CAPSTONE NEW ZEALAND FUND
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present this semi-annual report on the Capstone New Zealand
Fund (the "Fund") for the six months ended April 30, 1998. The Fund's net asset
value ("NAV") at April 30, 1998 was US $8.53 per share compared to US $11.25 at
the end of our October 31, 1997 fiscal year. A dividend of $0.20 per share was
paid January 6, 1998 and reduced the NAV by a like amount.
FUND'S COMPARATIVE PERFORMANCE
The Fund's strategy continues to concentrate on a diversified portfolio of small
to 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* (the "NZSCI") that measures the performance of small to medium
size cap stocks of the New Zealand market. During the six months ended April 30,
1998, the NZSCI decreased by 17.1% in New Zealand dollars. For the same period,
the Fund's total return was -22.6% in United States dollars. In analyzing
comparisons of performance to the NZSCI, the reader should remember an index
does not reflect currency conversions, cash positions, brokerage costs or
administrative or management fees incurred by the Fund or individual investor.
NEW ZEALAND MARKET OVERVIEW
It has been a difficult six-month period for the Fund and for the Pacific Rim as
a whole. An increasing current account deficit and a continued depreciation of
the New Zealand dollar ("NZD") have caused local and offshore investors to
become more cautious creating downward pressure on the New Zealand equities
market.
The current account deficit, which occurs when imports exceed exports, remains a
focus for investors. Weak tourism growth, reduced migration and a weakening
trade balance have caused the deficit to reach approximately 8% of GDP
(approximately $8 billion). We expect the deficit to peak over the next several
months and start to show signs of recovery in early 1999 mainly because of an
improvement in export growth to Asia and the United States.
The uncertainty of the current account deficit has been the driving force behind
the continued depreciation of the New Zealand dollar (the"NZD"). Because the
Fund's holding are converted into US$ on a daily basis, the decline in the NZD
has had a negative impact on the Fund's NAV. The NZD has declined 11.2% over the
past six months from $0.623 on October 31, 1997 to $0.553 on April 30, 1998.
Subsequently, short-term interest rates have been pushed higher putting further
pressure on the equities market. However, we believe that the NZD has recently
showed signs of stabilizing and interest rates have begun to trend lower and
over the next several months this should reduce further currency risk and should
improve investor's confidence in the equities market.
In summary, we believe that in the short-term the New Zealand equity market will
continue to experience downward pressure because of the volatility of the New
Zealand dollar and the uncertainty of the current account deficit. However,
during this declining period, we have been re-weighting the portfolio in stocks
that should benefit from a lower currency and taking advantage of stocks, that
on a value basis, are relatively cheap and in many cases are trading at their
book value. We continue to have a long-term outlook and encourage our investors
to have the same view.
THE BUDGET
New Zealand will produce its fifth consecutive fiscal surplus (estimated to be
2.8% of GDP) for the year ended June 1998 and in the recently released 1998
Budget Policy Statement, the government is forecasting an operating surplus of
1.3% of GDP for 1999. This will allow the government to continue to repay debt,
which is forecast to fall below 20% of GDP in the next three years, to follow
through with the July 1998 middle class income tax cuts and to increase spending
in areas such as health and education. Also, the government continues to remove
import tariffs and plans to phase out all tariffs by 2010.
<PAGE>
THE PORTFOLIO
The Fund is widely diversified by industry sector. At April 30, 1998 the
percentages of equity investments of the Fund by major industry categories
were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Port Operations 12.7% Chemicals 3.7%
Transportation 12.7% Utilities-Electric 2.6%
Construction 1.2% Breweries 3.3%
Insurance 12.9% Environmental Control 3.2%
Miscellaneous 7.0% Manufacturing 0.4%
Broadcast Media 9.1% Real Estate 3.2%
Commercial Services 1.1% Stock & Station Services 2.6%
Electrical Manufacturing 6.6% Oil & Gas 2.4%
Horticultural Supplier 3.0% Vehicle Distributor 1.5%
Retail 3.6% Forestry 2.3%
</TABLE>
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 and Portfolio Manager Assistant Portfolio Manager
* 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.
THIS PUBLICATION MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS
FOR CAPSTONE NEW ZEALAND FUND.
<PAGE>
<TABLE>
<CAPTION>
CAPSTONE NEW ZEALAND FUND
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
MARKET VALUE PERCENTAGE OF
COMMON STOCK - (93.78%) SHARES (NOTE 1-A) NET ASSETS
------------------------------------------------
<S> <C> <C> <C>
BREWERIES - (3.33%)
DB Group, Limited 100,000 $ 166,593 3.33%
BROADCAST MEDIA - (7.84%)
Radio Otago, Limited 64,300 85,695 1.71%
Radio Pacific, Limited 151,700 306,635 6.13%
--------- ------
392,330 7.84%
CHEMICALS - (3.66%)
Nuplex Industries, Limited 120,798 183,129 3.66%
COMMERCIAL SERVICES - (1.14%)
Taylors Group, Limited 120,100 57,356 1.14%
CONSTRUCTION/BUILDING MATERIALS - (1.24%)
Milburn New Zealand, Limited 62,155 62,127 1.24%
ELECTRICAL/APPLIANCE MANUFACTURING - (6.56%)
Fisher & Paykel Industries 58,030 172,401 3.44%
PDL Holdings, Limited 41,100 156,339 3.12%
--------- ------
328,740 6.56%
ENVIRONMENTAL CONTROL - (3.17%)
Waste Management NZ, Limited 52,874 158,552 3.17%
FISHERIES - (1.39%)
Sanford, Limited 50,000 69,414 1.39%
FOOD PRODUCTS - (0.73%)
Restaurant Brands New Zealand, Limited 50,000 36,373 0.73%
HORTICULTURE SUPPLIER - (3.04%)
Fruitfed Supplies, Limited 449,000 152,094 3.04%
INSURANCE - (12.92%)
Metlifecare, Limited 300,000 378,166 7.56%
National Mutual Holdings, Limited 111,059 268,273 5.36%
--------- ------
646,439 12.92%
INVESTMENT COMPANIES - (1.47%)
Helaby Holdings, Limited 61,640 73,593 1.47%
<PAGE>
<CAPTION>
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------
MARKET VALUE PERCENTAGE OF
SHARES (NOTE 1-A) NET ASSETS
<S> <C> <C> <C>
LUMBER & WOOD PRODUCTS - (2.33%)
Evergreen Forest, Limited (a) 500,000 $ 116,615 2.33%
MANUFACTURING - (0.41%)
Steel & Tube Holdings, Limited 20,000 20,435 0.41%
MANUFACTURING DISTRIBUTION - (0.69%)
Scott Technologies, Limited 36,697 34,643 0.69%
MEDIA - (1.27%)
Independent Newspapers, Limited 15,000 63,722 1.27%
OIL & GAS - (2.42%)
New Zealand Refining Co., Limited 13,647 121,253 2.42%
PORT OPERATIONS - (12.66%)
Lyttleton Port Co., Limited 250,000 191,582 3.83%
Northland Port Corporation, Limited 302,300 243,411 4.86%
Port of Tauranga, Limited 5,000 8,107 0.16%
South Port New Zealand, Limited 336,500 190,595 3.81%
--------- ------
633,695 12.66%
REAL ESTATE - (3.21%)
Kiwi Income Property Trust 140,000 87,850 1.76%
Guardian Property Fund (Note 5) 72,009 72,541 1.45%
--------- ------
160,391 3.21%
RETAIL-DEPARTMENT STORES - (3.55%)
Arthur Barnett, Limited 210,300 177,508 3.55%
STOCK & STATION SERVICES - (2.55%)
Williams & Kettle, Limited 153,500 127,860 2.55%
TEXTILES-MANUFACTURING - (0.77%)
Donaghy's, Limited 58,715 38,474 0.77%
TOURIST SERVICES - (0.67%)
Tourism Holdings, Limited (a) 50,000 33,319 0.67%
<PAGE>
<CAPTION>
PORTFOLIO OF INVESTMENTS - APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------
SHARES OR MARKET VALUE PERCENTAGE OF
PAR VALUE (NOTE 1-A) NET ASSETS
<S> <C> <C> <C>
TRANSPORTATION - (12.74%)
Air New Zealand, Limited - Class B 112,600 $ 159,446 3.18%
Mainfreight, Limited 234,000 180,619 3.61%
Owens Group, Limited 303,680 227,659 4.55%
Tranz Rail Holdings, Limited 20,000 70,080 1.40%
--------- ------
637,804 12.74%
UTILITIES-ELECTRIC - (2.57%)
Infrastructure & Utilities Corporation, Limited 266,229 128,620 2.57%
VEHICLE DISTRIBUTOR - (1.45%)
The Colonial Motor Co., Limited 88,100 72,406 1.45%
TOTAL COMMON STOCK (Cost $5,990,979) 4,693,485 93.78%
BONDS - (3.82%)
Shortland Properties, 6.375%, Convertible, due 12/31/98 $ 201,200 91,617 1.83%
State Bank of South Australia, 9.00%, due 7/30/02 94,000 53,745 1.07%
Transalta NZ Capital Notes, 9.84%, due 10/01/01 25,000 15,197 0.30%
Transalta NZ Capital Notes, 8.81%, due 10/01/03 25,000 15,167 0.30%
Transalta NZ Capital Notes, 8.86%, due 10/01/06 25,000 15,731 0.32%
--------- ------
TOTAL BONDS (Cost $269,313) 191,457 3.82%
CASH EQUIVALENTS - (1.14%)
Fifth Third Bank Repurchase Agreement, dated 4/30/98, 5.06%, due 5/01/98,
repurchase price $56,999 (Collateralized by Federal National Mortgage
Association Notes, 6.50%, due 2/01/13, market value $58,981, including accrued
interest) (Cost $56,991) 56,991 56,991 1.14%
TOTAL INVESTMENTS (Cost $6,317,283) 4,941,933 98.74%
OTHER ASSETS, LESS LIABILITIES 62,949 1.26%
---------- -------
NET ASSETS $5,004,882 100.00%
========== =======
(a) Non-income producing security
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPSTONE NEW ZEALAND FUND
STATEMENT OF ASSET AND LIABILITIES - APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities at market value (identified cost $6,317,283) (Note 1A) $4,941,933
Foreign currency holdings - New Zealand Dollar account, at market (Note 1B) 90,361
Receivable for securities sold 2,503
Receivable for capital stock sold 7,350
Dividends receivable 1,471
Interest receivable 6,669
-----------
Total Assets 5,050,287
-----------
LIABILITIES:
Payable for capital stock redeemed 7,710
Accrued expenses 37,695
-----------
Total Liabilities 45,405
-----------
NET ASSETS $5,004,882
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE:
($5,004,882 / 586,988 shares of beneficial interest outstanding) $8.53
===========
SOURCE OF NET ASSETS:
Paid in capital $6,395,116
Accumulated net investment deficit (1,553)
Accumulated net realized loss on investments (12,308)
Net unrealized depreciation on securities and foreign currencies (1,376,373)
-----------
$5,004,882
===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
CAPSTONE NEW ZEALAND FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividend income $ 99,994
Interest income 32,779
-----------
Total Investment Income 132,773
Expenses: (Note 2)
Advisory fees 21,785
Distribution fees 7,262
Administrative services 7,356
Transfer agent fees 25,152
Reports and notices to stockholders 6,042
Audit fees 6,063
Legal fees 2,697
Directors' fees and expenses 1,788
Custodian fees 4,771
Fund accounting fees 18,135
Registration and filing fees 4,948
Miscellaneous 6,531
-----------
Total Expenses 112,530
-----------
Net Investment Income 20,243
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions 16,101
Net realized loss on conversion of foreign currencies to U.S. Dollars (26,938)
Unrealized depreciation of investments:
Beginning of period $ 141,549
End of period (1,376,373)
-----------
Net change in unrealized depreciation of investments (1,517,922)
-----------
Net realized and unrealized loss on investments (1,528,759)
-----------
Net decrease in net assets resulting from operations $ (1,508,516)
===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPSTONE NEW ZEALAND FUND
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, 1997
------------------------------------------
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income $ 20,243 $ 140,296
Net realized gain (loss) on investments (10,837) 4,369
Net change in unrealized depreciation of investments, forward
currency contracts and foreign currencies (1,517,922) (920,559)
----------- -----------
Net decrease in net assets resulting from operations (1,508,516) (775,894)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (120,230) (134,014)
CAPITAL SHARE TRANSACTIONS:
Decrease in net assets resulting from capital share
transactions (Note 3) (210,400) (503,680)
----------- -----------
Total decrease in net assets (1,839,146) (1,413,588)
NET ASSETS:
Beginning of period 6,844,028 8,257,616
----------- -----------
End of period (including accumulated net investment income (deficit) of
$(1,553) and $98,434, respectively) $5,004,882 $6,844,028
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - 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 (the "Act"), as a
diversified open-end management investment company. The Fund's investment
objective is to seek 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 consistently followed by the Fund in the preparation of its
financial statements.
A) VALUATION OF SECURITIES - 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 sales 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 any applicable price,
securities will be valued at a fair value as determined in good faith in
accordance with procedures established by the Board of Trustees.
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 the market prices
of the investments. Such fluctuations are included with the net realized and
unrealized gains and losses from investments.
C) ACCOUNTING FOR INVESTMENTS - Security transactions are accounted for on the
trade date. Realized gains and losses on security transactions are based on the
identified cost basis for both financial statement and Federal income tax
purposes. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Discounts and premiums on bonds purchased are amortized over
the life of the bonds. Interest income and estimated expenses are accrued daily.
D) FEDERAL INCOME TAXES - No provision has been made for Federal income taxes
since it is the policy of the Fund to continue to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income and realized capital
gains, to relieve it from all, or substantially all, such taxes. Under the
United States-New Zealand tax treaty, New Zealand imposes a withholding tax on
dividends (15%) and interest (10%) received by the Fund. There is currently no
New Zealand tax on capital gains.
E) DISTRIBUTIONS TO SHAREHOLDERS - The Fund distributes its net investment
income, if any, and net realized gains (net of any capital loss carryovers)
annually. 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, ADMINISTRATIVE FEES AND OTHER TRANSACTIONS
WITH AFFILIATES
The Fund retains FCA Corp, ("FCA") as its Investment Adviser. Under the
Investment Advisory Agreement (the "Agreement"), the Adviser is paid a monthly
fee based on the average net assets at the annual rate of .75%.
The Administrator, Capstone Asset Management Company, is paid a fee,
calculated daily and paid monthly, equal to an annual rate of .25% of the Fund's
average daily net assets.
Capstone Asset Planning Company ("CAPCO") serves as Distributor of the
Fund's shares. CAPCO is an affiliate of the Administrator, and both are
wholly-owned subsidiaries of Capstone Financial Services, Inc. ("CFS").
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 Fund shareholders. Distribution and marketing expenses
include, among other things, printing of prospectuses, 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, 1998, the Fund paid $7,262 in 12b-1 fees. Of this amount
approximately 20.9% was paid to Service Organizations other than CAPCO.
Certain officers and directors of the Fund who are also officers and
directors of the Adviser, the Administrator, Distributor or CFS, received no
compensation from the Fund. During the six months ended April 30, 1998,
directors of the Fund who are not "interested persons" received directors' fees
of $1,750.
NOTE 3 - CAPITAL STOCK
At April 30, 1998 there were 586,988 shares outstanding. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 64,642 $ 649,458 598,767 $7,747,373
Shares issued to shareholders in reinvestment
of distributions 9,459 92,030 7,766 102,048
------- ---------- ------- -----------
74,101 741,488 606,533 7,849,421
Shares redeemed (95,255) (951,888) (647,261) (8,353,101)
------- ---------- ------- -----------
Net increase (decrease) (21,154) $(210,400) (40,728) $ (503,680)
======= ========== ======= ===========
</TABLE>
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities other than U.S. Government obligations
aggregated $736,561 and $1,056,139 respectively. At April 30, 1998, the cost of
investments for Federal income tax purposes was $6,317,283. Accumulated net
unrealized depreciation on investments was $1,375,350 consisting of $493,321
gross unrealized appreciation and $1,868,671 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 and October 1997, the Guardian
shares were renewed for additional two year periods to October 15, 1999. 1996,
1997 and 1998 cash dividends were reinvested into 10,994 additional shares,
bringing the position to 72,009. The Guardian share are valued daily based on a
weekly quoted price. At April 30, 1998, the value of the Guardian investment was
$72,541 representing approximately 1.4% of the Fund's net assets.
<PAGE>
<TABLE>
CAPSTONE NEW ZEALAND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------------
The following table sets forth the per share operating performance data for a
share of capital stock outstanding, total return, ratios to average net assets
and other supplemental data for each period indicated.
<CAPTION>
SIX
MONTHS
ENDED
APRIL 30, YEARS ENDED OCTOBER 31,
--------------------------------------------------
1998 1997 1996 1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period............... $11.25 $12.73 $11.12 $10.44 $11.61 $ 9.75
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment loss............................. 0.03 0.24 0.19 0.31 0.16 0.09
Net realized and unrealized gain (loss)......... (2.55) (1.55) 1.93 0.90 (1.00) 1.77
------ ------ ------ ------ ------ ------
Total from investment operations................ (2.52) (1.31) 2.12 1.21 (0.84) 1.86
------ ------ ------ ------ ------ ------
Less distributions from:
Net investment income........................... (0.20) (0.17) (0.29) (0.21) (0.06) --
Net realized gain on investments................ -- -- (0.22) (0.32) (0.27) --
------ ------ ------ ------ ------ ------
(0.20) (0.17) (0.51) (0.53) (0.33) --
Net asset value at end of period..................... $ 8.53 $11.25 $12.73 $11.12 $10.44 $11.61
====== ====== ====== ====== ====== ======
TOTAL RETURN (%) (1)................................. (22.62)% (10.46)% 20.03% 12.22% (7.40)% 19.08%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (in thousands)........... $5,005 $6,844 $8,258 $3,494 $3,014 $2,732
Ratio of total expenses to average net assets........ 3.88%(2) 2.89% 3.63% 4.77% 4.40% 8.19%
Ratio of total expenses to average net assets, before
reimbursement and waiver of expenses............ N/A 2.50% 2.72% 2.52% 2.50% 2.50%
Ratio of net investment income to average net assets. 0.70%(2) 1.65% 2.32% 3.06% 1.55% 0.95%
Portfolio turnover rate.............................. 13% 24% 38% 38% 40% 32%
Average commission rate (per share of security)...... $0.0062 $0.0079 $0.0050
(1) Calculated without sales charge. Sales charge eliminated on August 21, 1995.
(2) Annualized
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
CAPSTONE NEW ZEALAND FUND
5847 SAN FELIPE, SUITE 4100
HOUSTON, TEXAS 77057
1-800-262-6631
SEMIANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1998
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
Edward L. Jaroski Edward L. Jaroski
President-Capstone International Series Trust
James F. Leary
Robert W. Scharar
John R. Parker President-Capstone New Zealand Fund
Bernard J. Vaughan Linda G. Giuffre
Treasurer
Iris R. Clay
Secretary
- --------------------------------------------------------------------------------
INVESTMENT ADVISER TRANSFER AGENT
FCA Corp First Data Investor Services Group, Inc.
5847 San Felipe 3200 Horizon Drive
Suite 850 P.O. Box 61503
Houston, TX 77057 King of Prussia, PA 19406-0903
1-800-845-2340
ADMINISTRATOR CUSTODIAN
Capstone Asset Management Company Fifth Third Bank
5847 San Felipe, Suite 4100 Fifth Third Center
Houston, TX 77057 38 Fountain Square Plaza
1-800-262-6631 Cincinnati, OH 45263
DISTRIBUTOR AUDITORS
Capstone Asset Planning Company Briggs, Bunting & Dougherty, LLP
5847 San Felipe, Suite 4100 Two Logan Square, Suite 2121
Houston, TX 77057 Philadelphia, PA 19103-4901
1-800-262-6631
<PAGE>
SEMIANNUAL REPORT
APRIL 30, 1998
CAPSTONE
NEW ZEALAND
FUND
GRAPHIC OF: Pyramid
A Member Of
THE CAPSTONE GROUP
of Mutual Funds
GRAPHIC OF: Pyramid
THE CAPSTONE GROUP
OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
EQUITY
O CAPSTONE GROWTH FUND, INC.
FIXED INCOME
O CAPSTONE GOVERNMENT INCOME FUND
INTERNATIONAL/GLOBAL
O CAPSTONE JAPAN FUND
O CAPSTONE NEW ZEALAND FUND
For more complete information about the Capstone Funds including charges
and expenses, contact the Distributor at the address below to receive
additional prospectuses.
Please read it carefully before you invest or send money.
This publication must be accompanied or preceded by a
current prospectus for Capstone New Zealand Fund
CAPSTONE ASSET PLANNING COMPANY
5847 SAN FELIPE, SUITE 4100
HOUSTON, TEXAS 77057
1-800-262-6631
CAPSTONE NEW ZEALAND FUND
5847 SAN FELIPE, SUITE 4100
HOUSTON, TX 77057
