<PAGE>
Cappiello-Rushmore Trust
Annual Report
June 30, 1999
<PAGE>
- -------------------------------------------------------------------------------
ANNUAL REPORT, June 30, 1999
[Cappiello-Rushmore LOGO APPEARS HERE] Cappiello-Rushmore Trust
4922 Fairmont Avenue, Bethesda, MD 20814
- -------------------------------------------------------------------------------
(800) 622-1386 (301) 657-1510
August 13, 1999
Dear Fellow Investor:
This is the Cappiello-Rushmore Trust's seventh annual report. The funds'
performances for the fiscal year ended June 30, 1999 were as follows:
- -------------------------------------------------------------------------------
Total Return Comparison
(Average annual total returns for the period ended June 30, 1999)
<TABLE>
<CAPTION>
Since
One Year Five Years Inception
-------- ---------- ---------
<S> <C> <C> <C>
Cappiello-Rushmore Growth Fund 23.32% 21.55% 17.33%
Cappiello-Rushmore Utility Income Fund 12.24% 15.43% 9.51%
Cappiello-Rushmore Emerging Growth Fund (4.39)% 8.95% 7.40%
Standard & Poor's 500 Index 22.76% 27.87% 22.46%
</TABLE>
The S&P 500 Index is an unmanaged index and, unlike the Funds, has no
management fees or other operating expenses to reduce its reported return.
Returns are historical and include changes in principal and reinvested
dividends and capital gains. Your return and principal will vary and you may
have a gain or loss when you sell shares. The Funds commenced operations on
October 6, 1992.
- -------------------------------------------------------------------------------
Summary
The Funds' fiscal year spanned a full-fledged bear market in U.S. stocks and
a dazzling recovery that turned into a new bull market that reached all time
highs -- all in just twelve months. The bear market started in the summer and
fall of 1998, and a new bull market move began in last October and continues
to this date --quite a year! Briefly, the market's plunge in mid-summer of
1998 turned into near panic by September. At this point, the Federal Reserve
(the Fed) began a series of three one-quarter of one-percent reductions in
short-term rates to counteract the temporary stock and bond market paralysis
triggered by the surprising Russian devaluation. The Fed's interest rate
actions stopped the market decline and by late October helped engineer a
dramatic reversal to a bull market that carried all major stock indexes to
continuing new highs in early 1999.
As 1999 progressed, the stock market, spurred by improving corporate
earnings, low interest rates, and even lower inflation, crossed the 10,000
level on the Dow in March and continued its move through most of April under
the belief that the Fed would maintain its accommodative stance on rates and
money supply for some time. Basic commodity prices continued to be well
behaved with the exception of oil, which had a significant rebound from its
lows. Small capitalization stocks staged short sporadic rallies during the
year as did cyclical stocks but the gains were ephemeral since investors
continued to favor the more liquid larger cap stocks.
During this period, there was no firm evidence that the economy was
overheating and that inflation was anything but benign. However, there were
isolated economic signs of a tightening labor market and some
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
indications of firmer basic commodities pricing, particularly oil (usually a
precursor to inflationary pressures). Surprisingly, in late May, the Fed
raised rates for the first time in more than a year by 1/4 of 1%. Investors,
shaken by the belief that the Fed was ending its accommodative stance on rates
and money supply, reacted negatively. However, in short order, the market
accepted this move on the part of the Fed as a positive sign of vigilance as
well as prudence. Accordingly, as the Funds' fiscal year ended, stocks began
to recover, buoyed by indications of better than expected second quarter
earnings that were announced in July. Accordingly, we entered the new fiscal
year on an up-beat note.
Growth Fund
The Growth Fund continues to seek capital appreciation by investing in
larger established companies with favorable relationships between price-
earnings ratios and growth rates. Once again, as in four of the past five
years, the Fund had a total return of greater than 20%. More importantly, this
return beat the benchmark Standard & Poor's 500 Index's total return of
22.76%.
The Fund's largest sector positions at year end were technology (computer
hardware and software, electronics, and telecommunications) at 29.4% of the
portfolio, financial services (banks, investment companies, etc.) at 23.6%,
business services at 8.7%, merchandising and retail at 8.6%, and oil and gas
services at 5.1%. Cash and equivalents totaled 6% at year-end.
Among the best performing stocks at year-end were:
<TABLE>
<S> <C>
e4L, Inc. +452.17%
Charles Schwab Corp. +234.10%
Frontier Corp. +86.10%
</TABLE>
The largest single stock position in the portfolio was shared by three
stocks: IBM, Shared Medical Systems Corp, and Franklin Resources Inc., each
representing 6.2% of the portfolio.
More importantly, at year's end the Growth Fund portfolio of stocks had a
better-than-average growth rate, 14% versus 13% for the S&P 500 Index with a
less-expensive price-earnings ratio, 25.8 times earnings for the Fund versus
27.6 times earnings for the Index.
As in past years, we continue to believe that growth stocks should fare well
in the expected economic environment of the next twelve months. However,
unlike the past year, we believe earnings growth in 1999-2000 will become more
important since the stock market will no longer be able to rely on a favorable
interest rate environment to drive price-earnings multiple expansion.
Accordingly, one expected trend is an increased focus on stocks representing
growth at a reasonable price. "Quality" earnings growth is defined as company
growth likely to persist over the next several years reported using relatively
conservative accounting procedures. Another expected trend is the gradual
broadening out of the market into sectors heretofore shunned by most
investors, including the defense and energy sectors, as well as emphasis on
mid-capitalization and smaller capitalization stocks where growth is less
expensive. In such a broadening market, selectivity will be more important
than ever before. High growth mid-cap stocks with reasonable valuations should
provide superior returns in such a rotational market
Utility Income Fund
The Utility Income Fund is designed for investors who are seeking a more
conservative, income-oriented stock market investment. The portfolio is
designed to offer higher dividend yields than the stock market average with
substantially lower volatility in share price. The Fund is managed to provide
such higher-than-average yields through investing in utility stocks such as
electric, natural gas, and telephones. With dividend income as a focus,
capital gains are a secondary consideration. Total return for the Fund for the
year was 12.24%, representing the second consecutive year of double-digit
returns for this conservative portfolio. At year's end, 84.0% of the portfolio
was concentrated in utilities as follows: gas and electric power companies
represented 44.5%, telecommunications 35.8%, with natural gas distribution at
3.7%.
- -------------------------------------------------------------------------------
2
<PAGE>
- -------------------------------------------------------------------------------
The balance of the portfolio was invested primarily in a diversified
grouping of Real Estate Investment Trusts. Cash and equivalents represented
3.4% of assets at year's end.
Among the best performing stocks at year end were:
<TABLE>
<S> <C>
Frontier Corp. +86.10%
ALLTEL Corp. +53.76%
Bell Atlantic Corp. +43.29%
</TABLE>
The utility industry continues to move from the full-fledged regulation of
the past (when state and federal regulators held the industry in a static-
state and reluctantly granted rates) to the current period of deregulation,
globalization and merger-mania. While uncertainties, particularly in regards
to deregulation, still abound in the utility sector, most company managements
seemed to have coped reasonably well in managing the transition from a
regulated status to one of increasing competition. Nevertheless, these
uncertainties have pushed utilities, primarily electrics, to a lower valuation
when related to the S&P 500 stocks. Given the improving prospects for the
entire industry, we believe this makes for a most attractive investment
situation. Telecommunication stocks (35.8% of portfolio) such as regional
telephone companies SBC Communications, Inc., Frontier Corp., and Bell
Atlantic Corp., have been excellent performers during the year. We expect
further expansion and merger activity in this sector as well as increased
growth (from both rising basic demand and the growing internet business) which
should result in higher dividend income. Further, gas stocks are becoming
increasingly attractive. They represent value based on earnings and book value
relative to current prices. We intend to increase our investments in this
group in the current year.
Emerging Growth Fund
The Emerging Growth Fund registered a negative return of 4.39% for the
twelve months ended June 30, 1999. The results, while disappointing, reflected
the small cap sector's continued underperformance, particularly in comparison
to the returns of the Dow Jones Industrial Average and the Standard & Poor's
500 Index over the past several years.
It has been more than six years (1992) since the small cap sector has
significantly outperformed the larger cap group. More distressing is the fact
that smaller stocks continue to reflect the same positive characteristics that
were in place last year; such as good earnings momentum, in most cases
established products or services, competent and successful management and
solid balance sheets. Further, most small cap stocks have little or no
exposure to the international financial vagaries such as volatile currencies
that belabored world stock markets for the past two years. The major reason
for this small cap performance discrepancy between the solid growth
characteristics of small caps and their stock price underperformance seems to
be liquidity and risk aversion. Liquidity relates to the ability of
institutions to buy and sell large blocks of stocks without essentially
disturbing the market price. Risk aversion is the continuing tendency of
investors to seek safety and lower volatility in the larger companies that
possess big assets and a longer history of operations as opposed to smaller
stocks.
We ended fiscal 1999 with the portfolio assets focused in four major
sectors: technology (semiconductors, telecommunications, and computer software
and services) at 29.6%, merchandising and retailing at 18.6%, healthcare at
13.9%, and business services and equipment at 12.6%. Our largest single stock
position was Stanford Telecommunications, Inc. which represented 6.8% of the
portfolio. At year's end, cash and equivalents stood at 11% of net assets.
Among the best performing stocks during the year were e4L, Inc. up 452.17%,
REMEC, Inc. up 41.76%, and Steven Madden, Ltd. up 17.30%. Among the best
stocks purchased after June 30, 1998, were:
<TABLE>
<S> <C>
Stanford Telecommunications, Inc. +228.71%
Labor Ready, Inc. +136.21%
Shared Medical Systems Corp. +57.77%
</TABLE>
- -------------------------------------------------------------------------------
3
<PAGE>
- -------------------------------------------------------------------------------
As we have noted, small cap stocks are compelling values at current levels.
These values are reflected in the Fund's portfolio holdings and the numbers
are strikingly eloquent; this year's projected earnings growth for the total
portfolio is 18% versus 13% for the market (S&P 500). Yet despite this
superior projected growth, the Fund's price-earnings ratio is significantly
cheaper, 22.8 times earnings versus 27.6 times earnings for the market (S&P
500). The Fund continues to represent a "pure" small capitalization portfolio
with the average capitalization of $487 million.
Historically, the last great period of underperformance versus large cap
stocks occurred from 1969 to 1973. From 1975 to 1979, the small cap stocks
turned around and outperformed their large cap counterparts by an average of
24.7% a year from 1975 to 1979. During the past five years (1994 - 1998) small
stock underperformance has approached the distressed price levels last seen in
1969 - 1973. The reversal this time around could be equally as powerful as it
was in the mid-to-late 1970's.
The Gold Fund
Gold, and particularly gold stocks, continues to disappoint investors. The
past twelve months have seen a series of announcements which potentially could
increase the supply of gold by Central Banks with the sale or intended sale of
gold bullion by Great Britain, as well as the International Monetary Fund and
the European Monetary Union. The latter, with the launch of the Euro this
year, continues to threaten limited gold backing of its currency. Some
announcements have been intentions such as the International Monetary Fund's
plan to sell some of its gold reserves. Other announcements have been actual,
such as the Bank of England's auction of 3.5% of its gold reserves. No matter
the cause, gold prices have plunged to 20-year lows. Overall, the threat of
increased supply continues to dampen demand.
A more important psychological negative for gold stocks has been the
relatively low rate of inflation both in the U.S. and Europe. Further, the
lackluster response of gold prices during the financial crisis of last summer
and early fall was a psychological negative.
On the plus side, gold mining companies have begun to consolidate through
acquisitions and mergers, making for fewer but stronger companies.
Additionally, marginal gold producers are beginning to shut down unprofitable
facilities, further reducing supply. Nevertheless, the outlook for the next
twelve months is mixed, at best. This belief is centered on the fact that
present and prospective gold investors are understandably cautious since gold
has been in a relative free-fall for the better part of three years. It will
take time for confidence to be restored in the gold market.
Longer term, however, the picture may be getting brighter. Global growth
should start to ignite some moderate inflation fears later this year. In
addition, the Asian recovery should serve to increase the demand for physical
gold. Finally, a contrary indicator is a recent cover of Fortune Magazine with
the word "eMoney" in bold text as if this is the moment when the world rejects
the glittering currency of the past and replaces it with the new (and more
economically correct) instantaneous version of currency along the wire.
Gold is not an investment built for the short-term gratification of e-
commerce. However, experience tells us great investments, whether they be
stocks, real estate, or gold, unfold over long periods of time and normally
through periods of negative news stories.
Market Outlook
As the summer of 1999 ends, rising interest rates have begun to cast a
shadow on the bull market. Rates are being pushed up by fear of rising
inflation. While inflation is currently benign (even with unemployment at its
lowest level in 29 years), there is a lingering fear on the part of investors
as well as the Fed that wage increases are about to escalate with resulting
inflationary pressure. Further, the belief is that there is too much
speculation in stocks and real estate. This opts for further Fed rate
increases. The goal of monetary policy is to maximize sustainable growth and
prosperity and the first priority is to do no harm. Accordingly, the Fed has
to be particularly alert to those economic influences that pose a risk to
maximum sustainable growth
.
- -------------------------------------------------------------------------------
4
<PAGE>
- -------------------------------------------------------------------------------
However, in perspective, it is well to remember that the Fed cut rates last
year in response to the world financial crisis. Now the Fed seems to be intent
on bringing rates back to normal (i.e. where they were before the market crash
in early July 1998). More perspective: rate hikes, while they are badly
received initially by the market, are really positive signs long-term. They
indicate that steps are being taken that will ultimately strengthen the
economy. The danger is that if the Fed tightens too much, it could shake the
market and threaten worldwide growth as in 1997 and 1998. Likewise, if it does
too little, inflation may heat up. Our view is that the Fed will do less
rather than more.
Another "plus" is the Y2K problem. To date, this has been considered a
"minus," but perversely, all this worrying about the impact of the year 2000
on our computer systems and the economy has served to moderate, and in some
cases depress, profits in various sectors of our economy. Once the millennium
is passed, spending on Y2K will soon end, which will free up corporate
resources for spending on more productive technology, thus improving
profitability. Additionally, the drag on earnings from Y2K costs that are
being expensed will end, boosting profits in the first and second quarters of
2000.
Obviously, stocks always carry risks and some of the risks are well known
and advertised: for example corporate profits could stagnate instead of grow.
This would reduce capital spending, cause dollar weakness, and affect the
stock market. Any prolonged weakness in the stock market could impact
consumers' sense of well being. Since consumer spending accounts for about
two-thirds of the U.S. economy, the effect could be significant.
In summary, based on our expectation for rising corporate profits,
historically low interest rates (despite the recent run-up) and lower
inflation, we continue to be positive about the stock market. Much of this
forecast is based on consumer spending which, while slowing slightly in the
months ahead (reflecting the impact of higher interest rates on the economy),
will not slow enough to put the economy at risk for a recession.
As always, thank you for your continued support.
/s/ Frank A. Cappiello
--------------------------
Frank A. Cappiello
Chairman
Cappiello-Rushmore Trust
- -------------------------------------------------------------------------------
5
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
June 30, 1999
UTILITY INCOME FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Market Value
Shares (Note 1)
- -------------------------------------------------------------
<S> <C>
COMMON STOCKS -- 92.4%
Business Services -- 1.7%
5,000 Metzler Group, Inc.* $ 138,125
-----------
Gas and Electric -- 44.5%
11,200 Allegheny Energy, Inc. 359,100
13,000 Alliant Energy Corp. 368,875
13,500 CMS Energy Corp. 565,312
3,000 Hawaiian Electric Industries, Inc. 106,500
8,000 IDACORP, Inc. 252,000
13,400 KeySpan Corp. 353,425
9,500 New Century Energies, Inc. 368,719
14,500 Potomac Electric Power Co. 426,844
15,900 Southern Co. 421,350
4,000 Texas Utilities Company 165,000
9,500 TNP Enterprises, Inc. 344,375
-----------
3,731,500
-----------
Natural Gas Distribution -- 3.7%
11,800 Washington Gas Light Co. 306,800
-----------
Real Estate Investment Trusts -- 6.7%
5,200 Archstone Communities Trust 114,075
5,000 FelCor Lodging Trust, Inc. 103,750
4,300 First Industrial Realty Trust, Inc. 117,981
3,600 Mack-Cali Realty Corp. 111,375
2,900 Spieker Properties, Inc. 112,738
-----------
559,919
-----------
Telecommunication -- 35.8%
8,800 ALLTEL Corp. 629,200
7,000 AT&T Corp. 390,688
9,400 Bell Atlantic Corp. 614,525
11,300 Frontier Corp. 666,700
12,000 SBC Communications, Inc. 696,000
-----------
2,997,113
-----------
Total Common Stocks
(Cost $5,079,834) 7,733,457
-----------
CONVERTIBLE PREFERRED
STOCKS -- 4.2%
6,000 Kmart Financing, 7.75%
(Cost $334,325) 351,000
-----------
<CAPTION>
- -------------------------------------------------------------
Market Value
Shares (Note 1)
- -------------------------------------------------------------
<S> <C>
MONEY MARKET FUNDS -- 3.4%
282,495 Fund for Government Investors
(Cost $282,495) $ 282,495
-----------
Total Investments -- 100.0%
(Cost $5,696,654) $ 8,366,952
===========
</TABLE>
6
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
June 30, 1999 (continued)
GROWTH FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
Market Value
Shares (Note 1)
- ------------------------------------------------------
<S> <C>
COMMON STOCKS -- 88.1%
Automobile Parts and
Accessories -- 2.4%
8,000 AlliedSignal, Inc. $ 504,000
-----------
Beverages -- 2.6%
8,800 Coca-Cola Co. 550,000
-----------
Business Services -- 8.7%
25,000 First Data Corp. 1,223,436
22,000 Metzler Group, Inc.* 607,750
-----------
1,831,186
-----------
Computer Hardware and
Equipment -- 6.2%
10,000 International Business
Machines Corp. 1,292,500
-----------
Computer Software and
Services -- 6.2%
20,000 Shared Medical Systems Corp. 1,305,000
-----------
Electronics -- 2.0%
6,000 Raytheon Co., Class B 422,250
-----------
Financial Services -- 23.6%
8,500 American Express Co. 1,106,063
3,200 Bank of America Corp. 234,600
9,000 Charles Schwab Corp. 988,875
32,000 Franklin Resources, Inc. 1,300,000
7,700 H&R Block, Inc. 385,000
20,000 SLM Holding Corp. 916,250
-----------
4,930,788
-----------
Healthcare -- 5.7%
19,000 United Healthcare Company 1,189,875
-----------
Merchandising and Retail -- 8.6%
22,500 Dollar General Corp. 652,500
160,000 e4L, Inc.* 1,150,000
-----------
1,802,500
-----------
Oil and Gas Services -- 5.1%
6,500 Schlumberger, Ltd. 413,969
60,000 Varco International, Inc.* 656,250
-----------
1,070,219
-----------
<CAPTION>
- ------------------------------------------------------
Market Value
Shares (Note 1)
- ------------------------------------------------------
<S> <C>
Paper Products -- 2.0%
9,000 Willamette Industries, Inc. $ 414,563
-----------
Telecommunication -- 15.0%
15,000 AT&T Corp. 837,188
20,000 Frontier Corp. 1,180,000
20,000 Hughes Electronics Corp. 1,125,000
-----------
3,142,188
-----------
Total Common Stocks
(Cost $9,711,065) 18,455,069
-----------
WARRANTS -- 5.9%
44,000 Federated Department Stores,
Inc. WTS C* (Cost $216,340)
1,237,500
-----------
MONEY MARKET FUNDS -- 6.0%
1,253,753 Fund for Government
Investors (Cost $1,253,753) 1,253,753
-----------
Total Investments -- 100.0%
(Cost $11,181,158) $20,946,322
===========
</TABLE>
7
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
June 30, 1999 (continued)
EMERGING GROWTH FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
Market Value
Shares (Note 1)
- ---------------------------------------------------------------
<S> <C>
COMMON STOCKS -- 89.0%
Business Services and Equipment -- 12.6%
14,000 Labor Ready, Inc.* $ 455,000
10,000 Miami Computer Supply Corp.* 188,750
5,000 National Data Corp. 213,750
3,900 Snyder Communications, Inc.* 127,725
4,000 World Color Press, Inc.* 110,000
-----------
1,095,225
-----------
Computer Software and Services -- 12.7%
7,800 Actrade International Ltd* 99,938
3,000 Jack Henry & Associates, Inc.* 117,750
5,000 Mastech Corp.* 93,125
8,200 Shared Medical Systems Corp. 535,050
3,700 Visio Corp.* 140,831
3,900 Xircom, Inc.* 117,244
-----------
1,103,938
-----------
Financial Services -- 4.4%
5,584 Investment Technology Group, Inc.* 180,782
7,200 Waddell & Reed Financial, Inc. 197,550
-----------
378,332
-----------
Food Products -- 1.4%
6,000 Hain Food Group, Inc.* 123,750
-----------
Healthcare -- 13.9%
2,900 Barr Laboratories, Inc.* 115,638
10,000 Eclipsys Corp.* 239,375
30,000 KV Pharmaceutical Co., Class A* 465,000
9,000 Orthodontic Centers of America, Inc.* 127,125
26,000 PolyMedica Corp.* 260,000
-----------
1,207,138
-----------
Merchandising and Retail -- 18.6%
3,400 BEBE Stores, Inc.* 115,600
65,000 e4L, Inc.* 467,187
6,800 Nautica Enterprises, Inc.* 114,750
30,000 Paul Harris Stores, Inc.* 204,375
45,000 Pier 1 Imports, Inc. 506,250
16,000 Steven Madden, Ltd.* 217,000
-----------
1,625,162
-----------
<CAPTION>
- ---------------------------------------------------------------
Market Value
Shares (Note 1)
- ---------------------------------------------------------------
<S> <C>
Oil and Gas Services -- 2.9%
20,000 Bolt Technology Corp.* $ 115,000
4,400 Tidewater, Inc. 134,200
-----------
249,200
-----------
Semiconductors -- 2.4%
12,000 Smart Modular Technologies, Inc.* 208,500
-----------
Telecommunications -- 14.5%
18,000 InterVoice, Inc.* 259,875
3,000 Pacific Gateway Exchange, Inc.* 87,375
20,000 REMEC, Inc.* 322,500
20,000 Stanford Telecommunications, Inc.* 592,500
-----------
1,262,250
-----------
Transportation -- 5.6%
30,000 Aramex International, Ltd.* 258,750
10,000 Hub Group, Inc., Class A* 224,375
-----------
483,125
-----------
Total Common Stocks
(Cost $5,397,328) 7,736,620
-----------
MONEY MARKET FUNDS -- 11.0%
956,460 Fund for Government Investors
(Cost $956,460) 956,460
-----------
Total Investments -- 100.0%
(Cost $6,353,788) $ 8,693,080
===========
</TABLE>
8
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
June 30, 1999 (continued)
GOLD FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
Market Value
Shares (Note 1)
- ------------------------------------------------------
<S> <C>
COMMON STOCKS -- 99.5%
Metals and Mining
Australia -- 16.3%
6,000 Lihir Gold, Ltd.* $ 86,250
8,000 WMC, Ltd., ADR 140,000
-----------
226,250
-----------
Canada -- 34.1%
9,000 Aber Resources, Ltd.* 78,188
9,000 Barrick Gold Corp. 174,375
16,000 Cambior, Inc. 52,000
32,016 Kinross Gold Corp.* 54,027
8,000 Placer Dome, Inc. 94,500
20,000 TVX Gold, Inc.* 20,000
-----------
473,090
-----------
Ghana -- 6.0%
12,000 Ashanti Goldfields Co., Ltd. 83,250
-----------
<CAPTION>
- ------------------------------------------------------
Market Value
Shares (Note 1)
- ------------------------------------------------------
<S> <C>
United States -- 43.1%
35,000 Battle Mountain Gold Co. $ 85,312
20,000 Crown Resources Corp.* 32,500
15,000 Homestake Mining Co. 122,812
4,000 Newmont Mining Corp. 79,500
8,500 Stillwater Mining Co.* 277,844
-----------
597,968
-----------
Total Common Stocks
(Cost $2,135,592) 1,380,558
-----------
MONEY MARKET FUNDS -- 0.5%
6,409 Fund for Government
Investors (Cost $6,409) 6,409
-----------
Total Investments -- 100.0%
(Cost $2,142,001) $ 1,386,967
===========
</TABLE>
- ----------------
* Non-income producing
ADR American Depository Receipts
See Notes to Financial Statements.
9
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
June 30, 1999
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Securities at Cost.......... $5,696,654 $11,181,158 $6,353,788 $2,142,001
========== =========== ========== ==========
Securities at Value (Note
1)......................... $8,366,952 $20,946,322 $8,693,080 $1,386,967
Receivable for Securities
Sold....................... -- -- -- 17,000
Receivable for Shares Sold.. 38,340 5,768 33 --
Dividends Receivable........ 10,873 17,424 1,722 --
Interest Receivable......... 763 3,597 1,160 24
---------- ----------- ---------- ----------
Total Assets................ 8,416,928 20,973,111 8,695,995 1,403,991
---------- ----------- ---------- ----------
LIABILITIES
Investment Advisory Fee
Payable.................... 2,436 8,274 3,689 764
Administration Fee Payable.. 4,873 16,548 7,378 1,091
Liability for Shares
Redeemed................... 6,720 77,586 48,819 8,184
Distributions Payable....... 5,914 -- -- --
---------- ----------- ---------- ----------
Total Liabilities........... 19,943 102,408 59,886 10,039
---------- ----------- ---------- ----------
NET ASSETS................... $8,396,985 $20,870,703 $8,636,109 $1,393,952
========== =========== ========== ==========
Shares Outstanding........... 654,245 947,538 658,931 348,815
========== =========== ========== ==========
Net Asset Value Per Share.... $12.83 $22.03 $13.11 $4.00
========== =========== ========== ==========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements of Operations
For the Year Ended June 30, 1999
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Interest.................. $ 14,841 $ 59,248 $ 89,144 $ 4,120
Dividends................. 351,930 112,276 38,519 8,699
-------- ---------- ---------- ---------
Total Investment Income... 366,771 171,524 127,663 12,819
-------- ---------- ---------- ---------
Expenses
Investment Advisory Fee
(Note 2)................. 30,479 97,413 63,027 12,055
Administrative Fee (Note
2)....................... 60,959 194,827 126,053 17,228
Other Fees................ 208 108 455 --
-------- ---------- ---------- ---------
Total Expenses............ 91,646 292,348 189,535 29,283
-------- ---------- ---------- ---------
Net Investment Income
(Loss).................... 275,125 (120,824) (61,872) (16,464)
-------- ---------- ---------- ---------
Net Realized Gain (Loss) on
Investment Transactions... 474,361 4,333,506 1,345,716 (461,455)
Net Change in Unrealized
Appreciation/ Depreciation
of Investments............ 224,539 (420,750) (713,036) 192,968
-------- ---------- ---------- ---------
Net Gain (Loss) on
Investments............... 698,900 3,912,756 632,680 (268,487)
-------- ---------- ---------- ---------
Net Increase (Decrease) in
Net Assets Resulting from
Operations................ $974,025 $3,791,932 $ 570,808 $(284,951)
======== ========== ========== =========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements Of Changes In Net Assets
<TABLE>
<CAPTION>
Utility
Income Fund Growth Fund
- ------------------------------------------------------------------------------------
For the Years Ended June 30,
-----------------------------------------------------
1999 1998 1999 1998
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
From Investment Activities
Net Investment Income
(Loss).................. $ 275,125 $ 398,161 $ (120,824) $ (193,212)
Net Realized Gain
on Investment
Transactions............ 474,361 508,641 4,333,506 3,356,716
Change in Net Unrealized
Appreciation/Depreciation
of Investments.......... 224,539 1,300,391 (420,750) 1,303,719
----------- ------------ ------------ ------------
Net Increase in Net
Assets Resulting from
Operations.............. 974,025 2,207,193 3,791,932 4,467,223
----------- ------------ ------------ ------------
Distributions to Shareholders
From Net Investment
Income.................. (275,180) (400,295) -- --
From Net Realized Gain on
Investments............. (554,083) -- (4,104,765) --
----------- ------------ ------------ ------------
Total Distributions to
Shareholders............ (829,263) (400,295) (4,104,765) --
----------- ------------ ------------ ------------
From Share Transactions
Net Proceeds from Sales
of Shares............... 6,111,444 16,647,062 13,234,395 29,015,150
Reinvestment of
Distributions........... 743,808 321,286 3,959,935 --
Cost of Shares Redeemed.. (8,401,545) (17,782,741) (20,841,675) (33,550,866)
----------- ------------ ------------ ------------
Net Decrease in Net
Assets Resulting from
Share Transactions...... (1,546,293) (814,393) (3,647,345) (4,535,716)
----------- ------------ ------------ ------------
Total Increase
(Decrease) in Net
Assets.................. (1,401,531) 992,505 (3,960,178) (68,493)
Net Assets -- Beginning of
Year..................... 9,798,516 8,806,011 24,830,881 24,899,374
----------- ------------ ------------ ------------
Net Assets -- End of Year. $ 8,396,985 $ 9,798,516 $ 20,870,703 $ 24,830,881
=========== ============ ============ ============
Shares
Sold..................... 487,318 1,393,270 667,460 1,333,472
Issued in Reinvestment of
Distributions........... 59,063 26,251 242,643 --
Redeemed................. (672,475) (1,485,904) (1,043,833) (1,561,079)
----------- ------------ ------------ ------------
Net Decrease in Shares... (126,094) (66,383) (133,730) (227,607)
=========== ============ ============ ============
See Notes to Financial Statements.
- ------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Emerging
Growth Fund Gold Fund
- -----------------------------------------------------------------------------------
For the Years Ended June 30,
----------------------------------------------------
1999 1998 1999 1998
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
From Investment Activities
Net Investment Loss...... $ (61,872) $ (214,292) $ (16,464) $ (21,980)
Net Realized Gain (Loss)
on Investment
Transactions............ 1,345,716 1,678,627 (461,455) (935,910)
Net Change in Unrealized
Appreciation/Depreciation
of Investments.......... (713,036) (1,834,311) 192,968 (234,352)
------------ ------------ ---------- ------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... 570,808 (369,976) (284,951) (1,192,242)
------------ ------------ ---------- ------------
Distributions to Shareholders
From Net Realized Gain on
Investments............. (101,776) -- -- --
------------ ------------ ---------- ------------
From Share Transactions
Net Proceeds from Sales
of Shares............... 42,030,888 36,436,165 -- 11,756,801
Reinvestment of
Distributions........... 91,112 -- -- --
Cost of Shares Redeemed.. (48,113,508) (42,639,433) (507,885) (11,786,315)
------------ ------------ ---------- ------------
Net Decrease in Net
Assets Resulting from
Share Transactions...... (5,991,508) (6,203,268) (507,885) (29,514)
------------ ------------ ---------- ------------
Total Decrease in Net
Assets.................. (5,522,476) (6,573,244) (792,836) (1,221,756)
Net Assets -- Beginning of
Year..................... 14,158,585 20,731,829 2,186,788 3,408,544
------------ ------------ ---------- ------------
Net Assets -- End of Year. $ 8,636,109 $ 14,158,585 $1,393,952 $ 2,186,788
============ ============ ========== ============
Shares
Sold..................... 3,627,533 2,329,100 -- 1,893,015
Issued in Reinvestment of
Distributions........... 7,530 -- -- --
Redeemed................. (4,000,674) (2,802,091) (120,066) (1,909,526)
------------ ------------ ---------- ------------
Net Decrease in Shares... (365,611) (472,991) (120,066) (16,511)
============ ============ ========== ============
See Notes to Financial Statements.
- -----------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Utility Income Fund
- -------------------------------------------------------------------------------
For the Years Ended June 30,
----------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value -- Beginning of
Year............................ $12.56 $10.40 $10.60 $ 9.24 $ 8.39
------ ------ ------ ------- -------
Income from Investment
Operations:
Net Investment Income............ 0.40 0.47 0.53 0.49 0.55
Net Realized and Unrealized Gain
(Loss) on Securities............ 1.09 2.17 (0.19) 1.39 0.85
------ ------ ------ ------- -------
Total from Investment
Operations..................... 1.49 2.64 0.34 1.88 1.40
------ ------ ------ ------- -------
Distributions to Shareholders:
From Net Investment Income....... (0.40) (0.48) (0.54) (0.52) (0.55)
From Net Realized Capital Gain... (0.82) -- -- -- --
------ ------ ------ ------- -------
Total Distributions to
Shareholders................... (1.22) (0.48) (0.54) (0.52) (0.55)
------ ------ ------ ------- -------
Net Increase (Decrease) in Net
Asset Value..................... 0.27 2.16 (0.20) 1.36 0.85
------ ------ ------ ------- -------
Net Asset Value -- End of Year... $12.83 $12.56 $10.40 $ 10.60 $ 9.24
====== ====== ====== ======= =======
Total Investment Return........... 12.24% 25.55% 3.39% 20.60% 16.62%
Ratios to Average Net Assets:
Expenses......................... 1.05% 1.05% 1.05% 1.05% 1.05%
Net Investment Income............ 3.16% 4.01% 4.88% 4.82% 6.26%
Supplementary Data:
Portfolio Turnover Rate.......... 22.0% 29.5% 17.3% 45.1% 147.0%
Net Assets at End of Year (in
thousands)...................... $8,397 $9,799 $8,806 $15,106 $17,151
Number of Shares Outstanding at
End of Year (in thousands)...... 654 780 847 1,425 1,855
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Growth Fund
- ------------------------------------------------------------------------------
For the Years Ended June 30,
-----------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Year....... $ 22.96 $ 19.02 $ 17.87 $ 14.64 $ 11.05
------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income
(Loss)................... (0.13) (0.18) (0.09) (0.07) 0.01
Net Realized and
Unrealized Gain on
Securities............... 3.86 4.12 1.83 3.30 3.60
------- ------- ------- ------- -------
Total from Investment
Operations.............. 3.73 3.94 1.74 3.23 3.61
------- ------- ------- ------- -------
Distributions to
Shareholders:
From Net Investment
Income................... -- -- -- -- (0.02)
From Net Realized Capital
Gain..................... (4.66) -- (0.59) -- --
------- ------- ------- ------- -------
Total Distributions to
Shareholders............ (4.66) -- (0.59) -- (0.02)
------- ------- ------- ------- -------
Net Increase (Decrease) in
Net Asset Value.......... (0.93) 3.94 1.15 3.23 3.59
------- ------- ------- ------- -------
Net Asset Value -- End of
Year..................... $ 22.03 $ 22.96 $ 19.02 $ 17.87 $ 14.64
======= ======= ======= ======= =======
Total Investment Return.... 23.32% 20.72% 10.10% 22.06% 32.65%
Ratios to Average Net
Assets:
Expenses.................. 1.50% 1.50% 1.50% 1.50% 1.50%
Net Investment Income
(Loss)................... (0.62)% (0.74)% (0.46)% (0.41)% 0.12%
Supplementary Data:
Portfolio Turnover Rate... 54.3% 65.1% 41.9% 74.5% 70.9%
Net Assets at End of Year
(in thousands)........... $20,871 $24,831 $24,899 $31,777 $19,337
Number of Shares
Outstanding at End of
Year (in thousands)...... 948 1,081 1,309 1,778 1,321
See Notes to Financial Statements.
- ------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Emerging Growth Fund
- ------------------------------------------------------------------------------
For the Years Ended June 30,
----------------------------------------------
1999 1998 1997 1996 1995
------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Year....... $13.82 $ 13.84 $ 16.99 $ 14.96 $ 10.41
------ ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Loss....... (0.09) (0.21) (0.24) (0.16) (0.08)
Net Realized and
Unrealized Gain (Loss) on
Securities............... (0.52)/A/ 0.19/A/ (0.25) 2.30 4.63
------ ------- ------- ------- -------
Total from Investment
Operations.............. (0.61) (0.02) (0.49) 2.14 4.55
------ ------- ------- ------- -------
Distributions to
Shareholders:
From Net Realized Capital
Gain..................... (0.10) -- (2.66) (0.11) --
------ ------- ------- ------- -------
Net Increase (Decrease) in
Net Asset Value.......... (0.71) (0.02) (3.15) 2.03 4.55
------ ------- ------- ------- -------
Net Asset Value -- End of
Year..................... $13.11 $ 13.82 $ 13.84 $ 16.99 $ 14.96
====== ======= ======= ======= =======
Total Investment Return.... (4.39)% (0.14)% (2.15)% 14.36% 43.71%
Ratios to Average Net
Assets:
Expenses.................. 1.51% 1.50% 1.50% 1.50% 1.50%
Net Investment Loss....... (0.49)% (1.07)% (1.20)% (0.98)% (0.61)%
Supplementary Data:
Portfolio Turnover Rate... 171.6% 121.2% 66.2% 121.2% 96.1%
Net Assets at End of Year
(in thousands)........... $8,636 $14,159 $20,732 $44,985 $36,606
Number of Shares
Outstanding at End of
Year (in thousands)...... 659 1,025 1,498 2,647 2,447
</TABLE>
- -----------------------------
/A/The per share amount does not coincide with the net realized and
unrealized gain/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.
See Notes to Financial Statements.
- ------------------------------------------------------------------------------
16
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Gold Fund
- -----------------------------------------------------------------------------
For the Years Ended June 30,
------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value -- Beginning
of Year...................... $ 4.66 $ 7.02 $ 9.93 $ 9.89 $ 9.52
------ ------ ------ ------ ------
Income from Investment
Operations:
Net Investment Loss........... (0.05) (0.05) (0.08) (0.06) (0.05)
Net Realized and Unrealized
Gain (Loss) on Securities.... (0.61) (2.31) (2.83) 0.10 0.42
------ ------ ------ ------ ------
Total from Investment
Operations.................. (0.66) (2.36) (2.91) 0.04 0.37
------ ------ ------ ------ ------
Distributions to Shareholders:
Total Distributions to
Shareholders................ -- -- -- -- --
------ ------ ------ ------ ------
Net Increase (Decrease) in Net
Asset Value.................. (0.66) (2.36) (2.91) 0.04 0.37
------ ------ ------ ------ ------
Net Asset Value -- End of
Year......................... $ 4.00 $ 4.66 $ 7.02 $ 9.93 $ 9.89
====== ====== ====== ====== ======
Total Investment Return........ (14.16)% (33.62)% (29.31)% 0.40% 3.89%
Ratios to Average Net Assets:
Expenses...................... 1.70% 1.70% 1.70% 1.70% 1.70%
Net Investment Loss........... (0.96)% (0.74)% (0.76)% (0.59)% (0.51)%
Supplementary Data:
Portfolio Turnover Rate....... -- 56.5% 108.5% 59.1% 51.2%
Net Assets at End of Year (in
thousands)................... $1,394 $2,187 $3,409 $6,122 $6,796
Number of Shares Outstanding
at End of Year (in
thousands)................... 349 469 485 616 687
</TABLE>
See Notes to Financial Statements.
- -----------------------------------------------------------------------------
17
<PAGE>
Cappiello-Rushmore Trust
- -------------------------------------------------------------------------------
Notes to Financial Statements
June 30, 1999
1. Significant Accounting Policies
Cappiello-Rushmore Trust (the "Trust") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a no-load,
open-end investment company and is authorized to issue an unlimited number of
shares. The Trust consists of four separate portfolios (the "Funds"), each
with a different investment objective. As of March 10, 1998, shares of the
Gold Fund are no longer available for new purchases. Existing shareholders may
continue to hold previously purchased shares. The financial statements have
been prepared in conformity with generally accepted accounting principles
which permit management to make certain estimates and assumptions at the date
of the financial statements. The following is a summary of significant
accounting policies which the Funds follow:
(a) Listed securities are valued at the last sales price of the New York
Stock Exchange and other major exchanges. Over-the-Counter securities are
valued at the last sales price. If market quotations are not readily
available, the Board of Trustees will value the Funds' securities in good
faith. The trustees will periodically review this method of valuation and
recommend changes which may be necessary to assure that the Funds'
instruments are valued at fair value.
(b) Security transactions are recorded on the trade date (the date the
order to buy or sell is executed). Interest income is accrued on a daily
basis. Dividend income is recorded on the ex-dividend date. Realized gains
and losses from securities transactions are computed on an identified cost
basis.
(c) Dividends from net investment income are declared and paid annually
in the Growth, Emerging Growth and Gold Funds and quarterly in the Utility
Income Fund. Dividends are reinvested in additional shares unless
shareholders request payment in cash. Net capital gains, if any, are
distributed annually.
(d) For Federal income tax purposes, each Fund of the Trust is treated as
a separate corporation. Each Fund intends to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and
distribute all net investment income, if any, and realized capital gains to
their shareholders. Therefore, no Federal income tax provision is required.
2. Investment Advisory Fees and Other Transactions with Affiliates
Investment advisory services are provided by McCullough, Andrews and
Cappiello, Inc., (the "Adviser"). Under an agreement with the Adviser, the
Trust pays a fee at the annual rate of 0.50% of the daily net assets of the
Growth and Emerging Growth Funds, 0.70% of the daily net assets of the Gold
Fund and 0.35% of the daily net assets of the Utility Income Fund. Certain
Officers and Trustees of the Trust are affiliated with the Adviser.
The Trust has contracted with Money Management Associates (the
"Administrator") to provide Administrative services to the Trust. Under the
administrative services agreement with the Administrator, the Trust pays a fee
at the annual rate of 1.00% of the daily net assets of the Growth, Emerging
Growth and Gold Funds, and 0.70% of the daily net assets of the Utility Income
Fund. Certain Officers and Trustees of the Trust are affiliated with the
Administrator.
Certain of these administrative services are provided by Rushmore Trust and
Savings, FSB ("Rushmore Trust"), a majority-owned subsidiary of the
Administrator, under a subcontractual agreement with the Administrator. These
services include transfer agency functions, dividend disbursing and other
shareholder services and custody of the Trust's assets. The Trust has an
agreement with Rushmore Trust to receive short-term borrowings to cover share
redemptions. No borrowings were outstanding at June 30, 1999.
Each fund of the Trust invests excess cash in Fund for Government Investors,
a money market mutual fund. Certain Officers and Trustees of Fund for
Government Investors are affiliated with the Trust.
18
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
3. Securities Transactions
For the year ended June 30, 1999, purchases and sales (including maturities)
of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Purchases................... $1,834,388 $ 9,973,053 $18,078,409 $ --
========== =========== =========== ===========
Sales....................... $3,103,965 $18,465,357 $22,669,624 $ 265,383
========== =========== =========== ===========
</TABLE>
4. Unrealized Appreciation and Depreciation of Investments
Unrealized appreciation (depreciation) as of June 30, 1999 based on the cost
for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gross Unrealized
Appreciation............... $2,619,408 $ 9,781,637 $ 2,396,859 $ 222,310
Gross Unrealized
Depreciation............... (46,684) (16,473) (82,945) (1,062,516)
---------- ----------- ----------- -----------
Net Unrealized Appreciation
(Depreciation)............. $2,644,724 $ 9,765,164 $ 2,313,914 $ (840,206)
========== =========== =========== ===========
Cost of Investments for
Federal Income Tax
Purposes................... $5,722,228 $11,181,158 $ 6,379,166 $ 2,227,173
========== =========== =========== ===========
</TABLE>
5. Net Assets
At June 30, 1999 net assets consisted of the following:
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Paid-in-Capital............. $5,484,359 $ 7,613,121 $ 5,341,352 $ 5,014,672
Undistributed Net Investment
Income..................... 136 -- -- --
Accumulated Net Realized
Gain (Loss) on Investments. 242,192 3,492,418 955,465 (2,865,686)
Net Unrealized Appreciation
(Depreciation) on
Investments................ 2,670,298 9,765,164 2,339,292 (755,034)
---------- ----------- ----------- -----------
Net Assets.................. $8,396,985 $20,870,703 $ 8,636,109 $ 1,393,952
========== =========== =========== ===========
</TABLE>
6. Federal Income Tax
Permanent differences between tax and financial reporting of net investment
income and realized gains are reclassified to paid-in-capital. As of June 30,
1999, net investment losses were reclassified to paid-in-capital as follows:
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Investment Loss......... -- $ 120,824 $ 61,872 $ 16,464
</TABLE>
19
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
At June 30, 1999, for Federal income tax purposes, the following Funds had
capital loss carryovers which may be applied against future net taxable
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
Emerging
Expires June 30, Growth Fund Gold Fund
- ---------------- ----------- ----------
<S> <C> <C>
2000.................................................... -- $ 434,866
2001.................................................... $56,256 281,566
2005.................................................... -- 648,259
2006.................................................... -- 954,368
2007.................................................... -- 461,455
------- ----------
Total.................................................. $56,256 $2,780,514
======= ==========
</TABLE>
20
<PAGE>
- -------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
of Cappiello-Rushmore Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Utility Income, Growth,
Emerging Growth and Gold Funds of the Cappiello-Rushmore Trust (the "Trust")
as of June 30, 1999, and the related statements of operations for the year
then ended, the statements of changes in net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at June 30, 1999, by correspondence with the custodian and broker. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the Utility Income, Growth, Emerging Growth, and Gold Funds of the Cappiello-
Rushmore Trust, as of June 30, 1999, the results of their operations for the
year then ended, the changes in their net assets for each of the two years in
the period then ended, and their financial highlights for each of the five
years in the period then ended, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Washington, DC
August 6, 1999
- -------------------------------------------------------------------------------
21
