<PAGE>
1
CAPSTONE NEW ZEALAND FUND
- --------------------------------------------------------------------------------
Dear Shareholder,
We are pleased to present this semi-annual report on the Capstone New Zealand
Fund for the six months ended April 30, 1997. The Fund's net asset value ("NAV")
at April 30, 1997 was US $12.48 per share compared to US $12.73 at the end of
our October 31, 1996 fiscal year. The payment of the December 1996 dividend of
$0.174 reduced the NAV by a like amount.
FUND'S COMPARATIVE PERFORMANCE
The Fund's strategy continues to concentrate on a diversified portfolio of
medium-sized stocks not readily available to individual US investors. The most
relevant index to compare the Fund's performance is the New Zealand Small
Company Index* ("NZSCI") that measures the performance of small to medium cap
stocks of the New Zealand market. During the six months ended April 30, 1997,
the NZSCI increased by 2.7% in New Zealand dollars. For the same period, the
Fund's total return was -.66%. In analyzing comparisons of performance to the
NZSCI, the reader should remember an index does not reflect any cash positions,
brokerage costs or administrative or management fees incurred by the Fund or
individual investor.
NEW ZEALAND MARKET OVERVIEW
The 1996 calendar year was a good year for the market as a whole and your Fund;
according to Lipper Analytical Services, the Capstone New Zealand Fund was
ranked number 5 out of 57 Pacific Ex-Japan funds with a total return of 26.37%.
During the same period, the NZSCI was up 23.6%. Some of the 1996 gains have been
lost primarily because of a decline in the New Zealand currency from $0.7071 on
October 31, 1996 to $0.6927 on April 30, 1997. The decline in the currency was
caused in part by declining interest rates and the New Zealand Reserve Bank's
("NZRB") efforts to help keep the economy's growth from driving up the inflation
rate. Inflation is currently around 1.8%.
We believe the 1996 appreciation of the Fund and of the New Zealand market were
in part an overdue adjustment on a relative valuation to other countries.
Furthermore, we believe the market will have yet another upward adjustment
because of lower interest rates, a stabilizing but cheaper currency and
continued government fiscal responsibility. The government continues to repay
foreign debt out of its budget surplus and is expected to follow through with
the proposed 1998 income tax cuts.
The New Zealand market should provide some comfort to US investors concerned
with the historically high price-to-earnings ratio ("P/E") and low dividend
yields of the US market. Our portfolio contains many companies that represent
sound business ventures that have low multiples of earnings accompanied by
reasonable cash returns. Some examples** are:
o BAYCORP HOLDINGS, LTD. provides debt collection, credit reporting and
factored ledgers services. They are also involved in a joint venture
with Telnet Systems Inc. (Minneapolis) in telemarketing services. The
company's P/E ratio is 20.7X, Price-to-Book ratio ("P/B") is 6.2X and
their cash yield is 4.5%. The Fund's unrealized gain is 87% since the
purchase of the stock.
o SOUTH PORT NEW ZEALAND, LTD. located in Bluff on the southern tip of
the South Island is involved in port operations and rural sector
activities. The company's P/E ratio is 15.1X, P/B is 1.4X and their
cash yield is 4.0% The Fund's unrealized gain is 36% since the
purchase of the stock.
o FISHER & PAYKEL INDUSTRIES, LTD. manufactures and distributes around
the world major appliances, consumer electronics and industrial and
professional products and also is a major provider of consumer
finance. The company's P/E ratio is 14.9X, P/B ratio is 1.5X and their
cash yield is 3.5%. The Fund's unrealized gain is 42% since the
purchase of the stock.
______________
* The New Zealand Small Company Index is composed of approximately 100
equity securities, excluding those in the New Zealand Stock Exchange
40-Index, weighted by their full market capitalization.
** Ratios, yields and gains calculated using May 30, 1997 data.
<PAGE>
2
CAPSTONE NEW ZEALAND FUND
- --------------------------------------------------------------------------------
o NATIONAL MUTUAL HOLDINGS, LTD. is a leading provider of insurance,
superannuation and savings and investment products and services
throughout Australia, Asia and New Zealand. The company's P/E ratio is
8.6X, P/B ratio is 1.3X and their cash yield is 4.1%. The Fund's
unrealized gain is 23% since the purchase of the stock.
o NORTHLAND PORT CORP. (NZ), LTD. provides port and cargo operations,
shipping services, marine transport and group engineering. The
company's P/E ratio is 18.4X, P/B ratio is 3.0X and their cash yield
is 2.4%. The Fund's unrealized gain is 51% since the purchase of the
stock.
THE PORTFOLIO
The Fund is widely diversified by industry sector. At April 30, 1997 the
percentages of equity investments of the Fund by major industry categories were
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Port Operations 14.42% Chemicals 4.34%
Transportation 8.00% Utilities - Electric 3.41%
Forest Products & Paper 6.41% Finance 3.00%
Insurance 6.37% Environmental Control 2.62%
Miscellaneous 6.27% Textiles - Manufacturing 2.52%
Broadcast Media 5.60% Real Estate 2.42%
Commercial Services 5.22% Stock & Station Services 2.33%
Electrical/Appliance Manufacturing 4.85% Oil & Gas 2.27%
Horticultural Supplier 4.84% Vehicle Distributor 2.13%
Retail 4.69%
</TABLE>
We continue to closely monitor the market. We were one of the few US investors
to attend the New Zealand Investment Conference in March 1997 which included in
the program the who's who of the New Zealand political and business community.
Should you have any questions please feel free to contact us, and we thank you
for your continued support.
Sincerely,
/s/ROBERT W. SCHARAR /s/W. LANCE HALL
- ------------------------------ ------------------------------
Robert W. Scharar W. Lance Hall
President Assistant Portfolio Manager
THIS PUBLICATION MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS FOR
CAPSTONE NEW ZEALAND FUND
<PAGE>
3
CAPSTONE NEW ZEALAND FUND
PORTFOLIO OF INVESTMENTS - APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value Percentage of
COMMON & PREFERRED STOCKS - 91.71% Shares (Note 1-A) Net Assets
- ---------------------------------- -------- ---------- -------------
<S> <C> <C> <C>
BROADCAST MEDIA (5.60%)
Radio Otago, Limited ............................. 64,300 $102,443 1.23%
Radio Pacific, Limited ........................... 151,700 362,535 4.37
-------- -----
464,978 5.60
CHEMICALS (4.34%)
Fernz Corporation, Limited ....................... 53,000 178,058 2.15
Nuplex Industries, Limited ....................... 70,798 181,454 2.19
-------- -----
359,512 4.34
COMMERCIAL SERVICES (5.22%)
Baycorp Holdings, Limited ........................ 100,000 273,617 3.30
Taylors Group, Limited ........................... 120,100 159,731 1.92
-------- -----
433,348 5.22
COMPUTER SOFTWARE/SERVICES (0.26%)
Triumph Industries, Limited ...................... 55,700 21,221 0.26
CONSTRUCTION/BUILDING MATERIALS (1.16%)
Milburn Corp., Limited ........................... 49,724 96,443 1.16
ELECTRICAL/APPLIANCE MANUFACTURING (4.85%)
Fisher & Paykel Industries ....................... 55,844 200,379 2.41
PDL Holdings, Limited ............................ 41,100 202,137 2.44
-------- -----
402,516 4.85
ENTERTAINMENT (0.96%)
Shotover Jet, Limited ............................ 260,000 79,245 0.96
ENVIRONMENTAL CONTROL (2.62%)
Waste Management NZ, Limited ..................... 52,245 217,141 2.62
FINANCE (3.00%)
Australia & New Zealand Banking Group, Limited ... 39,000 248,541 3.00
FISHERIES (1.19%)
Sanford, Limited ................................. 50,000 98,710 1.19
FOOD PROCESSING (0.53%)
Mr. Chips Holdings, Limited ...................... 93,700 44,136 0.53
</TABLE>
<PAGE>
4
CAPSTONE NEW ZEALAND FUND
PORTFOLIO OF INVESTMENTS - APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value Percentage of
Shares (Note 1-A) Net Assets
------ ---------- -------------
<S> <C> <C> <C>
FOREST PRODUCTS & PAPER (6.41%)
Fletcher Challenge Forestry .............. 234,864 $ 323,754 3.90%
Evergreen Forests, Limited ............... 500,000 207,810 2.51
---------- -----
531,564 6.41
HORTICULTURAL SUPPLIER (4.84%)
Fruitfed Supplies, Limited ............... 449,000 401,219 4.84
INSURANCE (6.37%)
Metropolitan Lifecare Group .............. 400,000 362,975 4.38
National Mutual Holdings, Limited ........ 109,000 165,354 1.99
---------- -----
528,329 6.37
INVESTMENT COMPANIES (1.14%)
Helaby Holdings, Limited ................. 61,640 94,790 1.14
MEDICAL SUPPLIES (0.75%)
Zuellig New Zealand, Limited ............. 159,940 62,042 0.75
OIL & GAS (2.27%)
New Zealand Refining, Limited ............ 9,647 188,780 2.27
PORT OPERATIONS (14.42%)
Lyttelton Port Corp., Limited ............ 250,000 339,423 4.09
Northland Port Corp., Limited ............ 262,300 554,170 6.68
Port of Tauranga, Limited ................ 5,000 12,572 0.15
South Port New Zealand, Limited .......... 289,500 290,778 3.50
---------- -----
1,196,943 14.42
PRINTING - COMMERCIAL (0.28%)
McCollam Printers ........................ 15,500 23,621 0.28
REAL ESTATE (2.42%)
Kiwi Income .............................. 140,000 118,313 1.43
New Zealand Guardian Trust (Note 5) ...... 64,792 82,021 0.99
---------- -----
200,334 2.42
RETAIL - APPAREL (1.00%)
Hallenstein Glasson Holdings, Limited .... 57,900 82,621 1.00
RETAIL - DEPARTMENT STORES (3.69%)
Arthur Barnett, Limited .................. 210,300 305,917 3.69
</TABLE>
<PAGE>
5
CAPSTONE NEW ZEALAND FUND
PORTFOLIO OF INVESTMENTS - APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value in Value Percentage of
NZ Dollars (Note 1-A) Net Assets
------------ ---------- -------------
<S> <C> <C> <C>
STOCK & STATION SERVICES (2.33%)
Williams & Kettle, Limited ...................... 153,500 $ 193,520 2.33%
TEXTILES - MANUFACTURING (2.52%)
Cavalier Corporation, Limited ................... 50,000 90,744 1.09
Donaghy's, Limited .............................. 58,715 118,762 1.43
---------- ------
209,506 2.52
TRANSPORTATION (8.00%)
Air New Zealand, Limited - Class B .............. 62,600 180,824 2.18
Mainfreight, Limited ............................ 195,000 186,405 2.25
Owens Group, Limited ............................ 213,680 296,032 3.57
---------- ------
663,261 8.00
UTILITIES - ELECTRIC (3.41%)
Infrastructure & Utilities Corporation, Limited . 216,229 170,751 2.06
Transalta New Zealand, Limited .................. 88,000 112,162 1.35
---------- ------
282,913 3.41
VEHICLE DISTRIBUTOR (2.13%)
The Colonial Motor Co., Limited ................. 91,100 176,694 2.13
TOTAL COMMON & PREFERRED STOCKS (Cost $6,849,833) ............ $7,607,845 91.71%
BONDS (4.85%)
- -------------
Countrywide Bank, 7%, 05/15/97 .................. $ 200,000 $ 135,025 1.63%
Shortland Properties, 6.375%, Conv. 12/31/98 .... 226,500 150,621 1.82
State Bank of South Australia, 9%, 07/30/02 ..... 94,000 60,374 0.73
Transalta NZ Cap Notes, 9.84%, 10/01/01 ......... 25,000 18,724 0.23
Transalta NZ 7 yr, 8.81%, 10/01/03 .............. 25,000 18,460 0.22
Transalta NZ 10 yr, 8.86%, 10/01/06 ............. 25,000 18,616 0.22
---------- ------
TOTAL BONDS (Cost $394,200) ......................... 401,820 4.85
TOTAL INVESTMENTS (Cost $7,244,033) ................. 8,009,665 96.56
OTHER ASSETS, LESS LIABILITIES ...................... 285,679 3.44
---------- ------
NET ASSETS .......................................... $8,295,344 100.00%
========== ======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
6
CAPSTONE NEW ZEALAND FUND
STATEMENT OF ASSETS AND LIABILITIES - APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments in securities at market (identified cost $7,244,033)(Note 1-A) ...................... $8,009,665
Cash ............................................................................................ 141,624
Foreign currency holdings - New Zealand Dollar account, at market (Note 1-B) .................... 115,506
Receivables:
Investment securities sold...........................................................$38,852
Dividends and interest................................................................38,905 77,757
------- ----------
Total Assets ........................................................................... 8,344,552
----------
LIABILITIES:
Payable for Trust shares redeemed ............................................................... 17,442
Accrued advisory and administration fees ........................................................ 9,796
Accrued expenses ................................................................................ 21,970
----------
Total Liabilities ...................................................................... 49,208
----------
NET ASSETS: .............................................................................................. $8,295,344
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE:
($8,295,344/664,897 shares of beneficial interest outstanding) ......................................... $ 12.48
==========
SOURCE OF NET ASSETS:
Paid in capital ................................................................................. $7,313,326
Undistributed net investment income ............................................................. 109,546
Accumulated net realized gain on investments and foreign currency transactions .................. 127,071
Net unrealized appreciation of investments and foreign currencies ............................... 745,401
----------
$8,295,344
==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
7
CAPSTONE NEW ZEALAND FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $30,070) ........................ $ 193,404
Interest .................................................................... 17,281
---------
Total Investment Income ................................................. 210,685
Expenses: (Note 2)
Advisory fees .................................................... $ 33,562
Administration services .......................................... 24,252
Transfer agent fees .............................................. 24,305
Filing and registration fees ..................................... 4,072
Professional fees ................................................ 7,635
Custodian fees ................................................... 12,091
Distribution fees ................................................ 11,237
Trustees' fees and expenses ...................................... 5,200
Miscellaneous .................................................... 7,348
---------
Total Expenses ............................................... 129,702
Less: Custodian fees paid indirectly ........................... (10,300)
---------
Net Expenses .............................................................. 119,402
---------
Net Investment Income ............................................... 91,283
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions .......................... 138,859
Realized gain on foreign currency transactions ........................ 54,211
---------
Net realized gain ........................................................... 193,070
Net change in unrealized appreciation of investments and foreign currencies ...... (316,643)
---------
Net realized and unrealized gain (loss) on investments and foreign currencies (123,573)
---------
Net decrease in net assets resulting from operations .................... $ (32,290)
=========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
8
CAPSTONE NEW ZEALAND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1997 Fiscal Year Ended
(Unaudited) October 31, 1996
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income ................................................. $ 91,283 $ 111,784
Net realized gain (loss) on investments and foreign currency
transactions ..................................................... 193,070 (11,788)
Net change in unrealized appreciation of investments and foreign
currencies ....................................................... (316,643) 1,011,044
---------- ----------
Net increase (decrease) in net assets resulting from operations .. (32,290) 1,111,040
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................................. (134,014) (94,166)
Net realized gains from investment transactions ....................... -- (73,239)
TRUST SHARE TRANSACTIONS:
Increase in net assets resulting from Trust share transactions (Note 3) 204,032 3,819,564
---------- ----------
Net increase in net assets ....................................... 37,728 4,763,199
NET ASSETS:
Beginning of period ................................................... 8,257,616 3,494,417
---------- ----------
End of period (including undistributed net investment income of
$109,546 and $98,100, respectively) .............................. $8,295,344 $8,257,616
========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Capstone New Zealand Fund (the "Fund") is one of two series of beneficial
interest of Capstone International Series Trust (the "Trust") which is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company, The Fund seeks to provide
long-term capital appreciation and current income by investing in equity
securities, debt securities, and securities convertible into common stock of New
Zealand issuers. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
A) SECURITY VALUATION - Portfolio securities which are traded on securities
exchanges are valued at the last sales price on that exchange prior to the
relevant closing or, if there is no recent last sale price available, at the
last current bid quotation. A security which is listed or traded on more than
one exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Fixed income securities are valued using
market quotations or pricing services. In the absence of an applicable price,
securities will be valued at a fair value as determined in good faith in
accordance with procedures established by the trustees.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
9
CAPSTONE NEW ZEALAND FUND
B) CURRENCY TRANSLATION - For purposes of determining the Fund's net asset
value, all assets and liabilities initially expressed in foreign currency values
are converted into U.S. dollar values at the prevailing market rate at 14:00 GMT
on each U.S. business day, as established by the Board of Trustees. The cost of
securities is determined by using historical exchange rates. Income is
translated at approximate rates prevailing when accrued. The Fund does not
isolate that portion of gains and losses on investments which is due to changes
in foreign exchange rates from that which is due to changes in market prices of
the investments. Such fluctuations are included with the net realized and
unrealized gains and losses from investments. Net realized and unrealized gain
(loss) from foreign currency transactions includes gains and losses between
trade and settlement dates on securities transactions, gains and losses arising
from sales of foreign currency, and gains and losses between the ex and payment
dates on dividends, interest, and foreign withholding taxes.
C) ACCOUNTING FOR INVESTMENTS - Security transactions are accounted for on the
trade date. Realized gains and losses on security transactions are determined
based on the identified cost method. Dividend income and other distributions are
recorded on the ex-dividend date. Interest income and expenses are accrued
daily.
D) FEDERAL INCOME TAXES - No provision for Federal income taxes has been made
since it is the Fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and realized capital gains (in excess of
any available capital loss carryovers)to its shareholders. At April 30, 1997,
the Fund had a capital loss carryover of $5,840 which expires in 2004. Under the
United States-New Zealand tax treaty, New Zealand imposes a withholding tax of
15% on dividends and 10% on interest. There is currently no New Zealand tax on
capital gains.
E) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - The Fund distributes its net
investment income and net realized gains (net of any capital loss carryovers)
annually. Dividends and distributions to shareholders are recorded by the Fund
on the ex-dividend date. Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions and capital loss carryovers.
F) USE OF ESTIMATES - The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEES, AND OTHER TRANSACTIONS WITH AFFILIATES
The Investment Adviser, FCA Corp, is paid a fee, calculated daily and paid
monthly, equal to an annual rate of 0.75% of the average net assets of the Fund.
The Administrator, Capstone Asset Management Company, is paid a fee, calculated
daily and paid monthly, equal to an annual rate of 0.25% of the Fund's average
net assets. The Administrator is also entitled to receive a monthly fee of
$2,000 representing the cost of certain accounting and bookkeeping services.
This fee which amounted to $12,000 for the six months ended April 30, 1997, is
not subject to the expense limitation discussed below.
The Adviser and Administrator have agreed to reduce their fees if the
ordinary business expenses of the Fund net of custodian credits exceed any
expense limitation applicable to the Fund pursuant to the laws or regulations of
any state. The most restrictive limitation applicable to the Fund is equal to
the sum of 2.5% of the first $30 million of the Fund's average net assets, 2.0%
of the next $70 million of the Fund's average net assets and 1.5% of the Fund's
average net assets in excess of $100 million.
Capstone Asset Planning Company ("CAPCO") serves as Distributor and
Underwriter to the Fund. Effective August 21, 1995, the 4.75% front-end sales
load applicable to sales of Fund shares was eliminated.
The Fund has adopted a Service and Distribution Plan (the "Plan") pursuant
to Rule 12b-1 under the Act whereby Fund assets are used to reimburse CAPCO for
costs and expenses incurred with the distribution and marketing of shares of the
Fund and servicing of the Fund shareholders. Distribution and marketing expenses
include, among other things, printing of prospectuses,
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
10
CAPSTONE NEW ZEALAND FUND
advertising literature and costs of personnel involved with the promotion and
distribution of the Fund's shares. Under the Plan, the Fund pays CAPCO an amount
computed at an annual rate of up to 0.25% of the Fund's average net assets
(including reinvested dividends paid with respect to those assets). Of this
amount, CAPCO may reallocate to securities dealers (which may include CAPCO
itself) and other financial institutions and organizations (collectively,
"Service Organizations") amounts based on the Fund's average net assets owned by
stockholders for whom the Service Organizations have a servicing relationship.
The Plan permits CAPCO to carry forward for a maximum of twelve months
distribution expenses covered by the Plan for which CAPCO has not yet received
reimbursement. For the six months ended April 30, 1997, the Fund paid $11,237 in
12b-1 fees, of which 27% was paid to Service Organizations other than CAPCO.
The Fund's Custodian has provided credits in the amount of $10,300 against
custodian charges based on the uninvested cash balances of the Fund.
The Administrator is an affiliate of CAPCO and both are wholly-owned
subsidiaries of Capstone Financial Services, Inc. ("CFS"). Certain officers and
trustees of the Trust and the Fund who are also officers and directors of the
Adviser, the Administrator, CAPCO or CFS, received no compensation from the
Fund. During the six months ended April 30, 1997 trustees of the Fund who are
not "interested persons" received fees of $1,250.
NOTE 3 -TRUST SHARES
Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
For the Six Months Ended
April 30, 1997 Fiscal Year Ended
(Unaudited) October 31, 1996
------------------------ ------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold .................................... 458,199 $ 5,961,070 634,364 $ 7,280,993
Shares issued to shareholders in reinvestment of
distributions ................................ 7,766 102,048 15,526 163,953
-------- ----------- -------- -----------
465,965 6,063,118 649,890 7,444,946
Shares redeemed ................................ (449,938) (5,859,086) (315,346) (3,625,382)
-------- ----------- -------- -----------
Net increase ................................... 16,027 $ 204,032 334,544 $ 3,819,564
======== =========== ======== ===========
</TABLE>
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short term securities)
aggregated $1,970,737 and $1,152,492, respectively for the six months ended
April 30, 1997. At April 30, 1997 the cost of investments for Federal income tax
purposes was $7,244,033. Accumulated net unrealized appreciation on investments
was $765,632 consisting of $1,105,080 gross unrealized appreciation and $339,448
of gross unrealized depreciation.
NOTE 5 - RESTRICTED SECURITY
In 1993, the Fund acquired 61,015 shares of Guardian Property Fund
("Guardian"), a closed end mutual fund (offered by The New Zealand Guardian
Trust Company Limited), through private placements at a cost of $60,606. These
shares cannot be sold prior to their valuation date, which occurs two years
after the date of investment. In October 1995, the Guardian shares were renewed
for an additional two years with a new valuation date of October 15, 1997. In
March, June, and November, 1996, cash dividends were received and reinvested
into 3,777 additional shares, bringing the position to 64,792 shares. The
Guardian shares are valued daily based on a weekly quoted price. At April 30,
1997, the value of the Guardian investment was $82,021, representing
approximately 1% of the Fund's net assets.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
11
CAPSTONE NEW ZEALAND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table sets forth the per share operating performance data for a
share of beneficial interest outstanding, total return, ratios to average net
assets and other supplemental data for each period indicated.
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1997 Year Ended October 31,
---------------- -------------------------------------------------
(Unaudited) 1996 1995 1994 1993 1992(1)
----------- ---- ---- ---- ---- -------
PER SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ...................... $12.73 $11.12 $10.44 $11.61 $ 9.75 $10.00
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) ............................ .18 .19 .31 .16 .09 (.06)
Net realized and unrealized gain (loss) on
investments ......................................... (.26) 1.93 .90 (1.00) 1.77 (.19)
------ ------ ------ ------ ------ ------
Total from investment operations ........................ (.08) 2.12 1.21 (.84) 1.86 (.25)
Less distributions from:
Net investment income ................................... .17 .29 .21 .06 .00 .00
Net realized gain on investments ........................ .00 .22 .32 .27 .00 .00
------ ------ ------ ------ ------ ------
Total distributions ......................................... .17 .51 .53 .33 .00 .00
------ ------ ------ ------ ------ ------
Net asset value at end of period ............................ $12.48 $12.73 $11.12 $10.44 $11.61 $ 9.75
====== ====== ====== ====== ====== ======
TOTAL RETURN(2) ............................................. (.67)% 20.03% 12.22% (7.40)% 19.08% (2.50)%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (in thousands) .................. $8,295 $8,258 $3,494 $3,014 $2,732 $ 883
RATIOS:
Operating expenses to average net assets:
Before expense reimbursement............................. 2.67%(4) 3.63% 4.77% 4.40% 8.19% 28.18%
After expense reimbursement.............................. 2.67%(4) 2.72% 2.52% 2.50% 2.50% 5.18%
Net investment income (loss) to average net assets........... 2.04%(4) 2.32% 3.06% 1.55% .95% (1.84)%
Portfolio turnover rate ..................................... 14% 38% 38% 40% 32% 4%
Average commission rate (per share of security)(3) .......... $ 0.0048 $ 0.0050 N/A N/A N/A N/A
</TABLE>
(1) November 25, 1991 (commencement of operations) to October 31, 1992.
(2) Calculated without sales charge. Sales charge eliminated on August 21, 1995.
(3) Average commission rate (per share of security) as required by amended
disclosure requirements effective September 1, 1995.
(4) Annualized
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
12
CAPSTONE NEW ZEALAND FUND
5847 San Felipe, Suite 4100
Houston, Texas 77057
1-800-262-6631
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1997
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
- -------- --------
Edward L. Jaroski Edward L. Jaroski
President-Capstone International Series Trust
Eugene W. Potter, Jr.
Robert W. Scharar
Bernard J. Vaughan President-Capstone New Zealand Fund
Linda G. Giuffre
Treasurer
Iris R. Clay
Secretary
Norma R. Ybarbo
Assistant Secretary
- --------------------------------------------------------------------------------
INVESTMENT ADVISER TRANSFER AGENT
- ------------------ --------------
FCA Corp Fund/Plan Services, Inc.
5847 San Felipe, Suite 850 3200 Horizon Drive
Houston, TX 77057 P.O. Box 61503
King of Prussia, PA 19406-0903
1-800-845-2340
ADMINISTRATOR CUSTODIAN
- ------------- ---------
Capstone Asset Management Company Fifth Third Bank, N.A.
5847 San Felipe, Suite 4100 38 Fountain Square Plaza
Houston, TX 77057 Cincinnati, OH 45263
1-800-262-6631
UNDERWRITER
-----------
Capstone Asset Planning Company
5847 San Felipe, Suite 4100
Houston, TX 77057
1-800-262-6631
