<PAGE>
- -------------------------------------------------------------------------------
SEMI-ANNUAL REPORT, December 31, 1995
CAPPIELLO-RUSHMORE TRUST
4922 FAIRMONT AVENUE, BETHESDA, MARYLAND 20814
(800) 622-1386 (301) 657-1510
[LOGO OF CAPPIELLO RUSHMORE FUND APPEARS HERE]
- -------------------------------------------------------------------------------
Dear Fellow Investor:
The past year was noteworthy as being among the strongest in stock market
history. In terms of performance, the S&P 500 was up 37.6% and the Dow Jones
Utility Average was up over 25.4%. The "prime mover" for the markets was a
combination of rising corporate earnings and declining interest rates.
Additionally, price earnings ratios expanded in most stock sectors reflecting
the fact that investors were willing to pay more for each dollar of earnings
in a period of lower inflation and lower interest rates. All of the Cappiello-
Rushmore Funds' investment performances were most satisfactory as measured
against the market indices as follows:
- -------------------------------------------------------------------------------
TOTAL RETURN 1995
January 1, 1995--December 31, 1995
Cappiello-Rushmore Growth +37.08%
Cappiello-Rushmore Emerging Growth +35.96%
Cappiello-Rushmore Gold +4.09%
Cappiello-Rushmore Utility Income +29.83%
* * * * * * * * * * * * * * * * * * * * * * * *
Standard & Poor's 500 Index +37.58%
Philadelphia Exchange Gold & Silver Index (XAU) +10.14%
The S&P 500 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.
- -------------------------------------------------------------------------------
The Growth Fund's performance, up more than 37%, was the result of our
emphasis on mid-capitalization and large capitalization stocks in the faster
growing sectors of the economy such as healthcare (United Heathcare, Shared
Medical) and in technology (Sun Microsystems).
- -------------------------------------------------------------------------------
<PAGE>
The Emerging Growth Fund's performance was up 35.9% despite the fact that
smaller capitalization stocks did not do as well as the larger cap blue chips
in 1995. Contributing to the Fund's performance were companies in a broad
spectrum of sectors including National Media Corporation (up more than four
times) and LSI Logic (up more than 62%). We continue to search for undervalued
growth companies in all sectors of the economy; in addition to the fast-
growing technology and healthcare areas.
The Cappiello-Rushmore Utility Income Fund recorded a 29.8% return for the
year bettering the Dow Jones Utility Average's performance of 25.4%. This is
the second consecutive year of the Fund's superior performance versus the Dow
Utility Average. On January 5, 1996, Investor's Business Daily noted that the
Cappiello-Rushmore Utility Income Fund was one of the top performing specialty
funds for the quarter ended December 31, 1995.
The Gold Fund has been in operation since March 7, 1994 and enjoyed modest
performance given the relatively flat price of gold and other precious metals.
Gold prices began to climb in the first month of 1996, however, moving above
the $400 per ounce level. We continue to believe that the rising demand for
gold (both for industrial use and jewelry) will be significantly augmented by
investment demand. Most experts forecast a slower pace for gold production and
a significant reduction in central bank's selling of gold. This should make
for improved prices of gold and other precious metals in 1996 and thereby
enhance the total value of the Cappiello-Rushmore Gold Fund.
OUTLOOK FOR 1996: THE ECONOMY
The near term outlook continues to look sluggish with no recession in 1996,
but not much growth either. The largest force in our economy, the consumer,
continues to be cautious and careful. Most of this caution was reflected in
the disappointing Christmas season for retailers. Exports (about 14% of the
economy) have been slowing due to the weakening economies of major buyers of
U.S. goods: Japan, Mexico, and Europe. Only Canada, as the number one buyer of
U.S. goods, is in an expansion phase. Capital spending, a bulwark of growth
for the past several years, is the only expanding force in the economy,
reflecting the actions of corporations as they increase spending to raise
productivity and efficiency. Accordingly, the first half of 1996 will reflect
a much slower growth rate than 1995. Slower growth with low inflation (under
3%) is the perfect recipe for the Federal Reserve to cut interest rates.
Expectations are that the Federal Reserve will cut interest rates in the
next several months. Combining these rate cuts with those expected in Germany
and Japan should stimulate exports (now 14% of Gross Domestic Product--the
broadest measure of the nation's output of goods and services) and thereby add
strength to the second half of the year. We expect an average annual growth of
2.5% in 1996 as measured by Gross Domestic Product.
Despite the slackening economy, corporate earnings should be up this year, a
reflection of a modest increase in sales and continued improving profit
margins. The best comparison should come in the second half of the year. Price
earnings ratios, currently in the 15:1 to 16:1 range, are not excessive for a
period when inflation is below 3%.
2
<PAGE>
OUTLOOK FOR 1996: THE STOCK MARKET
The past year was an extraordinary time for the financial markets. The
current year, 1996, is expected to be more normal with market "corrections"
from time to time and a total return well below the level of 1995. Something
in the order of 10-15% would seem to be within reason considering the economic
outlook, stock market history following big years such as 1995, and the four
year cyclical trend of stock prices tied to the presidential election
schedule.
In our opinion, there are largely two risks for the financial markets.
First, the economy must continue to grow at 2% or more. Any rate below that is
too great a threat to earnings. Second, the flow of funds into the stock
market must continue. In fact, as interest rates continue to fall, stocks
become a more attractive alternative to bonds or savings accounts. Individuals
have been increasing their equity holdings during the past several years, but
the percentage of stock relative to individuals' assets is still much lower
than in some past periods such as the 1960's. Increasingly, middle income
earners are coming to believe that stocks may represent their only hope of a
decent retirement living, as faith in the Social Security System is waning.
Additionally, forecasted lower interest rates in 1996 should benefit utility
stocks (particularly the electrics) where the Cappiello-Rushmore Utility
Income Fund is well positioned.
Finally, we believe the rationale to own U.S. equities now is based on the
positive position of the corporate sector in the U.S. Despite the political
rhetoric out of Washington, American corporations are better off than the
competition in any other major industrial nation. In terms of labor relations,
government intervention, debt levels, modernization of productions facilities,
and currency valuation, things could hardly be better. The approach says
nothing about short-term timing, and indeed a correction in this market would
not be a surprise. However, looking out six to twelve months, the
opportunities for U.S. stocks in an expanding global economy appear
attractive.
A slower economy does not necessarily mean lower stock prices. If interest
rates continue to moderate, stock prices will have good underlying support
even if earnings grow less rapidly than in 1995. In this environment there
will be heightened interest in large and small capitalization companies whose
earnings continue to grow at above average rates. Companies such as these are
well represented in the Cappiello-Rushmore Growth and Emerging Growth Funds,
respectively.
/s/ Frank Cappiello
Frank A. Cappiello
Chairman, Cappiello-Rushmore Trust
January 31, 1996
3
<PAGE>
December 31, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
UTILITY INCOME FUND GROWTH FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Market Value
Shares (Note 1)
- ---------------------------------------------------------------------------
COMMON STOCKS
<S> <C>
GAS & ELECTRIC -- 69.65%
15,000 Allegheny Power Systems, Inc. $ 429,375
40,000 Central and South West Corp. 1,115,000
91,440 Citizens Utilities Co., Ser. A 1,165,860
20,000 CMS Energy Corp. 597,500
30,000 Detroit Edison Co. 1,035,000
50,000 Houston Industries, Inc. 1,212,500
20,000 Interstate Power Co. 665,000
40,000 Long Island Lighting Co. 655,000
20,000 Potomac Electric Power Co. 525,000
25,000 Public Service Co. of Colorado 884,375
40,000 Public Service Enterprise Group, Inc. 1,225,000
28,000 Southern Co. 689,500
22,000 Texas Utilities Co. 904,750
46,000 TNP Enterprises, Inc. 862,500
17,000 Union Electric Co. 709,750
31,000 United Illuminating Co. 1,158,625
30,000 Washington Water Power Co. 525,000
-----------
14,359,735
-----------
NATURAL GAS DISTRIBUTION -- 9.72%
40,000 Brooklyn Union Gas Co. 1,170,000
40,700 Washington Gas Light Co. 834,350
-----------
2,004,350
-----------
TELEPHONE -- 15.32%
30,000 Alltel Corp. 885,000
20,000 Nynex Corp. 1,080,000
30,000 Southern New England Telecommunications Corp. 1,192,500
-----------
3,157,500
-----------
TOTAL COMMON STOCKS -- 94.69%
(COST $16,972,637) 19,521,585
-----------
CONVERTIBLE PREFERRED -- 4.03%
19,000 Sea Containers, Ltd. Conv. Pfd. $4.00
(Cost $856,320) 831,250
-----------
MUTUAL FUNDS -- 1.28%
264,402 Fund for Government Investors, Inc. (Cost $264,402) 264,402
-----------
TOTAL INVESTMENTS -- 100.00%
(COST $18,093,359) $20,617,237
===========
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market Value
Shares (Note 1)
- -----------------------------------------------------------
<S> <C>
COMMON STOCKS
BEVERAGES -- SOFT DRINKS -- 2.76%
10,000 Coca-Cola Co. $ 742,500
------------
CHEMICALS -- 1.92%
8,700 W. R. Grace Co. 514,388
------------
COMPUTER AND BUSINESS
EQUIPMENT -- 12.35%
20,000 Cisco Systems, Inc.* 1,492,500
40,000 Sun Microsystems, Inc.* 1,825,000
------------
3,317,500
------------
COMPUTER SOFTWARE INFORMATION
PROCESSING -- 8.36%
20,000 Reynolds & Reynolds Co. 777,500
27,000 Shared Medical Systems Corp. 1,468,125
------------
2,245,625
------------
COMPUTER SOFTWARE -- 2.15%
25,000 Softkey International, Inc.* 578,125
------------
DIVERSIFIED ELECTRONICS -- 3.66%
20,000 GM Hughes Electronics Corp. 982,500
------------
FINANCIAL -- 15.97%
15,000 American Express Co. 620,625
19,000 Franklin Resources, Inc. 957,125
20,000 Bancorp Hawaii, Inc. 717,500
50,000 Charles Schwab Corp. 1,006,250
15,000 Student Loan Marketing Association 988,125
------------
4,289,625
------------
HEALTHCARE -- 16.31%
20,000 CR Bard, Inc. 645,000
30,000 Health Systems International, Inc.* 963,750
35,000 Horizon/CMS Healthcare* 883,750
27,900 Tenet Healthcare Corp.* 578,925
20,000 United Healthcare Corp. 1,310,000
------------
4,381,425
------------
MANUFACTURING EQUIPMENT -- 2.16%
22,500 Ultratech Stepper, Inc.* 579,375
------------
RETAIL -- 11.69%
25,000 Albertsons, Inc. 821,875
200,000 K-Mart Corp.* 1,450,000
50,000 Limited, Inc. 868,750
------------
3,140,625
------------
</TABLE>
4
<PAGE>
December 31, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
GROWTH FUND (CONTINUED) EMERGING GROWTH FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Market Value
Shares (Note 1)
- ---------------------------------------------------------------------------
<S> <C>
COMMON STOCKS (CONTINUED)
SEMICONDUCTORS/COMPONENTS -- 8.91%
14,000 Micron Technology, Inc. $ 554,750
60,000 National Semiconductor Corp.* 1,335,000
20,000 Silicon Valley Group, Inc.* 505,000
-----------
2,394,750
-----------
TELECOMMUNICATIONS/EQUIPMENT -- 2.89%
20,000 Nokia Corp. (ADR) 777,500
-----------
TRANSPORTATION -- 6.25%
20,487 KLM Royal Dutch Airlines 722,167
30,500 Pittston Services Group 956,937
-----------
1,679,104
-----------
TOTAL COMMON STOCKS -- 95.38%
(COST $20,961,909) 25,623,042
-----------
WARRANTS -- 3.72%
125,000 Federated Department Stores, Inc.*
WTS C (Cost $734,513) 1,000,000
-----------
MUTUAL FUNDS -- 0.90%
242,321 Fund for Government Investors, Inc. (Cost $242,321) 242,321
-----------
TOTAL INVESTMENTS -- 100.00%
(COST $21,938,743) $26,865,363
===========
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market Value
Shares (Note 1)
- -----------------------------------------------------------
<S> <C>
COMMON STOCKS
AUTO--2.44%
45,000 Lo-Jack Corp.* $ 500,625
40,000 Sheldahl, Inc.* 725,000
-----------
1,225,625
-----------
COMPUTER SOFTWARE--3.57%
45,000 Dataworks Corp.* 568,125
30,000 Softkey International, Inc.* 693,750
57,000 Vmark Software, Inc.* 534,375
-----------
1,796,250
-----------
COMPUTER SOFTWARE INFORMATION
PROCESSING -- 7.63%
57,800 National Data Corp. 1,430,550
35,000 Shared Medical Systems Corp. 1,903,125
20,000 Transaction Network Services, Inc.* 500,000
-----------
3,833,675
-----------
COMMUNICATIONS PRODUCTS--9.36%
50,000 Applied Voice Technology, Inc.* 687,500
50,000 Boca Research, Inc.* 1,325,000
50,000 Madge Networks NV* 2,237,500
25,000 Netstar, Inc.* 456,250
-----------
4,706,250
-----------
ELECTRONICS--0.95%
25,000 Mylex Corp.* 478,125
-----------
FINANCIAL--0.25%
106,500 Search Capital Group, Inc.* 123,146
-----------
HEALTHCARE PRODUCTS--11.29%
24,000 Hanger Orthopedic Group, Inc.* 66,000
25,000 ICU Medical, Inc.* 425,000
70,000 I-STAT Corp.* 2,275,000
53,000 KV Pharmaceutical Co., Class A* 708,875
17,000 Lifequest Medical, Inc.* 46,750
20,000 Neoprobe Corp.* 322,500
45,000 Neurex Corp.* 410,625
10,000 Neurogen Corp.* 268,750
50,000 Protein Design Labs, Inc.* 1,156,250
-----------
5,679,750
-----------
</TABLE>
5
<PAGE>
December 31, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
EMERGING GROWTH FUND (CONTINUED) EMERGING GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market Value
Shares (Note 1)
- ----------------------------------------------------------
<S> <C>
COMMON STOCKS (CONTINUED)
HEALTHCARE SERVICES -- 4.68%
280,000 Unilab Corp.* $ 752,500
100,000 Universal Hospital Services, Inc.* 975,000
16,000 Visx, Inc.* 624,000
-----------
2,351,500
-----------
INSURANCE -- 0.86%
30,000 Titan Holdings, Inc. 431,250
-----------
LEISURE -- 2.58%
111,700 Ek Chor China Motorcycle Co., Ltd. 1,298,512
-----------
MANUFACTURING -- 4.47%
105,000 Simula, Inc.* 1,968,750
25,000 Speedfam International, Inc.* 281,250
-----------
2,250,000
-----------
MEDIA -- 11.45%
274,300 National Media Corp.* 5,760,300
-----------
MISCELLANEOUS -- 1.78%
25,000 Uniphase Corp.* 893,750
-----------
OIL AND GAS PRODUCTION & SERVICE -- 8.78%
150,000 Reading & Bates Corp.* 2,250,000
75,000 Weatherford Enterra, Inc.* 2,165,625
-----------
4,415,625
-----------
RETAIL -- 8.31%
300,000 Filenes Basement Corp.* 693,750
114,800 Intertan, Inc.* 832,300
153,000 Programmers Paradise, Inc.* 1,032,750
370,000 Score Board, Inc.* 1,618,750
-----------
4,177,550
-----------
SEMICONDUCTORS/COMPONENTS -- 5.83%
62,000 Actel Corp.* 666,500
27,500 Credence Systems Corp.* 629,063
50,000 LSI Logic Corp.* 1,637,500
-----------
2,933,063
-----------
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Market Value
Shares (Note 1)
- -------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 7.83%
15,000 Alpha Industries, Inc.* $ 211,875
30,000 AML Communications, Inc.* 315,000
25,000 Celeritek, Inc.* 265,625
40,000 Davox Corp.* 475,000
70,000 Hungarian Telephone & Cable Co.* 743,750
65,000 Metricom, Inc.* 885,625
38,000 Network Equipment Technology* 1,040,250
-----------
3,937,125
-----------
TRANSPORTATION -- 4.58%
116,000 World Airways, Inc.* 1,305,000
100,000 Worldcorp, Inc.* 1,000,000
-----------
2,305,000
-----------
TOTAL COMMON STOCKS -- 96.64%
(COST $42,041,324) 48,596,496
-----------
MUTUAL FUNDS -- 3.36%
1,691,708 Fund for Government Investors, Inc. (Cost $1,691,708) 1,691,708
-----------
TOTAL INVESTMENTS -- 100.00%
(COST $43,733,032) $50,288,204
===========
</TABLE>
6
<PAGE>
December 31, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
GOLD FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Market Value
Shares (Note 1)
- -------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS
METALS AND MINING -- 79.36%
25,000 Agnico Eagle Mines, LTD. $ 315,625
40,000 Amax Gold, Inc.* 290,000
12,000 Barrick Gold Corp. 316,500
35,000 Battle Mountain Gold Co. 293,125
25,000 Cambior Inc. 271,875
17,000 Coeur D'Alene Mines Corp. 291,125
30,000 Echo Bay Mines, LTD. 311,250
70,000 FMC Gold Co. 288,750
40,000 Glamis Gold , LTD. 250,000
30,000 Hemlo Gold Mines, Inc. 281,250
20,000 Homestake Mining Co. 312,500
40,000 Kinross Gold Corp.* 305,000
60,000 Miramar Mining Corp.* 292,500
7,000 Newmont Gold Co. 306,250
7,000 Newmont Mining Corp. 316,750
12,000 Placer Dome, Inc. 289,500
85,000 Royal Oak Mines, Inc.* 302,813
25,000 Santa Fe Pacific Gold Corp. 303,125
16,000 Stillwater Mining Co.* 308,000
45,000 TVX Gold, Inc.* 320,625
----------
TOTAL COMMON STOCKS -- 79.36%
(COST $5,757,029) 5,966,563
----------
MUTUAL FUNDS -- 20.64%
1,551,402 Fund for Government Investors, Inc. (Cost $1,551,402) 1,551,402
----------
TOTAL INVESTMENTS -- 100.00%
(COST $7,308,431) $7,517,965
==========
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
7
<PAGE>
December 31, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Securities at Value (Note 1,
see portfolios for cost in-
formation).................. $20,617,237 $26,865,363 $50,288,204 $7,517,965
Dividends Receivable......... 121,705 14,060 7,330 5,706
Interest Receivable.......... 1,318 6,787 11,114 4,213
Receivable for Securities
Sold........................ 916,357 1,900,971 -- 104,997
Receivable for Shares Pur-
chased...................... 195,764 79,453 122,195 17,006
----------- ----------- ----------- ----------
Total Assets................ 21,852,381 28,866,634 50,428,843 7,649,887
----------- ----------- ----------- ----------
LIABILITIES
Dividends Payable............ 59,946 -- 53,563 --
Investment Advisory Fee Pay-
able........................ 6,093 11,985 21,349 4,802
Administration Fee Payable... 12,186 23,970 42,698 6,860
Liability for Shares Re-
deemed...................... 178,594 2,118,092 1,281,982 1,632,094
Liability for Securities Pur-
chased...................... 177,120 -- 266,667 --
----------- ----------- ----------- ----------
Total Liabilities........... 433,939 2,154,047 1,666,259 1,643,756
----------- ----------- ----------- ----------
NET ASSETS.................... $21,418,442 $26,712,587 $48,762,584 $6,006,131
=========== =========== =========== ==========
Shares Outstanding............ 2,034,207 1,623,732 3,099,917 656,028
=========== =========== =========== ==========
Net Asset Value Per Share..... $10.53 $16.45 $15.73 $9.16
=========== =========== =========== ==========
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
For the Six Months Ended December 31, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest.................... $ 48,323 $ 34,153 $ 129,742 $ 18,152
Dividends................... 503,203 125,072 45,765 23,807
---------- ---------- --------- ---------
Total Investment Income..... 551,526 159,225 175,507 41,959
---------- ---------- --------- ---------
EXPENSES
Investment Advisory Fee
(Note 2)................... 31,162 60,619 139,941 26,131
Administrative Fee (Note
2)......................... 62,325 121,238 279,881 37,330
---------- ---------- --------- ---------
Total Expenses.............. 93,487 181,857 419,822 63,461
---------- ---------- --------- ---------
NET INVESTMENT INCOME
(LOSS)..................... 458,039 (22,632) (244,315) (21,502)
---------- ---------- --------- ---------
Net Realized Gain (Loss) on
Investments................ 338,976 933,898 1,069,454 (135,262)
Net Change in Unrealized
Appreciation (Depreciation)
of Investments............. 1,895,137 1,542,323 (134,464) (329,492)
---------- ---------- --------- ---------
NET GAIN (LOSS) ON INVEST-
MENTS...................... 2,234,113 2,476,221 934,990 (464,754)
---------- ---------- --------- ---------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS................. $2,692,152 $2,453,589 $ 690,675 $(486,256)
========== ========== ========= =========
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
UTILITY
INCOME FUND GROWTH FUND
- ---------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES
Net Investment Income
(Loss)................. $ 458,039 $ 310,889 $ (22,632) $ 18,604
Net Realized Gains
(Losses) on Investment
Transactions........... 338,976 (344,643) 933,898 256,659
Net Change in Unrealized
Appreciation
(Depreciation) of
Investments............ 1,895,137 375,805 1,542,323 620,171
----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ 2,692,152 342,051 2,453,589 895,434
DISTRIBUTIONS TO SHARE-
HOLDERS
From Net Investment
Income................. (459,010) (311,144) -- (18,530)
From Net Realized Gain
on Investments......... -- -- -- --
FROM SHARE TRANSACTIONS
(Note 4)............... 2,034,451 10,484,421 4,922,343 4,913,042
----------- ----------- ----------- -----------
Net Increase in Net
Assets................. 4,267,593 10,515,328 7,375,932 5,789,946
NET ASSETS -- Beginning
of Period.............. 17,150,849 9,116,957 19,336,655 9,992,632
----------- ----------- ----------- -----------
NET ASSETS -- End of Pe-
riod................... $21,418,442 $19,632,285 $26,712,587 $15,782,578
=========== =========== =========== ===========
- ---------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING
GROWTH FUND GOLD FUND
- --------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES
Net Investment Loss..... $ (244,315) $ (54,601) $ (21,502) $ (18,273)
Net Realized Gains
(Losses) on Investment
Transactions........... 1,069,454 87,802 (135,262) 35,362
Net Change in Unrealized
Appreciation
(Depreciation) of
Investments............ (134,464) 1,958,509 (329,492) (307,338)
----------- ----------- ---------- ----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ 690,675 1,991,710 (486,256) (290,249)
DISTRIBUTIONS TO SHARE-
HOLDERS
From Net Investment
Income................. -- -- -- --
From Net Realized Gain
on Investments......... (344,884) -- -- --
FROM SHARE TRANSACTIONS
(Note 4)............... 11,811,017 (201,262) (303,468) 137,955
----------- ----------- ---------- ----------
Net Increase (Decrease)
in Net Assets.......... 12,156,808 1,790,448 (789,724) (152,294)
NET ASSETS -- Beginning
of Period.............. 36,605,776 18,132,910 6,795,855 6,395,263
----------- ----------- ---------- ----------
NET ASSETS -- End of Pe-
riod................... $48,762,584 $19,923,358 $6,006,131 $6,242,969
=========== =========== ========== ==========
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
UTILITY
INCOME FUND
- --------------------------------------------------------------------------------
FOR THE SIX FOR THE FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, JUNE 30, JUNE 30,
1995 1995 1994 1993*
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period...... $ 9.24 $ 8.39 $10.82 $10.00
------- ------- ------- -------
Net Investment Income ..... 0.254 0.555 0.527 0.255
Net Realized and Unrealized
Gains (Losses) on
Securities................ 1.290 0.846 (2.421) 0.820
------- ------- ------- -------
Net Increase (Decrease) in
Net Asset Value Resulting
from Operations........... 1.544 1.401 (1.894) 1.075
Dividends to Shareholders.. (0.254) (0.551) (0.525) (0.255)
Distributions to
Shareholders from Net
Realized Capital Gains.... -- -- (0.011) --
------- ------- ------- -------
Net Increase (Decrease) in
Net Asset Value........... 1.29 0.85 (2.43) 0.82
------- ------- ------- -------
Net Asset Value -- End of
Period.................... $10.53 $ 9.24 $ 8.39 $10.82
======= ======= ======= =======
Total Investment ReturnB.... 16.90% 16.62% (18.18)% 9.98%
Ratios to Average Net
Assets:
Expenses................... 1.05%A 1.05% 1.05% 1.05%
Net Investment Income ..... 5.14%A 6.26% 5.21% 3.31%
Supplementary Data:
Portfolio Turnover Rate.... 31.24% 147.04% 26.13% 15.93%
Number of Shares
Outstanding at End of
Period
(000's omitted)........... 2,034 1,855 1,086 778
</TABLE>
--------
A Annualized.
B Total Investment Returns for periods of less than one year are not
annualized.
- --------------------------------------------------------------------------------
* From Commencement of Operations October 6, 1992.
See Notes to Financial Statements.
12
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH FUND
- --------------------------------------------------------------------------------
FOR THE SIX FOR THE FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, JUNE 30, JUNE 30,
1995 1995 1994 1993*
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period...... $14.64 $11.05 $10.63 $10.00
------- ------- ------- -------
Net Investment Income
(Loss).................... (0.015) 0.014 (0.021) 0.012
Net Realized and Unrealized
Gains on Securities....... 1.825 3.593 0.444 0.620
------- ------- ------- -------
Net Increase in Net Asset
Value Resulting from
Operations................ 1.810 3.607 0.423 0.632
Dividends to Shareholders.. -- (0.017) (0.003) (0.002)
Distributions to
Shareholders from Net
Realized Capital Gains.... -- -- -- --
------- ------- ------- -------
Net Increase in Net Asset
Value..................... 1.81 3.59 0.42 0.63
------- ------- ------- -------
Net Asset Value -- End of
Period.................... $16.45 $14.64 $11.05 $10.63
======= ======= ======= =======
Total Investment ReturnB.... 12.36 % 32.65 % 3.99 % 6.34%
Ratios to Average Net
Assets:
Expenses................... 1.50 %A 1.50 % 1.50 % 1.50%
Net Investment Income
(Loss).................... (0.19)%A 0.12 % (0.18)% 0.17%
Supplementary Data:
Portfolio Turnover Rate.... 41.33 % 70.89 % 119.03 % 21.13%
Number of Shares
Outstanding at End of
Period (000's omitted).... 1,624 1,321 904 298
</TABLE>
- --------
A Annualized.
B Total Investment Returns for periods of less than one year are not annualized.
- --------------------------------------------------------------------------------
*From Commencement of Operations October 6, 1992.
See Notes to Financial Statements.
13
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
FOR THE SIX FOR THE FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, JUNE 30, JUNE 30,
1995 1995 1994 1993*
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period...... $14.96 $10.41 $11.32 $10.00
------- ------- ------- -------
Net Investment Income
(Loss).................... (0.072) (0.075) (0.104) (0.050)
Net Realized and Unrealized
Gains (Losses) on
Securities................ 0.951 4.625 (0.686) 1.377
------- ------- ------- -------
Net Increase (Decrease) in
Net Asset Value Resulting
from Operations........... 0.879 4.550 (0.790) 1.327
Dividends to Shareholders.. -- -- -- --
Distributions to
Shareholders from Net
Realized Capital Gains.... (0.109) -- (0.120) (0.007)
------- ------- ------- -------
Net Increase (Decrease) in
Net Asset Value........... 0.77 4.55 (0.91) 1.32
------- ------- ------- -------
Net Asset Value -- End of
Period.................... $15.73 $14.96 $10.41 $11.32
======= ======= ======= =======
Total Investment ReturnB.... 5.88 % 43.71 % (7.31)% 13.35 %
Ratios to Average Net
Assets:
Expenses................... 1.50 %A 1.50 % 1.50 % 1.50 %
Net Investment Income
(Loss).................... (0.87)%A (0.61)% (0.85)% (0.63)%
Supplementary Data:
Portfolio Turnover Rate.... 62.12 % 96.11 % 128.13 % 67.90 %
Number of Shares
Outstanding at End of
Period
(000's omitted)........... 3,100 2,447 1,742 420
</TABLE>
--------
A Annualized.
B Total Investment Returns for periods of less than one year are not
annualized.
- --------------------------------------------------------------------------------
*From Commencement of Operations October 6, 1992.
See Notes to Financial Statements.
14
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GOLD FUND
- --------------------------------------------------------------------------------
FOR THE SIX FOR THE FOR THE
MONTHS ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, JUNE 30,
1995 1995 1994*
------------ ---------- ------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value -- Beginning of
Period........................... $ 9.89 $ 9.52 $10.00
------- ------- -------
Net Investment Income (Loss)...... (0.028) (0.047) (0.008)
Net Realized and Unrealized Gains
(Losses) on Securities........... (0.702) 0.417 (0.472)
------- ------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations....................... (0.730) 0.370 (0.480)
Dividends to Shareholders......... -- -- --
Distributions to Shareholders from
Net Realized Capital Gains....... -- -- --
------- ------- -------
Net Increase (Decrease) in Net
Asset Value...................... (0.73) 0.37 (0.48)
------- ------- -------
Net Asset Value -- End of Period.. $ 9.16 $ 9.89 $ 9.52
======= ======= =======
Total Investment ReturnB........... (7.38)% 3.89 % (4.80)%
Ratios to Average Net Assets:
Expenses.......................... 1.70 %A 1.70 % 1.68 %
Net Investment Income (Loss)...... (0.58)%A (0.51)% (0.25)%
Supplementary Data:
Portfolio Turnover Rate........... 38.76 % 51.23 % 22.85 %
Number of Shares Outstanding at
End of Period (000's omitted).... 656 687 672
</TABLE>
- --------
A Annualized.
B Total Investment Returns for periods of less than one year are not
annualized.
- --------------------------------------------------------------------------------
*From Commencement of Operations March 7, 1994.
See Notes to Financial Statements.
15
<PAGE>
December 31, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Cappiello-Rushmore Trust ("Trust") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a no-load,
open-end investment company and is authorized to issue an unlimited number of
shares. The Trust consists of four separate portfolios ("Funds"), each with a
different investment objective. The following is a summary of significant
accounting policies which the Funds follow:
(a) Listed securities are valued at the last sales price of the New York
Stock Exchange and other major exchanges. Over-the-Counter securities are
valued at the last sales price. If market quotations are not readily
available, the Board of Trustees will value the Funds' securities in good
faith. The trustees will periodically review this method of valuation and
recommend changes which may be necessary to assure that the Funds'
instruments are valued at fair value.
(b) Security transactions are recorded on the trade date (the date the
order to buy or sell is executed). Interest income is accrued on a daily
basis. Dividend income is recorded on the ex-dividend date. Realized gains
and losses from securities transactions are computed on an identified cost
basis.
(c) Dividends from net investment income are declared and paid annually in
the Growth, Emerging Growth and Gold Funds and quarterly in the Utility
Income Fund. Dividends are re-invested in additional shares unless
shareholders request payment in cash. Net capital gains, if any, are
distributed annually.
(d) For Federal income tax purposes, each Fund of the Trust is treated as a
separate corporation. Each Fund intends to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and
distribute all net investment income and realized capital gains to their
shareholders. If for some reason one or more Funds fails to qualify as a
regulated investment company, the Investment Adviser and Administrator will
indemnify the Fund. Therefore, no Federal income tax provision is required.
2. Investment Advisory and Administrative Services
Investment advisory services are provided by McCullough, Andrews and
Cappiello, Inc., ("Adviser"). Under an agreement with the Adviser, the Trust
pays a fee at the annual rate of 0.50% of the daily net assets of the Growth
and Emerging Growth Funds, 0.70% of the daily net assets of the Gold Fund and
0.35% of the daily net assets of the Utility Income Fund. Certain Trustees of
the Trust are affiliated with the Adviser.
The Trust has contracted with Money Management Associates ("Administrator")
to provide Administrative services to the Trust. Under the administrative
services agreement with the Administrator, the Trust pays a fee at the annual
rate of 1.00% of the daily net assets of the Growth, Emerging Growth and Gold
Funds, and .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.
3. Securities Transactions
For the period ended December 31, 1995, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Purchases...................... $7,197,059 $15,342,660 $43,175,821 $2,664,228
---------- ----------- ----------- ----------
Sales.......................... $4,999,962 $ 9,064,339 $30,370,988 $2,541,736
---------- ----------- ----------- ----------
</TABLE>
16
<PAGE>
December 31, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
4. Share Transactions
Transactions in shares and dollars of the Trust for the period ended December
31, 1995 were as follows:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
In Shares
Shares Sold............ 1,733,435 1,244,259 5,306,197 1,173,445
Shares Issued in
Reinvestment of
Dividends............. 34,642 -- 18,518 --
------------ ------------ ------------ ------------
1,768,077 1,244,259 5,324,715 1,173,445
Shares Redeemed........ (1,589,311) (941,432) (4,671,551) (1,204,631)
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Shares............. 178,766 302,827 653,164 (31,186)
============ ============ ============ ============
In Dollars
Shares Sold............ $ 17,225,638 $ 20,114,394 $ 88,073,655 $ 11,138,137
Shares Issued in
Reinvestment of
Dividends............. 354,025 -- 291,283 --
------------ ------------ ------------ ------------
17,579,663 20,114,394 88,364,938 11,138,137
Shares Redeemed........ (15,545,212) (15,192,051) (76,553,921) (11,441,605)
------------ ------------ ------------ ------------
Net Increase in Dol-
lars.................. $ 2,034,451 $ 4,922,343 $ 11,811,017 $ (303,468)
============ ============ ============ ============
</TABLE>
5. Net Unrealized Appreciation/Depreciation of Investments
Unrealized appreciation (depreciation) as of December 31, 1995, based on the
cost for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Gross Unrealized Appreci-
ation................... $ 2,543,618 $ 6,243,164 $11,888,216 $ 249,888
Gross Unrealized Depreci-
ation................... (57,020) (1,319,209) (5,704,423) (301,452)
----------- ----------- ----------- ----------
Net Unrealized
Appreciation............ $ 2,486,598 $ 4,923,955 $ 6,183,793 $ (51,564)
=========== =========== =========== ==========
Cost of Investments for
Federal Income Tax Pur-
poses................... $18,130,639 $21,941,407 $44,104,411 $7,569,529
=========== =========== =========== ==========
</TABLE>
17
<PAGE>
December 31, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
6. Net Assets
At December 31, 1995, net assets consisted of the following:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Paid-in Capital............ $20,223,952 $20,449,209 $41,368,084 $6,136,825
Undistributed Net
Investment Income (Loss).. 8,118 (22,632) (244,315) (21,502)
Accumulated Net Realized
Gain (Loss) on
Investments............... (1,337,506) 1,359,390 1,083,643 (318,726)
Net Unrealized Appreciation
on Investments............ 2,523,878 4,926,620 6,555,172 209,534
----------- ----------- ----------- ----------
Net Assets................. $21,418,442 $26,712,587 $48,762,584 $6,006,131
=========== =========== =========== ==========
</TABLE>
7. Federal Income Tax
Each Fund of the Trust has adopted Statement of Position 93-2; Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. Adoption of this
standard results in the reclassification to paid-in capital of permanent
differences between tax and financial reporting of net investment income and
realized gains/(losses). As of June 30, 1995, the effect of permanent
differences between tax and financial reporting of net investment losses as
shown below resulted in a reclassification of such losses to paid-in capital:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Reduction of paid-in
capital................ $-- $11,780 $279,593 $37,250
</TABLE>
At June 30, 1995, for Federal income tax purposes, the following Funds had
capital loss carryovers which may be applied against future net taxable
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
UTILITY EMERGING
EXPIRES JUNE 30, INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
---------------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
1998........................... $ -- $ -- $ -- $1,289,399
1999........................... -- -- 953,933 --
2000........................... -- -- -- 434,866
2001........................... -- 11,388 287,195 281,566
2002........................... 248,705 810,143 147,771 --
2003........................... 1,421,534 -- -- --
---------- -------- ---------- ----------
Total........................ $1,670,239 $821,531 $1,388,899 $2,005,831
========== ======== ========== ==========
</TABLE>
18
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
CAPPIELLO-
RUSHMORE
TRUST
UTILITY INCOME FUND
GROWTH FUND
EMERGING GROWTH FUND
GOLD FUND
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
DECEMBER 31, 1995
[LOGO OF CAPPIELLO RUSHMORE FUND APPEARS HERE]
[LOGO OF RECYCLED PAPER APPEARS HERE]
[LOGO OF SOY INK APPEARS HERE]
