarter
      of 1997).

3.    The lowest  quarterly  returns of the three Funds,  since the inception of
      the Trust on October 6, 1992,  are as follows:  the Utility  Income  Fund,
      -10.32% (in the 1st Quarter of 1994); the Growth Fund,  -7.79% (in the 4th
      Quarter  of 1997);  and the  Emerging  Growth  Fund,  -17.85%  (in the 4th
      Quarter of 1997).
    



                                        5
<PAGE>
                                Performance Table
                          Average Annual Total Returns
                      (for Periods Ended December 31, 1997)

<TABLE>
<CAPTION>
                                  Utility                                               
                                  Income                             Emerging          S&P 500          Russell 2000  
                                   Fund           Growth Fund      Growth Fund         IndexTM            Index     
                                 ---------        ------------     ------------        --------          -----------
<S>                              <C>              <C>              <C>                 <C>               <C>  
One Year                          25.25%            22.17%            4.72%             33.36%            22.36%
Five Years                         9.31%            16.51%            10.61%            20.27%            16.40%
</TABLE>

   
                         FEES and EXPENSES of the FUNDS
    
This table  describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.

<TABLE>
<CAPTION>
                                                              Utility                      Emerging
                                                              Income         Growth         Growth
                                                               Fund           Fund           Fund
                                                               ------        ------         -------  
<S>                                                           <C>            <C>            <C>    
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
     Management Fees                                           0.35%          0.50%          0.50%
     Other Expenses                                            0.70%          1.00%          1.00%
                                                               -----          -----          -----
Total Annual Fund Operating Expenses                           1.05%          1.50%          1.50%
                                                               -----          -----          -----
</TABLE>
If  your  monthly  account  balance  per  Fund  averages  $500  or  less  due to
redemptions you may be charged a $5 fee.

EXAMPLE

This  Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

The  Example  assumes  that you invest  $10,000  in a Fund for the time  periods
indicated  below and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:

<TABLE>
<CAPTION>
                                1 Year         3 Years        5 Years         10 Years
                                ------         -------        -------         --------
<S>                             <C>            <C>            <C>             <C>    
Utility Income Fund             $ 107           $ 334          $ 579          $ 1,283
Growth Fund                       153             474            818            1,791
Emerging Growth Fund              153             474            818            1,791

</TABLE>
                                        6

<PAGE>



                   INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
                          STRATEGIES, and RELATED RISKS

Cappiello-Rushmore Utility Income Fund
   
Fund Investment Objective

The Utility  Income  Fund's  investment  objective  is to provide  high  current
income, with capital appreciation a secondary consideration.

Principal Fund Investment Strategies

The Utility Income Fund seeks to achieve its objective by investing up to 65% of
its total assets in the equity  securities of public  utility  companies and may
also invest in the bonds of public utility companies. We invest primarily in the
equity  securities of electric utility companies and, to a lesser extent, in gas
utility companies. The Fund also may invest up to 35% of its total assets in the
securities of telecommunications  companies.  The Fund also may invest up to 20%
of its total assets in the  securities of foreign  issuers which are traded on a
recognized U.S.  securities exchange or in  dollar-denominated  ADRs. The Fund's
investments  may  include  common  stocks,  preferred  stocks,  and  convertible
securities of both U.S. and foreign issuers.  The Fund, to a lesser extent,  may
also purchase U.S. Government securities and enter into repurchase agreements.
    
In the stock  selection  process,  we seek to identify  the ability of a utility
company to earn and pay an increasing  stream of  dividends.  We use a number of
computer  screens to identify  stocks that appear to be favorably  priced on the
basis of  dividend  yield  and that may  benefit  from the  current  market  and
economic  environment.  We then review  these  stocks for factors  that could be
reflected in a rise in dividends and stock price such as: (i) favorable earnings
and dividend trends, including cash flow (net earnings plus depreciation), which
is critical to future dividends; (ii) reasonable utility rate regulations; (iii)
growing service area and/or market; and (iv) non-regulated earnings sources.
   
We usually sell a company's stock when that company's  "fundamentals" (i.e., the
company's capital structure, operating characteristics,  pre-tax profit margins,
and return on  stockholders'  equity) change for the worse.  Generally,  company
stock  will  also be sold  when  the  stock  price  of the  company  experiences
significant, unexplained declines.

The Fund,  from time to time,  may take  temporary  defensive  measures that are
inconsistent  with the Fund's principle  investment  strategies in attempting to
respond to adverse market, economic,  political, or other conditions.  Thus, the
Fund  may  temporarily  invest  all or  part  of its  assets  in  cash  or  cash
equivalents,  which  include,  but are not limited to  short-term  money  market
instruments,  U.S.  Government  securities,  certificates  of deposit,  bankers'
acceptances, or repurchase agreements secured by U.S. Government securities. The
effect of taking these  temporary  defensive  positions is that the Fund may not
achieve its investment objective.

Principal Risks of Investing In the Utility Income Fund

The main risks  that could  adversely  affect  the value of the  Utility  Income
Fund's shares and the total return on your investment in this Fund stem from the
Fund's  concentration  policies.  As with any stock-oriented  fund, the value of
your  investment in the Fund will rise or fall  depending on the  performance of
individual  securities  as well as  stock  market  movements.  Because  the Fund
concentrates its investments in the public utilities  industry,  and within that
industry  may focus on a single  sector,  the  electric  utilities  sector,  the
performance  of this  Fund is  subject  to the risk  that the  public  utilities
industry, and in particular the electric utilities sector of that industry, will
underperform  the market as a whole.  Since the Fund focuses on a single sector,
the Fund's performance largely depends on that sector's  performance,  which may
differ from that of the overall public utilities industry. Rising interest rates
or  deteriorating  economic  conditions  may hurt  the  performance  of  utility
companies' stocks.  Further,  adverse rate regulation can result in a decline in
utility  company sales and  earnings.  To the extent that the Fund may invest in
the  securities  of  foreign  issuers,  the Fund also will be subject to foreign
company risks, such as changes in currency exchange rates, inadequate disclosure
of company information, and political instability.
    

                                        7

<PAGE>



Cappiello-Rushmore Growth Fund
   
Fund Investment Objective

The Growth Fund's investment objective is long-term capital appreciation.

Principal Fund Investment Strategies

The Growth Fund seeks to achieve its  objective by investing at least 65% of its
total   assets   in   stocks   of   larger-capitalization    growth   companies.
Larger-capitalization  companies usually are established  companies with a track
record of sales and  earnings.  From these large  capitalization  companies,  we
select companies that we believe have the potential to increase  earnings faster
than the overall market. The Fund's stock investments may include common stocks,
preferred stocks,  and convertible  securities of both U.S. and foreign issuers.
We invest primarily in the common stocks of U.S. companies,  but also may invest
up to 20% of the Fund's total assets in foreign securities which are traded on a
recognized U.S. securities exchange or in  dollar-denominated  ADRs. We also may
engage in other  investment  practices  designed  to seek  either to enhance the
Fund's  returns or to protect the portfolio from losses.  For example,  the Fund
may also invest up to 10% of its total assets in warrants, preferred stocks, and
convertible  debt  securities,  and  up to 5% of its  total  assets  in  certain
"high-yield" securities (i.e., below investment-grade  corporate bonds, commonly
known as "junk bonds," and which are subject to greater risks, including default
risks,  than those  found in  higher-rated  securities).  The Fund,  to a lesser
extent, may also purchase U.S.  Government  securities and enter into repurchase
agreements.
    
In the stock selection process, we look for growth companies that are growing or
have the  potential to grow faster than the S&P 500 IndexTM.  The nucleus of the
Growth Fund's portfolio will usually be stocks with lower price-earnings  ratios
and above average  yields.  In selecting a stock for inclusion in the portfolio,
we employ computer  screens to identify stocks with attractive  fundamentals and
valuations.  We then review those companies seeking a catalyst for action, i.e.,
factors  that could  indicate a future  rise in stock  prices,  such as a new or
changed  management  or a new product.  These  computer  screens are employed to
determine: (i) fundamentals such as sales and earnings growth; and (ii) relative
valuations  (those stocks that appear to be attractively  priced compared to the
fundamentals).
   
We usually sell a company's  stock when that  company no longer is  considered a
growth company, when that company shows deteriorating fundamentals,  or when the
stock price of the company experiences significant, unexplained declines.

The Fund,  from time to time,  may take  temporary  defensive  measures that are
inconsistent  with the Fund's principle  investment  strategies in attempting to
respond to adverse market, economic,  political, or other conditions.  Thus, the
Fund  may  temporarily  invest  all or  part  of its  assets  in  cash  or  cash
equivalents.  The effect of taking these temporary  defensive  positions is that
the Fund may not achieve its investment objective.

As an anticipated result of these principal  investment  strategies,  the Growth
Fund may engage in the active and frequent trading of portfolio securities. This
increased portfolio turnover for the Fund could produce high brokerage costs for
the Fund and result in taxable distributions to Fund shareholders.

Principal Risks of Investing In the Growth Fund

The main risks that could adversely affect the value of the Growth Fund's shares
and the total  return  on your  investment  in this Fund are that the  growth in
earnings  and the  rates of  return of the  growth  companies  in which the Fund
invests  suddenly  slow or stop so that the prices of these  companies  fall. In
addition,  while larger  company  stocks tend to be less  volatile  than smaller
company  stocks,  the  value of your  investment  in the Fund  will rise or fall
depending on the  performance  of individual  securities as well as stock market
movements.  Because of their size,  larger companies  usually have financial and
managerial resources to offset adversity. These larger companies,  however, also
may be slower to  innovate  or  respond  to  changing  conditions  than  smaller
companies.
    


                                        8

<PAGE>



Cappiello-Rushmore Emerging Growth Fund
   
Fund Investment Objective

The  Emerging   Growth  Fund's   investment   objective  is  long-term   capital
appreciation.

Principal Fund Investment Strategies

The  Emerging  Growth Fund seeks to achieve its  objective by investing at least
65% of its total  assets in the stocks and  securities  convertible  into common
stocks and warrants of emerging  companies  with market  capitalization  of less
than $750 million.  We search for those smaller  companies that show or have the
potential to show rapid growth, but are not yet widely  recognized.  We also may
invest in older, established companies that, due to new products,  rising sales,
expanding  market,  or  other  corporate  changes,  may have  the  potential  of
increasing earnings growth. The Fund invests mainly in the common stocks of U.S.
companies,  but also may invest up to 20% of the Fund's  total assets in foreign
emerging  growth  companies  which are traded on a  recognized  U.S.  securities
exchange  or in  dollar-denominated  ADRs.  We may also  invest up to 25% of the
Fund's assets in stock and related  securities of  larger-capitalized  companies
and up to 35% of the Fund's assets in investment-grade corporate debt securities
and  preferred  stocks,  regardless of whether  these  securities  are issued by
emerging growth companies.

The  Emerging  Growth  Fund may also  invest  up to 10% of its  total  assets in
warrants, preferred stocks, and convertible debt securities, and up to 5% of its
total assets in certain high-yield securities. The Fund may also engage in other
investment  practices  designed to seek to either  enhance the Fund's returns or
protect the  portfolio  from  losses.  The Fund,  to a lesser  extent,  may also
purchase U.S. Government securities and enter into repurchase agreements.
    
In selecting a stock for inclusion in the portfolio,  we employ computer screens
to identify stocks with attractive  fundamentals and valuations.  A catalyst for
action is  sought.  These  computer  screens  are  employed  to  determine:  (i)
fundamentals  such as sales and earnings  growth;  and (ii) relative  valuations
(those stocks that appear to be attractively priced compared to fundamentals).
   
We usually sell a company's  stock when that company no longer is  considered an
emerging growth company, when that company shows deteriorating fundamentals,  or
when  the  stock  price  of the  company  experiences  significant,  unexplained
declines.

The Fund,  from time to time,  may take  temporary  defensive  measures that are
inconsistent  with the Fund's principle  investment  strategies in attempting to
respond to adverse market, economic,  political, or other conditions.  Thus, the
Fund  may  temporarily  invest  all or  part  of its  assets  in  cash  or  cash
equivalents.  The effect of taking these temporary  defensive  positions is that
the Fund may not achieve its investment objective.

As an anticipated result of these principal investment strategies,  the Emerging
Growth  Fund  may  engage  in the  active  and  frequent  trading  of  portfolio
securities.  This increased  portfolio  turnover for the Fund could produce high
brokerage  costs  for the Fund  and  result  in  taxable  distributions  to Fund
shareholders.

Principal Risks of Investing In the Emerging Growth Fund

The main risks of  smaller-capitalization  emerging growth  companies that could
adversely  affect the value of the Emerging  Growth  Fund's shares and the total
return on your  investment  in this Fund are that the growth in earnings and the
rates of return  of the  emerging  growth  companies  in which the Fund  invests
suddenly slow or stop so that the prices of these companies fall and also that:
    
         o        Smaller-capitalization  companies are usually younger and less
                  established  with  a  relatively-short  record  of  sales  and
                  earnings.

         o        Because of their size, smaller companies may lack the depth of
                  financial  and  management  resources  to weather  economic or
                  financial  turmoil.  For the  same  reason,  however,  smaller
                  companies may have more flexibility and are usually quicker to
                  innovate or respond to changing  conditions  when  compared to
                  larger capitalized companies.

                                        9

<PAGE>



         o        Smaller  companies tend to be more volatile in their sales and
                  earnings performance, as well as in their stock price.

         o        Because  stocks of smaller  companies  usually  trade in lower
                  volumes than stocks of larger  companies,  these stocks may be
                  more  vulnerable to market risk and may be harder to sell than
                  stocks of larger companies.

A Review of Risk Considerations

Risk In General

The risks of a fund are  usually  defined by the fund's  individual  securities,
overall portfolio,  and investment tactics.  Over longer periods of time, stocks
have  been  among  the most  successful  investments  available  to the  public.
Nevertheless,  stocks do  fluctuate in price.  Accordingly,  there is a risk you
could lose as well as make money by investing in the  Cappiello-Rushmore  Funds.
As with any fund,  there is no guarantee that the  performance of the Funds will
be positive over any period of time, either short term or long term.
   
Additional Risks

In addition to the specific  principal  risks  identified  above for each of the
Funds, a Fund also may encounter the following broad-based risks:
    
         Fund  Risk  -- The  possibility  that a  Fund's  performance  during  a
specific period may not meet or exceed that of the market as a whole.
   
         Concentration  Risk -- The risk that the  particular  industry in which
the Fund may focus its investments will underperform the market as a whole.

         Sector Risk -- The risk that the particular  economic sector in which a
Fund may focus its investments  will  underperform the market as a whole. To the
extent that a Fund's investments are concentrated in issuers conducting business
in the same  economic  sector,  the Fund is subject to the risks of investing in
that  sector,  including  legislative  or  regulatory  changes,  adverse  market
conditions, and/or increased competition.
    
         Market  Risk -- The  possibility  that  stock  prices in  general  will
decline over short, or even extended,  periods of time. Stock markets tend to be
cyclical,  with periods when stock prices  generally rise and periods when stock
prices  generally  decline.  Investors  have  noticed that when the stock market
surges up, many stocks post  higher  prices.  On the other hand,  when the stock
market falls sharply,  many common stocks will drop even more sharply.  A change
in market psychology can cause a security's price to decline irrespective of any
truly fundamental change in the company itself.

         Interest Rate Risk -- The risk of a rise in interest rates that usually
depresses the prices of  fixed-income  type  securities and often of equities as
well. In the short run, high interest rates reduce interest-sensitive investment
spending.  Interest rate uncertainty is related to various factors.  Among these
factors  are  swings in money  growth,  uncertainty  about the  policies  of the
Federal Reserve Board, and inflationary expectations.

         Small-Issuer Risk -- Small- and medium-capitalization  companies may be
more vulnerable than larger,  more-established organizations to adverse business
or economic developments. In particular, small-capitalization companies may have
limited  product  lines,  markets,  and  financial  resources,  and  also may be
dependent upon a  relatively-small  management  group.  These  securities may be
traded over-the-counter or listed on an exchange and may not pay dividends.
   
    
         Event Risk -- The  possibility  that  corporate  securities  may suffer
substantial  declines in market  value due to  corporate  restructurings.  While
event risk may be high for certain  corporate  securities held by a Fund,  event
risk in the aggregate should be low because of each Fund's varied holdings.

         Foreign  Company Risks --  Investments  in foreign  securities  involve
additional  risks,  such as  changes  in  currency  exchange  rates,  inadequate
disclosure of company information,  and political  instability.  Some additional
significant risks associated with investing in foreign companies include:

                                       10

<PAGE>



          o    Volatility -- Investments in securities of foreign  companies can
               be more volatile than investments in U.S. companies.  Diplomatic,
               political,  or economic  developments could affect investments in
               foreign companies.

          o    Regulatory  Environment  -- Foreign  companies  generally are not
               subject to uniform accounting,  auditing, and financial reporting
               standards   comparable  to  those  applicable  to  U.S.  domestic
               companies.   Foreign   issuers   may  be  subject  to   different
               accounting, auditing, reporting, and recordkeeping standards than
               those  applicable to domestic  issuers.  There is generally  less
               government  regulation  of listed  companies  abroad  than in the
               United States.
   
         Money Market Investment Risk -- Under adverse market conditions, one or
more of the Funds could  invest  some or even all of its assets in money  market
securities.  Although each Fund's objective would be to attempt to avoid losses,
this defensive  tactic,  if employed in a significant way, could have the effect
of reducing the benefit from any upswing in the market.
    

                             MANAGEMENT'S DISCUSSION
                               OF FUND PERFORMANCE

During the past  twelve  months,  the stock  market,  as  measured  by the major
indices,  moved to new all time  highs  propelled  by a still  growing  economy,
falling  inflation  expectations,  and lower interest  rates.  The effect of the
Asian crisis  impacted  stock prices in October 1997 and in early Spring of 1998
as the second wave of Asian  economic woes affected some sectors of the economy.
One of the  results of this crisis has been the  two-tiered  nature of the stock
market  where  "size" did count in producing  the better  investment  returns as
nervous  investors  sought  liquidity  and  safety in the  large  capitalization
stocks. Further,  individual stock performances seemed to be directly related to
size  rather  than  value,  earnings  growth,  or  management  capability.  More
remarkable has been foreign  investment in the U.S. market.  As the Asian crisis
began to become apparent about a year ago, it generated a flight of capital from
troubled  Asian markets into the U.S. and, to a lesser extent,  Europe.  Most of
this foreign  inflow sought  liquidity and the money flowed into index funds (in
the case of equities) and U.S.  Treasury  securities.  The latter helped to push
rates down, particularly on the 30-year Treasury Bond.

Cappiello-Rushmore Utility Income Fund

The   Utility   Income   Fund  is  managed  to  provide   shareholders   with  a
relatively-high   dividend   yield.   Capital   gains   growth  is  a  secondary
consideration. Nevertheless, for the fiscal-year ended June 30, 1998, the Fund's
overall total return was 25.55%,  a satisfying mix of both capital  appreciation
and an above-average dividend yield.

During the year, we accomplished some  diversification  from electric  utilities
into more  attractive  valuations in  telecommunications  as well as non-utility
sectors. Nevertheless,  electric utilities still comprise 46.4% of the portfolio
with telecommunication stocks at 22.1% and natural gas at 5.4% of the portfolio.
The best  performing  stocks  from June 30, 1997 to June 30,  1998,  were ALLTEL
Corp. (up 39%), TNP Enterprises Inc. (up 33%), and Southern Company (up 27%).

We continue to exercise  discipline in evaluating  utility  stocks for purchase,
stressing five factors:

         o         Yield (relative to other utilities and the overall market)
         o         Company Management (particularly important in a deregulating
                     industry)
         o         Financial Strength
         o         Future Dividend Growth
         o         Level of Risk

The uncertainties  associated with deregulated  markets will continue to pose an
operating risk for the electric  utility  industry.  As utilities search for new
sectors  of   profitability,   competition   for  new  projects  is  increasing.
Acquisition   through    privatization   is   also   an   alternative   to   the
increasingly-competitive domestic power market.


                                       11

<PAGE>



Cappiello-Rushmore Growth Fund

The Growth Fund seeks capital  appreciation  by investing in  larger-established
companies with favorable  relationships between price/earnings ratios and growth
rates.  This  approach  resulted in a  satisfying  return of 20.72% for the year
marking the fourth  consecutive  year of  double-digit  returns.  Among the best
acting stocks for the year ended June 30, 1998, were Federated  Department Store
warrants,  Class "C" (up 119%), GM Hughes Electronics  Corporation (up 59%), and
American  Express  Company (up 53%). The largest sector  positions are financial
services  (25.5% of the portfolio),  health care (11.9% of the  portfolio),  and
computer hardware and equipment (10.1% of the portfolio).

Larger capitalization  stocks fared well during the year,  outperforming smaller
issues as investors  placed a premium on the  liquidity of larger  stocks.  This
preference  reflected the prevailing  economic  conditions of slowing (but still
growing) corporate  earnings,  moderately-declining  interest rates, and healthy
fund inflows into stocks.  We continue to invest in well-managed,  growing,  and
profitable businesses that we believe will benefit from long-term trends such as
economic and  demographic  changes.  These trends usually result in increases in
demand for products and services and offer  profitable  business  opportunities.
One  example  is the  demographic  trend of the aging of  America.  The  elderly
population  is growing much more rapidly  than the general  population  and this
group has increasingly required more health care. Consequently,  we have focused
on health care stocks,  which comprise  11.9% of the  portfolio.  A second trend
relates to the "baby boomer"  group.  As they  approach  their forties and early
fifties,  "baby boomers" have gradually  recognized the need to save and invest.
Our  concentration  in this area  includes  finance  companies  such as American
Express Company, Franklin Resources,  Inc., and Charles Schwab Corp. This sector
comprises 25.5% of the portfolio.

During the year, we added to our telecommunication position with the addition of
Frontier Corporation and to the retail sector with the purchase of Talbots, Inc.

Cappiello-Rushmore Emerging Growth Fund

The  Emerging  Growth  Fund  recorded  a  slightly   negative  0.14%  investment
performance  for the  fiscal  year  ended  June  30,  1998.  This  disappointing
performance was reflective of the  small-capitalization  stock sector during the
twelve  months  ended June 30,  1998,  in which  small cap stocks  significantly
underperformed   their  larger  peers.   The  last  time  that  small  companies
outperformed the S&P 500 IndexTM was in 1991 and 1992. Since then, the group has
lagged the  larger  stock  indices.  This lag in  smaller  stocks has  persisted
despite  the fact that many of these  companies  have  good  earnings  momentum,
established products, capable and seasoned management, and solid balance sheets.
Yet, despite these factors, small stocks continued to sell at growing discounts.
The  answer  to  the  discrepancy  seems  to be  "liquidity"  -- the  desire  of
institutional   investors   to  put   incoming   cash  to  work  in  buying  the
big-capitalization  stocks where large amounts of stock can be bought (and sold)
without  significantly  disturbing the price of stocks.  "Liquidity" rather than
valuation  seems  to be the rule in  investment  decisions  for the  past  eight
months.  Put another way, the stocks  comprising the largest 10% of indices like
the Dow Jones  Industrial  Average,  the S&P 500  IndexTM,  and the Russell 2000
Index  have  received  the major  portion of  institutional  flows over the past
months.

We ended fiscal year 1998 with the portfolio focused in three major sectors: (1)
health  care is the  largest  sector at 22.0% of the  portfolio  followed by (2)
technology  (computer,  electronic,  and  telecommunication)  and (3) retailing.
Since we  continue  to believe  the U.S.  health care system is moving to one of
managed care,  health care stocks now  constitute  22.0% of the  portfolio.  Our
health  care  stocks  have   performed   well.   Our  largest   position  is  KV
Pharmaceutical  Co.  (A)  showing  a cost of  $293,949  and a  market  value  of
$1,244,375 as of June 30, 1998.

During the year, we sought to reduce risk associated with individual  securities
by  positioning  more of the  portfolio  into  lower P/E  stocks.  These  stocks
represent solid values whose price we believe more than adequately  reflects any
possible earnings disappointments.

Among the best performing  stocks during the year were FTI Consulting,  Inc. (up
113%), KV Pharmaceutical  Co. (A) (up 105%), and Immune Response Corp. (up 97%).
New names in the portfolio in fiscal year 1998 are Bay  Networks,  Inc. (up 30%)
and Steven Madden, Ltd. (up 27%).



                                       12

<PAGE>



The Salomon/Smith  Barney Emerging Growth Index Stocks are now at price earnings
levels not seen since 1979, during the market crash of 1987, and during the 1990
recession.   Future   prospects  for  emerging  growth  stocks  look  promising,
particularly  from  these  depressed  levels.  Looking  ahead to the next six to
twelve  months,  we believe  that the  momentum of the  earnings  growth rate of
smaller  companies  will continue to be favorable.  These  companies can have an
advantage in a growing  economy with their  unique  ability to adapt  relatively
swiftly to changing  conditions.  Lower inventories,  limited product lines, and
leaner  management  also give small companies  strategic  flexibility and enable
these companies to respond more rapidly to new opportunities in the marketplace.
Additionally,  small  companies  with  promising  products or services,  or that
operate in dynamic industries, have the potential for more rapid earnings growth
than larger companies.  Further, because their international exposure is usually
limited,  small  companies are not as likely to be affected by  fluctuations  in
earnings from overseas operations. For this reason, we believe the smaller stock
values are even more  compelling for the balance of 1998 and 1999,  particularly
in comparison to the slowing growth rates of the large multi-national  exporting
companies.

Finally,  we continue to be optimistic about the Fund's  prospects.  Many of our
holdings sell at attractive  valuations relative to their expected growth rates.
For some time,  investors have largely failed to fully  appreciate the values in
the small  capitalization  sector.  However,  with a continued moderate economic
recovery and low  inflation,  small niche  companies  which can  increase  their
earnings and sell at historically low valuations  should ultimately be sought by
investors.

Market Outlook

While  interest  rates remain low and consumer  confidence is reaching  previous
high  levels,  mutual  fund cash  inflows  have  moderated  and the  momentum in
industrial production is unlikely to accelerate. Currently, the overriding issue
for the market is the  outlook  for  corporate  profits.  Profits  depend on the
outlook  for the  economy  and the extent of the Asian  effect over the next six
months.  Unquestionably,  Asia has slowed the  economy  and  corporate  profits,
particularly  in the  technology  sector.  A  stronger  dollar  has also  slowed
exports.  These  factors  are  expected  to  persist,  but not enough to produce
weakness in other sectors such as business  investment.  Some  counterbalance to
this weakness will be consumer  spending (which is likely to continue its upward
trend), bolstered by "real" wage growth and the refinancing of home mortgages to
lower rates.  We believe the  underlying  environment is still very positive for
equities and this should push the market higher in this fiscal year. Slow growth
with modest  inflation  should maintain  earnings growth and keep interest rates
within a narrow range.

Finally,  we believe it is more important to evaluate each company  individually
rather than  focusing on general  market  trends.  Forecasting  the direction or
general level of the stock market is difficult,  if not impossible.  Many of the
best  investors  of this  century  made a point of not  focusing too much on the
level of the market.  Investors are best served by emphasizing the  fundamentals
and buying companies with sustainable earnings growth at reasonable  valuations.
If this is done  consistently,  relatively good returns should be generated over
time.


                             Performance Comparison

Assuming a $10,000  initial  investment,  the following graph compares the total
returns of the Funds to the  performance of the S&P 500 IndexTM and Russell 2000
Index since the Funds began  operating on October 6, 1992.  Please remember that
past performance  does not necessarily  reflect how the Funds may perform in the
future.



                                       13

<PAGE>



                                [GRAPHIC OMITTED]

   
<TABLE>
<CAPTION>
    Account Value          Utility                      Emerging
     Total Return          Income        Growth          Growth        S&P 500       Russell 2000
       (as of)              Fund          Fund            Fund         IndexTM          Index
- ----------------------   -----------    --------       ---------       --------      ------------
<S>                      <C>            <C>            <C>             <C>           <C>
October 6, 1992            $10,000       $10,000        $10,000        $10,000         $10,000
June 30, 1993              $10,998       $10,634        $11,335        $11,297         $11,871
June 30, 1994              $ 8,998       $11,058        $10,506        $11,455         $12,386
June 30, 1995              $10,493       $14,667        $15,141        $14,442         $14,877
June 30, 1996              $12,655       $17,904        $17,315        $18,197         $18,431
June 30, 1997              $13,083       $19,711        $16,943        $24,511         $21,441
June 30, 1998              $16,425       $23,794        $16,919        $31,904         $24,980
</TABLE>
    

<TABLE>
<CAPTION>
                Average Annual Total Returns as of June 30, 1998

                      Utility Income          Growth            Emerging
                           Fund                Fund           Growth Fund
                      -------------           ------          -----------
<S>                   <C>                     <C>             <C>
One Year                  25.55%              20.72%            (0.14)%
Five Year                  8.35%              17.48%             8.34%
Since Inception            9.04%              16.32%             9.60%
</TABLE>

                             SHAREHOLDER INFORMATION

How to Invest In the Funds

Facts To Know Before You Invest:

          o    The minimum initial investment in each Fund is $2,500
          o    Retirement accounts may be opened with a $500 minimum investment
          o    There are no minimum amounts for subsequent investments
          o    There are no sales charges
          o    The Funds reserve the right to reject any purchase order
          o    All shares are electronically  recorded;  certificated shares are
               not available
          o    A $10 fee may be charged for items returned for  insufficient  or
               uncollectible


                                       14

<PAGE>



Purchasing Shares:

     By Mail

     Complete an  application  and make a check  payable to  "Cappiello-Rushmore
     Trust." Send your  completed  and signed  application  and check drawn on a
     U.S. bank to:

         Cappiello-Rushmore Trust
         4922 Fairmont Avenue
         Bethesda, Maryland  208l4

     By Bank Wire

     Speak to the branch  manager of your  bank.  Request a transfer  of federal
     funds to Rushmore  Trust and Savings,  FSB,  instructing  your bank to wire
     transfer the money before 4:00 P.M., Eastern Time, to:
   
         Rushmore Trust and Savings, FSB
         Bethesda, Maryland
         Routing # 0550-71084
    
     Specify the Fund name,  your account number (if assigned),  and the name(s)
     in which the account is registered.

     After  instructing  your bank to transfer federal funds, you must telephone
     Shareholder Services at (800) 622- 1386 or (301) 657-1510 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.  Remember  that it is  important  to complete  the wire  transfer
     before 4:00 P.M., Eastern Time.

     Through Brokers

     You  may  invest  in the  Fund  by  purchasing  shares  through  registered
     broker-dealers,  banks,  or  other  financial  institutions  that  purchase
     securities  for their  customers.  Please note that these third parties may
     charge a fee for their services.

How To Redeem Your Investment

Redeeming Shares:

     By Telephone (1-800-622-1386)

     As a Fund shareholder,  you will automatically receive telephone redemption
     privileges.  If you choose to redeem your  investment by telephone,  please
     contact  Shareholder  Services at 1-800-622-1386  between the hours of 8:30
     A.M.  and 4:30  P.M.,  Eastern  Time.  For your  protection,  we will  take
     measures  to verify  your  identity  by  requiring  some  form of  personal
     identification  prior to  acting  on  telephone  instructions  and may also
     record telephone transactions. A written confirmation will be mailed to you
     within five  business days after your  redemption.  Please note that we may
     terminate or modify telephone redemption privileges upon 60 days notice.

     By Mail or Fax

       Mail your instructions for                 Fax your instructions for
         redemption to:                             redemption to:

       Rushmore Trust and Savings, FSB            (301) 657-1520
       4922 Fairmont Avenue                       Attn:  Shareholder Services
       Bethesda, MD  20814
       Attn:  Shareholder Services

                                       15

<PAGE>


     Include the following information in your redemption request:

          o    the name of the Fund and account number you are redeeming from
          o    your name(s) and address as it appears on your account
          o    the dollar amount or number of shares you wish to redeem
          o    your signature(s) as it appears on your account
          o    a daytime telephone number

Additional Information You Should Know When You Redeem

There are no fees charged for redemptions.

         o    You may  receive  redemption  proceeds  by bank  wire,  check,  or
              through the Automated Clearing House System (ACH). When the amount
              to be redeemed is at least $5,000, we will, upon instruction, wire
              transfer the amount to your commercial  bank or brokerage  account
              specified  in your  account  application.  For  amounts  less than
              $5,000,  you may have redemption  proceeds deposited directly into
              an account specified on the account  application or request that a
              redemption check be delivered by mail to your address of record.

         o    If you  request  payment of  redemptions  to a third party or to a
              location  other than an address on record,  the request must be in
              writing  and your  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).

         o    Normally,  payment for all shares  redeemed  will be issued within
              one business day. However, withdrawal requests on investments that
              have been made by check may be  delayed  up to ten  calendar  days
              following  the  investment  or until the check  clears,  whichever
              occurs   first.   This  delay  is  necessary  to  assure  us  that
              investments  made by  check  are  good  funds.  You  will  receive
              redemption  proceeds promptly upon confirmation of receipt of good
              funds.

         o    If your monthly Fund account balance  averages $500 or less due to
              redemptions,  you may be  charged  a $5 fee.  The fee  will not be
              imposed on tax-sheltered  retirement plans or accounts established
              under the Uniform Gifts or Transfers to Minors Acts. Additionally,
              we reserve the right to redeem  involuntarily those accounts which
              fall below $500 after providing 60 days written notice.
   
         o    The right of redemption  may be suspended,  or the date of payment
              postponed,  during the following periods: (a) periods during which
              the New York Stock  Exchange  (the  "NYSE") is closed  (other than
              customary weekend or holiday  closings);  (b) periods when trading
              on the NYSE is restricted,  or an emergency  exists, as determined
              by  the  Securities  and  Exchange  Commission  ("SEC"),  so  that
              disposal of a Fund's  investments  or  determination  of net asset
              value is not reasonably practicable; or (c) for such other periods
              as the SEC,  by order,  may  permit for  protection  of the Fund's
              investors.
    


                                       16

<PAGE>



                     ADDITIONAL INFORMATION ABOUT THE FUNDS

Exchanging Fund Shares
   
The Trust is  comprised  of four  separate  Cappiello-Rushmore  Funds,  three of
which, the Utility Income,  Growth,  and Emerging Growth Funds, are described in
this Prospectus. The fourth Cappiello-Rushmore Fund, the Gold Fund, is described
in a separate prospectus.

You may exchange shares of one Cappiello-Rushmore Fund, without cost, for shares
of another  Cappiello-Rushmore  Fund,  or may choose to exchange,  without cost,
Cappiello-Rushmore  Fund  shares  for  shares of any of the  following  Rushmore
Funds: Fund for Government  Investors,  Fund for Tax-Free  Investors,  Inc., The
Rushmore Fund,  Inc., or American Gas Index Fund, Inc. The registration for both
accounts must be identical,  and you should obtain a current  prospectus for the
fund into which you are exchanging by calling 1-800-343-3355.  Exchanges will be
effected  at the  respective  net asset  values of the  Funds  involved  as next
determined after receipt of the exchange request. The Funds may change or cancel
their exchange policies at any time, upon 60 days' notice to shareholders.
    
Effective immediately,  the  Cappiello-Rushmore  Gold Fund no longer will accept
purchase  orders for new shares,  and Gold Fund  shares are no longer  available
through the Trust's  exchange  privilege.  Trust  shareholders  may  continue to
exchange  their Gold Fund shares for shares of other Rushmore  Funds,  including
shares of the three  Funds in the  Cappiello-Rushmore  Trust other than the Gold
Fund, in accordance with the terms of the Trust's exchange privilege.

Pricing of Fund Shares

The price of a Fund's  shares on any given day is the Fund's net asset value per
share.  This figure is computed by dividing the total market value of the Fund's
investments and other assets, less any liabilities, by the number of Fund shares
outstanding. The net asset value per share of each Fund is determined as of 4:00
P.M., Eastern Time, on days when the NYSE is open for business.  Orders accepted
by the Trust  directly  or by an  authorized  third  party will be priced at the
Fund's net asset values next computed after orders are received. This means that
if you place a purchase or redemption order after 4:00 P.M.,  Eastern Time, this
order will be effected at the next calculation of net asset value, normally 4:00
P.M. the next business day.
   
Each of the Funds values its portfolio  securities  based on the market value of
these  securities.  Each  security  held by the Funds,  and which is listed on a
securities  exchange,  is valued at the last  quoted  sale price on the NYSE and
other major exchanges for a given day. Price information on each listed security
is  taken  from  the  exchange   where  the   security  is   primarily   traded.
Over-the-counter  securities  are 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. 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 in good faith by the Board of  Trustees or
at the direction of the Trustees.

If a Fund  has  portfolio  securities  that  are  primarily  listed  on  foreign
exchanges  that trade on weekends or other days when the Fund does not price its
shares,  then the net asset  value of the Fund's  shares may change on days when
shareholders  of the Fund  will not be able to  purchase  or redeem  the  Fund's
shares.
    
Dividends and Distributions

All dividends and capital gain  distributions of each Fund will be reinvested in
additional  Fund shares  (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.

Although the timing and amount of all dividends and distributions are subject to
the discretion of the Board of Trustees, the distribution schedule for the Funds
is as follows:


                                       17

<PAGE>



     o   If you own shares of the  Growth  and/or  Emerging  Growth  Funds,  net
         investment income and net capital gains will be distributed annually in
         December.

     o   If you are a shareholder  of the Utility  Income Fund, you will receive
         net  investment  income  quarterly.  Capital gains will be  distributed
         annually in December.

Tax Consequences of Investing In the Funds

Taxability of Distributions
   
The Funds  intend to meet the  requirements  for being  tax-qualified  regulated
investment  companies.  As long as the Funds meet these requirements,  the Funds
pay no federal income tax on the earnings distributed to shareholders. The Funds
intend to distribute all of their earnings to their shareholders.  Dividends and
capital  gains  distributions  you  receive  from any  Cappiello-Rushmore  Fund,
whether reinvested or taken as cash, are generally  considered taxable to you as
ordinary  income or as capital gains income.  Each of the Funds expects that its
distributions to shareholders,  as a result of the Fund's  investment  objective
and  strategies,  will consist  primarily  of  dividends  on ordinary  income or
capital  gains.  The Form 1099 that is mailed to you each  January  details your
dividends and their  federal tax category.  You should verify your tax liability
with your tax professional.
    
Taxability of Transactions

Any  time  you  sell or  exchange  shares  of the  Funds,  this  transaction  is
considered a taxable event for you. For example,  if you exchange  shares of one
Fund  for  shares  of  another,  the  transaction  would be  treated  as a sale.
Consequently,  any gain  resulting  from the  transaction  would be  subject  to
federal income tax.


                            MANAGEMENT, ORGANIZATION,
                              and CAPITAL STRUCTURE

Investment Adviser


                 McCullough, Andrews & Cappiello, Inc.

                                
          Main Office                      East Coast Office

          Suite 4250                       Suite 250
          101 California Street            10751 Falls Road
          San Francisco, CA  94111         Lutherville, MD  21093

McCullough,  Andrews  &  Cappiello,  Inc.  (the  "Adviser")  has  served  as the
investment  adviser to the Funds since their  inception on October 6, 1992.  For
the advisory services performed,  the Adviser received the following fees during
the Funds' fiscal year ended June 30, 1998:

<TABLE>
<CAPTION>

                                Utility Income Fund        Growth Fund         Emerging Growth Fund
                                --------------------       -------------       --------------------
<S>                             <C>                        <C>                 <C>   
Advisory Fees Paid as a
Percentage of Net Assets               0.35%                  0.50%                  0.50%

</TABLE>

                                       18

<PAGE>



Portfolio Managers

Frank A. Cappiello and Robert F. McCullough,  C.P.A.,  manage the Funds and have
done so since their  inception in October,  1992. Mr.  McCullough is Chairman of
the Board of the Adviser and Mr.  Cappiello is President.  Both have been in the
investment business for more than thirty years.

Mr.  McCullough is a graduate of Santa Clara  University  and is a member of the
American Institute of CPAs and the California Society of CPAs.

Mr.  Cappiello is a graduate of the  University of Notre Dame (A.B.) and Harvard
University  (M.B.A.) He is past  President of the  Baltimore  Security  Analysts
Society and former Trustee of the Maryland State Retirement Systems.

Year 2000 Preparations

The day-to-day  operations of the Trust are dependent  upon the Trust's  service
providers,  principally the Adviser, Money Management Associates, Rushmore Trust
and Savings, FSB, and Rushmore Services, Inc.  (collectively,  the "Servicers"),
and upon the smooth functioning of the computer systems that they utilize.  Many
computer systems currently cannot properly  recognize or process  date-sensitive
information  relating to the year 2000 and beyond.  Like other  mutual funds and
financial and business  organizations  around the world,  the Trust,  therefore,
could be adversely affected if the computer systems used by these Servicers, and
their vendors,  do not properly process and calculate  date-related  information
and data on and after January 1, 2000.  The Servicers  have been  evaluating the
impact  that the year 2000  issue  may have on the  computer  systems  that they
utilize and are making  appropriate  modifications  to these systems in order to
assure that they will be prepared for the year 2000. The Trust and the Servicers
expect that any further  modifications  to their computer  systems  necessary to
address  the year 2000  issue will be made and  tested in a timely  manner.  The
Servicers also are working with their outside  vendors,  and other persons whose
systems  are  linked  to  those  of the  Trust  and  the  Servicers,  to  obtain
satisfactory assurances regarding the year 2000 issue. The costs of this systems
remediation will not be paid directly by the Trust. Inadequate remediation could
have  an  adverse  effect  on the  Trust's  operations,  including  pricing  and
securities  trading and settlement,  and the provision of shareholder  services.
Although, at this time, there can be no assurance that the remedial action taken
by the Servicers  will be sufficient or timely,  the Servicers do not anticipate
that the  transition  to the 21st  century  will have a  material  impact on the
ability of the Servicers to continue to service the Trust at current levels.


                                       19

<PAGE>



                              FINANCIAL HIGHLIGHTS

The following  financial  highlights  tables are intended to help you understand
each Fund's  financial  performance  for the past 5 years.  Certain  information
reflects  financial  results for a single Fund share.  The total  returns in the
table  represent  the rate that you would have earned (or lost) on an investment
in the Funds (assuming  reinvestment of all dividends and  distributions).  This
information has been audited by Deloitte & Touche LLP, whose report,  along with
the financial  statements of the Funds, is included in the annual report for the
Funds, which is available upon request.
<TABLE>
<CAPTION>
   
                                               Utility Income Fund                                 Growth Fund     
                                           For the Year Ended June 30,                     For the Year Ended June 30,              
                             1998       1997      1996      1995      1994         1998     1997        1996       1995      1994  
                             ----       ----      ----      ----      ----         ----     ----        ----       ----      ----  
<S>                           <C>       <C>        <C>       <C>       <C>        <C>       <C>         <C>        <C>       <C>
Net Asset Value --
  Beginning of Period         $ 10.40   $  10.60   $  9.24   $  8.39  $  10.82   $ 19.02  $  17.87    $  14.64   $  11.05  $  10.63
                              -------   --------   -------   -------  --------   -------- --------    --------   --------  --------
Income from Investment
  Operations:

  Net Investment Income          0.47       0.53      0.49      0.55      0.53     (0.18)   (0.09)      (0.07)       0.01    (0.02)
     (Loss)

  Net Realized and
    Unrealized Gain  (Loss)
    on Securities               2.17      (0.19)      1.39      0.85    (2.42)     (4.12)     1.83        3.30       3.60      0.44
                               ------     ------      ----      ----    ------     ------     ----        ----       ----      ----
Total from Investment
  Operations                     2.64       0.34      1.88      1.40    (1.89)       3.94     1.74        3.23       3.61      0.42
                               ------       ----      ----      ----    ------     ------     ----        ----       ----      ----

Less Distributions:

  Dividends (from net
    investment  income)        (0.48)     (0.54)    (0.52)    (0.55)    (0.53)         --       --          --     (0.02)        --

  Distributions (from
    capital gains)                 --         --        --        --    (0.01)         --   (0.59)          --         --        --
                            ---------  --------- --------- ---------    ------  ---------   ------   ---------  --------- ---------
    Total Distribution to
      Shareholders             (0.48)     (0.54)    (0.52)    (0.55)    (0.54)         --   (0.59)          --     (0.02)        --
                               ------     ------    ------    ------    ------   --------   ------   ---------     ------ ---------
  Net Asset Value -- End
     of  Period               $ 12.56   $  10.40  $  10.60   $  9.24   $  8.39   $  22.96 $  19.02    $  17.87  $  14.64  $  11.05 
  
Total Investment Return        25.55%      3.39%    20.60%    16.62%  (18.18)%     20.72%   10.10%      22.06%     32.65%     3.99%

Ratios and Supplemental
  Data:

  Net Assets -- End of
    Period (000s Omitted     $  9,799     $8,806   $15,106   $17,151    $9,117    $24,831  $24,899     $31,777    $19,337    $9,993

  Ratio of Expenses to
    Average Net Assets          1.05%      1.05%     1.05%     1.05%     1.05%      1.50%    1.50%       1.50%      1.50%     1.50%

  Ratio of Net Income to
    Average Net Assets          4.01%      4.88%     4.82%     6.26%     5.21%    (0.74)%  (0.46)%     (0.41)%      0.12%   (0.18)%

  Portfolio Turnover Rate      29.45%     17.33%    45.11%   147.04%    26.13%     65.08%   41.93%      74.50%     70.89%   119.03%

</TABLE>
    
A    The per share amount does not coincide with the net realized and unrealized
     loss for the year  because of the timing of sales and  redemptions  of Fund
     shares and the amounts of per share realized and  unrealized  gain and loss
     at such time.

                                       20
<PAGE>

                              FINANCIAL HIGHLIGHTS (Continued)

The following  financial  highlights  tables are intended to help you understand
each Fund's  financial  performance  for the past 5 years.  Certain  information
reflects  financial  results for a single Fund share.  The total  returns in the
table  represent  the rate that you would have earned (or lost) on an investment
in the Funds (assuming  reinvestment of all dividends and  distributions).  This
information has been audited by Deloitte & Touche LLP, whose report,  along with
the financial  statements of the Funds, is included in the annual report for the
Funds, which is available upon request.
<TABLE>
<CAPTION>
                      
                                                     Emerging Growth Fund                                  
                                                   For the Year Ended June 30,
                                 1998       1997         1996        1995          1994                 
                                ----       ----         ----        ----          ----     
<S>                             <C>        <C>          <C>         <C>           <C>

Net Asset Value --        
  Beginning of Period           $13.84   $  16.99     $  14.96    $  10.41      $  11.32     
                                ------   --------     --------    --------      --------             
Income from Investment
  Operations:

  Net Investment Income  
     (Loss)                     (0.21)     (0.24)       (0.16)      (0.08)        (0.10)             

  Net Realized and        
    Unrealized Gain  (Loss
    on Securities                0.19A     (0.24)         2.30        4.63        (0.69)             
                                  ----      ------         ----        ----        ------
                                                                           
Total from Investment     
  Operations                    (0.02)     (0.48)         2.14        4.55        (0.79)        
                              --------     ------         ----        ----        ------        
                                                                           
Less Distributions:
                          
  Dividends (from net     
    investment  income)             --         --           --          --            --             
                                                                           
  Distributions (from     
    capital gains)                  --     (2.67)       (0.11)          --        (0.12)             
                              --------     ------       ------    --------        ------             
                                                                           
    Total Distribution to 
      Shareholders                  --     (2.67)       (0.11)          --        (0.12)             
                              --------     ------       ------   ---------        ------             
                                                                           
  Net Asset Value -- End  
     of  Period                 $13.82   $  13.84     $  16.99    $  14.96      $  10.41              
                                                                           
Total Investment Return        (0.14)%    (2.15)%       14.36%      43.71%       (7.31)%             
                                                                           
Ratios and Supplemental   
  Data:                   
                          
  Net Assets -- End of    
    Period (000s Omitted        14,159    $20,732      $44,985     $36,606       $18,133             
                                                                           
  Ratio of Expenses to    
    Average Net Assets           1.50%      1.50%        1.50%       1.50%         1.50%             
                                                                           
  Ratio of Net Income to  
    Average Net Assets         (1.07)%    (1.20)%      (0.98)%       0.61%       (0.85)%             
                                                                           
  Portfolio Turnover Rate      121.20%     66.16%      121.22%      96.11%       128.13%             

</TABLE>
A    The per share amount does not coincide with the net realized and unrealized
     loss for the year  because of the timing of sales and  redemptions  of Fund
     shares and the amounts of per share realized and  unrealized  gain and loss
     at such time.



                                       21

<PAGE>



In addition to this prospectus, the following information is available to assist
you in making an investment decision:

Information Available Upon Request          Description

Statement of Additional Information         A document that includes additional
                                            information about the Funds.

Annual and Semi-Annual Reports              Bi-annual reports that contain
                                            information about the investments of
                                            the Funds.  These reports also
                                            discuss the market conditions and
                                            investment strategies that
                                            significantly affected the  Funds'
                                            performances during their last
                                            fiscal year.
   
There are a variety of ways to receive the above  information  upon your request
and  without  charge.  To receive  the above  information  or to  request  other
information about the Trust, or to make shareholder  inquiries,  you may contact
the Cappiello-Rushmore Trust directly by telephone, at 1-800-343-3355,  or visit
our  internet  site at  http://www.rushmorefunds.com,  or you may send a written
request to the Trust's  offices,  at 4922 Fairmont  Avenue,  Bethesda,  Maryland
20814. Additional information about the Funds can also be reviewed and copied at
the Securities and Exchange  Commission's Public Reference Room in Washington D.
C. (for hours of operation  please call the Commission at  1-800-SEC-0330).  You
may also obtain copies of the information by visiting the Commission's  internet
site at  http://www.sec.gov,  or, upon payment of a duplicating  fee, by writing
the  Public  Reference  Section  of the  Commission  at 450 Fifth  Street,  N.W.
Washington, D. C. 20549-6009.

               Cappiello-Rushmore Trust Investment Company Act File No. 811-6601
    


                                       22

<PAGE>
                                                                     Rule 497(c)
                                                               File No. 33-46283


                            CAPPIELLO-RUSHMORE TRUST


                                    GOLD FUND


                                   Prospectus

                                November 1, 1998


The Cappiello-Rushmore Trust (the "Trust") is a no-load mutual fund complex with
four separate investment  portfolios,  one of which (the "Fund") is described in
this Prospectus. This Prospectus contains important information about this Fund.
Please read this  Prospectus  before  investing and keep this Prospectus on file
for future reference.

Effective  immediately,  the Gold Fund no longer will accept purchase orders for
new  shares,  and Gold Fund shares are no longer  available  through the Trust's
exchange privilege.  Trust shareholders may continue to exchange their Gold Fund
shares for shares of other Rushmore Funds,  including  shares of the other three
Funds in the  Cappiello-Rushmore  Trust,  in  accordance  with the  terms of the
Trust's exchange privilege.

Neither  the  securities  and  exchange  commission  nor  any  state  securities
commission has approved or  disapproved  of these  securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.



<PAGE>



                                TABLE OF CONTENTS




                                                                          Page
   

Risk and Return Summary................................................
   Investments, Risks, and Performance.................................
   Risk/Return Bar Chart and Table.....................................
   Performance Table...................................................

Fees and Expenses of the Fund..........................................

Investment Objectives, Principal Investment Strategies,
and Related Risks......................................................
   A Review of Risk Considerations.....................................

Management's Discussion of Fund Performances...........................
   Market Outlook......................................................
   Performance Comparison..............................................

Shareholder Information................................................
   How to Invest In the Funds..........................................
   How to Redeem Your Investment.......................................

Additional Information About the Funds.................................
   Exchanging Fund Shares..............................................
   Pricing of Fund Shares..............................................
   Dividends and Distributions.........................................
   Tax Consequences of Investing In the Fund...........................

Management, Organization, and Capital Structure........................
   Investment Adviser..................................................
   Year 2000 Preparations..............................................

Financial Highlights...................................................
    


                                        2

<PAGE>



                             RISK and RETURN SUMMARY
                       Investments, Risks, and Performance

Fund Investment Objective
   
The Gold Fund's investment objective is long-term capital appreciation.

Principal Fund Investment Strategies

The Gold Fund seeks to achieve its  objective  by  investing at least 65% of its
total assets in the stocks of companies  that engage in gold and other  precious
metal-related  activities.  Other precious metals include silver,  platinum, and
palladium,  and also diamonds and other precious minerals,  as well as silver or
other  precious  metal  bullion and coins.  Precious  metal  activities  include
mining, exploration,  fabrication, processing, marketing, and distribution. Also
included are  companies  dealing or investing  in gold and  operating  companies
principally engaged in financing, managing,  controlling, or operating companies
engaged in these activities. The Fund invests mainly in the common stock of U.S.
and foreign gold and precious metal-related  companies. The Fund has no limit on
investment in the securities of foreign  issuers,  but does not invest more than
20% of its total assets in those  foreign  securities  which are not traded on a
recognized U.S. securities exchange or in dollar-denominated American Depository
Receipts  ("ADRs").  The Fund, to a lesser extent,  may also invest in warrants,
preferred stock, and convertible debt securities,  as well as bullion, coins and
precious metals, futures contacts, and options.

Principal Risks of Investing In the Gold Fund

The main risks that could  adversely  affect the value of the Gold Fund's shares
and the total  return  on your  investment  in this  Fund  stem from the  Fund's
concentration  policies.  As with any  stock-oriented  fund,  the  value of your
investment  in the  Fund  will  rise or fall  depending  on the  performance  of
individual  securities  as well as  stock  market  movements.  Because  the Fund
concentrates its investments in the precious metals-related securities industry,
the  performance  of the Fund is  subject  to the risk that this  industry  will
underperform  the market as a whole.  To the extent  that the Fund may invest in
the  securities  of  foreign  issuers,  the Fund also will be subject to foreign
company risks, such as changes in currency exchange rates, inadequate disclosure
of company  information,  and  political  instability.  The  stocks of  precious
metals-related  companies  also  carry  higher  risks  than the  stocks of other
companies,  in particular  the risk of wide price  movements due to a variety of
economic and political factors, including:
    
     o    changes in inflation or in expectations regarding inflation in various
          countries
     o    the availability of supplies of precious metals and minerals
     o    changes in industrial and commercial demand
     o    metal  and  mineral   sales  by   governments,   central   banks,   or
          international agencies
     o    investment speculation
     o    monetary and other economic policies of various governments
     o    governmental restrictions on the private ownership of certain precious
          metals and minerals
   
Loss of money is a risk of investing in the Gold Fund. An investment in the Fund
is not a deposit of any bank and is not  insured or  guaranteed  by the  Federal
Deposit Insurance Corporation or any other government agency.


                         Risk/Return Bar Chart and Table

The  chart  and  table  below  show the  annual  calendar-year  returns  and the
performance of the Fund, which commenced  operations on March 7, 1994, and whose
fiscal  year-end  is June  30th.  The  information  in the  chart  and the table
provides  some  indication  of the  risks of  investing  in the Fund by  showing
changes  in Fund  performance  from year to year and by  showing  how the Fund's
average  annual  returns for 1 year and 3 years compare with the  performance of
the  Philadelphia  Stock  Exchange Gold and Silver  IndexTM (the "XAU Index") (a
capitalization-weighted  index featuring  eleven  widely-held  securities in the
gold and silver mining and  production  industry or companies  investing in such
mining and production companies).

                                        3

<PAGE>





The  chart  and the  table  below  assume  the  reinvestment  of  dividends  and
distributions.  How the Fund has  performed  in the  past  does not  necessarily
indicate how the Fund will perform in the future.

The chart  immediately  below shows the annual total return of the Fund for each
calendar year from 1995 through 1997.  The table that follows the chart compares
the Fund's average annual total returns for 1 year and 3 years with those of the
XAU Index for periods  ended  December 31, 1997,  the  most-recently  completely
calendar year.

                            Annual Total Return Chart


                                [GRAPHIC OMITTED]

<TABLE>
<CAPTION>

       Year Ended                              
         (as of)               Gold Fund       
- -------------------           -----------      
<S>                            <C>             
December 31, 1995                  4%          
December 31, 1996                 (6%)         
December 31, 1997                (45%)         

</TABLE>


Notes to Annual Total Return Chart:

1.   The year-to-date  total return for the Trust's  most-recent  fiscal quarter
     (ended September 30, 1998) for the Gold Fund is -0.43%

2.   The  highest  and  lowest  quarterly  returns  for the Gold Fund  since the
     inception  of the Fund on March 7, 1994,  are 20.74% (in the 1st Quarter of
     1996) and -32.18% (in the 4th Quarter of 1997), respectively.

    
                                Performance Table
                          Average Annual Total Returns
                      (for Periods Ended December 31, 1997)
<TABLE>
<CAPTION>

                                  Gold Fund        XAU Index
                                  ---------        ---------
<S>                               <C>              <C>
One Year (1997)                   (45.22)%          (36.46)%
Three Years (1995-1997)           (18.87)%          (12.13)%
</TABLE>



                                        4

<PAGE>


   
                          FEES and EXPENSES of the FUND
    
This table  describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.


Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
    Management Fees                                             0.70%
    Other Expenses                                              1.00%
                                                                -----
  Total Annual Fund Operating Expenses                          1.70%
                                                                -----

If  your  monthly  account  balance  per  Fund  averages  $500  or  less  due to
redemptions you may be charged a $5 fee.

EXAMPLE

This  Example is intended to help you compare the cost of  investing in the Fund
with the cost of investing in other mutual funds.

The Example  assumes  that you invest  $10,000 in the Fund for the time  periods
indicated  below and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
<TABLE>
<CAPTION>

    1 Year         3 Years         5 Years        10 Years
    ------         -------         -------        --------
    <S>            <C>             <C>            <C>
     $ 173          $ 536           $ 923         $ 2,009

</TABLE>
                   INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
                          STRATEGIES, and RELATED RISKS
   
Fund Investment Objective

The Gold Fund's investment objective is long-term capital appreciation.

Principal Fund Investment Strategies

The Gold Fund seeks to achieve its  objective  by  investing at least 65% of its
total assets in the stocks of companies  that engage in gold and other  precious
metals  activities.   Other  precious  metals  include  silver,   platinum,  and
palladium,  and also diamonds and other precious minerals,  as well as silver or
other  precious  metal  bullion and coins.  Precious  metal  activities  include
mining, exploration,  fabrication, processing, marketing, and distribution. Also
included are  companies  dealing or investing  in gold and  operating  companies
principally engaged in financing, managing,  controlling, or operating companies
engaged in these activities. The Fund invests mainly in the common stock of U.S.
and foreign gold and precious metal-related  companies. The Fund has no limit on
investment in the securities of foreign  issuers,  but does not invest more than
20% of its total assets in those  foreign  securities  which are not traded on a
recognized U.S. securities exchange or in dollar-denominated  ADRs. The Fund, to
a lesser extent,  may also invest in warrants,  preferred stock, and convertible
debt  securities,  as  well as  bullion,  coins  and  precious  metals,  futures
contacts,  and options.  The Fund,  to a lesser  extent,  may also purchase U.S.
Government  securities and enter into repurchase  agreements.  The Fund does not
invest for income.


                                        5

<PAGE>



In selecting  stocks, we look for companies that have: (i) steady growth in both
sales and earnings;  (ii) extensive ore bodies and efficient  mining  operations
(where  appropriate);  and (iii) low melting and  refinery  costs with  adequate
capital to continue to maintain and expand operations.

We usually sell a company's stock when that company's  "fundamentals" (i.e., the
company's capital structure, operating characteristics,  pre-tax profit margins,
and return on  stockholders'  equity) change for the worse.  Generally,  company
stock  will  also be sold  when  the  stock  price  of the  company  experiences
significant, unexplained declines.

The Fund,  from time to time,  may take  temporary  defensive  measures that are
inconsistent  with the Fund's principle  investment  strategies in attempting to
respond to adverse market, economic,  political, or other conditions.  Thus, the
Fund  may  temporarily  invest  all or  part  of its  assets  in  cash  or  cash
equivalents,  which  include,  but are not limited to  short-term  money  market
instruments,  U.S.  Government  securities,  certificates  of deposit,  bankers'
acceptances, or repurchase agreements secured by U.S. Government securities. The
effect of taking these  temporary  defensive  positions is that the Fund may not
achieve its investment objective.

As an anticipated result of these principal investment strategies, the Gold Fund
may engage in the active and  frequent  trading of  portfolio  securities.  This
increased portfolio turnover for the Fund could produce high brokerage costs for
the Fund and result in taxable distributions to Fund shareholders.

Principal Risks of Investing In the Gold Fund

The main risks that could  adversely  affect the value of the Gold Fund's shares
and the total  return  on your  investment  in this  Fund  stem from the  Fund's
concentration  policies.  As with any  stock-oriented  fund,  the  value of your
investment  in the  Fund  will  rise or fall  depending  on the  performance  of
individual  securities  as well as  stock  market  movements.  Because  the Fund
concentrates its investments in the precious metals-related securities industry,
the  performance  of the Fund is  subject  to the risk that this  industry  will
underperform  the market as a whole.  To the extent  that the Fund may invest in
the  securities  of  foreign  issuers,  the Fund also will be subject to foreign
company risks, such as changes in currency exchange rates, inadequate disclosure
of company  information,  and  political  instability.  The  stocks of  precious
metals-related  companies  also  carry  higher  risks  than the  stocks of other
companies,  in particular  the risk of wide price  movements due to a variety of
economic and political factors, including:
    
     o    changes in inflation or in expectations regarding inflation in various
          countries
     o    the availability of supplies of precious metals and minerals
     o    changes in industrial and commercial demand
     o    metal  and  mineral   sales  by   governments,   central   banks,   or
          international agencies
     o    investment speculation
     o    monetary and other economic policies of various governments
     o    governmental restrictions on the private ownership of certain precious
          metals and minerals

A Review of Risk Considerations

Risk In General

The risks of a fund are  usually  defined by the fund's  individual  securities,
overall portfolio,  and investment tactics.  Over longer periods of time, stocks
have  been  among  the most  successful  investments  available  to the  public.
Nevertheless,  stocks do  fluctuate in price.  Accordingly,  there is a risk you
could lose as well as make money by  investing  in the  Cappiello-Rushmore  Gold
Fund. As with any fund,  there is no guarantee that the  performance of the Gold
Fund will be positive over any period of time, either short term or long term.


                                        6

<PAGE>


   
Additional Risks

In addition to the specific  principal risks of the Gold Fund identified  above,
the Fund also may encounter the following broad-based risks:
    
         Fund  Risk -- The  possibility  that the  Fund's  performance  during a
specific period may not meet or exceed that of the market as a whole.
   
         Concentration  Risk -- The risk that the  particular  industry in which
the Fund may focus its investments will underperform the market as a whole.

         Sector Risk -- The risk that the  particular  economic  sector in which
the Fund may focus its investments  will  underperform the market as a whole. To
the extent that the Fund's  investments are  concentrated in issuers  conducting
business  in the same  economic  sector,  the Fund is  subject  to the  risks of
investing in that sector,  including legislative or regulatory changes,  adverse
market conditions, and/or increased competition.
    
         Market  Risk -- The  possibility  that  stock  prices in  general  will
decline over short, or even extended,  periods of time. Stock markets tend to be
cyclical,  with periods when stock prices  generally rise and periods when stock
prices  generally  decline.  Investors  have  noticed that when the stock market
surges up, many stocks post  higher  prices.  On the other hand,  when the stock
market falls sharply,  many common stocks will drop even more sharply.  A change
in market psychology can cause a security's price to decline irrespective of any
truly fundamental change in the company itself.

         Interest Rate Risk -- The risk of a rise in interest rates that usually
depresses the prices of  fixed-income  type  securities and often of equities as
well. In the short run, high interest rates reduce interest-sensitive investment
spending.  Interest rate uncertainty is related to various factors.  Among these
factors  are  swings in money  growth,  uncertainty  about the  policies  of the
Federal Reserve Board, and inflationary expectations.

         Foreign  Company Risks --  Investments  in foreign  securities  involve
additional  risks,  such as  changes  in  currency  exchange  rates,  inadequate
disclosure of company information,  and political  instability.  Some additional
significant risks associated with investing in foreign companies include:

          o    Volatility -- Investments in securities of foreign  companies can
               be more volatile than investments in U.S. companies.  Diplomatic,
               political,  or economic  developments could affect investments in
               foreign companies.

          o    Regulatory  Environment  -- Foreign  companies  generally are not
               subject to uniform accounting,  auditing, and financial reporting
               standards   comparable  to  those  applicable  to  U.S.  domestic
               companies.   Foreign   issuers   may  be  subject  to   different
               accounting, auditing, reporting, and recordkeeping standards than
               those  applicable to domestic  issuers.  There is generally  less
               government  regulation  of listed  companies  abroad  than in the
               United States.

         Leveraging Risk -- Leveraging  activities include,  among other things,
borrowing  and the use of options and futures  contracts.  The risks  associated
with leveraging activities include:

          o    The success of a leveraging  strategy may depend on an ability to
               predict  movements  in  the  prices  of  individual   securities,
               fluctuations in markets, and movements in interest rates.

          o    Leveraging  may  result  in the  Fund  experiencing  losses  over
               certain ranges in the market that exceed losses  experienced by a
               non-leveraged fund.


                                        7

<PAGE>



          o    There may be an imperfect or no  correlation  between the changes
               in market value of the securities held by the Fund and the prices
               of futures contracts and options on futures contracts.

          o    Although  the Fund will  purchase  only  exchange-traded  futures
               contracts and options,  due to market conditions there may not be
               a liquid secondary market for a futures contract or an option. As
               a result,  the Fund may be unable  to close  out its  futures  or
               options contracts at a time which is advantageous to the Fund.

          o    Trading   restrictions  or  limitations  may  be  imposed  by  an
               exchange,  and  government  regulations  may restrict  trading in
               futures contracts and options.
   
    
         Event Risk -- The  possibility  that  corporate  securities  may suffer
substantial  declines in market  value due to  corporate  restructurings.  While
event risk may be high for certain corporate  securities held by the Fund, event
risk in the aggregate should be low because of the Fund's varied holdings.

         Small-Issuer Risk -- Small- and medium-capitalization  companies may be
more vulnerable than larger,  more-established organizations to adverse business
or economic developments. In particular, small-capitalization companies may have
limited  product  lines,  markets,  and  financial  resources,  and  also may be
dependent upon a  relatively-small  management  group.  These  securities may be
traded over-the-counter or listed on an exchange and may not pay dividends.
   
         Money Market  Investment Risk -- Under adverse market  conditions,  the
Fund could  invest  some or even all of its assets in money  market  securities.
Although  the  Fund's  objective  would  be to  attempt  to avoid  losses,  this
defensive  tactic,  if employed in a significant  way,  could have the effect of
reducing the benefit from any upswing in the market.
    

                             MANAGEMENT'S DISCUSSION
                               OF FUND PERFORMANCE

During the past  twelve  months,  the stock  market,  as  measured  by the major
indices,  moved to new all time  highs  propelled  by a still  growing  economy,
falling  inflation  expectations,  and lower interest  rates.  The effect of the
Asian crisis  impacted  stock prices in October 1997 and in early Spring of 1998
as the second wave of Asian  economic woes affected some sectors of the economy.
One of the  results of this crisis has been the  two-tiered  nature of the stock
market  where  "size" did count in producing  the better  investment  returns as
nervous  investors  sought  liquidity  and  safety in the  large  capitalization
stocks. Further,  individual stock performances seemed to be directly related to
size  rather  than  value,  earnings  growth,  or  management  capability.  More
remarkable has been foreign  investment in the U.S. market.  As the Asian crisis
began to become apparent about a year ago, it generated a flight of capital from
troubled  Asian markets into the U.S. and, to a lesser extent,  Europe.  Most of
this foreign  inflow sought  liquidity and the money flowed into index funds (in
the case of equities) and U.S.  Treasury  securities.  The latter helped to push
rates down, particularly on the 30-year Treasury Bond.

The factors that  materially  affected  performance  of the Gold Fund during the
fiscal year ended June 30, 1998 were:

          o    Market   conditions  for  gold  (both  bullion  gold  shares  and
               derivatives  relative to these  shares) can be  characterized  as
               poor for most of the entire fiscal year
          o    The sale and  possibilities  of future  sales of gold  bullion by
               several central banks including  Australia (sale) and Switzerland
               (possible reduction of gold as backing for the Swiss Franc)

                                        8

<PAGE>



          o    European  Monetary  Union  (EMU)  limited  gold  backing  of  new
               currency and placed no restrictions on future gold reserves
          o    The  benign  rate of  inflation  both  in the  U.S.  and  abroad,
               particularly Europe
          o    Weakness in Asian demand also translated into weakness in foreign
               purchases of platinum, silver, and gold jewelry by Asians as well
               as weakness in precious metal buying for industrial uses
          o    BRE-X Scandal was a continuing demoralizing event
          o    Inability to raise capital forced  marginal  companies to abandon
               projects or close properties
          o    Foreign  currency  weakness  served to limit interest in precious
               metals

In this difficult environment,  we took steps to lower risks in the portfolio by
shifting from the smaller  precious  metal stocks to  larger-capitalization  and
more-diversified  producers.  Reflecting this change, two of our best performing
stocks were Stillwater Mining Company (up 22%) and Battle Mountain Gold (up 4%).

The outlook for  precious  metals and the Fund's  prospects  for the fiscal year
ending June 30, 1999, is mixed. Some of the negative forces will likely continue
in 1999.  However,  new  events and  changed  perceptions  may lead to  improved
conditions for the industry, as follows:

          o    The new European  Central Bank may place a moratorium  (or limit)
               on the sale of gold by its member nations
          o    Asian  stability may develop which could weaken the dollar versus
               the yen and other  currencies  leading to a more  attractive gold
               price
          o    Inflation  may become a larger  force and a fear than in the past
               several years
          o    Gold  production  shortfall  in 1997  and  likely  again  in 1998
               relative to demand should eventually lead to higher price levels;
               the  situation  will be  magnified  as the  gold  industry  lacks
               financial resources to build production going forward

We believe  that the time will come when the forces of supply and demand come to
the fore and will be reinforced with diminishing reliance on paper reserves such
as the  dollar.  In summary,  1999 may see the  reversal in the forces that have
depressed the price of gold and other precious metals.

Market Outlook

While  interest  rates remain low and consumer  confidence is reaching  previous
high  levels,  mutual  fund cash  inflows  have  moderated  and the  momentum in
industrial production is unlikely to accelerate. Currently, the overriding issue
for the market is the  outlook  for  corporate  profits.  Profits  depend on the
outlook  for the  economy  and the extent of the Asian  effect over the next six
months.  Unquestionably,  Asia has slowed the  economy  and  corporate  profits,
particularly  in the  technology  sector.  A  stronger  dollar  has also  slowed
exports.  These  factors  are  expected  to  persist,  but not enough to produce
weakness in other sectors such as business  investment.  Some  counterbalance to
this weakness will be consumer  spending (which is likely to continue its upward
trend), bolstered by "real" wage growth and the refinancing of home mortgages to
lower rates.  We believe the  underlying  environment is still very positive for
equities and this should push the market higher in this fiscal year. Slow growth
with modest  inflation  should maintain  earnings growth and keep interest rates
within a narrow range.

Finally,  we believe it is more important to evaluate each company  individually
rather than  focusing on general  market  trends.  Forecasting  the direction or
general level of the stock market is difficult,  if not impossible.  Many of the
best  investors  of this  century  made a point of not  focusing too much on the
level of the market.  Investors are best served by emphasizing the  fundamentals
and buying companies with sustainable earnings growth at reasonable valuations.
If this is done  consistently,  relatively good returns should be generated over
time.




                                        9

<PAGE>



                             Performance Comparison

Assuming a $10,000 initial  investment,  the following graph compares the Fund's
total returns to the  performance of the  Philadelphia  Exchange Gold and Silver
Index since the Fund began operating on March 7, 1994. Please remember that past
performance does not necessarily reflect how the Fund may perform in the future.

                                [GRAPHIC OMITTED]

<TABLE>
<CAPTION>

      Acccount Value
       Total Return              Gold             Philadelphia Exchange
         (as of)                 Fund             Gold and Silver Index
      --------------            -------           ----------------------
     <S>                       <C>                <C>
     March 7, 1994             $10,000                   $10,000
     June 30, 1994             $ 9,520                   $ 9,560
     June 30, 1995             $ 9,890                   $ 9,970
     June 30, 1996             $ 9,930                   $10,266
     June 30, 1997             $ 7,020                   $ 7,914
     June 30, 1998             $ 4,660                   $ 5,937
</TABLE>


                Average Annual Total Returns as of June 30, 1998

                         One Year              (33.62)%
                     Since Inception           (16.21)%


                             SHAREHOLDER INFORMATION

How to Invest In the Fund

Facts To Know Before You Invest:

          o    The minimum initial investment in is $2,500
          o    Retirement accounts may be opened with a $500 minimum investment
          o    There are no minimum amounts for subsequent investments
          o    There are no sales charges
          o    The Funds reserve the right to reject any purchase order
          o    All shares are electronically  recorded;  certificated shares are
               not available
          o    A $10 fee may be charged for items returned for  insufficient  or
               uncollectible funds

                                       10

<PAGE>



Purchasing Shares:

     By Mail

     Complete an  application  and make a check  payable to  "Cappiello-Rushmore
     Trust." Send your  completed  and signed  application  and check drawn on a
     U.S. bank to:

         Cappiello-Rushmore Trust
         4922 Fairmont Avenue
         Bethesda, Maryland  208l4

     By Bank Wire

     Speak to the branch  manager of your  bank.  Request a transfer  of federal
     funds to Rushmore  Trust and Savings,  FSB,  instructing  your bank to wire
     transfer the money before 4:00 P.M., Eastern Time, to:
   
         Rushmore Trust and Savings, FSB
         Bethesda, Maryland
         Routing # 0550-71084
    
     Specify the Fund name,  your account number (if assigned),  and the name(s)
     in which the account is registered.

     After  instructing  your bank to transfer federal funds, you must telephone
     Shareholder  Services at (800) 622-1386 or (301) 657-1510 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.  Remember  that it is  important  to complete  the wire  transfer
     before 4:00 P.M., Eastern Time.

     Through Brokers

     You  may  invest  in the  Fund  by  purchasing  shares  through  registered
     broker-dealers,  banks,  or  other  financial  institutions  that  purchase
     securities  for their  customers.  Please note that these third parties may
     charge a fee for their services.

How To Redeem Your Investment

Redeeming Shares:

     By Telephone (1-800-622-1386)

     As a Fund shareholder,  you will automatically receive telephone redemption
     privileges.  If you choose to redeem your  investment by telephone,  please
     contact  Shareholder  Services at 1-800-622-1386  between the hours of 8:30
     A.M.  and 4:30  P.M.,  Eastern  Time.  For your  protection,  we will  take
     measures  to verify  your  identity  by  requiring  some  form of  personal



                                       11

<PAGE>



     identification  prior to  acting  on  telephone  instructions  and may also
     record telephone transactions. A written confirmation will be mailed to you
     within five  business days after your  redemption.  Please note that we may
     terminate or modify telephone redemption privileges upon 60 days notice.

     By Mail or Fax


     Mail your instructions for                Fax your instructions for
       redemption to:                             redemption to:
     Rushmore Trust and Savings, FSB                (301) 657-1520
     4922 Fairmont Avenue                           Attn:  Shareholder Services
     Bethesda, MD  20814
     Attn:  Shareholder Services

     Include the following information in your redemption request:

         o     the name of the Fund and account number you are redeeming from
         o     your name(s) and address as it appears on your account
         o     the dollar amount or number of shares you wish to redeem
         o     your signature(s) as it appears on your account
         o     a daytime telephone number

Additional Information You Should Know When You Redeem

There are no fees charged for redemptions.

         o    You may  receive  redemption  proceeds  by bank  wire,  check,  or
              through the Automated Clearing House System (ACH). When the amount
              to be redeemed is at least $5,000, we will, upon instruction, wire
              transfer the amount to your commercial  bank or brokerage  account
              specified  in your  account  application.  For  amounts  less than
              $5,000,  you may have redemption  proceeds deposited directly into
              an account specified on the account  application or request that a
              redemption check be delivered by mail to your address of record.

         o    If you  request  payment of  redemptions  to a third party or to a
              location  other than an address on record,  the request must be in
              writing  and your  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).

         o    Normally,  payment for all shares  redeemed  will be issued within
              one business day. However, withdrawal requests on investments that
              have been made by check may be  delayed  up to ten  calendar  days
              following  the  investment  or until the check  clears,  whichever
              occurs   first.   This  delay  is  necessary  to  assure  us  that
              investments  made by  check  are  good  funds.  You  will  receive
              redemption  proceeds promptly upon confirmation of receipt of good
              funds.

                                       12

<PAGE>




         o    If your monthly Fund account balance  averages $500 or less due to
              redemptions,  you may be  charged  a $5 fee.  The fee  will not be
              imposed on tax-sheltered  retirement plans or accounts established
              under the Uniform Gifts or Transfers to Minors Acts. Additionally,
              we reserve the right to redeem  involuntarily those accounts which
              fall below $500 after providing 60 days written notice.
   
         o    The right of redemption  may be suspended,  or the date of payment
              postponed,  during the following periods: (a) periods during which
              the New  York  Stock  Exchange  ("NYSE")  is  closed  (other  than
              customary weekend or holiday  closings);  (b) periods when trading
              on the NYSE is restricted,  or an emergency  exists, as determined
              by  the  Securities  and  Exchange  Commission  ("SEC"),  so  that
              disposal of the Fund's  investments or  determination of net asset
              value is not reasonably practicable; or (c) for such other periods
              as the SEC,  by order,  may  permit for  protection  of the Fund's
              investors.
    

                      ADDITIONAL INFORMATION ABOUT THE FUND

Exchanging Fund Shares
   
The Trust is comprised for four separate Cappiello-Rushmore Funds, one of which,
the  Gold   Fund,   is   described   in  this   Prospectus.   The  three   other
Cappiello-Rushmore Funds, the Utility Income, Growth, and Emerging Growth Funds,
are described in a separate prospectus.

You may exchange shares of one Cappiello-Rushmore Fund, without cost, for shares
of another  Cappiello-Rushmore  Fund,  or may choose to exchange,  without cost,
Cappiello-Rushmore  Fund  shares  for  shares of any of the  following  Rushmore
Funds: Fund for Government  Investors,  Fund for Tax-Free  Investors,  Inc., The
Rushmore Fund,  Inc., or American Gas Index Fund, Inc. The registration for both
accounts must be identical,  and you should obtain a current  prospectus for the
fund into which you are exchanging by calling 1-800-343-3355.  Exchanges will be
effected  at the  respective  net asset  values of the  Funds  involved  as next
determined after receipt of the exchange request.  The Fund may change or cancel
their exchange policies at any time, upon 60 days' notice to shareholders.
    
Effective immediately,  the  Cappiello-Rushmore  Gold Fund no longer will accept
purchase  orders for new shares,  and Gold Fund  shares are no longer  available
through the Trust's  exchange  privilege.  Trust  shareholders  may  continue to
exchange  their Gold Fund shares for shares of other Rushmore  Funds,  including
shares of the three  Funds in the  Cappiello-Rushmore  Trust other than the Gold
Fund, in accordance with the terms of the Trust's exchange privilege.

Pricing of Fund Shares

The price of the Fund's  shares on any given day is the  Fund's net asset  value
per share.  This figure is computed by dividing  the total  market  value of the
Fund's investments and other assets, less any liabilities, by the number of Fund
shares  outstanding.  The net asset value per share of the Fund is determined as
of 4:00 P.M.,  Eastern Time, on days when the NYSE is open for business.  Orders
accepted by the Trust directly or by an authorized third party will be priced at
the Fund's net asset values next computed after orders are received.  This means
that if you place a purchase or redemption order after 4:00 P.M.,  Eastern Time,
this order will be effected at the next calculation of net asset value, normally
4:00 P.M. the next business day.



                                       13

<PAGE>



The Fund  values its  portfolio  securities  based on the market  value of these
securities.  Each security held by the Fund, and which is listed on a securities
exchange,  is valued at the last  quoted  sale price on the NYSE and other major
exchanges for a given day. Price  information  on each listed  security is taken
from the  exchange  where the  security is  primarily  traded.  Over-the-counter
securities are 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. Gold and other precious metals are valued daily at fair market value,
based upon price quotations in common use. 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 in good faith by the Board of
Trustees or at the direction of the Trustees.
   
If a Fund  has  portfolio  securities  that  are  primarily  listed  on  foreign
exchanges  that trade on weekends or other days when the Fund does not price its
shares,  then the net asset  value of the Fund's  shares may change on days when
shareholders  of the Fund  will not be able to  purchase  or redeem  the  Fund's
shares.
    
Dividends and Distributions

All dividends and capital gain  distributions  of the Fund will be reinvested in
additional  Fund shares  (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.

Although the timing and amount of all dividends and distributions are subject to
the discretion of the Board of Trustees,  the Fund intends to distribute all net
investment income and net capital gains annually in December.


Tax Consequences of Investing In the Fund

Taxability of Distributions
   
The Fund intends to meet the  requirements  for being a tax-qualified  regulated
investment company. As long as the Fund meets these requirements,  the Fund pays
no federal  income tax on the earnings  distributed  to  shareholders.  The Fund
intends to  distribute  all of its earnings to its  shareholders.  Dividends and
capital gains  distributions you receive,  whether  reinvested or taken as cash,
are generally  considered  taxable to you as ordinary income or as capital gains
income. The Fund expects that its distributions to shareholders,  as a result of
the Fund's  investment  objective  and  strategies,  will  consist  primarily of
dividends on ordinary  income or capital gains.  The Form 1099 that is mailed to
you each January  details your  dividends and their  federal tax  category.  You
should verify your tax liability with your tax professional.
    
Taxability of Transactions

Any time you sell or exchange shares of the Fund, this transaction is considered
a taxable  event for you. For example,  if you exchange  shares of the Gold Fund
for shares of another  Cappiello-Rushmore Fund, the transaction would be treated
as a sale.  Consequently,  any  gain  resulting  from the  transaction  would be
subject to federal income tax.



                                       14

<PAGE>



                            MANAGEMENT, ORGANIZATION,
                              and CAPITAL STRUCTURE


Investment Adviser

                  McCullough, Andrews & Cappiello, Inc.

          Main Office                         East Coast Office
          
          Suite 4250                          Suite 250
          101 California Street               10751 Falls Road
          San Francisco, CA  94111            Lutherville, MD
                                              21093

McCullough,  Andrews & Cappiello,  Inc. (the "Adviser") has served as the Fund's
investment  adviser  since its  inception  on March 7,  1994.  For the  advisory
services performed,  the Adviser received 0.70% of the average net assets of the
Fund for the fiscal year ended June 30, 1998.

Portfolio Manager

David H. Andrews,  C.F.A., is the portfolio manager for the Fund. Mr. Andrews is
the Vice Chairman the Adviser and has managed the Fund since its inception.  Mr.
Andrews has been in the  securities  business for more than forty years and is a
Chartered Financial Analyst (C.F.A.) and past President of the Security Analysts
of San Francisco.  He is a graduate of Harvard College and the Stanford Graduate
School of Business.

Year 2000 Preparations

The day-to-day  operations of the Trust are dependent  upon the Trust's  service
providers,  principally the Adviser, Money Management Associates, Rushmore Trust
and Savings, FSB, and Rushmore Services, Inc.  (collectively,  the "Servicers"),
and upon the smooth functioning of the computer systems that they utilize.  Many
computer systems currently cannot properly  recognize or process  date-sensitive
information  relating to the year 2000 and beyond.  Like other  mutual funds and
financial and business  organizations  around the world,  the Trust,  therefore,
could be adversely affected if the computer systems used by these Servicers, and
their vendors,  do not properly process and calculate  date-related  information
and data on and after January 1, 2000.  The Servicers  have been  evaluating the
impact  that the year 2000  issue  may have on the  computer  systems  that they
utilize and are making  appropriate  modifications  to these systems in order to
assure that they will be prepared for the year 2000. The Trust and the Servicers
expect that any further  modifications  to their computer  systems  necessary to
address  the year 2000  issue will be made and  tested in a timely  manner.  The
Servicers also are working with their outside  vendors,  and other persons whose
systems  are  linked  to  those  of the  Trust  and  the  Servicers,  to  obtain
satisfactory assurances regarding the year 2000 issue. The costs of this systems
remediation will not be paid directly by the Trust. Inadequate remediation could
have  an  adverse  effect  on the  Trust's  operations,  including  pricing  and
securities  trading and settlement,  and the provision of shareholder  services.
Although, at this time, there can be no assurance that the remedial action taken
by the Servicers  will be sufficient or timely,  the Servicers do not anticipate
that the  transition  to the 21st  century  will have a  material  impact on the
ability of the Servicers to continue to service the Trust at current levels.




                                       15

<PAGE>



                              FINANCIAL HIGHLIGHTS

The financial  highlights  table is intended to help you  understand  the Fund's
financial performance since it commenced operations in 1994. Certain information
reflects  financial  results for a single Fund share.  The total  returns in the
table  represent  the rate that you would have earned (or lost) on an investment
in the Fund (assuming  reinvestment  of all dividends and  distributions).  This
information has been audited by Deloitte & Touche LLP, whose report,  along with
the Fund's  financial  statements,  is included in the annual  report,  which is
available upon request.
<TABLE>
<CAPTION>
                                                                                                                         For the
                                                                                                                         Period
                                                                              For the Year                               Ended
                                                                              Ended June 30,                             June 30,
                                                              --------------------------------------------------         --------- 

                                                               1998          1997             1996          1995             1994*
                                                               ----          ----             ----          ----             ----
<S>                                                         <C>          <C>              <C>            <C>              <C>
Net Asset Value--Beginning of Period............            $   7.02     $    9.93        $    9.89      $   9.52         $   10.00
                                                            --------
  Income from Investment Operations:
    Net Investment Loss.........................              (0.05)        (0.08)           (0.06)        (0.05)            (0.01)
    Net Realized and Unrealized Gain
      (Loss) on Securities......................              (2.31)        (2.83)             0.10          0.42            (0.47)
                                                             -------       -------            ------        -----            ------
      Total from Investment Operations..........              (2.36)        (2.91)             0.04          0.37            (0.48)
                                                            ---------      -------            ------        -----            ------

Less Distributions:
  Dividends (from net investment income)                       ----            --                --           --                 --
  Distributions (from capital gains)                             --            --                --           --                 --
                                                             -------       -------            ------        -----            -----
     Total Distributions to Shareholders.......                 --            --               --            --                 --
                                                             -------       -------            ------        -----            ------
  Net Asset Value--End of Period................              $ 4.66     $    7.02        $    9.93     $    9.89        $     9.52
                                                       ============= =============  =============== =============  ================

Total Investment Return........................            (33.62)%     (29.41) %           0.40 %        3.89 %         (4.80) %A

Ratios and Supplemental Data:
  Net Assets--End of Period (000s omitted).....             $ 2,187        $3,409           $6,122        $6,796            $6,395
  Ratio of Expenses to Average Net Assets......               1.70%        1.70 %           1.70 %        1.70 %          1.68 % B
  Ratio of Net Loss to Average Net Assets......             (0.74)%      (0.76) %         (0.59) %      (0.51) %        (0.25) % B
  Portfolio Turnover Rate......................              56.49%      108.47 %          59.06 %       51.23 %           22.85 %

</TABLE>
* The Gold Fund commenced operations on March 7, 1994.
A Total Investment  Return for periods of less than one year are not annualized.
B Annualized.
                                                            16

<PAGE>



In addition to this prospectus, the following information is available to assist
you in making an investment decision:


Information Available Upon Request           Description

Statement of Additional Information          A document that includes additional
                                             information about the Fund.

Annual and Semi-Annual Reports               Bi-annual reports that contain 
                                             information about the Fund's
                                             investments.  These reports also
                                             discuss the market conditions and
                                             investment strategies that
                                             significantly affected the Fund's
                                             performance  during  its last
                                             fiscal year.
   
There are a variety of ways to receive the above  information  upon your request
and  without  charge.  To receive  the above  information,  or to request  other
information above the Trust, or to make shareholder  inquiries,  you may contact
the Cappiello-Rushmore Trust directly by telephone, at 1-800-343-3355,  or visit
our  internet  site at  http://www.rushmorefunds.com,  or you may send a written
request to the Trust's  offices,  at 4922 Fairmont  Avenue,  Bethesda,  Maryland
20814. Additional information about the Funds can also be reviewed and copied at
the Securities and Exchange  Commission's Public Reference Room in Washington D.
C. (for hours of operation  please call the Commission at  1-800-SEC-0330).  You
may also obtain copies of the information by visiting the Commission's  internet
site at  http://www.sec.gov,  or, upon payment of a duplicating  fee, by writing
the  Public  Reference  Section  of the  Commission  at 450 Fifth  Street,  N.W.
Washington, D. C. 20549-6009.
    
               Cappiello-Rushmore Trust Investment Company Act File No. 811-6601


                                                        17

<PAGE>
                                                                     Rule 497(c)
                                                               File No. 33-46283



                            CAPPIELLO-RUSHMORE TRUST

                               Utility Income Fund
                                   Growth Fund
                              Emerging Growth Fund
                                    Gold Fund

                 4922 Fairmont Avenue, Bethesda, Maryland 20814
                                 (800) 343-3355
                                 (301) 657-1500



                       STATEMENT OF ADDITIONAL INFORMATION
                                November 1, 1998

   
This Statement of Additional Information is not a Prospectus.  It should be read
in  conjunction  with the  Trust's  Prospectuses,  each dated  November 1, 1998.
Copies  of the  Prospectuses  may be  obtained  without  charge  by  writing  or
telephoning the Trust at the above address or telephone numbers.

The audited financial statements of the Trust, for the Trust's fiscal year ended
June 30, 1998,  are included in the Trust's 1998 Annual Report to  Shareholders,
which  has been  filed  with  the  Securities  and  Exchange  Commission  and is
incorporated  herein by reference.  Copies of the Trust's 1998 Annual Report are
available, without charge, by request by writing or telephoning the Trust at the
above address or telephone numbers.
    

    

<PAGE>





                                TABLE OF CONTENTS


<TABLE>
<CAPTION>                                                                                                     
                                                                                                     Page in
                                                                                                     Utility
                                                                                                  Income Fund,
                                                                                                  Growth Fund,
                                                               Page in                                 and
                                                            Statement of          Page in           Emerging
                                                             Additional          Gold Fund         Growth Fund
                                                             Information        Prospectus         Prospectus
                                                            ------------        ----------         -----------
<S>                                                         <C>                 <C>                <C>
Trust Description, Investments, and Risks

Investment Policies

Investment Limitations

Management of the Trust

Control Persons and Principal Holders of
Securities

Investment Advisory and Other Services

Brokerage Allocation and Portfolio Transactions

Taxation of the Funds

Calculation of Performance  Data

Financial Statements






                                        2

<PAGE>




Trust Description, Investments, and Risks

The  Cappiello-Rushmore  Trust is an  open-end,  management  investment  company
organized as a business  trust under the laws of Delaware on March 12, 1992. The
following are the investment  strategies and risks  associated with investing in
the four  Cappiello-Rushmore  Funds (collectively,  the "Funds"),  each of which
Funds is  diversified  under the  Investment  Company  Act of 1940:  the Utility
Income Fund, the Growth Fund, the Emerging Growth Fund, and the Gold Fund.


Investment Policies

Repurchase Agreements

     What is a Repurchase Agreement?

     A repurchase agreement is an agreement where a Fund acquires a money market
     instrument from a commercial bank or broker/dealer  with the  understanding
     that the Fund will sell the  instrument  back at an  agreed-upon  price and
     date (normally, the next business day). Essentially, a repurchase agreement
     may be considered a loan backed by securities. The resale price reflects an
     agreed-upon  interest rate  effective for the period the instrument is held
     by the Fund. In these transactions, the value of the securities acquired by
     the Fund (including accrued interest earned) must be greater than the value
     of the repurchase  agreement itself.  The securities are held by the Fund's
     custodian bank until repurchased.

     Why Would a Fund Use Repurchase Agreements?

     Each Fund may  invest  in  repurchase  agreements  with  commercial  banks,
     brokers or dealers: (i) for defensive purposes due to market conditions; or
     (ii) to generate income from a Fund's excess cash balances.

     The  Board of  Trustees  will  monitor  each  Fund's  repurchase  agreement
     transactions  and  will  review  the  creditworthiness  of any  party  to a
     repurchase  agreement with the Funds. 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.

     Risks of Repurchase Agreements

     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 when the security is sold. 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. Consequently,  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 these
     risks can be controlled through monitoring procedures.






                                        3

<PAGE>



Lending of Securities

Each Fund may lend its securities to qualified  institutional  investors  (i.e.,
brokers,  dealers,  banks or other  financial  institutions)  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.

     Why Would a Fund Lend Its Securities?

     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.

     To lend securities, the following requirements must be met:

          1.   the borrower must 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  federal
               government  having at least  equal  the  value of the  securities
               loaned;

          2.   the borrower must add to the collateral whenever the price of the
               securities loaned rises;

          3.   the Fund must be able to terminate the loan at any time; and

          4.   the Fund should  receive  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 the market  value of the loaned
               securities.

     Risks of Lending

     A Fund will enter into securities lending and repurchase  transactions only
     with  parties who meet  creditworthiness  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.

Investment in Foreign Securities

The Utility  Income,  Growth,  and Emerging Growth Funds may invest up to 20% of
their  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").

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 ADRs.

     Risks of Investing In Foreign Issuers

     Investing in foreign companies involves risks not typically associated with
     investing in U.S. companies, including the following risks:



                                        4

<PAGE>




         1.       There is generally less  publicly-available  information about
                  foreign  companies  compared to reports  and ratings  that are
                  published about issuers in the United States.

         2.       Foreign issuers also are not subject to uniform accounting and
                  auditing and financial  reporting  standards,  practices,  and
                  requirements  comparable to those  applicable to United States
                  issuers.

         3.       Foreign  securities  markets are generally not as developed or
                  as efficient as those in the United  States.  While growing in
                  volume,  these markets usually have  substantially less volume
                  than the New York Stock Exchange.

         4.       Securities  of some  foreign  issuers are less liquid and more
                  volatile than securities of comparable United States issuers.

         5.       Fixed  commissions on foreign  exchanges are generally  higher
                  than  negotiated   commissions  on  United  States  exchanges,
                  although each Fund will endeavor to achieve the most favorable
                  net results on its portfolio transactions.

         6.       There is generally less government  supervision and regulation
                  of securities  exchanges,  brokers, and listed issuers than in
                  the United States.

         7.       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  U.S.  investment  in those
                  countries.

         8.       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.

         9.       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.

Options Transactions

     Purchasing Call and Put Options

     The Growth  Fund and  Utility  Income  Fund may  purchase  call  options to
     protect against anticipated increases in the prices of securities each Fund
     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
     money will  purchase call options  covering a much larger  quantity of this
     security than could be purchased directly.

                                       5
<PAGE>
     By purchasing call options,  these Funds could benefit from any significant
     increase in the price of the  underlying  security to a greater extent then
     if the Funds  invested the same amount in the security  directly.  However,
     because of the extremely  high  volatility of option  premiums,  there is a
     significant  risk  of  losing  the  entire  premium  if  the  price  of the
     underlying  security does not rise sufficiently,  or if this price does not
     rise before the option expires.

     Conversely,  put options could be purchased to protect against  anticipated
     declines in the market value of either specific portfolio  securities or of
     a Fund's assets  generally.  Alternatively,  put options could be purchased
     for  capital  appreciation  in  anticipation  of a  price  decline  in  the
     underlying  security.  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 a Fund's  volatility  by  increasing  the impact of changes in the
     market price of the underlying securities on the Fund's net asset value.

     The Trust 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
     covered call options and secured put options (the Emerging Growth Fund will
     not engage in any option transactions).

     By writing a call option,  a Fund becomes  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,  a Fund becomes  obligated  during the term of the
     option to purchase  the  securities  underlying  the option at the exercise
     price.  The Fund will be  considered  secured in respect to put options the
     Fund writes if the Fund maintains on deposit with its 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 the time the seller effects a closing purchase transaction by
     purchasing an option covering the same  underlying  security and having the
     same exercise price and expiration date as the option 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.

                                       6
<PAGE>
     Why Do The Funds Use Call and Put Options?

     The principal  reason for writing call options on stocks held by the Growth
     Fund,  the Utility Income Fund, and the Gold 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
     market value of the underlying security.

Futures Contracts on Metals and Related Options - Gold Fund

     Why Would the Gold Fund  Purchase  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 a 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.

     How Are The Contracts Purchased?

     No  consideration is paid or received by the Gold 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.

                                       7
<PAGE>
     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 Gold Fund to
     substantial  losses.  In this  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 protected 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 protected will, in fact,  correlate with
     the price movements in a futures contract or option,  and provide an offset
     to losses as intended.

     If the Gold Fund's investment adviser wants to protect the Fund 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 be at
     increased  prices which  reflect the change in the value of the  underlying
     commodity.

     Risks of Engaging In Metals Futures Contracts and Related Options

     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 Gold Fund is  subject to the  ability of the Fund's
     investment  adviser  to  correctly  predict  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 Gold 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 Gold 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.
   
High Yield Securities

Each of the Growth Fund and the Emerging  Growth Fund may invest up to 5% of its
total  assets  in  "high-yield"  securities.   As  described  below,  high-yield
securities are below  investment-grade  corporate bonds, commonly known as "junk
bonds," and which are subject to greater risks,  including  default risks,  than
those found in higher-rated securities.

                                       8
<PAGE>

The high-yield  corporate bonds  primarily  purchased by a Fund will be rated in
below investment-grade categories by Moody's Investors Service, Inc. ("Moody's")
or  Standard & Poor's  Ratings  Group  ("Standard  & Poor's")  ("Ba" or lower by
Moody's,  "BB" or lower  by  Standard  and  Poor's).  Neither  Fund  invests  in
securities  rated  lower than  "Caa" by  Moody's or "CCC" by  Standard & Poor's;
these ratings are applied to issues which are predominantly  speculative and may
be in  default  or as to which  there may be  present  elements  of danger  with
respect to principal and/or  interest.  Neither Fund invests in issues which are
in default.  A Fund may invest in unrated  securities when the Fund's investment
adviser  believes that the financial  condition of the issuer or the  protection
afforded by the terms of the  securities  limits risk to a level similar to that
of securities eligible for purchase by the Fund rated in below  investment-grade
categories  by Moody's or Standard & Poor's  (between  "Ba" and "Caa" ratings by
Moody's  and  between  "BB" and "CCC"  ratings by  Standard  &  Poor's).  If the
investment rating of a high-yield corporate security in which a Fund is invested
is downgraded to below "Caa" by Moody's or "CCC" by Standard & Poor's,  the Fund
will sell the  downgraded  security as soon as  practicable  and when the Fund's
investment  adviser  considers  it  desirable  to do so. See  Appendix A to this
Statement of Additional Information for a specific description of each corporate
bond rating category.

The  high-yield  securities  in  which  a Fund  invests  offer a wide  range  of
maturities  (from  less  than  one  year to  thirty  years)  and  yields.  These
securities  include  short-term  bonds or notes  (maturing  in less  than  three
years),  intermediate-term  bonds or notes (maturing in three to ten years), and
long-term  bonds  (maturing  in  more  than  ten  years).  While  there  are  no
limitations  on the average  maturity of the  securities  held by the Fund,  the
Fund's average portfolio maturity will ordinarily be six years.

Both credit and market  risks are  increased  by the Fund's  investment  in debt
securities  rated  below the top four grades by Standard & Poor's or Moody's and
comparable  unrated debt  securities.  Below  investment-grade  bonds by Moody's
(categories  "Ba," "B," "Caa") are of poorer  quality  and may have  speculative
characteristics.  Bonds  rated  "Caa" may be in  default or there may be present
elements of danger with respect to principal or interest. Below investment-grade
bonds rated by Standard & Poor's  (categories  "BB," "B," "CCC")  include  those
which are regarded, on balance, as predominantly speculative with respect to the
issuer's  capacity to pay interest and repay  principal in accordance with their
terms;  "BB"  indicates the lowest degree of speculation  and "CCC"  indicates a
high degree of speculation.  While these bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.

To the extent that a Fund invests in high-yield securities,  the share price and
yield of the Fund may be expected to  fluctuate  more than in the case of mutual
funds  that  invest in  higher-quality,  shorter-term  securities.  Moreover,  a
significant  economic downturn or major increase in interest rates may result in
issuers of below  investment-grade  securities  experiencing increased financial
stress,  which could adversely  affect their ability to service their principal,
interest,  and dividend  obligations,  meet projected business goals, and obtain
additional financing.  In this regard, it should be noted that, while the market
for  high-yield  corporate  bonds has been in existence  for many years and from
time to time has experienced economic downturns in recent years, this market has
involved  a  significant  increase  in the  use  of  high-yield  corporate  debt
securities to fund highly-leveraged  corporate  acquisitions and restructurings.
Past  experience may not,  therefore,  provide an accurate  indication of future
performance  of the  high-yield  bond  market,  particularly  during  periods of
economic recession. Furthermore, expenses incurred to recover an investment by a
Fund in a defaulted  security may  adversely  affect the Fund's net asset value.
Finally, the secondary market for high-yield  securities may be less liquid than
the market for higher-quality securities. The reduced liquidity of the secondary
market for high-yield  securities may adversely  affect the market price of, and
the  ability  of the Fund to value,  particular  securities  at  certain  times,
thereby making it difficult to make specific valuation determinations.
    

Investment Limitations

The following  policies cannot be changed  without  approval of the holders of a
majority of the outstanding shares of each Fund.
 
                                      9
<PAGE>
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  investors;  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: (i) insofar as any Fund may be deemed to
          have  issued  a  senior  security  by  reason  of  borrowing  money in
          accordance with restriction  (4), above;  (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 a Fund 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.  As disclosed in the Trust's  Prospectuses,  the Utilities
Income Fund may concentrate in the public  utilities  industry and the Gold Fund
may concentrate in the gold and precious metals-related 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;

                                       10
<PAGE>
     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;

     5.   purchase or acquire  the  security  of another  investment  company if
          immediately  after such  purchase or  acquisition  more than 3% of the
          total  outstanding  stock of such  investment  company is owned by the
          Fund and all affiliated  persons of the Fund,  unless this 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 Stock  Exchange  or the
          American Stock Exchange;

     7.   purchase  restricted  securities if the value of the Fund's  aggregate
          investment will exceed 10% of the Fund's total assets; or

     8.   purchase  or  sell  real  property   (including  limited   partnership
          interests,  but excluding readily marketable  interests in real estate
          investment trusts or readily marketable  securities of companies which
          invest in real estate).
   
The above-mentioned investment limitations are considered at the time investment
securities are purchased. If a percentage restriction is adhered to by a Fund at
the time of an  investment,  a later  increase or  decrease in the  investment's
percentage  of the value of the Fund's total assets  resulting  from a change in
these  values  or assets  will not  constitute  a  violation  of the  percentage
restriction.
    




                                       11

<PAGE>





Management of the Trust
   
The Trust is governed by a Board of Trustees.  The Trustees are  responsible for
overseeing the management of the Trust's  business affairs and play a vital role
in  protecting  the  interests of Fund  shareholders.  Among other  things,  the
Trustees  approve and review the Trust's  contracts and other  arrangements  and
monitor Fund performance and operations. 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.

</TABLE>
<TABLE>
<CAPTION>

                                        Position Held                  Principal Occupation(s)
Name, Age, Address                       With Trust                      During Past 5 Years
- ----------------------                 ----------------------          -----------------------
<S>                                    <C>                             <C>
Frank A.  Cappiello*,  72              Chairman of the                 President  of  McCullough,  Andrews & Cappiello,  Inc.,
Greenspring  Station                   Board and Trustee               the Trust's investment adviser, since 1983.
Suite 250
10751 Falls Road
Lutherville, MD  21093


Daniel L. O'Connor*, 56                President,                     General Partner of Money Management Associates,
1001 Grand Isle Way                    Treasurer, and                 registered investment adviser of the Rushmore Funds,
Palm Beach Gardens, FL 33418           Trustee                        since 1975.  Director, Rushmore Trust and Savings, FSB,
                                                                      the Trust's transfer agent and custodian.  Director on
                                                                      four Rushmore Fund Boards.


Peter J. DeAngelis, 62                 Trustee                        President of PDA Associates, Inc., a financial consulting
P.O. Box 284                                                          and investment firm, since 1974; President of Dow
Ironia, NJ  07945                                                     Beaters, Inc., a registered investment advisor, since
                                                                      1977.

Bruce C. Ellis,** 53                   Trustee                        A private investor in start-up companies.  Vice President,
7108 Heathwood Court                                                  LottoPhone, Inc., a telephone state lottery service,
Bethesda, MD  20817                                                   September 1991-1995.  Director, The Torray Fund, since
                                                                      1994; Director, the Sheppard Fund, since 1994; Director
                                                                      on three Rushmore Fund Boards.

Jeffrey R. Ellis,** 53                 Trustee                        Executive Vice President, Buddy Systems, Inc., a
513 Kerry Lane                                                        manufacturing-marketing company, Virginia Beach,
Virginia Beach, VA  23451                                             Virginia, since January, 1996; Vice President,
                                                                      LottoPhone, Inc., a telephone state lottery service,
                                                                      September 1993-1995.  Director on three Rushmore
                                                                      Fund Boards.

Dr. Peter B. Petersen, 66              Trustee                        Professor of Management and Organization Theory,
Johns Hopkins University Division                                     Johns Hopkins University since 1979.
of Business and Management
201 North Charles Street
Baltimore, MD 21201-4114




                                       12

<PAGE>




                                       Position Held                   Principal Occupation(s)
Name, Age, Address                     With Trust                      During Past 5 Years
- ----------------------                 ----------------------          -----------------------

David H. Andrews, CFA*, 69             Vice President                  Vice Chairman of McCullough, Andrews & Cappiello,
101 California Street                                                  Inc., the Trust's investment adviser, since 1991.
San Francisco, CA  94111

Robert F. McCullough, CPA*, 66         Vice President                  Chairman of McCullough,  Andrews & Cappiello,  Inc.,
101 California Street                                                  the Trust's  investment  adviser,  since 1983.
San Francisco, CA  94111

Timothy N. Coakley, CPA*, 31           Vice President                  Chief Financial Officer and Treasurer, Rushmore Trust
4922 Fairmont Avenue                                                   and Savings, FSB, since 1995. Vice President of four
Bethesda, MD  20814                                                    Rushmore Funds and the Cappiello-Rushmore Trust
                                                                       (collectively, the "Funds").  Controller of the Funds,
                                                                       1995-1997.  Formerly Audit Manager, Deloitte &
                                                                       Touche LLP until 1994.

Edward J. Karpowicz, CPA*, 35          Controller                      Vice President of Rushmore Trust and Savings, FSB,
4922 Fairmont Avenue                                                   since 1997.  Controller of the Funds.  Treasurer, Bankers
Bethesda, MD  20814                                                    Finance Investment Management Corp., August 1993 to
                                                                       June 1997.  Senior Accountant, Ernst & Young,
                                                                       September 1989 to February 1993.

Stephenie E. Adams*, 29                Secretary                       Secretary of three Rushmore Funds and the Cappiello-
4922 Fairmont Avenue                                                   Rushmore Trust.  Assistant Secretary of one Rushmore
Bethesda, MD  20814                                                    Fund.  Manager, Fund Administration and Marketing,
                                                                       Rushmore Services, Inc., from July 1994 to Present.
                                                                       Regional Sales Coordinator, Media General Cable, from
                                                                       June 1993 to June 1994.
</TABLE>
    
*   Indicates  an  "interested"  person.  An  interested  person  has any one of
    several close business or family ties to the Trust,  the Trust's  investment
    adviser, or an affiliated company of the Trust.

**  Bruce C. Ellis and Jeffrey R. Ellis are brothers.

   
The  aggregate  compensation  paid to each of the Trustees of the Trust  serving
during the fiscal year ended June 30, 1998, is set forth in the table below:
<TABLE>
<CAPTION>
                                                                     Pension or
                                                                 Retirement Benefits      Estimated Annual
            Name of Person                Aggregate               Accrued as Part of       Benefits Upon
              & Position                Compensation              Trust's Expenses           Retirement
            --------------               -------------           -------------------      -----------------
<S>                                     <C>                      <C>                      <C>
Frank A. Cappiello,*
Chairman of the Board of Trustees                $0                      $0                      $0




                                       13

<PAGE>





Daniel L. O'Connor,*
President, Treasurer, and Trustee                $0                      $0                      $0

Peter J. DeAngelis,
Trustee                                        $2,000                    $0                      $0

Bruce C. Ellis,
Trustee                                        $2,000                    $0                      $0

Jeffrey R. Ellis,
Trustee                                        $2,000                    $0                      $0

Dr. Peter B. Peterson,
Trustee                                        $2,000                    $0                      $0
    
</TABLE>
        *    Indicates an "interested"  person. An interested person has any one
             of several close business or family ties to the Trust,  the Trust's
             adviser, or an affiliated company of the Trust.


Control Persons and Principal Holders of Securities
   
As of October 20,  1998,  the  following  persons were the only persons who were
record owners or, to the knowledge of the Trust, beneficial owners of 5% or more
of the shares of the Funds.
<TABLE>
<CAPTION>

                                                        Controlling Party or                          
                                  Shares            Principal Holder of Securities
Fund                              Outstanding                Address                                  % Owned
- ----------------------------    ----------------     --------------------------------------           -----------------------
<S>                             <C>                  <C>                                              <C>
Utility Income Fund               686,353.457     Charles Schwab & Co., Inc.                            36.186% 1/
                                                  101 California Street
                                                  San Francisco, CA  94101

Growth Fund                       888,144.256     Charles Schwab & Co., Inc.                            21.872% 1/
                                                  101 California Street
                                                  San Francisco, CA  94101

                                                  National Financial Services Corporation                5.030% 1/
                                                  82 Devonshire Street
                                                  Boston, MA  02109

Emerging Growth Fund             1,729,563.045    Donaldson Lufkin Jenrette Securities Corp.            30.847% 1/
                                                  One Pershing Plaza
                                                  Jersey City, NJ  07399

                                                  Charles Schwab & Co., Inc.                             18.093% 1/
                                                  101 California Street
                                                  San Francisco, CA  94101

                                                  National Investor Services Corporation                11.845% 1/
                                                  55 Water Street
                                                  New York, NY  10041-3299

                                                  National Financial Services Corporation                7.403% 1/
                                                  82 Devonshire Street
                                                  Boston, MA  02109
                                       14
<PAGE>
Gold Fund                         434,622.302     Charles Schwab & Co., Inc.                            23.962% 1/
                                                  101 California Street
                                                  San Francisco, CA  94101

                                                  National Financial Services Corporation                8.996% 1/
                                                  82 Devonshire Street
                                                  Boston, MA  02109

                                                  Harold H. Cleaveland, Jr.                              7.589% 2/
                                                  3435 Westheimer Street
                                                  Houston, TX  77027
</TABLE>
    
1/      Record owner only.
2/      Beneficial owner only.

As of the date of this  Statement of  Additional  Information,  the Officers and
Trustees of the Trust, as a group, owned, of record and beneficially,  less than
1% of the outstanding shares of each Fund.

Investment Advisory and Other Services

Investment Adviser

The  four  Funds  of  the  Trust  receive  investment   advisory  services  from
McCullough,  Andrews & Cappiello, Inc. (the "Adviser"), 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 the  Adviser,  the Growth  Fund and the  Emerging  Growth Fund each pays the
Adviser an investment  advisory fee at an annual rate of 0.50% of the net assets
of the  respective  Fund; the Utility Income Fund pays the Adviser an investment
advisory fee at an annual rate of 0.35% of the net assets of that Fund;  and the
Gold Fund pays the Adviser an investment advisory fee at an annual rate of 0.70%
of the net  assets  of  that  Fund.  The  Adviser  manages  the  investment  and
reinvestment  of the  assets  of  each  Fund  in  accordance  with  that  Fund's
investment  objective,  policies,  and  limitations,   subject  to  the  general
supervision and control of the Trust's  Officers and the Board of Trustees.  The
Adviser bears all costs associated with providing these services. For the fiscal
years  ended  June 30,  1998,  1997,  and  1996,  the Funds  paid the  following
investment advisory fees to the Adviser:

<TABLE>
<CAPTION>
                                      1998           1997           1996
                                      ----           ----           ----
<S>                                   <C>           <C>             <C>
Utility Income Fund                   $  34,737     $   38,223     $   61,055
Growth Fund                            $130,057      $ 129,484      $ 137,107
Emerging Growth Fund                   $100,453      $ 151,476      $ 137,207
Gold Fund                             $  20,816     $   34,904     $   53,459
</TABLE>

The  Adviser 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, the Adviser also manages  investment
portfolios for employee retirement plans,  charitable  foundations,  endowments,
taxable corporations, and individuals.

                                       15
<PAGE>
Administrator

The Trust has contracted with Money Management Associates (the "Administrator"),
1001  Grand  Isle  Way,  Palm  Beach   Gardens,   Florida   33418,   to  provide
administrative   services  to  the  Trust.  Under  the  administrative  services
agreement between the Trust and the Administrator,  each of the Growth Fund, the
Emerging  Growth  Fund,  and the Gold  Fund pays the  Administrator  a fee at an
annual rate of 1.00% of the daily net assets of these respective  Funds, and the
Utility Income Fund pays the  Administrator  a fee at an annual rate of 0.70% of
the daily net assets of that Fund.  The  Administrator  is  responsible  for all
costs of the Funds except for the investment  advisory fee,  extraordinary legal
expenses,   and  interest.   Specifically,   the  Administrator  pays  costs  of
registration  of the Trust and the Fund shares with the  Securities and Exchange
Commission  (the "SEC") 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  to  existing  and  potential  shareholders,  shareholder  reports,
shareholder meetings,  and portfolio pricing services, and all costs incurred in
providing the custodial services.

For the fiscal years ended June 30,  1998,  1997,  and 1996,  the Trust paid the
following administrative services fees to the Administrator:

<TABLE>
<CAPTION>

                                      1998           1997           1996
                                      ----           ----           ----
<S>                                   <C>           <C>            <C>
Utility Income Fund                   $  69,475    $    76,447      $ 122,110
Growth Fund                            $260,115     $  258,968      $ 274,215
Emerging Growth Fund                   $200,000     $  302,952      $ 507,600
Gold Fund                             $  29,737    $    49,863     $   76,369
</TABLE>

Under a subcontractual  agreement,  the Administrator has engaged Rushmore Trust
and Savings,  FSB ("RTS"),  4922 Fairmont  Avenue,  Bethesda,  Maryland 20814, a
majority-held  subsidiary  of the  Administrator,  to provide  transfer  agency,
dividend  disbursing,  and other  shareholder  services  to the  Trust.  Under a
separate subcontractual  agreement,  the Administrator also has engaged Rushmore
Services,  Inc.  ("RSI"),  4922 Fairmont  Avenue,  Bethesda,  Maryland  20814, a
wholly-owned subsidiary of the Administrator, to provide administrative services
to the Funds.

Custodian and Independent Public Accountant

RTS is the Trust's custodian and is responsible for safeguarding and controlling
the  Trust's  cash and  securities,  handling  the  securities,  and  collecting
interest on the Funds' investments.

Independent certified public accountants,  Deloitte & Touche LLP, 1900 M Street,
N.W.,  Washington,  D.C.  20036- 3564, are  responsible  for auditing the annual
financial statements of the Trust.


Brokerage Allocation and Portfolio Transactions

Orders  placed for the Funds are either  agency  transactions  with a negotiated
commission or principal  transactions at a net transaction price.  Underwritings
have a fixed commission.

The Adviser is  responsible  for placing all orders for the purchase and sale of
portfolio  securities  for the Funds.  The Adviser,  in effecting  purchases and
sales for the Funds,  seeks out the best price and market for the  execution  of
each order.  The Adviser has no formula for the  distribution  of the  brokerage
business,  and the  Adviser's  intention is to place orders for the purchase and
sale of securities  with the primary  objective of obtaining the most  favorable
overall results for the Funds. The cost of securities transactions for the Funds
will  consist  primarily  of  brokerage  commissions  or dealer  or  underwriter
spreads.  Bonds and money market instruments are generally traded on a net basis
and do not normally involve either brokerage commissions or transfer taxes.

                                       16
<PAGE>
Occasionally,  securities may be purchased  directly from issuer. For securities
traded primarily in the  over-the-counter  market, the Adviser,  where possible,
will deal  directly  with  dealers  who make a market in the  securities  unless
better prices and execution are available  elsewhere.  These dealers usually act
as principals for their own account.

In selecting brokers or dealers through whom to effect transactions, the Adviser
will give consideration to a number of factors,  including price,  dealer spread
or commission,  if any, the reliability,  integrity,  and financial condition of
the broker-dealer, the size of the transaction, and the difficulty of execution.
Consideration  of these factors by the Adviser,  either in terms of a particular
transaction or the Adviser's overall  responsibilities with respect to the Funds
and any other accounts  managed by the Adviser,  could result in a Fund paying a
commission  or  spread  on a  transaction  that is in  excess  of the  amount of
commission or spread another  broker-dealer might have charged for executing the
same transaction.  In selecting brokers and dealers,  the Adviser also will give
consideration to the value and quality of any research, statistical,  quotation,
or valuation services provided by the broker or dealer. In placing a purchase or
sale order,  the Adviser may use a broker  whose  commission  in  effecting  the
transaction  is higher than that of some other broker if the Adviser  determines
in good faith that the amount of higher  commission is reasonable in relation to
the value of the brokerage and research services provided by this broker, viewed
in  terms  of  either  the  particular  transaction  or  the  Adviser's  overall
responsibilities with respect to the Funds and any other accounts managed by the
Adviser.  Brokerage and research services provided by brokers and dealers to the
Adviser (in addition to the  Adviser's  own research  efforts)  include  advice,
either  directly  or  through  publications  or  writings,  as to the  value  of
securities,   the  advisability  of  purchasing  or  selling   securities,   the
availability of securities or purchasers of sellers of securities,  and analyses
and reports concerning  issuers,  industries,  securities,  economic factors and
trends, and portfolio strategy, as well as technical market commentary, economic
commentary and forecasts,  and additional company research.  When placing orders
for a Fund,  the Adviser is not authorized to pay a commission in excess of that
which another broker might have charged for doing the same  transactions  solely
on account of the receipt of research services. A higher-cost broker-dealer will
not be selected, however, solely on the basis of sale volume, but rather will be
selected in accordance with the criteria set forth above.

To the extent research services are used by the Adviser in rendering  investment
advice to the Funds, these services would tend to reduce the Adviser's expenses.
The  Adviser,  however,  does not  believe  that an exact  dollar  value  can be
assigned to these  services.  Research  services  received  by the Adviser  from
brokers or dealers  executing  transactions  for the Funds will be available and
utilized  also for the  benefit  of other  portfolios  managed  by the  Adviser.
Similarly,  orders for the  Adviser's  non-Fund  accounts may result in research
utilized by the Funds.

The  Adviser  manages  a number  of  accounts  other  than the  Funds.  Although
investment  recommendations  or determinations for each Fund will be made by the
Adviser  independently  from the investment  recommendations  and determinations
made by the Adviser for any other account,  investments deemed appropriate for a
Fund by the  Adviser  may also be deemed  appropriate  by the  Adviser for other
accounts,  so that the same  security  may be  purchased or sold at or about the
same  time for both a Fund  and  other  accounts.  In these  circumstances,  the
Adviser may determine  that orders for the purchase or sale of the same security
for a Fund and one or more other accounts should be combined, in which event the
transactions  will be priced and  allocated in a manner deemed by the Adviser to
be  equitable  and in the best  interests  of the Fund and such other  accounts.
While,  in some instances,  combined orders could adversely  affect the price or
volume  of a  security,  the  Trust  believes  that its  participation  in these
transactions on balance will produce better overall results for the Funds.

<TABLE>
<CAPTION>
                           Brokerage Commissions Paid
                         (for the Period Ended June 30)


                  Utility Income                                   Emerging Growth
                       Fund                 Growth Fund                 Fund               Gold Fund
                       ----                 -----------                 ----               ---------
         <S>        <C>                      <C>                    <C>
         1998         $ 8,580                 $50,162                 $ 66,419              $15,770
         1997         $16,832                 $72,861                 $ 70,456              $41,300
         1996         $41,140                 $77,043                 $118,798              $42,749
</TABLE>
                                       17
<PAGE>
Each of the Fund's assets have  decreased each year since 1996.  Therefore,  the
above trade commissions (which are predominantly  based on asset size) have also
decreased.

Taxation of the Funds

Each Fund  currently is  qualified,  and will seek to continue to qualify,  as a
regulated  investment  company (a "RIC") under Subchapter M of the U.S. Internal
Revenue Code of 1986, as amended (the  "Code").  As a RIC, each Fund will not be
subject to federal income taxes on the net  investment  income and capital gains
that  the  Fund  distributes  to  its  shareholders.  The  distribution  of  net
investment  income and  capital  gains by a Fund to a Fund  shareholder  will be
taxable to the  shareholder  regardless  of whether  the  shareholder  elects to
receive  these  distributions  in cash or in  additional  shares.  Distributions
reported to a Fund  shareholder  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.

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  a
shareholder would receive from an investment in the Fund.

Calculation of Performance Data

Average Annual Total 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  (the "SEC Rules"),
Fund advertising stating performance must include total return quotes calculated
according to the following formula:

                  P (1+T)n = ERV

         Where:   P =      a hypothetical initial payment of $1,000.
                  T =      average annual total return.
                  n =      number of years.
                 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  Prospectuses  for the  Funds 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 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.

                                       18
<PAGE>
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 IndexTM,  the Philadelphia  Stock
Exchange  Gold  and  Silver  Index,  or the Dow  Jones  Industrial  Average,  as
appropriate,  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,  assuming the reinvestment of all
dividends and distributions,  for each  Cappiello-Rushmore  Fund, as of June 30,
1998, are as follows:
<TABLE>
<CAPTION>

                                 1 Year          5 Years        Since Inception
                                 ------          -------        ---------------
<S>                             <C>              <C>            <C>
Growth Fund                     20.72 %          17.48%             16.32 %
Emerging Growth Fund            (0.14)%           8.34%              9.60 %
Utility Income Fund             25.55 %           8.35%              9.04 %
Gold Fund                       (33.62)%           n/a              (16.21)%
</TABLE>

Computation of Yield

In addition to the total return  quotations  discussed above,  each of the Funds
also may advertise  its yield based on a thirty-day  (or one month) period ended
on  the  date  of  the  most-recent   balance  sheet  included  in  the  Trust's
Registration Statement, computed by dividing the net investment income per share
of a fund earned during the period by the maximum  offering price per Fund share
on the last day of the period, according to the following formula:


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

   Where:   a   =    dividends and interest earned during the period;
            b   =    expenses accrued for the period (net of reimbursements);
            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.


Financial Statements

Copies of the Trust's  audited  financial  statements  for the fiscal year ended
June 30, 1998,  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.





                                       19

<PAGE>



   
                                   APPENDIX A

Bond Ratings

Below is a description of Standard & Poor's Ratings Group  ("Standard & Poor's")
and Moody's Investors Service, Inc. ("Moody's") bond rating categories.  Each of
the Growth  Fund and the  Emerging  Growth Fund may invest up to 5% of its total
assets in bonds rated "BB" or lower by Standard & Poor's and/or "Ba" or lower by
Moody's.

Standard & Poor's Ratings
Group Corporate Bond Ratings

AAA -- This is the  highest  rating  assigned  by  Standard  & Poor's  to a debt
obligation  and  indicates an extremely  strong  capacity to pay  principal  and
interest.

AA -- Bonds rated "AA" also qualify as high-quality debt  obligations.  Capacity
to pay principal  and interest is very strong,  and in the majority of instances
these bonds differ from "AAA" issues only in small degree.

A -- Bonds  rated "A" have a strong  capacity  to pay  principal  and  interest,
although  these bonds are somewhat more  susceptible  to the adverse  effects of
changes in  circumstances  and  economic  conditions  than bonds in higher rated
categories.

BBB -- Bonds rated "BBB" are  regarded as having an adequate  capability  to pay
principal and interest. Whereas these bonds normally exhibit adequate protection
parameters,  adverse  economic  conditions  or changing  circumstances  are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.

BB -- Bonds rated "BB" have less near-term  vulnerability  to default than other
speculative  issues.  However,  these bonds face major ongoing  uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.

B -- Bonds rated "B" have a greater  vulnerability to default but currently have
the  capacity  to meet  interest  payments  and  principal  repayments.  Adverse
business,  financial,  or economic  conditions  will likely  impair  capacity or
willingness to pay interest and repay principal.

CCC -- Bonds rated "CCC" have a currently identifiable  vulnerability to default
and are dependent upon favorable business, financial, and economic conditions to
meet timely  payment of interest  and  repayment of  principal.  In the event of
adverse business,  financial, or economic conditions, these bonds are not likely
to have the capacity to pay interest and repay principal.

Moody's Investors Service, Inc.
Corporate Bond Ratings

Aaa -- Bonds rated "Aaa" are judged to be of the best quality. These bonds carry
the  smallest  degree  of  investment  risk  and are  generally  referred  to as
"gilt-edged."  Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure.  While the various  protective  elements
are likely to change,  these changes as can be  visualized  are most unlikely to
impair the fundamentally strong position of these issues.

                                      A-1
<PAGE>
Aa -- Bonds  rated  "Aa" are  judged  to be of high  quality  by all  standards.
Together with the Aaa group,  these bonds  comprise what are generally  known as
high grade  bonds.  These  bonds are rated  lower  than the best  bonds  because
margins of protections may not be as large as in "Aaa" securities or fluctuation
of  protective  elements  may be of  greater  amplitude  or  there  may be other
elements  present which make the long term risk appear  somewhat  larger than in
"Aaa" securities.

A -- Bonds rated "A" possess many favorable investment attributes, and are to be
considered as upper medium grade obligations.  Factors giving security principal
and interest are considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.

Baa -- Bonds rated "Baa" are considered as medium grade obligations (i.e., these
bonds are neither highly  protected nor poorly secured).  Interest  payments and
principal  security  appear  adequate  for the present  but  certain  protective
elements may be lacking or may be  characteristically  unreliable over any great
length of time. These bonds lack outstanding  investment  characteristics and in
fact have speculative characteristics as well.

Ba -- Bonds rated "Ba" are judged to have  speculative  elements.  Their  future
cannot be  considered  as well  assured.  Often the  protection  of interest and
principal  payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future.  Uncertainty of position  characterizes
bonds in this class.

B -- Bonds rated "B" generally lack characteristics of the desirable investment.
Assurance of interest and principal  payments or  maintenance  of other terms of
the contract over any longer period of time may be small.

Caa -- Bonds rated "Caa" are of poor standing. These issues may be in default or
there may be present elements of danger with respect to principal or interest.
    


                                      A-2


<PAGE>


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