<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEMIANNUAL REPORT, December 31, 1997
[LOGO] CAPPIELLO-RUSHMORE TRUST
4922 FAIRMONT AVENUE, BETHESDA, MD 20814
(800) 622-1386 (301) 657-1510
</TABLE>
- --------------------------------------------------------------------------------
February 19, 1998
Dear Fellow Investor:
The year 1997 was another good year for stocks, overall. The benchmark
Standard & Poor's 500 Index recorded a total return of more than 33%. As was the
case in 1996, last year's basis for the stock market rise was a continuation of
the trend to higher corporate profits, lower inflation and declining interest
rates. However, the rise in stock prices was not without considerable negatives
including concerns over the growing Asian crisis which culminated in a sharp
stock market drop in October.
The Cappiello-Rushmore Funds' investment performance in 1997 was as follows:
- --------------------------------------------------------------------------------
TOTAL RETURN 1997
DECEMBER 31, 1996 -- DECEMBER 31, 1997
<TABLE>
<S> <C>
Cappiello-Rushmore Growth Fund + 22.17%
Cappiello-Rushmore Emerging Growth Fund + 4.72%
Cappiello-Rushmore Utility Income Fund + 25.25%
Cappiello-Rushmore Gold Fund - 45.22%
*****************************************************************************
Standard & Poor's 500 Index + 33.36%
Philadelphia Exchange Gold & Silver Index - 36.46%
</TABLE>
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. YOUR RETURN AND PRINCIPAL WILL VARY AND YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL SHARES.
- --------------------------------------------------------------------------------
The Growth Fund rose more than 22% last year helped by the positive
performance of the financial stocks (28% of portfolio) as well as the technology
stocks (18%) and retailing (10%). Our largest stock positions were Franklin
Resources, Inc. (9%), Charles Schwab Corp. (9%) and Federated Department Stores,
Inc., "C" warrants (8%). As we have noted in previous communications, our
investment approach continues to be concentrated on companies in the
mid-to-large capitalization range where we believe earnings growth can be bought
at a lower price with lower risk than the very large Blue Chip companies that
comprise a large part of the weighted Standard & Poor's 500 stock average.
The Emerging Growth Fund was up over 4.7% last year. This investment
performance, while positive, reflected the volatility of the small
capitalization stock sector. Interestingly, through the first three quarters of
1997, small company stocks were excelling with the Fund up 27%. When the Asian
crisis broke, investors rushed back into the very large capitalization growth
stocks which are featured in the S&P 500 Index. There were a number of equity
sectors such as technology (21% of the portfolio), healthcare (17%), and oil and
offshore drilling (11%) that did well last year, but had negative returns in the
fourth quarter mirroring the heightened volatility of the overall stock market.
We are bullish on small cap growth stocks. Reasons for our bullishness for small
stocks include a slowdown in S&P 500 earnings growth which makes growth stock
earnings that much more attractive with many not as exposed to Asia as are
larger companies. Further, valuations are compelling on a relative basis. Small
cap stocks generally are selling at lower multiples of earnings with faster
growth rates. Interest rates that are at 15-year lows with lower inflation makes
for a P/E multiple expansion and, finally, investor sentiment toward the group
is negative and that's positive for savvy investors.
<PAGE>
The Utility Income Fund was up more than 25% on a total return basis
reflecting improving industry fundamentals as well as the overall decline in
interest rates during the year. Our focus continues to be achievement of higher
than average yield. Happily, in 1997, this was achieved accompanied with
significant capital appreciation. At the end of the year, the largest stock
positions were electric utilities, telephone, and natural gas stocks.
The Gold Fund's decline (down more than 45%) mirrored the substantial drop
in gold prices all during 1997. Among the reasons for the persistent weakness in
gold stocks and prices were: (1) the continued decline in inflation in most
industrialized countries, (2) a sensational financial scandal regarding a large
Canadian mining company's purported gold mine in Southeast Asia, and (3) the
announced gold sales by Central Banks. Additionally, the inability of gold
prices to respond positively to the Asian currency crisis weakened the
investment concept of gold as a hedge against financial uncertainties. While the
ever-increasing demand for jewelry remains a positive at current levels, gold
remains an undervalued asset for long-term investors.
Normally, the first month of the year is one of the best for stocks,
particularly small capitalization companies. Unfortunately the opening of the
1998 stock year seemed to bode ill for the rest of the year. (Legend has it that
as January goes -- "so goes the Dow") To begin with, the Asian crisis deepened
with most Southeast Asian currencies hitting new lows and the Indonesian and
South Korean stock markets worsened. Add to this the Presidential "intern"
scandal, and there seemed to be little good news as we entered the last trading
week of January. But what started out as a poor month ended on a bullish note of
optimism as the stock market in the U.S. and in most of Europe rallied strongly
led by four sectors: drugs, oils, banks and high technology.
It is still uncertain how much effect the Asian crisis will have on the U.S.
and European economies. Undoubtedly, we will see a rise in Asian exports to the
U.S. as these nations see this as a means of getting dollars. This will put
pressure on U.S. and European companies pricing margins but mainly in the
manufacturing area. This could lead to some price cutting or, at the very least,
no price increases. However, the main inflationary pressures in the U.S. are
wage pressures in the service sector (the bulk of the U.S. economy) and not
manufacturing. In summary, some deflation will be imported by Asian but a part
of this will be offset by higher service workers' wage costs.
Overall, we believe 1998 will feature an economic slowdown caused by weak
Asian economies which could keep interest rates at current levels or below.
However, we expect enough economic expansion in the U.S. to moderate the Asian
"effect". Except for Asia, there is a very positive environment in the U.S. for
1998, with continued low interest rates, full employment, and corporate
profitability generally above expectations. At year-end, the U.S. market was
selling at 19 times analysts expectations of 1998 earnings for the S&P 500.
Given the decline in interest rates, a higher price-earnings ratio is probably
justified, but there is no room for disappointments.
Accordingly, we do not expect that the remarkable gains of the last three
years to continue in 1998. Public pension plans have equity ratios that are
historically high. Private funds are high in their equity allocations as well,
although not as high as in 1972. A correction of more than 10% is possible in
the popular averages, however a major decline in asset values is not
anticipated. The dollar continues to be strong along with the economy, even with
interest rates remaining at low levels.
In summary, we look for a volatile year, with possibilities for good returns
in individual stocks where earnings surprise on the upside, and brutal declines
for issues which don't meet earnings per share expectations. Individual issues
and the asset mix will have a bearing on how the Cappiello-Rushmore portfolios
performs relative to the "market". As always, we continue to seek out companies
that offer the promise of long-term capital growth without exposing the assets
to shocks on the downside.
[SIGNATURE]
Frank A. Cappiello
Chairman
Cappiello-Rushmore Trust
2
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- ---------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)
UTILITY INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 65.3%
GAS & ELECTRIC -- 46.9%
15,000 Allegheny Energy, Inc. $ 487,500
11,000 Ameren Corp. 475,750
14,000 CMS Energy Corp. 616,875
14,000 Interstate Power Co. 524,125
25,000 Long Island Lighting Co. 753,125
10,000 New Century Energies 479,375
10,000 Peoples Energy Corp. 393,750
18,000 Potomac Electric Power Co. 464,625
22,000 Southern Co. 569,250
12,000 Texas Utilities 565,250
17,000 TNP Enterprises, Inc. 498,750
15,000 Unicom Corp. 461,250
15,000 United Illuminating Co. 689,063
20,000 Washington Water Power Co. 486,250
-------------
7,464,938
-------------
NATURAL GAS DISTRIBUTION -- 3.9%
20,000 Washington Gas Light Co. 618,750
-------------
REAL ESTATE INVESTMENT TRUSTS -- 4.2%
71,400 Crown American Realty Trust 664,913
-------------
TELEPHONE -- 10.4%
10,000 ALLTEL Corp. 410,625
7,000 Bell Atlantic Corp. 637,000
12,000 Southern New England Telecom 603,750
-------------
1,651,375
-------------
TOTAL COMMON STOCKS
(COST $7,608,358) 10,399,976
-------------
CONVERTIBLE PREFERRED STOCKS -- 1.7%
5,000 Sea Containers, Ltd. Conv. Pfd.
$4.00 (Cost $222,400) 278,750
-------------
MONEY MARKET FUNDS -- 33.0%
5,253,488 Fund for Government Investors
(Cost $5,253,488) 5,253,488
-------------
TOTAL INVESTMENTS -- 100.0%
(COST $13,084,246) $ 15,932,214
-------------
-------------
</TABLE>
GROWTH FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 88.3%
AIRCRAFT -- 1.2%
6,000 Boeing Co. $ 293,625
------------
BEVERAGES -- SOFT DRINKS -- 4.6%
17,500 Coca-Cola Co. 1,165,938
------------
CHEMICAL -- 1.2%
5,000 Du Pont E I De Nemours 300,313
------------
COMPUTER AND BUSINESS
EQUIPMENT -- 9.3%
22,000 Compaq Computer Corp. 1,241,625
3,000 International Business Machines 313,688
20,000 Sun Microsystems, Inc.* 797,500
------------
2,352,813
------------
COMPUTER SOFTWARE INFORMATION
PROCESSING -- 9.0%
29,600 Reynolds and Reynolds Co. 545,750
26,000 Shared Medical Systems Corp. 1,716,000
------------
2,261,750
------------
CONSUMER ELECTRONICS -- 1.4%
15,000 VLSI Technology, Inc.* 354,375
------------
CONTAINERS AND PACKAGING -- 2.0%
8,000 Sealed Air Corp.* 494,000
------------
DIVERSIFIED ELECTRONICS -- 9.7%
20,000 General Motors Corp. Class H 738,750
165,000 Gulf Canada Resources, Ltd.* 1,155,000
11,248 Raytheon Class A 554,667
------------
2,448,417
------------
FINANCIAL -- 27.9%
12,800 American Express Co. 1,142,400
52,500 Charles Schwab Corp. 2,201,719
26,500 Franklin Resources, Inc. 2,303,844
10,000 SLM Holding Corp. 1,391,250
------------
7,039,213
------------
</TABLE>
3
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- ---------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997 (CONTINUED)
(UNAUDITED)
GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MERCHANDISING/RETAIL -- 2.2%
75,000 National Media Corp.* $ 243,750
8,000 Wal Mart Stores, Inc. 315,500
-------------
559,250
-------------
OIL AND GAS -- 3.6%
22,000 Nuevo Energy Co.* 896,500
-------------
OIL AND GAS SERVICES -- 5.4%
64,000 Varco International, Inc.* 1,372,000
-------------
PHARMACEUTICAL -- 1.3%
3,000 Merck & Company, Inc. 318,750
-------------
SEMICONDUCTORS/COMPONENTS -- 3.3%
31,700 National Semiconductor Corp.* 822,219
-------------
TRANSPORTATION -- 6.3%
17,395 KLM Royal Dutch Airlines 656,660
35,250 Pittston Burlington Group 925,311
-------------
1,581,971
-------------
TOTAL COMMON STOCKS
(COST $12,453,956) 22,261,134
-------------
WARRANTS -- 7.6%
95,000 Federated Department Stores,
Inc. WTS C* (Cost $596,793) 1,917,813
-------------
MONEY MARKET FUNDS -- 4.1%
1,036,382 Fund for Government Investors
(Cost $1,036,382) 1,036,382
-------------
TOTAL INVESTMENTS -- 100.0%
(COST $14,087,131) $ 25,215,329
-------------
-------------
</TABLE>
EMERGING GROWTH FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 92.8%
COMPUTER SOFTWARE INFORMATION
PROCESSING -- 0.9%
7,500 Remec, Inc.* $ 168,750
------------
ELECTRONICS -- 2.1%
5,991 California Micro Devices Corp.* 32,202
25,000 Detection Systems, Inc.* 348,438
------------
380,640
------------
FOOD PROCESSING -- 1.9%
25,000 Authentic Specialty Food, Inc.* 340,625
------------
HEALTHCARE PRODUCTS -- 13.6%
60,000 Interferon Science, Inc.* 521,250
25,000 I-STAT Corp.* 395,313
59,000 KV Pharmaceutical Co., Class A* 1,224,250
30,000 Nexstar Pharmaceuticals* 341,250
------------
2,482,063
------------
HEALTHCARE SERVICES -- 3.8%
20,000 Pharmacyclics, Inc.* 512,500
10,000 Zonagen, Inc.* 181,875
------------
694,375
------------
HEALTHCARE SOFTWARE INFORMATION
PROCESSING -- 6.9%
20,000 General Scanning, Inc.* 345,000
14,000 Shared Medical Systems Corp. 924,000
------------
1,269,000
------------
INFORMATION PROCESSING -- 4.0%
20,000 National Data Corp. 722,500
------------
LEASING -- 2.3%
17,500 Mc Grath Rentcorp 428,750
------------
LODGING -- 3.1%
65,000 Candlewood Hotel Co., Inc.* 568,750
------------
</TABLE>
4
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- ---------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997 (CONTINUED)
(UNAUDITED)
EMERGING GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MERCHANDISING/RETAIL -- 23.5%
86,000 Braun Fashions Corp.* $ 892,250
40,000 Circuit City Carmax Group* 360,000
50,000 Foodmaker, Inc.* 753,125
20,000 Linens N Things, Inc.* 872,500
168,900 National Media Corp.* 548,924
55,000 Paul Harris Stores, Inc.* 553,437
150,000 Service Merchandise, Inc.* 318,750
-------------
4,298,986
-------------
OFFSHORE DRILLING -- 2.2%
75,000 Grey Wolf, Inc.* 403,125
-------------
OIL AND GAS SERVICES -- 9.2%
40,000 Reading and Bates Corp.* 1,675,000
-------------
SEMICONDUCTORS/COMPONENTS -- 1.7%
25,000 Align Rite International, Inc.* 318,750
-------------
SERVICE -- 5.8%
85,000 Forensic Technologies
International Corp.* 1,062,500
-------------
TELECOMMUNICATIONS -- 5.5%
20,000 Celeritek, Inc.* 280,000
30,000 World Access, Inc.* 716,250
-------------
996,250
-------------
TRANSPORTATION -- 6.2%
25,000 Hub Group, Inc. Class A* 743,751
15,000 Pittston Burlington Group 393,750
-------------
1,137,501
-------------
TOTAL COMMON STOCKS
(COST $14,407,645) 16,947,565
-------------
WARRANTS -- 5.1%
65,000 Barringer Technologies, Inc.
WTS* (Cost $715,630) 934,375
-------------
MONEY MARKET FUNDS -- 2.1%
382,580 Fund for Government Investors
(Cost $382,580) 382,580
-------------
TOTAL INVESTMENTS -- 100.0%
(COST $15,505,855) $ 18,264,520
-------------
-------------
</TABLE>
GOLD FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 81.8%
METALS AND MINING
UNITED STATES -- 47.8%
3,500 Alumax, Inc. $ 119,000
30,000 Amax Gold, Inc.* 69,375
35,000 Battle Mountain Gold Co. 205,625
25,000 Crown Resources Corp. 104,688
9,000 Newmont Mining Corp. 264,375
8,000 RMI Titanium Co.* 160,000
15,500 Stillwater Mining Co.* 259,625
25,000 TVX Gold, Inc.* 84,375
------------
1,267,063
------------
CANADA -- 33.9%
12,000 Aber Resources, Ltd.* 123,000
7,000 Agnico Eagle Mines, Ltd. 38,063
10,106 Ashanti Goldfields, Ltd. 75,795
9,000 Barrick Gold Corp. 167,625
7,000 Cambior, Inc. 41,125
28,000 Golden Star Resources, Ltd.* 99,750
5,500 Lihir Gold, Ltd.* 116,875
60,000 Miramar Mining Corp.* 114,378
9,500 Placer Dome, Inc. 120,530
200,000 Rea Gold Corp.* 2,000
------------
899,141
------------
TOTAL COMMON STOCKS
(COST $3,739,939) 2,166,204
------------
MONEY MARKET FUNDS -- 18.2%
483,271 Fund for Government Investors
(Cost $483,271) 483,271
------------
TOTAL INVESTMENTS -- 100.0%
(COST $4,223,210) $ 2,649,475
------------
------------
- ------------------------
*NON-INCOME PRODUCING
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- ---------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
<S> <C> <C> <C> <C>
ASSETS
Securities at Cost........ $13,084,246 $14,087,131 $15,505,855 $4,223,210
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Securities at Value (Note
1)...................... $15,932,214 $25,215,329 $18,264,520 $2,649,475
Receivable for Securities
Sold.................... -- 1,348,781 157,769 16,911
Receivable for Shares
Sold.................... 152,807 16,912 273 --
Dividends Receivable...... 33,925 16,770 2,940 --
Interest Receivable....... 8,203 5,862 1,577 1,152
----------- ----------- ----------- -----------
Total Assets............ 16,127,149 26,603,654 18,427,079 2,667,538
----------- ----------- ----------- -----------
LIABILITIES
Investment Advisory Fee
Payable................. 3,163 10,819 7,835 1,403
Administration Fee
Payable................. 16,075 71,739 62,589 7,905
Payable for Securities
Purchased............... 1,350,897 1,540,000 -- --
Liability for Shares
Redeemed................ 485,799 133,403 128,456 239,606
Other Fees Payable........ -- -- 164 --
Dividends Payable......... 20,168 -- -- --
----------- ----------- ----------- -----------
Total Liabilities....... 1,876,102 1,755,961 199,044 248,914
----------- ----------- ----------- -----------
NET ASSETS.................. $14,251,047 $24,847,693 $18,228,035 $2,418,624
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SHARES OUTSTANDING.......... 1,139,650 1,192,746 1,302,475 515,186
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET ASSET VALUE PER SHARE... $12.50 $20.83 $13.99 $4.70
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- ---------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest..................... $ 17,400 $ 43,153 $ 45,054 $ 12,680
Dividends.................... 233,591 72,925 17,679 4,679
------------- ------------- ------------- -----------
Total Investment Income.... 250,991 116,078 62,733 17,359
------------- ------------- ------------- -----------
EXPENSES
Investment Advisory Fee (Note
2)......................... 15,950 71,536 59,421 11,827
Administrative Fee (Note
2)......................... 31,901 143,071 118,842 16,895
Other Fees................... 84 -- 460 42
------------- ------------- ------------- -----------
Total Expenses............. 47,935 214,607 178,723 28,764
------------- ------------- ------------- -----------
NET INVESTMENT INCOME (LOSS)... 203,056 (98,529) (115,990) (11,405)
------------- ------------- ------------- -----------
Net Realized Gain (Loss) on
Investment Transactions...... 66,943 198,406 2,080,432 (315,745)
Net Change in Unrealized
Appreciation/ Depreciation of
Investments.................. 1,702,600 2,246,005 (2,127,974) (860,085)
------------- ------------- ------------- -----------
NET GAIN (LOSS) ON
INVESTMENTS.................. 1,769,543 2,444,411 (47,542) (1,175,830)
------------- ------------- ------------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS................... $1,972,599 $2,345,882 $(163,532) ($1,187,235)
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
UTILITY
INCOME FUND GROWTH FUND
<S> <C> <C> <C> <C>
FOR THE SIX FOR THE SIX
MONTHS MONTHS
ENDED FOR THE ENDED FOR THE
DECEMBER YEAR ENDED DECEMBER YEAR ENDED
31, 1997 JUNE 30, 31, 1997 JUNE 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------- ----------- ----------- -----------
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss).......... $ 203,056 $ 532,578 $ (98,529 ) $ (120,259)
Net Realized Gain (Loss) on Investment
Transactions........................ 66,943 462,173 198,406 (90,376)
Net Change in Unrealized Appreciation/
Depreciation of Investments......... 1,702,600 (763,657 ) 2,246,005 2,092,216
----------- ----------- ----------- -----------
Net Increase in Net Assets Resulting
from Operations................... 1,972,599 231,094 2,345,882 1,881,581
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income............ (204,258 ) (540,376 ) -- --
From Net Realized Gain on
Investments......................... -- -- -- (890,035)
----------- ----------- ----------- -----------
Total Distributions to
Shareholders...................... (204,258 ) (540,376 ) -- (890,035)
----------- ----------- ----------- -----------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares..... 9,830,595 2,791,305 14,264,025 24,857,946
Reinvestment of Distributions......... 151,439 429,181 -- 862,676
Cost of Shares Redeemed............... (6,305,339 ) (9,211,322 ) (16,661,588) (33,589,710)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net
Assets Resulting from Share
Transactions...................... 3,676,695 (5,990,836 ) (2,397,563 ) (7,869,088)
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ 5,445,036 (6,300,118 ) (51,681 ) (6,877,542)
NET ASSETS -- Beginning of Period....... 8,806,011 15,106,129 24,899,374 31,776,916
----------- ----------- ----------- -----------
NET ASSETS -- End of Period............. $14,251,047 $8,806,011 $24,847,693 $24,899,374
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SHARES
Sold.................................. 848,637 272,300 660,394 1,435,617
Issued in Reinvestment of
Distributions....................... 13,073 42,219 -- 50,332
Redeemed.............................. (568,782 ) (892,574 ) (776,523 ) (1,955,558)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Shares... 292,928 (578,055 ) (116,129 ) (469,609)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING
GROWTH FUND GOLD FUND
<S> <C> <C> <C> <C>
FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED
DECEMBER 31, FOR THE YEAR DECEMBER 31, FOR THE YEAR
1997 ENDED JUNE 30, 1997 ENDED JUNE 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
-------------- -------------- -------------- --------------
FROM INVESTMENT ACTIVITIES
Net Investment Loss....................................... $ (115,990 ) $ (363,496) $ (11,405 ) $ (37,734)
Net Realized Gain (Loss) on Investment Transactions....... 2,080,432 (650,708) (315,745 ) (527,830)
Net Change in Unrealized Depreciation of Investments...... (2,127,974 ) (414,690) (860,085 ) (1,066,830)
-------------- -------------- -------------- --------------
Net Decrease in Net Assets Resulting from Operations.... (163,532 ) (1,428,894) (1,187,235 ) (1,632,394)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Realized Gain on Investments..................... -- (5,065,773) -- --
-------------- -------------- -------------- --------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares......................... 25,465,430 61,065,491 9,858,343 30,042,821
Reinvestment of Distributions............................. -- 4,754,104 -- --
Cost of Shares Redeemed................................... (27,805,692 ) (83,578,594) (9,661,028 ) (31,124,263)
-------------- -------------- -------------- --------------
Net Increase (Decrease) in Net Assets Resulting from
Share Transactions.................................... (2,340,262 ) (17,758,999) 197,315 (1,081,442)
-------------- -------------- -------------- --------------
TOTAL DECREASE IN NET ASSETS............................ (2,503,794 ) (24,253,666) (989,920 ) (2,713,836)
NET ASSETS -- Beginning of Period........................... 20,731,829 44,985,495 3,408,544 6,122,380
-------------- -------------- -------------- --------------
NET ASSETS -- End of Period................................. $18,228,035 $20,731,829 $2,418,624 $ 3,408,544
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
SHARES
Sold...................................................... 1,570,850 4,123,530 1,506,773 3,355,585
Issued in Reinvestment of Distributions................... -- 359,071 -- --
Redeemed.................................................. (1,765,907 ) (5,632,148) (1,476,978 ) (3,486,619)
-------------- -------------- -------------- --------------
Net Increase (Decrease) in Shares....................... (195,057 ) (1,149,547) 29,795 (131,034)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
UTILITY INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
FOR THE SIX
MONTHS ENDED FOR THE
DECEMBER 31, FOR THE YEARS ENDED JUNE 30, PERIOD ENDED
1997 ------------------------------------------------- JUNE 30,
(UNAUDITED) 1997 1996 1995 1994 1993*
------------ ---------- ---------- ---------- ---------- ------------
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period................................ $10.40 $10.60 $9.24 $8.39 $10.82 $10.00
------------ ---------- ---------- ---------- ---------- ------------
Income from Investment Operations:
Net Investment Income................. 0.224 0.532 0.489 0.555 0.527 0.255
Net Realized and Unrealized Gain
(Loss) on Securities................ 2.102 (0.196) 1.391 0.846 (2.421) 0.820
------------ ---------- ---------- ---------- ---------- ------------
Total from Investment Operations.... 2.326 0.336 1.880 1.401 (1.894) 1.075
------------ ---------- ---------- ---------- ---------- ------------
Distributions to Shareholders:
From Net Investment Income............ (0.226) (0.536) (0.520) (0.551) (0.525) (0.255)
From Net Realized Capital Gain........ -- -- -- -- (0.011) --
------------ ---------- ---------- ---------- ---------- ------------
Total Distributions to
Shareholders...................... (0.226) (0.536) (0.520) (0.551) (0.536) (0.255)
------------ ---------- ---------- ---------- ---------- ------------
Net Increase (Decrease) in Net Asset
Value................................. 2.10 (0.20) 1.36 0.85 (2.43) 0.82
------------ ---------- ---------- ---------- ---------- ------------
Net Asset Value -- End of Period........ $12.50 $10.40 $10.60 $9.24 $8.39 $10.82
------------ ---------- ---------- ---------- ---------- ------------
------------ ---------- ---------- ---------- ---------- ------------
TOTAL INVESTMENT RETURN................. 22.56%(A) 3.39% 20.60% 16.62% (18.18)% 9.98%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 1.05%(B) 1.05% 1.05% 1.05% 1.05% 1.05%(B)
Net Investment Income................. 4.46%(B) 4.88% 4.82% 6.26% 5.21% 3.31%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 10.19% 17.33% 45.11% 147.04% 26.13% 15.93%
Net Assets at End of Period (000's
omitted)............................ $14,251 $8,806 $15,106 $17,151 $9,117 $8,415
Number of Shares Outstanding at End of
Period (000's omitted).............. 1,140 847 1,425 1,855 1,086 778
Average Commission Rate Paid(C)....... $0.0500 $0.0496 -- -- -- --
</TABLE>
------------------------------------------------------
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commissions are charged.
*FROM COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH FUND
<S> <C> <C> <C> <C> <C> <C>
FOR THE SIX
MONTHS ENDED FOR THE
DECEMBER 31, FOR THE YEARS ENDED JUNE 30, PERIOD ENDED
1997 ------------------------------------------------- JUNE 30,
(UNAUDITED) 1997 1996 1995 1994 1993*
------------ ---------- ---------- ---------- ---------- ------------
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $19.02 $17.87 $14.64 $11.05 $10.63 $10.00
------------ ---------- ---------- ---------- ---------- ------------
Income from Investment Operations:
Net Investment Income (Loss)........ (0.083) (0.092) (0.069) 0.014 (0.021) 0.012
Net Realized and Unrealized Gain on
Securities........................ 1.893 1.831 3.299 3.593 0.444 0.620
------------ ---------- ---------- ---------- ---------- ------------
Total from Investment
Operations...................... 1.810 1.739 3.230 3.607 0.423 0.632
------------ ---------- ---------- ---------- ---------- ------------
Distributions to Shareholders:
From Net Investment Income.......... -- -- -- (0.017) (0.003) (0.002)
From Net Realized Capital Gain...... -- (0.589) -- -- -- --
------------ ---------- ---------- ---------- ---------- ------------
Total Distributions to
Shareholders.................... -- (0.589) -- (0.017) (0.003) (0.002)
------------ ---------- ---------- ---------- ---------- ------------
Net Increase in Net Asset Value....... 1.81 1.15 3.23 3.59 0.42 0.63
------------ ---------- ---------- ---------- ---------- ------------
Net Asset Value -- End of Period...... $20.83 $19.02 $17.87 $14.64 $11.05 $10.63
------------ ---------- ---------- ---------- ---------- ------------
------------ ---------- ---------- ---------- ---------- ------------
TOTAL INVESTMENT RETURN................. 9.52%(A) 10.10% 22.06% 32.65% 3.99% 6.34%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 1.50%(B) 1.50% 1.50% 1.50% 1.50% 1.50%(B)
Net Investment Income (Loss).......... (0.69)%(B) (0.46)% (0.41)% 0.12% (0.18)% 0.17%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 20.83% 41.93% 74.50% 70.89% 119.03% 21.13%
Net Assets at End of Period (000's
omitted)............................ $24,848 $24,899 $31,777 $19,337 $9,993 $3,165
Number of Shares Outstanding at End of
Period (000's omitted).............. 1,193 1,309 1,778 1,321 904 298
Average Commission Rate Paid(C)....... $0.0436 $0.0453 -- -- -- --
</TABLE>
------------------------------------------------------
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commissions are charged.
*FROM COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING GROWTH FUND
<S> <C> <C> <C> <C> <C> <C>
FOR THE SIX
MONTHS ENDED FOR THE
DECEMBER 31, FOR THE YEARS ENDED JUNE 30, PERIOD ENDED
1997 ------------------------------------------------- JUNE 30,
(UNAUDITED) 1997 1996 1995 1994 1993*
------------ ---------- ---------- ---------- ---------- ------------
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $13.84 $16.99 $14.96 $10.41 $11.32 $10.00
------------ ---------- ---------- ---------- ---------- ------------
Income from Investment Operations:
Net Investment Loss................. (0.089) (0.242) (0.161) (0.075) (0.104) (0.050)
Net Realized and Unrealized Gain
(Loss) on Securities.............. 0.239 (0.243) 2.300 4.625 (0.686) 1.377
------------ ---------- ---------- ---------- ---------- ------------
Total from Investment
Operations...................... 0.150 (0.485) 2.139 4.550 (0.790) 1.327
------------ ---------- ---------- ---------- ---------- ------------
Distributions to Shareholders:
From Net Realized Capital Gain...... -- (2.665) (0.109) -- (0.120) (0.007)
------------ ---------- ---------- ---------- ---------- ------------
Net Increase (Decrease) in Net Asset
Value............................... 0.15 (3.15) 2.03 4.55 (0.91) 1.32
------------ ---------- ---------- ---------- ---------- ------------
Net Asset Value -- End of Period...... $13.99 $13.84 $16.99 $14.96 $10.41 $11.32
------------ ---------- ---------- ---------- ---------- ------------
------------ ---------- ---------- ---------- ---------- ------------
TOTAL INVESTMENT RETURN................. 1.08%(A) (2.15)% 14.36% 43.71% (7.31)% 13.35%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 1.50%(B) 1.50% 1.50% 1.50% 1.50% 1.50%(B)
Net Investment Loss................... (0.98)%(B) (1.20)% (0.98)% (0.61)% (0.85)% (0.63)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 61.20% 66.16% 121.22% 96.11% 128.13% 67.90%
Net Assets at End of Period (000's
omitted)............................ $18,228 $20,732 $44,985 $36,606 $18,133 $4,750
Number of Shares Outstanding at End of
Period (000's omitted).............. 1,302 1,498 2,647 2,447 1,742 420
Average Commission Rate Paid(C)....... $0.0400 $0.0382 -- -- -- --
</TABLE>
------------------------------------------------------
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commissions are charged.
*FROM COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GOLD FUND
<S> <C> <C> <C> <C> <C>
FOR THE SIX
MONTHS ENDED FOR THE
DECEMBER 31, FOR THE YEARS ENDED JUNE 30, PERIOD ENDED
1997 ------------------------------------ JUNE 30,
(UNAUDITED) 1997 1996 1995 1994*
------------ ---------- ---------- ---------- ------------
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $7.02 $9.93 $9.89 $9.52 $10.00
------------ ---------- ---------- ---------- ------------
Income from Investment Operations:
Net Investment Loss................. (0.022) (0.078) (0.060) (0.047) (0.008)
Net Realized and Unrealized Gain
(Loss) on Securities.............. (2.298) (2.832) 0.100 0.417 (0.472)
------------ ---------- ---------- ---------- ------------
Total from Investment
Operations...................... (2.320) (2.910) 0.040 0.370 (0.480)
------------ ---------- ---------- ---------- ------------
Distributions to Shareholders:
Total Distributions to
Shareholders.................... -- -- -- -- --
------------ ---------- ---------- ---------- ------------
Net Increase (Decrease) in Net Asset
Value............................... (2.32) (2.91) 0.04 0.37 (0.48)
------------ ---------- ---------- ---------- ------------
Net Asset Value -- End of Period...... $4.70 $7.02 $9.93 $9.89 $9.52
------------ ---------- ---------- ---------- ------------
------------ ---------- ---------- ---------- ------------
TOTAL INVESTMENT RETURN................. (33.05)%(A) (29.31)% 0.40% 3.89% (4.80)%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 1.70%(B) 1.70% 1.70% 1.70% 1.68%(B)
Net Investment Loss................... (0.68)%(B) (0.76)% (0.59)% (0.51)% (0.25)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 25.15% 108.47% 59.06% 51.23% 22.85%
Net Assets at End of Period (000's
omitted)............................ $2,419 $3,409 $6,122 $6,796 $6,395
Number of Shares Outstanding at End of
Period (000's omitted).............. 515 485 616 687 672
Average Commission Rate Paid(C)....... $0.0476 $0.0477 -- -- --
</TABLE>
-----------------------------------------------------------
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commissions are charged.
*FROM COMMENCEMENT OF OPERATIONS MARCH 7, 1994
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- ---------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
1. Significant Accounting Policies
Cappiello-Rushmore Trust (the "Trust") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a no-load,
open-end investment company and is authorized to issue an unlimited number of
shares. The Trust consists of four separate portfolios (the "Funds"), each with
a different investment objective. The financial statements have been prepared in
conformity with generally accepted accounting principles which permit management
to make certain estimates and assumptions at the date of the financial
statements. The following is a summary of significant accounting policies which
the Funds follow:
(a) Listed securities are valued at the last sales price of the New York
Stock Exchange and other major exchanges. Over-the-Counter securities are
valued at the last sales price. If market quotations are not readily
available, the Board of Trustees will value the Funds' securities in good
faith. The trustees will periodically review this method of valuation and
recommend changes which may be necessary to assure that the Funds' instruments
are valued at fair value.
(b) Security transactions are recorded on the trade date (the date the
order to buy or sell is executed). Interest income is accrued on a daily
basis. Dividend income is recorded on the ex-dividend date. Realized gain and
loss from investment 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, if any, and net realized capital gain to
their shareholders. Therefore, no Federal income tax provision is required.
2. Investment Advisory Fees and Other Transactions with Affiliates
Investment advisory services are provided by McCullough, Andrews and
Cappiello, Inc., (the "Adviser"). Under an agreement with the Adviser, the Trust
pays a fee at the annual rate of 0.50% of the daily net assets of the Growth and
Emerging Growth Funds, 0.70% of the daily net assets of the Gold Fund and 0.35%
of the daily net assets of the Utility Income Fund. Certain Officers and
Trustees of the Trust are affiliated with the Adviser.
The Trust has contracted with Money Management Associates (the
"Administrator") to provide Administrative services to the Trust. Under the
administrative services agreement with the Administrator, the Trust pays a fee
at the annual rate of 1.00% of the daily net assets of the Growth, Emerging
Growth and Gold Funds, and 0.70% of the daily net assets of the Utility Income
Fund. Certain Officers and Trustees of the Trust are affiliated with the
Administrator.
Certain of these administrative services are provided by Rushmore Trust and
Savings, FSB ("Rushmore Trust"), a majority-owned subsidiary of the
Administrator, under a subcontractual agreement with the Administrator. These
services include transfer agency functions, dividend disbursing and other
shareholder services and custody of the Trust's assets.
Each fund of the Trust invests excess cash in Fund for Government Investors,
a money market mutual fund. Certain Officers and Trustees of Fund for Government
Investors are affiliated with the Trust.
14
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- ---------------------------------------------------------
3. Securities Transactions
For the six months ended December 31, 1997, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Purchases.............................................. $ 1,757,871 $ 5,410,399 $13,077,252 $ 868,525
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
Sales.................................................. $ 875,615 $ 7,210,344 $14,892,729 $ 743,865
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
</TABLE>
4. Net Unrealized Appreciation/Depreciation of Investments
Unrealized appreciation (depreciation) as of December 31, 1997, based on the
cost for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Gross Unrealized Appreciation.......................... $ 2,818,368 $11,383,210 $ 5,005,650 $ 28,655
Gross Unrealized Depreciation.......................... (1,425) (255,012) (2,247,879) (1,689,244)
------------- ------------- ------------- -----------
Net Unrealized Appreciation (Depreciation)............. $ 2,816,943 $11,128,198 $ 2,757,771 $(1,660,589)
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
Cost of Investments for Federal Income Tax Purposes.... $13,115,271 $14,087,131 $15,506,749 $ 4,310,064
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
</TABLE>
5. Net Assets
At December 31, 1997, net assets consisted of the following:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Paid-in-Capital........................................ $11,521,740 $13,712,657 $15,472,030 $6,798,113
Undistributed Net Investment Income (Loss)............. 1,122 (98,529) (115,990) (11,405)
Accumulated Net Realized Gain (Loss) on Investments.... (119,783) 105,367 113,330 (2,794,349)
Net Unrealized Appreciation (Depreciation) on
Investments.......................................... 2,847,968 11,128,198 2,758,665 (1,573,735)
------------- ------------- ------------- -----------
Net Assets............................................. $14,251,047 $24,847,693 $18,228,035 $2,418,624
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
</TABLE>
6. Federal Income Tax
At June 30, 1997, for Federal income tax purposes, the following Funds had
capital loss carryovers which may be applied against future net taxable realized
gains of each succeeding year until the earlier of its utilization or its
expiration:
<TABLE>
<CAPTION>
UTILITY EMERGING
EXPIRES JUNE 30, INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
- ------------------------------------------------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
1998................................................... -- -- -- $1,010,282
1999................................................... -- -- $ 657,715 --
2000................................................... -- -- -- 434,866
2001................................................... -- -- 287,195 281,566
2003................................................... $ 155,713 -- -- --
2005................................................... -- $ 93,039 678,880 648,259
------------- ------------- ------------- -----------
Total............................................ $ 155,713 $ 93,039 $ 1,623,790 $2,374,973
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
</TABLE>
15
<PAGE>
[LOGO]
CAPPIELLO-RUSHMORE
TRUST
Semiannual Report
-----------------------------------------------------------
December 31, 1997
