<PAGE>
Cappiello-Rushmore Trust
Semiannual Report
December 31, 1998
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SEMIANNUAL REPORT, December 31, 1998
Cappiello-Rushmore Trust
4922 Fairmont Avenue, Bethesda, MD 20814
(800) 622-1386 (301) 657-1510
[LOGO OF CAPPIELLO-RUSHMORE FUND APPEARS HERE]
- -------------------------------------------------------------------------------
February 5, 1999
Dear Fellow Shareholder:
The fourth quarter of 1998 continued the markets recent roller coaster ride,
rising in the first two months and floundering in December. History has shown
that the market straightens out and heads higher into the New Year, and that
has been the case.
In retrospect, 1998 was a remarkable fourth straight year of double-digit
increases in the broader market averages. Nevertheless, this stellar
performance masks the increasing narrowness of the market. Just ten stocks in
the S&P 500 accounted for nearly half of the gain in that index and 50 of the
S&P stocks contributed 90% of the return. That means the other 450 stocks had
an average return of 1.5%. Less than 40% of NYSE stocks were up from December
31, 1997, to December 31, 1998. Further, small company stocks had an even
tougher year with the Russell 2000 Index showing a return of negative 4%.
Thus, 1998 was an extremely narrow market, and a much tougher place to make
money than the double-digit rise in the Index would imply. Accordingly, beyond
a handful of stocks, the equity markets turned in a lackluster year. The best
performing issues have, and continue to be, the very large consumer-oriented
company stocks and larger capitalization technology issues. Almost all of
these have price-to-earnings ratios far above the market average.
Looking into 1999, we view the current bull market still intact, despite the
turmoil in Brazil. At 1.6%, inflation is running at its lowest rate since 1963
and 1964. This inflation performance reflects current oil prices that are at
their lowest levels in 20 years and gold, the predictor of future inflation
developments, continues to stay depressed at under $300 per ounce.
Unemployment is at 4.3%, matching its peacetime low in 1957. Mortgage rates
averaged 6.83% last week, the lowest since 1967. Further, the federal budget
surplus was $70 billion in fiscal 1998, the first budget surplus since 1969.
An even bigger budget surplus is expected to be recorded this fiscal year
(ending September 30, 1999). Although the pace of overall corporate profit
growth will be slower this year, technology, health care and financial service
companies have good profit margins and continue to gain worldwide market
share. Since inflation will likely remain under 2%, the current level of
price-to-earnings ratios seems sustainable. Additionally, one should not
forget the enormous liquidity in the U.S. market. New retirement funds
continue to make their way into investments, and with interest rates still
low, stocks will remain the investment vehicle of choice.
As previously noted, the interest rate environment for equities in 1999
looks good, but the earnings growth picture does not. To be sure, some
companies will post strong profit gains, but we think the general trend of S&P
500 earnings per share will be up modestly. That means stock selection will be
at a premium, and investors cannot count on being carried along in a general
market uptrend. Nevertheless, we continue to see signs that the underlying
fundamentals of our holdings are healthy. The best sectors should be high
tech, healthcare, and retail. The latter will benefit from positive consumer
buying, coupled with the low cost of goods due to the falling prices of
materials. As always, fundamental values remain key to our investment
philosophy. We continue to seek out companies that offer the promise of long-
term capital growth for each of the Cappiello-Rushmore Funds.
Sincerely,
[SIGNATURE OF FRANK CAPPIELLO APPEARS HERE]
Frank Cappiello
Chairman
Cappiello-Rushmore Trust
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
December 31, 1998
(Unaudited)
UTILITY INCOME FUND GROWTH FUND
<TABLE>
- -----------------------------------------------------------------------
<CAPTION>
Market Value
Shares (Note 1)
<C> <S> <C>
- -----------------------------------------------------------------------
COMMON STOCKS -- 96.4%
Business Services -- 6.3%
12,000 Metzler Group, Inc.* $ 584,250
-----------
Gas and Electric -- 49.3%
15,000 Allegheny Energy, Inc. 517,500
14,000 CMS Energy Corp. 678,125
12,000 IDACORP, Inc. 434,250
14,000 Interstate Energy Corp. 451,500
15,500 KeySpan Energy Corp. 480,500
10,000 New Century Energies, Inc. 487,500
16,000 Potomac Electric Power Co. 421,000
20,000 Southern Co. 581,250
14,000 TNP Enterprises, Inc. 531,125
-----------
4,582,750
-----------
Natural Gas Distribution -- 4.7%
16,000 Washington Gas Light Co. 434,000
-----------
Real Estate Investment Trusts -- 6.0%
71,400 Crown American Realty Trust 553,350
-----------
Telecommunication -- 30.1%
10,000 ALLTEL Corp. 598,125
5,000 AT&T Corp. 376,250
10,000 Bell Atlantic Corp. 568,125
15,000 Frontier Corp. 510,000
14,000 SBC Communications, Inc. 750,750
-----------
2,803,250
-----------
Total Common Stocks (Cost $5,867,690) 8,957,600
-----------
CONVERTIBLE PREFERRED
STOCKS -- 2.1%
3,400 Kmart Financing, 7.75%
(Cost $180,820) 196,988
-----------
MONEY MARKET FUNDS -- 1.5%
141,554 Fund for Government Investors (Cost $141,554) 141,554
-----------
Total Investments -- 100.0% (Cost $6,190,064) $ 9,296,142
===========
</TABLE>
<TABLE>
- ---------------------------------------------------------------
<CAPTION>
Market Value
Shares (Note 1)
<C> <S> <C>
- ---------------------------------------------------------------
COMMON STOCKS -- 86.4%
Beverages -- 4.8%
15,000 Coca-Cola Co. $ 1,003,125
-----------
Business Services -- 9.1%
25,000 First Data Corp. 792,188
22,500 Metzler Group, Inc.* 1,095,468
-----------
1,887,656
-----------
Computer Hardware and
Equipment -- 4.5%
5,000 International Business Machines Corp. 923,750
-----------
Computer Software and
Services -- 4.8%
20,000 Shared Medical Systems Corp. 997,500
-----------
Financial Services -- 24.5%
10,000 American Express Co. 1,022,500
30,000 Charles Schwab Corp. 1,685,625
34,000 Franklin Resources, Inc. 1,088,000
27,000 SLM Holding Corp. 1,296,000
-----------
5,092,125
-----------
Healthcare -- 11.1%
8,000 Barr Labs, Inc.* 384,000
25,000 Foundation Health Systems, Inc.* 298,438
20,000 United Healthcare Company 861,250
20,000 Varian Associates, Inc. 757,500
-----------
2,301,188
-----------
Merchandising and Retail -- 12.2%
15,000 J. C. Penney Company, Inc. 703,125
170,000 National Media Corp.* 1,816,875
-----------
2,520,000
-----------
Oil and Gas Services -- 2.2%
60,000 Varco International, Inc.* 465,000
-----------
Telecommunication -- 13.2%
10,000 AT&T Corp. 752,500
20,000 Frontier Corp. 680,000
20,000 GM Hughes Electronics Corp. 793,750
10,000 Qualcomm, Inc.* 518,125
-----------
2,744,375
-----------
Total Common Stocks (Cost $10,232,013) 17,934,719
-----------
</TABLE>
2
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
December 31, 1998 (continued)
(Unaudited)
GROWTH FUND (continued) EMERGING GROWTH FUND
<TABLE>
- -------------------------------------------------------------------------
<CAPTION>
Market Value
Shares (Note 1)
<C> <S> <C>
- -------------------------------------------------------------------------
WARRANTS -- 4.1%
45,000 Federated Department Stores, Inc. WTS C* (Cost
$223,390) $ 855,000
-----------
MONEY MARKET FUNDS -- 9.5%
1,972,473 Fund for Government Investors (Cost $1,972,473) 1,972,473
-----------
Total Investments -- 100.0% (Cost $12,427,876) $20,762,192
===========
</TABLE>
<TABLE>
- ------------------------------------------------------------
<CAPTION>
Market Value
Shares (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
COMMON STOCKS -- 99.5%
Business Services -- 17.3%
30,000 FTI Consulting, Inc.* $ 101,250
22,000 Labor Ready, Inc.* 433,125
16,000 Metzler Group, Inc.* 779,000
11,000 National Data Corp. 535,563
-----------
1,848,938
-----------
Capital Goods -- 7.2%
26,000 Catalytica, Inc.* 468,000
20,000 Modtech, Inc.* 305,000
-----------
773,000
-----------
Computer Software and
Services -- 6.5%
14,000 Shared Medical Systems Corp. 698,250
-----------
Healthcare -- 23.9%
16,000 Aradigm Corp.* 200,000
19,000 Eclipsys Corp.* 551,000
37,000 KV Pharmaceutical Co., Class A* 765,438
37,000 PolyMedica Corp.* 342,250
18,500 Varian Associates, Inc. 700,687
-----------
2,559,375
-----------
Merchandising and Retail -- 22.4%
42,000 Braun's Fashion Corp.* 399,000
80,000 National Media Corp.* 855,000
45,000 Paul Harris Stores, Inc.* 365,625
30,000 Pier 1 Imports, Inc. 290,625
200,000 Service Merchandise Co.* 56,260
50,000 Steven Madden, Ltd.* 425,000
-----------
2,391,510
-----------
Oil and Gas Services -- 5.2%
61,000 Bolt Technology Corp.* 404,125
20,000 R&B Falcon Corp.* 152,500
-----------
556,625
-----------
Telecommunications -- 11.1%
15,000 Able Telecom Holding Corp.* 86,250
30,000 P-Com, Inc.* 119,532
20,000 REMEC, Inc.* 360,000
48,000 Stanford Telecommunications, Inc.* 618,000
-----------
1,183,782
-----------
</TABLE>
3
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
December 31, 1998 (continued)
(Unaudited)
EMERGING GROWTH FUND (continued) GOLD FUND
See Notes to Financial Statements.
<TABLE>
- ----------------------------------------------------------------------
<CAPTION>
Market Value
Shares (Note 1)
<C> <S> <C>
- ----------------------------------------------------------------------
COMMON STOCKS (continued)
Transportation -- 5.9%
30,000 Aramex International, Ltd.* $ 345,000
15,000 Hub Group, Inc., Class A* 290,625
-----------
635,625
-----------
Total Common Stocks (Cost $8,451,440) 10,647,105
-----------
MONEY MARKET FUNDS -- 0.5%
50,385 Fund for Government Investors (Cost $50,385) 50,385
-----------
Total Investments -- 100.0% (Cost $8,501,825) $10,697,490
===========
</TABLE>
<TABLE>
- ----------------------------------------------------------------------
<CAPTION>
Market Value
Shares (Note 1)
<C> <S> <C>
- ----------------------------------------------------------------------
COMMON STOCKS--96.9%
Metals and Mining
Africa -- 6.4%
12,000 Ashanti Goldfields Co. $ 112,500
----------
Australia -- 13.0%
6,000 Lihir Gold, Ltd.* 132,750
8,000 WMC, Ltd., ADR 96,000
----------
228,750
----------
Canada -- 31.6%
12,000 Aber Resources, Ltd.* 67,876
9,000 Barrick Gold Corp. 175,500
16,000 Cambior, Inc. 79,000
28,000 Golden Star Resources, Ltd.* 29,750
32,016 Kinross Gold Corp.* 74,037
8,000 Placer Dome, Inc. 92,000
20,000 TVX Gold, Inc.* 36,250
----------
554,413
----------
United States -- 45.9%
35,000 Battle Mountain Gold Co. 144,375
20,000 Crown Resources Corp.* 40,626
15,000 Homestake Mining Co. 137,812
4,000 Newmont Mining Corp. 72,250
10,000 Stillwater Mining Co.* 410,000
----------
805,063
----------
Total Common Stocks (Cost $2,608,232) 1,700,726
----------
MONEY MARKET FUNDS -- 3.1%
54,137 Fund for Government Investors (Cost $54,137) 54,137
----------
Total Investments -- 100.0% (Cost $2,662,369) $1,754,863
==========
</TABLE>
- ----------------
* Non-income producing
ADR American Depository Receipts
4
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
<S> <C> <C> <C> <C>
ASSETS
Securities at Cost.......... $6,190,064 $12,427,876 $ 8,501,825 $2,662,369
========== =========== =========== ==========
Securities at Value (Note
1)......................... $9,296,142 $20,762,192 $10,697,490 $1,754,863
Receivable for Securities
Sold....................... -- -- 42,473 --
Receivable for Shares Sold.. 1,003 76,154 33,426 --
Dividends Receivable........ 4,700 11,870 4,940 --
Interest Receivable......... 731 6,966 334 284
---------- ----------- ----------- ----------
Total Assets................ 9,302,576 20,857,182 10,778,663 1,755,147
---------- ----------- ----------- ----------
LIABILITIES
Investment Advisory Fee
Payable.................... 2,697 8,001 5,260 1,038
Administrative Fee Payable.. 15,995 44,903 45,272 4,862
Payable for Securities
Purchased.................. -- 790,312 -- --
Liability for Shares
Redeemed................... 16,902 235,183 176,390 18,829
Distributions Payable....... 8,236 851 30 --
Other Payables.............. -- -- 161 --
---------- ----------- ----------- ----------
Total Liabilities........... 43,830 1,079,250 227,113 24,729
---------- ----------- ----------- ----------
NET ASSETS................... $9,258,746 $19,777,932 $10,551,550 $1,730,418
========== =========== =========== ==========
Shares Outstanding........... 711,126 1,138,820 831,637 404,646
========== =========== =========== ==========
Net Asset Value Per Share.... $13.02 $17.37 $12.69 $4.28
========== =========== =========== ==========
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements of Operations
For the Six Months Ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
<S> <C> <C> <C> <C>
Investment Income
Interest................... $ 11,074 $ 34,470 $ 61,208 $ 3,687
Dividends.................. 180,638 49,420 14,862 4,790
---------- ---------- -------- ---------
Total Investment Income.... 191,712 83,890 76,070 8,477
---------- ---------- -------- ---------
Expenses
Investment Advisory Fee
(Note 2).................. 15,712 48,262 36,632 6,834
Administrative Fee (Note
2)........................ 31,424 96,524 73,264 9,762
Other Fees................. 664 28 161 --
---------- ---------- -------- ---------
Total Expenses............. 47,800 144,814 110,057 16,596
---------- ---------- -------- ---------
Net Investment Income
(Loss)..................... 143,912 (60,924) (33,987) (8,119)
---------- ---------- -------- ---------
Net Realized Gain (Loss) on
Investment Transactions.... 201,143 1,010,143 976,830 (206,796)
Change in Net Unrealized
Appreciation/ Depreciation
of Investments............. 660,320 (1,851,597) (856,663) 40,495
---------- ---------- -------- ---------
Net Gain (Loss) on
Investments................ 861,463 (841,454) 120,167 (166,301)
---------- ---------- -------- ---------
Net Increase (Decrease) in
Net Assets Resulting from
Operations................. $1,005,375 $ (902,378) $ 86,180 $(174,420)
========== ========== ======== =========
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements Of Changes In Net Assets
<TABLE>
<CAPTION>
Utility
Income Fund Growth Fund
For the Six For the Six
Months Ended For the Months Ended For the
December 31, Year Ended December 31, Year Ended
1998 June 30, 1998 June 30,
(Unaudited) 1998 (Unaudited) 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
From Investment Activi-
ties
Net Investment Income
(Loss)................ $ 143,912 $ 398,161 $ (60,924) $ (193,212)
Net Realized Gain on
Investment
Transactions.......... 201,143 508,641 1,010,143 3,356,716
Change in Net
Unrealized
Appreciation of
Investments........... 660,320 1,300,391 (1,851,597) 1,303,719
----------- ------------ ------------ ------------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations............ 1,005,375 2,207,193 (902,378) 4,467,223
----------- ------------ ------------ ------------
Distributions to Share-
holders
From Net Investment
Income................ (143,545) (400,295) -- --
From Net Realized Gain
on Investments........ (554,083) -- (4,104,765) --
----------- ------------ ------------ ------------
Total Distributions to
Shareholders.......... (697,628) (400,295) (4,104,765) --
----------- ------------ ------------ ------------
From Share Transactions
Net Proceeds from Sales
of Shares............. 3,453,316 16,647,062 7,601,878 29,015,150
Reinvestment of
Distributions......... 624,838 321,286 3,960,787 --
Cost of Shares
Redeemed.............. (4,925,671) (17,782,741) (11,608,471) (33,550,866)
----------- ------------ ------------ ------------
Net Decrease in Net
Assets Resulting from
Share Transactions.... (847,517) (814,393) (45,806) (4,535,716)
----------- ------------ ------------ ------------
Net Assets -- Beginning
of Period.............. 9,798,516 8,806,011 24,830,881 24,899,374
----------- ------------ ------------ ------------
Net Assets -- End of
Period................. $ 9,258,746 $ 9,798,516 $ 19,777,932 $ 24,830,881
=========== ============ ============ ============
Shares
Sold................... 276,043 1,393,270 371,399 1,333,472
Issued in Reinvestment
of Distributions...... 49,244 26,251 242,643 --
Redeemed............... (394,500) (1,485,904) (556,490) (1,561,079)
----------- ------------ ------------ ------------
Net Increase (Decrease)
in Shares............. (69,213) (66,383) 57,552 (227,607)
=========== ============ ============ ============
Total Increase
(Decrease) in Net
Assets................ (539,770) 992,505 (5,052,949) (68,493)
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Emerging
Growth Fund Gold Fund
For the Six For the Six
Months Ended For the Months Ended For the
December 31, Year Ended December 31, Year Ended
1998 June 30, 1998 June 30,
(Unaudited) 1998 (Unaudited) 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
From Investment Activi-
ties
Net Investment Loss.... $ (33,987) $ (214,292) $ (8,119) $ (21,980)
Net Realized Gain
(Loss) on Investment
Transactions.......... 976,830 1,678,627 (206,796) (935,910)
Change in Net
Unrealized
Appreciation/
Depreciation of
Investments........... (856,663) (1,834,311) 40,495 (234,352)
------------ ----------- ---------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations............ 86,180 (369,976) (174,420) (1,192,242)
------------ ----------- ---------- -----------
Distributions to Share-
holders
From Net Realized Gain
on Investments........ (101,776) -- -- --
------------ ----------- ---------- -----------
From Share Transactions
Net Proceeds from Sales
of Shares............. 24,673,870 36,436,165 -- 11,756,801
Reinvestment of
Distributions......... 91,142 -- -- --
Cost of Shares
Redeemed.............. (28,356,451) (42,639,433) (281,950) (11,786,315)
------------ ----------- ---------- -----------
Net Decrease in Net
Assets Resulting from
Share Transactions.... (3,591,439) (6,203,268) (281,950) (29,514)
------------ ----------- ---------- -----------
Net Assets -- Beginning
of Period.............. 14,158,585 20,731,829 2,186,788 3,408,544
------------ ----------- ---------- -----------
Net Assets -- End of
Period................. $ 10,551,550 $14,158,585 $1,730,418 $ 2,186,788
============ =========== ========== ===========
Shares
Sold................... 2,278,074 2,329,100 -- 1,893,015
Issued in Reinvestment
of Distributions...... 7,530 -- -- --
Redeemed............... (2,478,509) (2,802,091) (64,235) (1,909,526)
------------ ----------- ---------- -----------
Net Decrease in Shares. (192,905) (472,991) (64,235) (16,511)
============ =========== ========== ===========
Total Decrease in Net
Assets................ (3,607,035) (6,573,244) (456,370) (1,221,756)
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Utility Income Fund
For the Six
Months Ended
December 31, For the Years Ended June 30,
1998 ----------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
------------ ------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period.. $12.56 $10.40 $10.60 $9.24 $8.39 $10.82
------ ------ ------ ------- ------- ------
Income from Investment
Operations:
Net Investment Income.. 0.20 0.47 0.53 0.49 0.55 0.53
Net Realized and
Unrealized Gain (Loss)
on Investments........ 1.28 2.17 (0.19) 1.39 0.85 (2.42)
------ ------ ------ ------- ------- ------
Total from Investment
Operations........... 1.48 2.64 0.34 1.88 1.40 (1.89)
------ ------ ------ ------- ------- ------
Distributions to
Shareholders:
From Net Investment
Income................ (0.20) (0.48) (0.54) (0.52) (0.55) (0.53)
From Net Realized
Capital Gain.......... (0.82) -- -- -- -- (0.01)
------ ------ ------ ------- ------- ------
Total Distributions to
Shareholders......... (1.02) (0.48) (0.54) (0.52) (0.55) (0.54)
------ ------ ------ ------- ------- ------
Net Increase (Decrease)
in Net Asset Value.... 0.46 2.16 (0.20) 1.36 0.85 (2.43)
------ ------ ------ ------- ------- ------
Net Asset Value -- End
of Period............. $13.02 $12.56 $10.40 $10.60 $9.24 $8.39
====== ====== ====== ======= ======= ======
Total Investment Return. 12.05%A 25.55% 3.39% 20.60% 16.62% (18.18)%
Ratios to Average Net
Assets:
Expenses............... 1.07%B 1.05% 1.05% 1.05% 1.05% 1.05%
Net Investment Income.. 3.21%B 4.01% 4.88% 4.82% 6.26% 5.21%
Supplementary Data:
Portfolio Turnover
Rate.................. 8.89% 29.45% 17.33% 45.11% 147.04% 26.13%
Net Assets at End of
Period (in thousands). $9,259 $9,799 $8,806 $15,106 $17,151 $9,117
Number of Shares
Outstanding at End of
Period (in thousands). 711 780 847 1,425 1,855 1,086
</TABLE>
- -----------------------------
A Total Investment Return for periods of less than one year are not
annualized.
B Annualized
See Notes to Financial Statements.
9
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Growth Fund
For the Six
Months Ended
December 31, For the Years Ended June 30,
1998 ---------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
------------ ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period.. $22.96 $19.02 $17.87 $14.64 $11.05 $10.63
------- ------- ------- ------- ------- ------
Income from Investment
Operations:
Net Investment Income
(Loss)................ (0.05) (0.18) (0.09) (0.07) 0.01 (0.02)
Net Realized and
Unrealized Gain
(Loss) on Investments. (0.88) 4.12 1.83 3.30 3.60 0.44
------- ------- ------- ------- ------- ------
Total from Investment
Operations........... (0.93) 3.94 1.74 3.23 3.61 0.42
------- ------- ------- ------- ------- ------
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.... (5.59) 3.94 1.15 3.23 3.59 0.42
------- ------- ------- ------- ------- ------
Net Asset Value -- End
of Period............. $17.37 $22.96 $19.02 $17.87 $14.64 $11.05
======= ======= ======= ======= ======= ======
Total Investment Return. (2.76)%A 20.72% 10.10% 22.06% 32.65% 3.99%
Ratios to Average Net
Assets:
Expenses............... 1.50%B 1.50% 1.50% 1.50% 1.50% 1.50%
Net Investment Income
(Loss)................ (0.63)%B (0.74)% (0.46)% (0.41)% 0.12% (0.18)%
Supplementary Data:
Portfolio Turnover
Rate.................. 30.68% 65.08% 41.93% 74.50% 70.89% 119.03%
Net Assets at End of
Period (in thousands). $19,778 $24,831 $24,899 $31,777 $19,337 $9,993
Number of Shares
Outstanding at End of
Period (in thousands). 1,139 1,081 1,309 1,778 1,321 904
</TABLE>
- -----------------------------
A Total Investment Return for periods of less than one year are not
annualized.
BAnnualized
See Notes to Financial Statements.
10
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Emerging Growth Fund
For the Six
Months Ended
December 31, For the Years Ended June 30,
1998 -----------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period.. $13.82 $13.84 $16.99 $14.96 $10.41 $11.32
------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Loss.... (0.04) (0.21) (0.24) (0.16) (0.08) (0.10)
Net Realized and
Unrealized Gain (Loss)
on Investments........ (0.99)C 0.19C (0.25) 2.30 4.63 (0.69)
------- ------- ------- ------- ------- -------
Total from Investment
Operations........... (1.03) (0.02) (0.49) 2.14 4.55 (0.79)
------- ------- ------- ------- ------- -------
Distributions to
Shareholders:
From Net Realized
Capital Gain.......... (0.10) -- (2.66) (0.11) -- (0.12)
------- ------- ------- ------- ------- -------
Net Increase (Decrease)
in Net Asset Value.... (1.13) (0.02) (3.15) 2.03 4.55 (0.91)
------- ------- ------- ------- ------- -------
Net Asset Value -- End
of Period............. $12.69 $13.82 $13.84 $16.99 $14.96 $10.41
======= ======= ======= ======= ======= =======
Total Investment Return. (7.45)%A (0.14)% (2.15)% 14.36% 43.71% (7.31)%
Ratios to Average Net
Assets:
Expenses............... 1.51 %B 1.50 % 1.50 % 1.50 % 1.50 % 1.50 %
Net Investment Loss.... (0.47)%B (1.07)% (1.20)% (0.98)% (0.61)% (0.85)%
Supplementary Data:
Portfolio Turnover
Rate.................. 111.04% 121.20% 66.16% 121.22% 96.11% 128.13%
Net Assets at End of
Period (in thousands). $10,552 $14,159 $20,732 $44,985 $36,606 $18,133
Number of Shares
Outstanding at End of
Period (in thousands). 832 1,025 1,498 2,647 2,447 1,742
</TABLE>
- -----------------------------
A Total Investment Return for periods of less than one year are not
annualized.
B Annualized
C The per share amount does not coincide with the net realized and unrealized
gain/loss for the period 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.
11
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Gold Fund
For the Six
Months Ended For the Years Ended June For the
December 31, 30, Period Ended
1998 --------------------------------- June 30,
(Unaudited) 1998 1997 1996 1995 1994*
------------ ------ ------ ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period.. $4.66 $7.02 $9.93 $9.89 $9.52 $10.00
------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net Investment Loss.... (0.02) (0.05) (0.08) (0.06) (0.05) (0.01)
Net Realized and
Unrealized Gain (Loss)
on Investments........ (0.36) (2.31) (2.83) 0.10 0.42 (0.47)
------ ------ ------ ------ ------ ------
Total from Investment
Operations........... (0.38) (2.36) (2.91) 0.04 0.37 (0.48)
------ ------ ------ ------ ------ ------
Distributions to
Shareholders:
Total Distributions to
Shareholders......... -- -- -- -- -- --
------ ------ ------ ------ ------ ------
Net Increase (Decrease)
in Net Asset Value.... (0.38) (2.36) (2.91) 0.04 0.37 (0.48)
------ ------ ------ ------ ------ ------
Net Asset Value -- End
of Period............. $4.28 $4.66 $7.02 $9.93 $9.89 $9.52
====== ====== ====== ====== ====== ======
Total Investment Return. (8.16)%A (33.62)% (29.31)% 0.40% 3.89% (4.80)%A
Ratios to Average Net
Assets:
Expenses............... 1.70%B 1.70% 1.70% 1.70% 1.70% 1.68%B
Net Investment Loss.... (0.84)%B (0.74)% (0.76)% (0.59)% (0.51)% (0.25)%B
Supplementary Data:
Portfolio Turnover
Rate.................. -- 56.49% 108.47% 59.06% 51.23% 22.85%
Net Assets at End of
Period (in thousands). $1,730 $2,187 $3,409 $6,122 $6,796 $6,395
Number of Shares
Outstanding at End of
Period (in thousands). 405 469 485 616 687 672
</TABLE>
- -----------------------------
A Total Investment Return for periods of less than one year are not
annualized.
B Annualized
* From Commencement of Operations March 7, 1994
See Notes to Financial Statements.
12
<PAGE>
Cappiello-Rushmore Trust
- -------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 1998
(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. 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 December 31, 1998.
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.
13
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
3. Securities Transactions
For the six months ended December 31, 1998, 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......................... $ 750,170 $ 5,559,640 $12,801,072 $ --
========== =========== =========== =======
Sales............................. $1,112,236 $10,202,627 $14,025,236 $47,400
========== =========== =========== =======
</TABLE>
4. Unrealized Appreciation and Depreciation of Investments
Unrealized appreciation and depreciation of investments as of December 31,
1998, 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................ $3,095,973 $ 8,468,761 $3,005,161 $ 273,626
Gross Unrealized
Depreciation................ (20,920) (134,445) (822,562) (1,266,304)
---------- ----------- ---------- -----------
Net Unrealized Appreciation
(Depreciation).............. $3,075,053 $ 8,334,316 $2,182,599 $ (992,678)
========== =========== ========== ===========
Cost of Investments for
Federal Income Tax Purposes. $6,221,089 $12,427,876 $8,514,891 $ 2,747,541
========== =========== ========== ===========
</TABLE>
5. Net Assets
At December 31, 1998 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............. $6,183,135 $11,335,485 $ 7,803,293 $ 5,257,070
Undistributed Net Investment
Income (Loss) ............. 558 (60,924) (33,987) (8,119)
Accumulated Net Realized
Gain (Loss) on Investments. (31,025) 169,055 586,579 (2,611,027)
Net Unrealized Appreciation
(Depreciation) on
Investments................ 3,106,078 8,334,316 2,195,665 (907,506)
---------- ----------- ----------- -----------
Net Assets.................. $9,258,746 $19,777,932 $10,551,550 $ 1,730,418
========== =========== =========== ===========
</TABLE>
6. Federal Income Tax
At June 30, 1998, 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.................................................... -- 281,566
2005.................................................... $259,721 648,259
2006.................................................... -- 954,368
-------- ----------
Total................................................. $259,721 $2,319,059
======== ==========
</TABLE>
14
