<PAGE>
- -------------------------------------------------------------------------------
SEMIANNUAL REPORT, December 31, 1999
Cappiello-Rushmore Trust
4922 Fairmont Avenue, Bethesda, MD 20814
- -------------------------------------------------------------------------------
(800) 622-1386 (301) 657-1510
[LOGO OF CAPPIELLO-RUSHMORE FUND APPEARS HERE]
February 14, 2000
Dear Fellow Shareholder:
"Volatility" was the theme of the stock market as we entered the first
quarter of 2000 and the third quarter of the Cappiello-Rushmore Funds' fiscal
year. The month of January was a good example. The long-anticipated first
month of the new millennium opened with a bang with investors driving up the
technology and Internet stocks, thus creating a new high for the NASDAQ.
Equally surprising was a fast multi-day decline (January 4-6) that pushed
NASDAQ down to just under a 10% decline. And that was just the first week.
However, investors were not quite finished with their love-hate relationship
with the NASDAQ as they moved back into stocks that they had sold only a few
days before with enough new enthusiasm to send the over-the-counter average to
another new all time high on January 21. Presumably interest in Internet and
technology stocks began to decrease and the month ended with NASDAQ recording
a decline of 3.2%. No better were the other more venerable averages with the
S&P 500 down 5.1% and the Dow Industrials finishing the month with a drop of
4.8%.
February was no different, with the NASDAQ rampaging to new highs week after
week with the venerable Dow Jones Industrial Average lagging and struggling to
make a new high. In summary, it looks like this market is showing investors
not only extreme volatility but also unpredictability. Essentially the stock
market (both in the U.S. and international) is attempting to balance clearly
improving fundamentals (a growing economy with earnings growth and rising
productivity) with the uncertainty regarding inflation and the Federal
Reserve's determination to raise interest rates to slow the economy. In this
choppy sea of confusing positives and negatives, we believe the prescription
for long-term investment success is to keep things in perspective, both in
terms of the economics and strategy.
Beginning in 1996, the U.S. economy shifted into higher gear driven mainly
by acceleration in productivity growth with high technology driving
productivity. More to the point, technology-driven production of goods and
services is disinflationary, not inflationary, particularly the Internet. Add
to technology the process of globalization of markets, deregulation in most of
the world, and the trend toward capitalism rather than socialism and the
result is a potent blend of high growth, high employment, and almost no
inflation. This means that the U.S. economy isn't likely to slip into
recession any time soon nor is the stock market fated to become a huge
"bubble" that will burst such as in 1929. More probably, what we will see is a
continuous correction of overpriced stock sectors such as the Internet,
technology, and telecommunications to more reasonable levels. Concurrent with
these corrections we'll see the rise of the now abandoned sectors such as
finance, insurance, and small stocks. We're already witnessing the beginning
of this process in the small stock sector with the Russell 2000 Index of small
stocks outpacing the Dow 30 blue chips in the past few months. We'll see the
rest of this process sometime this year.
Further, the overvaluation that the Fed and most of Wall Street analysts
complain about is relegated to only a few stock groups. The vast majority of
stocks have done little or nothing over the past fourteen months. For example,
at December 31, 1999, only 1,182 stocks actually advanced for the year,
according to the New York Stock Exchange, while 2,557 declined and 19 were
unchanged. Percentage-wise just 31.5% of the listed stocks were up for the
year.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
In terms of strategy, nearly all investors have a long-term objective and
achieving that goal means running a marathon rather than a series of sprints.
Unlike the exhilaration of a sprint, a marathon is sometimes exciting and
sometimes boring as witness the famed Alaskan Iditorad Race. This is a
punishing 1,150 mile sled race in the
worst of winter weather. You don't use greyhounds to pull your sled if you
want to win. Instead you use the less fleet but stronger dogs that can do the
distance. To win, the driver needs to be patient, not rush the dogs and take
time to regularly rest and feed the team. That is the "winning" formula and it
demands patience as well as intelligence. That same formula can be applied to
an investment portfolio.
In summary, we remain bullish and believe the economy will continue to grow
although at a slower rate with modest inflation and higher corporate profits
and that this will be reflected in a broadening market that will encompass
many of the currently neglected stock sectors.
Sincerely,
/s/ Frank A. Cappiello
Frank A. Cappiello
Chairman
Cappiello-Rushmore Trust
- -------------------------------------------------------------------------------
2
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
December 31, 1999
(unaudited)
Utility Income Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares (Note 1)
- ----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 94.9%
Gas and Electric -- 48.9%
11,200 Allegheny Energy, Inc. $ 301,700
13,000 Alliant Energy Corp. 357,500
13,500 CMS Energy Corp. 421,030
3,000 Hawaiian Electric Industries, Inc. 86,625
8,000 IDACORP, Inc. 214,500
13,400 KeySpan Corp. 310,713
9,500 New Century Energies, Inc. 288,563
14,500 Potomac Electric Power Co. 332,594
15,900 Southern Co. 373,650
4,000 Texas Utilities Company 142,250
9,500 TNP Enterprises, Inc. 391,875
---------
3,221,000
---------
Natural Gas Distribution -- 4.9%
11,800 Washington Gas Light Co. 324,500
---------
Real Estate Investment Trusts -- 6.5%
5,200 Archstone Communities Trust 106,600
4,300 First Industrial Realty Trust, Inc. 117,981
3,600 Mack-Cali Realty Corp. 93,825
2,900 Spieker Properties, Inc. 105,669
---------
424,075
---------
Telecommunication -- 34.6%
6,900 ALLTEL Corp. 570,544
7,000 AT&T Corp. 355,250
9,400 Bell Atlantic Corp. 578,688
3,800 Global Crossing Ltd.* 190,000
12,000 SBC Communications, Inc. 585,000
---------
2,279,482
---------
Total Common Stocks (Cost $4,484,091) 6,249,057
---------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares (Note 1)
- ----------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED
STOCKS -- 4.0%
6,000 Kmart Financing, 7.75%
(Cost $334,325) 262,500
----------
MONEY MARKET FUNDS -- 1.1%
75,901 Fund for Government Investors (Cost $75,901) $ 75,901
----------
Total Investments -- 100.0% (Cost $4,894,317) $6,587,458
==========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
December 31, 1999
(unaudited)
Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares (Note 1)
- ---------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 97.1%
Automotive Products -- 2.9%
8,000 Honeywell International, Inc. $ 461,500
----------
Beverages -- 3.3%
8,800 Coca-Cola Co. 512,600
----------
Business Services -- 7.8%
25,000 First Data Corp. 1,232,813
----------
Computer Hardware and Equipment -- 6.9%
10,000 International Business Machines Corp. 1,080,000
----------
Data Processing & Preparation -- 1.5%
10,000 SunGard Data Systems, Inc.* 237,500
----------
Electronics -- 1.0%
6,000 Raytheon Co., Class B 159,375
----------
Financial Services -- 28.5%
8,500 American Express Co. 1,413,125
3,200 Bank of America Corp. 160,600
18,000 Charles Schwab Corp. 690,750
32,000 Franklin Resources, Inc. 1,026,000
7,700 H&R Block, Inc. 336,875
20,000 SLM Holding Corp. 845,000
----------
4,472,350
----------
Healthcare -- 6.4%
19,000 United Healthcare Company 1,009,375
----------
Merchandising and Retail -- 7.8%
22,500 Dollar General Corp. 511,875
14,000 Federated Department Stores, Inc.* 707,875
----------
1,219,750
----------
Oil and Gas Services -- 6.5%
6,500 Schlumberger, Ltd. 365,625
1,258 Transocean Sedco Forex, Inc.* 42,392
60,000 Varco International, Inc.* 611,250
----------
1,019,267
----------
Paper Products -- 2.7%
9,000 Willamette Industries, Inc. 417,938
----------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares (Note 1)
- -----------------------------------------------------------------------
<C> <S> <C>
Telecommunication -- 21.8%
15,000 AT&T Corp. $ 761,250
14,850 Global Crossing Ltd.* 742,500
20,000 Hughes Electronics Corp. 1,920,000
-----------
3,423,750
-----------
Total Common Stocks (Cost $8,433,520) 15,246,218
-----------
MONEY MARKET FUNDS -- 2.9%
458,096 Fund for Government Investors (Cost $458,096) 458,096
-----------
Total Investments -- 100.0% (Cost $8,891,616) $15,704,314
===========
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
December 31, 1999
(unaudited)
Emerging Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares (Note 1)
- --------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 98.0%
Business Services and Equipment -- 16.6%
5,000 Equity Marketing, Inc.* $ 64,375
7,000 Miami Computer Supply Corp.* 259,875
9,000 StarTek, Inc.* 326,250
2,400 Stericycle, Inc.* 45,150
7,000 Tidewater, Inc. 252,000
8,000 Workflow Management, Inc.* 229,000
5,000 Zomax, Inc.* 226,250
---------
1,402,900
---------
Computer Software and Services -- 21.8%
4,400 Actel Corp.* 105,600
5,500 Actrade International Ltd.* 82,156
18,000 Applix, Inc.* 325,125
800 Black Box Corp.* 53,600
19,000 Corsair Communications, Inc.* 154,375
4,700 Datalink Corp.* 90,475
32,000 Dot Hill System Corp.* 158,000
3,500 Equinox Systems, Inc.* 31,500
9,000 Hauppauge Digital, Inc.* 181,125
4,000 Infocure Corp.* 124,750
4,900 Percon, Inc.* 72,275
1,800 Point of Sale Ltd.* 26,325
13,500 Take-Two Interactive Software, Inc.* 174,656
10,100 Troy Group, Inc.* 151,500
4,200 Unigraphics Solution, Inc.* 113,400
---------
1,844,862
---------
Electronics -- 6.7%
3,700 Audiovox Corp.* 112,388
10,000 Power-One, Inc.* 458,125
---------
570,513
---------
Financial Services -- 5.0%
5,000 Knight/Trimark Group, Inc.* 230,000
7,200 Waddell & Reed Financial, Inc. 195,300
---------
425,300
---------
Food Products -- 1.6%
6,000 Hain Food Group, Inc.* 134,250
---------
Healthcare Products and Services -- 8.6%
10,000 Endocare, Inc.* 84,375
12,000 KV Pharmaceutical Co., Class A* 263,250
9,000 PolyMedica Corp.* 208,125
3,000 QLT Phototherapeutics, Inc.* 176,250
---------
732,000
---------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares (Note 1)
- -----------------------------------------------------------------------
<C> <S> <C>
Merchandising and Retail -- 11.5%
10,000 BEBE Stores, Inc.* $ 270,000
13,600 Children's Place Retail Stores, Inc.* 223,550
1,900 Copart, Inc.* 82,650
10,000 Electronics Boutique Holdings Corp.* 180,000
5,000 Funco, Inc.* 55,938
16,000 Topps Company, Inc.* 166,000
----------
978,138
----------
Semiconductors and Related -- 2.0%
2,000 Cybex Computer Products Corp.* 81,000
4,000 TelCom Semiconductor, Inc.* 84,000
----------
165,000
----------
Technology -- 11.1%
3,600 American Xtal Technology, Inc.* 62,775
10,000 Excel Technology, Inc.* 179,375
20,000 LaserSight, Inc.* 200,000
3,600 Measurement Specialties, Inc.* 75,150
8,200 Performance Technology, Inc.* 142,475
2,300 ScanSource, Inc.* 93,294
3,000 Sigmatron International, Inc.* 19,500
8,500 II-VI, Inc.* 171,062
----------
943,631
----------
Telecommunications -- 12.2%
6,000 Catapult Communications Corp.* 59,625
10,200 Comtech Telecommunications Corp.* 150,450
12,500 Gilat Communications Ltd.* 300,781
13,000 InterVoice-Brite, Inc.* 302,250
6,800 PairGain Technologies, Inc.* 96,475
5,000 REMEC, Inc.* 127,500
----------
1,037,081
----------
Transportation -- 0.9%
8,000 Aramex International Ltd.* 73,500
----------
Total Common Stocks (Cost $6,403,662) 8,307,175
----------
MONEY MARKET FUNDS -- 2.0%
167,178 Fund for Government Investors (Cost $167,178) 167,178
----------
Total Investments -- 100.0% (Cost $6,570,840) $8,474,353
==========
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
December 31, 1999
(unaudited)
Gold Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares (Note 1)
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 98.8%
Metals and Mining
Australia -- 24.2%
6,000 Lihir Gold, Ltd.* $ 84,000
7,500 WMC, Ltd., ADR 164,063
--------
248,063
--------
Canada -- 27.6%
7,500 Aber Resources, Ltd.* 46,875
8,500 Barrick Gold Corp. 150,344
8,000 Placer Dome, Inc. 86,000
--------
283,219
--------
Ghana -- 1.5%
6,000 Ashanti Goldfields Co., Ltd. 15,750
--------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares (Note 1)
- ----------------------------------------------------------------------
<C> <S> <C>
United States -- 45.5%
35,000 Battle Mountain Gold Co. $ 72,187
10,000 Crown Resources Corp.* 18,750
14,000 Homestake Mining Co. 109,375
4,000 Newmont Mining Corp. 98,000
5,300 Stillwater Mining Co.* 168,937
----------
467,249
----------
Total Common Stocks (Cost $1,528,284) 1,014,281
----------
MONEY MARKET FUNDS -- 1.2%
12,704 Fund for Government Investors (Cost $12,704) 12,704
----------
Total Investments -- 100.0% (Cost $1,540,988) $1,026,985
==========
</TABLE>
- ----------------
* Non-income producing
ADR American Depository Receipts
See Notes to Financial Statements.
6
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
December 31, 1999
(unaudited)
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
<S> <C> <C> <C> <C>
ASSETS
Securities at Cost.......... $4,894,317 $ 8,891,616 $6,570,840 $1,540,988
========== =========== ========== ==========
Securities at Value (Note
1)......................... $6,587,458 $15,704,314 $8,474,353 $1,026,985
Receivable for Securities
Sold....................... 758,814 2,010,719 -- 76,147
Receivable for Shares Sold.. 11,814 1,087 222 --
Dividends Receivable........ 12,671 10,256 -- --
Interest Receivable......... 240 5,935 848 73
---------- ----------- ---------- ----------
Total Assets................ 7,370,997 17,732,311 8,475,423 1,103,205
---------- ----------- ---------- ----------
LIABILITIES
Investment Advisory Fee
Payable.................... 2,220 7,499 3,533 686
Administration Fee Payable.. 13,814 44,236 20,317 3,163
Payable for Securities
Purchased.................. -- -- -- --
Liability for Shares
Redeemed................... 17,232 92,740 163,705 79,343
Distributions Payable....... 6,230 2,445 1,604
Other Liabilities........... 240 -- -- --
---------- ----------- ---------- ----------
Total Liabilities........... 39,736 146,920 189,159 83,192
---------- ----------- ---------- ----------
NET ASSETS................... $7,331,261 $17,585,391 $8,286,264 $1,020,013
========== =========== ========== ==========
Shares Outstanding........... 615,331 1,063,587 747,109 279,839
========== =========== ========== ==========
Net Asset Value Per Share.... $11.91 $16.53 $11.09 $3.64
========== =========== ========== ==========
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Statements of Operations
For the Six Months Ended December 31, 1999
(unaudited)
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
<S> <C> <C> <C> <C>
Investment Income
Interest.................. $ 6,778 $ 48,859 $ 8,664 $ 235
Dividends................. 164,227 22,276 5,821 2,299
--------- ----------- ---------- ---------
Total Investment Income... 171,005 71,135 14,485 2,534
--------- ----------- ---------- ---------
Expenses
Investment Advisory Fee
(Note 2)................. 14,061 46,467 20,203 4,497
Administrative Fee (Note
2)....................... 28,122 92,933 40,405 6,425
Other Fees................ 24 -- 52 18
--------- ----------- ---------- ---------
Total Expenses............ 42,207 139,400 60,660 10,940
--------- ----------- ---------- ---------
Net Investment Income
(Loss).................... 128,798 (68,265) (46,175) (8,406)
--------- ----------- ---------- ---------
Net Realized Gain (Loss) on
Investment Transactions... 642,749 1,447,473 1,568,245 (348,543)
Change in Net Unrealized
Appreciation/ Depreciation
of Investments............ (977,157) (2,952,466) (435,779) 241,031
--------- ----------- ---------- ---------
Net Gain (Loss) on
Investments............... (334,408) (1,504,993) 1,132,466 (107,512)
--------- ----------- ---------- ---------
Net Increase (Decrease) in
Net Assets Resulting from
Operations................ $(205,610) $(1,573,258) $1,086,291 $(115,918)
========= =========== ========== =========
</TABLE>
See Notes to Financial Statements.
8
<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
1999 June 30, 1999 June 30,
(unaudited) 1999 (unaudited) 1999
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
From Investment Activi-
ties
Net Investment Income
(Loss)................ $ 128,798 $ 275,125 $ (68,265) $ (120,824)
Net Realized Gain on
Investment
Transactions.......... 642,749 474,361 1,447,473 4,333,506
Change in Net
Unrealized
Appreciation of
Investments........... (977,157) 224,539 (2,952,466) (420,750)
----------- ----------- ----------- ------------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations............ (205,610) 974,025 (1,573,258) 3,791,932
----------- ----------- ----------- ------------
Distributions to
Shareholders
From Net Investment
Income................ (128,674) (275,180) -- --
From Net Realized Gain
on Investments........ (265,222) (554,083) (3,471,861) (4,104,765)
----------- ----------- ----------- ------------
Total Distributions to
Shareholders.......... (393,896) (829,263) (3,471,861) (4,104,765)
----------- ----------- ----------- ------------
From Share Transactions
Net Proceeds from Sales
of Shares............. 4,417,058 6,111,444 3,313,697 13,234,395
Reinvestment of
Distributions......... 356,878 743,808 3,281,812 3,959,935
Cost of Shares
Redeemed.............. (5,240,154) (8,401,545) (4,835,702) (20,841,675)
----------- ----------- ----------- ------------
Net Increase (Decrease)
in Net Assets
Resulting from Share
Transactions.......... (466,218) (1,546,293) 1,759,807 (3,647,345)
----------- ----------- ----------- ------------
Total Decrease in Net
Assets................ (1,065,724) (1,401,531) (3,285,312) (3,960,178)
Net Assets -- Beginning
of Period.............. 8,396,985 9,798,516 20,870,703 24,830,881
----------- ----------- ----------- ------------
Net Assets -- End of
Period................. $ 7,331,261 $ 8,396,985 $17,585,391 $ 20,870,703
=========== =========== =========== ============
Shares
Sold................... 354,845 487,318 168,078 667,460
Issued in Reinvestment
of Distributions...... 29,370 59,063 203,208 242,643
Redeemed............... (423,129) (672,475) (255,238) (1,043,833)
----------- ----------- ----------- ------------
Net Increase (Decrease)
in Shares............. (38,914) (126,094) 116,048 (133,730)
=========== =========== =========== ============
</TABLE>
See Notes to Financial Statements.
9
<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
1999 June 30, 1999 June 30,
(unaudited) 1999 (unaudited) 1999
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
From Investment Activi-
ties
Net Investment Loss.... $ (46,175) $ (61,872) $ (8,406) $ (16,464)
Net Realized Gain
(Loss) on Investment
Transactions.......... 1,568,245 1,345,716 (348,543) (461,455)
Net Change in
Unrealized
Appreciation/
Depreciation of
Investments........... (435,779) (713,036) 241,031 192,968
----------- ----------- ---------- ----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations............ 1,086,291 570,808 (115,918) (284,951)
----------- ----------- ---------- ----------
Distributions to
Shareholders
From Net Realized Gain
on Investments........ (2,152,332) (101,776) -- --
----------- ----------- ---------- ----------
From Share Transactions
Net Proceeds from Sales
of Shares............. 3,184,895 42,030,888 -- --
Reinvestment of
Distributions......... 2,082,991 91,112 -- --
Cost of Shares
Redeemed.............. (4,551,690) (48,113,508) (258,021) (507,885)
----------- ----------- ---------- ----------
Net Increase (Decrease)
in Net Assets
Resulting from Share
Transactions.......... 716,196 (5,991,508) (258,021) (507,885)
----------- ----------- ---------- ----------
Total Decrease in Net
Assets................ (349,845) (5,522,476) (373,939) (792,836)
Net Assets -- Beginning
of Period.............. 8,636,109 14,158,585 1,393,952 2,186,788
----------- ----------- ---------- ----------
Net Assets -- End of
Period................. $ 8,286,264 $ 8,636,109 $1,020,013 $1,393,952
=========== =========== ========== ==========
Shares
Sold................... 253,823 3,627,533 -- --
Issued in Reinvestment
of Distributions...... 192,158 7,530 -- --
Redeemed............... (357,803) (4,000,674) (68,976) (120,066)
=========== =========== ========== ==========
Net Increase (Decrease)
in Shares............. 88,178 (365,611) (68,976) (120,066)
=========== =========== ========== ==========
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Utility Income Fund
For the Six
Months Ended
December 31, For the Years Ended June 30,
1999 ----------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period.. $12.83 $12.56 $10.40 $10.60 $ 9.24 $ 8.39
------ ------ ------ ------ ------- -------
Income from Investment
Operations:
Net Investment Income.. 0.21 0.40 0.47 0.53 0.49 0.55
Net Realized and
Unrealized Gain (Loss)
on Investments........ (0.48) 1.09 2.17 (0.19) 1.39 0.85
------ ------ ------ ------ ------- -------
Total from Investment
Operations........... (0.27) 1.49 2.64 0.34 1.88 1.40
------ ------ ------ ------ ------- -------
Distributions to
Shareholders:
From Net Investment
Income................ (0.21) (0.40) (0.48) (0.54) (0.52) (0.55)
From Net Realized
Capital Gain.......... (0.44) (0.82) -- -- -- --
------ ------ ------ ------ ------- -------
Total Distributions to
Shareholders......... (0.65) (1.22) (0.48) (0.54) (0.52) (0.55)
------ ------ ------ ------ ------- -------
Net Increase (Decrease)
in Net Asset Value.... (0.92) 0.27 2.16 (0.20) 1.36 0.85
------ ------ ------ ------ ------- -------
Net Asset Value -- End
of Period............. $11.91 $12.83 $12.56 $10.40 $ 10.60 $ 9.24
====== ====== ====== ====== ======= =======
Total Investment Return. (2.13)%A 12.24% 25.55% 3.39% 20.60% 16.62%
Ratios to Average Net
Assets:
Expenses............... 1.05%B 1.05% 1.05% 1.05% 1.05% 1.05%
Net Investment Income.. 3.21%B 3.16% 4.01% 4.88% 4.82% 6.26%
Supplementary Data:
Portfolio Turnover
Rate.................. -- 22.0% 29.5% 17.3% 45.1% 147.0%
Net Assets at End of
Period (in thousands). $7,331 $8,397 $9,799 $8,806 $15,106 $17,151
Number of Shares
Outstanding at End of
Period (in thousands). 615 654 780 847 1,425 1,855
</TABLE>
- -----------------------------
A Total investment return for periods of less than one year are not
annualized.
B Annualized
See Notes to Financial Statements.
11
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Growth Fund
For the Six
Months Ended
December 31, For the Years Ended June 30,
1999 -----------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period.. $ 22.03 $ 22.96 $ 19.02 $ 17.87 $ 14.64 $ 11.05
------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Loss.... (0.06) (0.13) (0.18) (0.09) (0.07) 0.01
Net Realized and
Unrealized Gain (Loss)
on Investments........ (1.70) 3.86 4.12 1.83 3.30 3.60
------- ------- ------- ------- ------- -------
Total from Investment
Operations........... (1.76) 3.73 3.94 1.74 3.23 3.61
------- ------- ------- ------- ------- -------
Distributions to
Shareholders:
From Net Investment
Income................ -- -- -- -- -- (0.02)
From Net Realized
Capital Gain.......... (3.74) (4.66) -- (0.59) -- --
------- ------- ------- ------- ------- -------
Total Distributions to
Shareholders......... (3.74) (4.66) -- (0.59) -- (0.02)
------- ------- ------- ------- ------- -------
Net Increase in Net
Asset Value........... (5.50) (0.93) 3.94 1.15 3.23 3.59
------- ------- ------- ------- ------- -------
Net Asset Value -- End
of Period............. $ 16.53 $ 22.03 $ 22.96 $ 19.02 $ 17.87 $ 14.64
======= ======= ======= ======= ======= =======
Total Investment Return. (7.57)%A 23.32% 20.72% 10.10% 22.06% 32.65%
Ratios to Average Net
Assets:
Expenses............... 1.50%B 1.50% 1.50% 1.50% 1.50% 1.50%
Net Investment Income
(Loss)................ (0.73)%B (0.62)% (0.74)% (0.46)% (0.41)% 0.12%
Supplementary Data:
Portfolio Turnover
Rate.................. 1.4% 54.3% 65.1% 41.9% 74.5% 70.9%
Net Assets at End of
Period (in thousands). $17,585 $20,871 $24,831 $24,899 $31,777 $19,337
Number of Shares
Outstanding at End of
Period (in thousands). 1,064 948 1,081 1,309 1,778 1,321
</TABLE>
- -----------------------------
A Total investment return for periods of less than one year are not
annualized.
B Annualized.
See Notes to Financial Statements.
12
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Emerging Growth Fund
For the Six
Months Ended
December 31, For the Years Ended June 30,
1999 ----------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period.. $13.11 $13.82 $ 13.84 $ 16.99 $ 14.96 $ 10.41
------ ------ ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Loss.... (0.06) (0.09) (0.21) (0.24) (0.16) (0.08)
Net Realized and
Unrealized Gain (Loss)
on Investments........ 1.66 (0.52)A 0.19A (0.25) 2.30 4.63
------ ------ ------- ------- ------- -------
Total from Investment
Operations........... 1.60 (0.61) (0.02) (0.49) 2.14 4.55
------ ------ ------- ------- ------- -------
Distributions to
Shareholders:
From Net Realized
Capital Gain.......... (3.62) (0.10) -- (2.66) (0.11) --
------ ------ ------- ------- ------- -------
Net Increase (Decrease)
in Net Asset Value.... (2.02) (0.71) (0.02) (3.15) 2.03 4.55
------ ------ ------- ------- ------- -------
Net Asset Value -- End
of Period............. $11.09 $13.11 $ 13.82 $ 13.84 $ 16.99 $ 14.96
====== ====== ======= ======= ======= =======
Total Investment Return. 12.85%B (4.39)% (0.14)% (2.15)% 14.36% 43.71%
Ratios to Average Net
Assets:
Expenses............... 1.50%C 1.51% 1.50% 1.50% 1.50% 1.50%
Net Investment Loss.... (1.14)%C (0.49)% (1.07)% (1.20)% (0.98)% (0.61)%
Supplementary Data:
Portfolio Turnover
Rate.................. 125.2% 171.6% 121.2% 66.2% 121.2% 96.1%
Net Assets at End of
Period (in thousands). $8,286 $8,636 $14,159 $20,732 $44,985 $36,606
Number of Shares
Outstanding at End of
Period (in thousands). 747 659 1,025 1,498 2,647 2,447
</TABLE>
- -----------------------------
A The per share amount does not coincide with the net realized and
unrealized gain/loss for the year because of the timing of sales and
redemptions of Fund shares and the amounts of per share realized and
unrealized gain and loss at such time.
B Total investment return for periods of less than one year are not
annualized.
C Annualized
See Notes to Financial Statements.
13
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Gold Fund
For the Six
Months Ended
December 31, For the Years Ended June 30,
1999 ------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Period.. $ 4.00 $ 4.66 $ 7.02 $ 9.93 $ 9.89 $ 9.52
------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net Investment Loss.... (0.03) (0.05) (0.05) (0.08) (0.06) (0.05)
Net Realized and
Unrealized Gain (Loss)
on Investments........ (0.33) (0.61) (2.31) (2.83) 0.10 0.42
------ ------ ------ ------ ------ ------
Total from Investment
Operations........... (0.36) (0.66) (2.36) (2.91) 0.04 0.37
------ ------ ------ ------ ------ ------
Distributions to
Shareholders:
Total Distributions to
Shareholders.......... -- -- -- -- -- --
------ ------ ------ ------ ------ ------
Net Increase (Decrease)
in Net Asset Value.... (0.36) (0.66) (2.36) (2.91) 0.04 0.37
------ ------ ------ ------ ------ ------
Net Asset Value -- End
of Period............. $ 3.64 $ 4.00 $ 4.66 $ 7.02 $ 9.93 $ 9.89
====== ====== ====== ====== ====== ======
Total Investment Return. (9.01)%A (14.16)% (33.62)% (29.31)% 0.40% 3.89%
Ratios to Average Net
Assets:
Expenses............... 1.70%B 1.70% 1.70% 1.70% 1.70% 1.70%
Net Investment Loss.... (1.31)%B (0.96)% (0.74)% (0.76)% (0.59)% (0.51)%
Supplementary Data:
Portfolio Turnover
Rate.................. -- -- 56.5% 108.5% 59.1% 51.2%
Net Assets at End of
Period (in thousands). $1,020 $1,394 $2,187 $3,409 $6,122 $6,796
Number of Shares
Outstanding at End of
Period (in thousands). 280 349 469 485 616 687
</TABLE>
- -----------------------------
A Total investment return for periods of less than one year are not
annualized.
B Annualized
See Notes to Financial Statements.
14
<PAGE>
Cappiello-Rushmore Trust
- -------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 1999
(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, if any, 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, 1999.
Each fund of the Trust invests excess cash in Fund for Government Investors,
a money market mutual fund. Certain Officers and Trustees of Fund for
Government Investors are affiliated with the Trust.
15
<PAGE>
Cappiello-Rushmore Trust
- --------------------------------------------------------------------------------
3. Securities Transactions
For the six months ended December 31, 1999, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Purchases........................ -- $ 249,487 $9,445,623 --
========== =========== ========== ==========
Sales............................ $1,238,492 $ 4,072,466 $9,930,872 $ 258,765
========== =========== ========== ==========
</TABLE>
4. Net Unrealized Appreciation and Depreciation of Investments
Unrealized appreciation and depreciation as of December 31, 1999, based on
the cost for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Gross Unrealized Appreciation.. $1,884,795 $7,313,236 $2,222,819 $ 174,596
Gross Unrealized Depreciation.. (214,687) (500,538) (356,559) (715,821)
---------- ---------- ---------- ----------
Net Unrealized Appreciation
(Depreciation)................ $1,670,108 $6,812,698 $1,866,260 $ (541,225)
========== ========== ========== ==========
Cost of Investments for Federal
Income Tax Purposes........... $4,917,350 $8,891,616 $6,608,093 $1,568,210
========== ========== ========== ==========
</TABLE>
5. Net Assets
At December 31, 1999 net assets consisted of the following:
<TABLE>
<CAPTION>
Utility Emerging
Income Fund Growth Fund Growth Fund Gold Fund
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Paid-in-Capital............... $5,018,141 $ 9,372,928 $6,057,548 $4,756,651
Undistributed Net Investment
Income....................... 260 (68,265) (46,175) (8,406)
Accumulated Net Realized Gain
(Loss) on Investments........ 619,719 1,468,030 371,378 (3,214,229)
Net Unrealized Appreciation
(Depreciation) on
Investments.................. 1,693,141 6,812,698 1,903,513 (514,003)
---------- ----------- ---------- ----------
Net Assets.................... $7,331,261 $17,585,391 $8,286,264 $1,020,013
========== =========== ========== ==========
</TABLE>
6. Federal Income Tax
At June 30, 1999, for Federal income tax purposes, the following Funds had
capital loss carryovers which may be applied against future net taxable
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
Emerging
Growth
Expires June 30, Fund Gold Fund
- ---------------- -------- ----------
<S> <C> <C>
2000....................................................... -- $ 434,866
2001....................................................... -- 281,566
2005....................................................... $56,256 648,259
2006....................................................... -- 954,368
2007....................................................... -- 461,455
------- ----------
Total..................................................... $56,256 $2,780,514
======= ==========
</TABLE>
16
<PAGE>
Cappiello-Rushmore Trust
- -------------------------------------------------------------------------------
7. Agreement with Friedman Billings Ramsey Group, Inc.
On October 20, 1999, the Adviser and Rushmore Trust reached a definitive
agreement to be acquired by Friedman Billings Ramsey Group, Inc. The
transaction is subject to various regulatory approvals.
17
<PAGE>
[LOGO CAPPIELLO RUSHMORE TRUST]
[SEMI ANNUAL REPORT DECEMBER 31, 1999]
