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1
CAPSTONE NIKKO JAPAN FUND
A FUND OF
CAPSTONE INTERNATIONAL SERIES TRUST
SUPPLEMENT DATED JULY 25, 1997
TO
PROSPECTUS DATED FEBRUARY 28, 1997
AND SUPPLEMENTED MAY 22, 1997
The Board of Trustees of Capstone International Series Trust has called a
special meeting of stockholders of its two series, Capstone Nikko Japan Fund
("Japan Fund") and Capstone New Zealand Fund, to be held on August 8, 1997. The
purposes of the meeting are:
(1) To approve a new investment advisory agreement for Japan Fund
(for stockholders of Japan Fund only);
(2) To elect a new Board of Trustees; and
(3) To ratify the selection of new independent accountants for the
Trust for the fiscal year ending October 31, 1997.
Nikko Capital Management (U.S.A.), Inc., the current investment adviser of Japan
Fund, has determined to resign as investment adviser because this activity is no
longer fully compatible with the firm's business plans. In consultation with
counsel and after consideration of various ways to proceed, the Board of
Trustees determined to propose the selection of FCA Corp to serve as investment
adviser to Japan Fund. FCA has served as investment adviser to Capstone New
Zealand Fund since that fund's inception in November of 1991. If the investment
advisory contract is approved by shareholders, FCA has proposed that the Fund's
investment objective be modified to seek long-term capital appreciation and
current income by investing not only in securities listed on the Tokyo Stock
Exchange, but also in securities of issuers a substantial portion of whose
business activities, profits and/or earnings were in, or derived from, Japan.
FCA would also invest in debt securities, rated BBB or better, of such issuers
or that are payable in yen or are otherwise linked to the performance of the
Japanese market or economy. Also, FCA would invest in American Depository
Receipts related to these securities, in addition to buying the securities
directly. The proposed Investment Advisory Agreement would increase Japan Fund's
advisory fees from 0.40% to 0.75% of the Fund's average annual net assets,
reflecting FCA Corp's more research-oriented investment style. However, FCA Corp
has committed to waive its fees and make additional reimbursements to the Fund
to the extent necessary to maintain the Fund's expense ratio at no greater than
2.5% of the Fund's net assets at least through October 31, 1998, which would
cause the Fund's expenses to be lower than they are currently, at least until
October 31, 1998. If approved by shareholders at the special meeting, these
changes will be effected as soon as practicable following the shareholder
meeting.
Detailed information regarding the proposals is contained in a proxy statement
mailed to the Fund's stockholders of record as of July 14, 1997. Potential
investors may direct their questions regarding the proposals to the Fund at
800-262-6631.
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2
CAPSTONE NEW ZEALAND FUND
A FUND OF
CAPSTONE INTERNATIONAL SERIES TRUST
SUPPLEMENT DATED JULY 25, 1997
TO
PROSPECTUS DATED FEBRUARY 28, 1997
The Board of Trustees of Capstone International Series Trust has called a
special meeting of stockholders of its two series, Capstone Nikko Japan Fund
("Japan Fund") and Capstone New Zealand Fund, to be held on August 8, 1997. The
purposes of the meeting are:
(1) To approve a new investment advisory agreement for Japan Fund
(for stockholders of Japan Fund only);
(2) To elect a new Board of Trustees; and
(3) To ratify the selection of new independent accountants for the
Trust for the fiscal year ending October 31, 1997.
Detailed information regarding the proposals is contained in a proxy statement
mailed to the Fund's stockholders of record as of July 14, 1997. Potential
investors may direct their questions regarding the proposals to the Fund at
800-262-6631.
