CAPSTONE JAPAN FUND
================================================================================
Dear Shareholder:
We are pleased to present this semi-annual report on the Capstone Japan Fund for
the six months ended April 30, 2000. The Fund's net asset value ("NAV") at April
30, 2000 was US $ 7.24 per share compared to US $ 6.88 per share on October 31,
1999.
FUND'S COMPARATIVE PERFORMANCE
The Fund's strategy is to seek a diversified portfolio of stocks of mostly
larger-cap companies that provide current income through dividends, trade at
comparatively low price/earnings multiples, have a below average price-to-book
ratio, and/or have potential for long-term capital appreciation. This includes a
focus on American Depository Receipts because they can provide an efficient
currency exchange management for a US dollar fund and greater liquidity.
The most relevant index against which to compare the Fund's performance is the
TOPIX that comprises all the stocks currently listed on the first section of the
Tokyo Stock Exchange. During the six months ended April 30, 2000, the TOPIX
increased by 5.43% in Japanese yen and by 3.83% in $US. For the same period, the
Fund's total US dollar return was 5.23%. In analyzing comparisons of performance
to the TOPIX, the reader should remember an index does not reflect any cash
positions, brokerage costs or administrative or management fees incurred by the
Fund or individual investor. The yen/Dollar exchange rate was 106.42 yen/$ on
April 30, 2000 versus 104.8 yen/$ on October 31, 1999.
JAPAN MARKET OVERVIEW
Japan's stock markets have seen a lot of movement, both up and down, since the
beginning of the year, owing largely to the sharp declines in US stocks and the
changes in stocks comprising the Nikkei Average. The TOPIX fell from the 1,700s
at the beginning of the year to the 1,500s in May, after US stock markets
plummeted. The Nikkei Average dropped from the 19,000s to the 16,000s for the
same period, largely because of the change in its constituent stocks. It was the
first change in 10 years and the largest change in the index's history. The
share prices of the 30 stocks to be newly included in the index rose to such an
extent that if the index had not been adjusted it would have gained 2,000 Yen
following their inclusion. However, the Nikkei Average was adjusted in order to
ensure that it did not fluctuate sharply following its reconfiguration, so in
effect the index was depressed by 2,000 Yen as a result of the change in its
constituent stocks. Despite the fact that the Nikkei 225 has fallen to its
lowest level since the beginning of the calendar year, a more long-term view of
past performance shows us that Tokyo market has actually risen by a greater
degree in the recent past than all of the other major markets.
There is little net buying by overseas investors at the moment, and the inflow
of funds into equity mutual funds following the redemption of a large amount of
postal savings accounts has not been as large as some expected, partly because
of the turmoil in the market in recent months. However, from looking at market
fundamentals, there are reasons to be optimistic about the market. Manufacturing
industry earnings growth in FY00 should be around 5% higher than current
predictions. (The forecast is for 20% growth in recurring profits). January -
March GDP figures are predicted to show annualized growth of around 10% because
of the improvement in consumer demand. There has been a clear recovery in
capital investment, particularly in the IT industry. On the monetary front,
short-term and long-term interest rates remain close to zero. The Bank of Japan
will maintain its zero interest rate policy until there are signs of a recovery
in consumer spending or until the yen has strengthened to an unacceptable level.
The Bank of Japan is determined not to let the yen strengthen beyond 100 yen/
dollar. Meanwhile, further US rate hikes are widely expected, and this, together
with the threat of currency intervention, should keep the exchange rate around
102-112 yen to a dollar.
OVERVIEW OF THE JAPANESE ECONOMY
The Japanese economy is still reliant on government support, and its economy is
weaker than European and US economies. The US equity market has been supported
by strong domestic demand and a strong dollar, while the European equity markets
are being supported by the weak Euro and resulting strong external demand. By
contrast, the Japanese economy is still apparently managing a self-sustained
recovery. Moreover, the Japanese economy's heavy reliance on fiscal spending
makes the market even more sensitive to its government's credibility.
<PAGE>
CAPSTONE JAPAN FUND
================================================================================
Recent economic trends in Japan reveal that the Japanese economy has not yet
broken free from the severe situation, as the recovery of aggregate demand
remains weak. Personal consumption remains broadly flat due to sluggish income.
The employment situation remains severe, with the unemployment ratio staying at
its highest level. Housing investment is decreasing from the high level seen at
the beginning of the year, but condominium construction is relatively bullish.
The decrease in investment in plant and equipment is coming to an end.
Corporations, especially those in the manufacturing sector, have become more
positive toward investments, and industrial production continues to gradually
increase. Exports, especially those to Asia, are increasing. The government aims
to realize a smooth pass toward a full-scale recovery from public to private
demand and to establish a new solid foundation for economic development in the
21st century.
We view the Japanese market as a buy because outsiders have focused too much on
the government's slow and ineffective changes without factoring in the
underlying positive impacts resulting from the restructuring of Japanese
entrepreneurs and more established businesses. The easier access of Japanese
investors to global equities through the NASDAQ and other programs will only
serve to accelerate the changes.
If you have any questions, please feel free to contact us. We thank you for your
continued support.
Sincerely,
/s/ Robert W. Scharar
Robert W. Scharar
President and Portfolio Manager
TOPIX is an unmanaged index including all the stocks currently listed in the
Tokyo Stock Exchange First Section (over 90% of all equity securities traded n
the Tokyo Stock Exchange) weighted by market capitalization. Index returns are
calculated monthly and assume reinvestment of dividends. Unlike Fund returns,
TOPIX returns do not reflect deduction of any fees or expenses.
<PAGE>
<TABLE>
<CAPTION>
CAPSTONE JAPAN FUND
PORTFOLIO OF INVESTMENTS - APRIL 30, 2000 (UNAUDITED)
==========================================================================================================================
MARKET % OF
VALUE NET
COMMON STOCKS (94.01%) SHARES (NOTE 1-A) ASSETS
------- ------------ --------
<S> <C> <C> <C>
AUTOMOTIVE (4.03%)
Bridgestone Corporation - ADR 550 $ 119,342 2.16%
Honda Motor Corporation - ADR 600 53,100 0.96%
Toyota Motor Corporation - ADR 500 49,969 0.91%
--------- -----
222,411 4.03%
AUDIO/ VIDEO EQUIPMENT (0.82%)
SONY Corporation - ADR # 200 45,125 0.82%
CONSTRUCTION (1.93%)
Daiwa House Industry Co., Limited - ADR 1,600 106,596 1.93%
COMMUNICATIONS EQUIPMENT (16.61%)
Cannon Inc - ADR 6,500 301,844 5.47%
Fujitsu, Limited - ADR 1,600 226,516 4.11%
NEC Corporation - ADR 2,850 387,778 7.03%
--------- -----
916,138 16.61%
CONSUMER ELECTRONICS (6.32%)
Matsushita Electric Industrial Co., Limited 2,000 52,926 0.96%
Softbank Corporation 1,200 295,350 5.36%
--------- -----
348,276 6.32%
COSMETICS (0.34%)
Fancl Corporation 130 18,921 0.34%
DISTRIBUTION/WHOLESALE (0.34%)
Itochu Corporation 4,000 18,617 0.34%
ELECTRONIC EQUIPMENT (6.03%)
Fanuc, Limited 500 52,371 0.95%
Hitachi, Limited 3,000 35,808 0.65%
Kyocera Corporation 300 50,160 0.91%
Murata Manufacturing 1,000 194,310 3.52%
--------- -----
332,649 6.03%
FINANCIAL SERVICES (0.93%)
Orix Corporation 360 51,364 0.93%
<PAGE>
CAPSTONE JAPAN FUND
PORTFOLIO OF INVESTMENTS - APRIL 30, 2000 (UNAUDITED)
==========================================================================================================================
MARKET % OF
VALUE NET
SHARES (NOTE 1-A) ASSETS
------- ------------ --------
FOOD & BEVERAGE (9.44%)
Ajinomoto, Incorporated - ADR 1,200 $ 137,131 2.49%
Coca-Cola West Japan 7,072 196,308 3.56%
Kirin Brewery Company Limited - ADR 900 118,800 2.15%
Mikuni Coca-Cola Bottling 1,000 13,602 0.25%
Q.P. Corporation 8,000 54,777 0.99%
--------- -----
520,618 9.44%
INDICES (5.54%)
Salomon Nikkei 225 Index 10,000 98,125 1.78%
World Equity Benchmark Series - Japan Index Series 13,600 207,400 3.76%
--------- -----
305,525 5.54%
MACHINERY (4.41%)
Kurita Water Industries 5,000 108,952 1.97%
Minebea Co., Limited - ADR 5,500 134,356 2.44%
--------- -----
243,308 4.41%
MISCELLANEOUS FINANCING (3.31%)
Nomura Securities Co., Limited 3,000 75,503 1.37%
Tokio Marine & Fire Insurance Co. 8,000 78,020 1.41%
Tokio Marine & Fire Insurance Co. - ADR 600 28,950 0.53%
--------- -----
182,473 3.31%
PHARMACEUTICALS (12.86%)
Banyu Pharmaceuticals Co., Limited - ADR 300 132,135 2.40%
Eisai Co., Limited - ADR 7,400 215,691 3.91%
Kyorin Pharmaceutical Co., Limited 2,000 98,080 1.78%
Takeda Chemical Industry 4,000 263,151 4.77%
--------- -----
709,057 12.86%
PRODUCER MANUFACTURING (3.52%)
Nippon Steel Corporation 63,000 141,652 2.57%
Sumitomo Rubber Industries 10,000 52,279 0.95%
--------- -----
193,931 3.52%
RETAIL (9.19%)
Fast Retailing 200 88,087 1.60%
Seven-Eleven Japan Co., Limited - ADR 3,400 418,426 7.59%
--------- -----
506,513 9.19%
<PAGE>
CAPSTONE JAPAN FUND
PORTFOLIO OF INVESTMENTS - APRIL 30, 2000 (UNAUDITED)
==========================================================================================================================
MARKET % OF
VALUE NET
SHARES (NOTE 1-A) ASSETS
------- ------------ --------
TELECOMMUNICATIONS (3.00%)
Nippon Telegraph & Telephone Corporation - ADR 2,600 $ 165,587 3.00%
TRANSPORT EQUIPMENT (4.53%)
Yamato Transport Company, Limited 10,000 249,827 4.53%
UTILITIES (0.86%)
Tokyo Electric Power 2,000 47,189 0.86%
TOTAL COMMON STOCK (Cost $3,500,480) 5,184,125 94.01%
CLOSED-END MUTUAL FUND (2.70%)
Japan O.T.C. Equity Fund (Cost $152,819) 15,000 149,062 2.70%
PAR VALUE
----------
REPURCHASE AGREEMENT (4.49%)
Fifth Third Bank, 5.48%, dated 4/28/00, due 5/1/00-- $247,543 247,543 4.49%
--------- -----
(at amortized cost), collateralized by FHLMC Gold,
7.00%, due 03/01/15 with a value of $253,987.
TOTAL INVESTMENTS (Cost $3,900,842) 5,580,730 101.20%
LIABILITIES IN EXCESS OF OTHER ASSETS (66,166) (1.20%)
---------- --------
NET ASSETS $5,514,564 100.00%
========== ========
</TABLE>
# Call options have been written by the Fund against these positions. (Note 5)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
CAPSTONE JAPAN FUND
STATEMENT OF ASSETS AND LIABILITIES - APRIL 30, 2000 (UNAUDITED)
==========================================================================================================================
<S> <C>
ASSETS:
Investments in securities at market value (identified cost $3,900,842) (Note 1A) $ 5,580,730
Foreign currency, at value (identified cost $3,450) (Note 1B) 3,330
Receivable for capital shares sold 50,548
Interest and dividends receivable 5,163
-------------
Total Assets 5,639,771
-------------
LIABILITIES:
Cash overdraft 50,545
Accrued expenses 59,286
Covered call options written, at value (premiums received $5,080) 15,376
-------------
Total Liabilities 125,207
-------------
NET ASSETS $ 5,514,564
=============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE:
($5,514,564 / 761,914 shares of beneficial interest outstanding) $ 7.24
=============
SOURCE OF NET ASSETS:
Paid in capital $ 7,297,349
Net investment loss (98,113)
Accumulated net realized loss on investments (3,354,033)
Net unrealized appreciation on securities and foreign currencies 1,669,361
-------------
$ 5,514,564
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPSTONE JAPAN FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)
==========================================================================================================================
<S> <C> <C>
INVESTMENT INCOME:
Dividend income (net of foreign taxes withheld of $1,045) $ 12,361
Interest income 2,738
---------
Total Investment Income 15,099
---------
Expenses: (Note 2)
Advisory fees $ 20,036
Distribution fees 6,679
Administrative services 5,343
Transfer agent fees 14,016
Reports and notices to stockholders 2,596
Audit fees 7,297
Legal fees 7,293
Directors' fees and expenses 2,715
Custodian fees 1,503
Fund accounting fees 28,834
Registration and filing fees 12,460
Miscellaneous 4,440
----------
Total Expenses 113,212
---------
Net Investment Loss (98,113)
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions 213,218
Net realized gain on option contracts written 9,190
Net realized loss on conversion of foreign currencies to U.S. Dollars (3,067)
Unrealized appreciation of investments, foreign currencies
and forward currency contracts:
Beginning of period 1,506,265
End of period 1,669,361
----------
Net change in unrealized appreciation of investments, foreign currencies
and forward currency contracts 163,096
---------
Net realized and unrealized gain on investments 382,437
---------
Net increase in net assets resulting from operations $ 284,324
=========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
CAPSTONE JAPAN FUND
STATEMENT OF CHANGES IN NET ASSETS
============================================================================================================================
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
(UNAUDITED)
OPERATIONS:
Net investment loss $ (98,113) $ (146,688)
Net realized gain on investments 219,341 31,045
Net change in unrealized appreciation of investments, forward
currency contracts and foreign currencies 163,096 1,724,174
----------- -----------
Net increase in net assets resulting from operations 284,324 1,608,531
CAPITAL SHARE TRANSACTIONS:
Increase (decrease) in net assets resulting
from capital share transactions (Note 3) (74,447) 1,092,263
----------- -----------
Total increase in net assets 209,877 2,700,794
NET ASSETS
Beginning of period 5,304,687 2,603,893
----------- -----------
End of period $5,514,564 $5,304,687
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2000 (UNAUDITED)
================================================================================
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Capstone Japan Fund, formerly Capstone Nikko Japan 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 income using
a research oriented approach. 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 Japanese
securities exchanges are valued at the last sales price 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. All other
equity securities not so traded are valued at the last current bid quotation. 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.
<PAGE>
CAPSTONE JAPAN FUND
D) OPTION ACCOUNTING PRINCIPLES - When the Fund sells an option, an amount equal
to the premium received by the Fund is recorded as a liability. The amount of
the liability is marked-to-market to reflect the current market value of the
options written. The current market value of a traded option is the last sale
price and options not traded that day are valued at the prevailing quoted bid
price. When an option expires on its stipulated expiration date or the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or loss,
if the cost of a closing purchase transaction exceeds the premium received when
the option was sold) without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is extinguished.
If a call option is exercised, the premium is added to the proceeds from the
sale of the underlying security in determining whether the Fund has a realized
gain or loss.
E) FORWARD CURRENCY CONTRACTS - Forward currency transaction are undertaken to
hedge against possible variations in the foreign exchange rates between the
United States Dollar and the Japanese Yen. A forward currency contract is an
agreement between two parties to buy or sell a currency at a set price on a
future date. Forward contracts are marked-to-market daily and the change in the
market value is recorded by the Fund as an unrealized gain or loss. When a
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if the
counterparties are unable to meet the terms of the contracts or if the value of
the currency changes unfavorably.
F) FEDERAL INCOME TAXES - No provision has been made for Federal income taxes on
net income or capital gains, since it is the policy of the Fund to continue to
comply with the special provisions of the Internal Revenue Code applicable to
investment companies and to distribute all of its taxable income and realized
capital gains, in excess of any capital loss carryovers, to relieve it from all,
or substantially all, such taxes. At October 31, 1999, the Fund had capital loss
carryovers of $3,573,374 of which $1,399,016 expires in 2000, $1,494,646 expires
in 2001, $434,729 expires in 2005 and $244,983 expires in 2006. Under the United
States-Japan tax treaty, Japan imposes a withholding tax of 15% on the dividends
received by the Fund. There is currently no Japanese tax on capital gains.
G) 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 net operating losses.
H) 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 .20% 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
<PAGE>
CAPSTONE JAPAN FUND
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, 2000, the Fund paid $6,679 in 12b-1 fees. Of this amount
approximately 8.0% 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, 2000,
directors of the Fund who are not "interested persons" received directors' fees
of $2,715.
NOTE 3 - CAPITAL STOCK
At April 30, 2000 there were 761,914 shares outstanding. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
---------------- -----------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ----- -----
<S> <C> <C> <C> <C>
Shares sold 376,426 $ 2,717,026 694,202 $ 3,880,475
Shares issued to shareholders in reinvestment
of distributions -- -- -- --
-------- ----------- -------- -------------
376,426 2,717,026 694,202 3,880,475
Shares redeemed (385,759) (2,791,473) (495,243) (2,788,212)
-------- ----------- -------- -------------
Net increase (decrease) (9,333) $ (74,447) 198,959 $ 1,092,263
======== =========== ======== =============
</TABLE>
NOTE 4 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities other than U.S. Government obligations
aggregated $586,467 and $712,268 respectively. At April 30, 2000, the cost of
investments for Federal income tax purposes was $3,900,842. Accumulated net
unrealized appreciation on investments was $1,669,361 consisting of $1,842,166
gross unrealized appreciation and $172,805 gross unrealized depreciation.
NOTE 5 - OPTIONS WRITTEN BY THE FUND
A call option gives the holder the right to buy the underlying stock from
the writer (the Fund) at a specified price within a fixed period of time.
Therefore, the securities held by the Fund against which options are written may
not be traded and are held in escrow by the custodian.
The following table sets forth the outstanding call options written by the Fund
as of April 30, 2000.
<TABLE>
<CAPTION>
CALL OPTIONS ON PREMIUM MARKET UNREALIZED
--------------- RECEIVED VALUE APPRECIATION
-------- ------ -------------
<S> <C> <C> <C>
200 shs Sony Corp-ADR@ 130 exp Jan 2001 $5,080 $15,376 $10,296
======= ======= =======
</TABLE>
<PAGE>
CAPSTONE JAPAN FUND
The aggregate market value at April 30, 2000 of securities subject to
call options is $45,125 or approximately 1% of net assets. Written option
activity for the six months ended April 30, 2000 was as follows:
NUMBER OF AMOUNT OF
OPTIONS PREMIUM
--------- ---------
Options outstanding at October 31, 1999 11 $14,270
Options written -- --
Options expired (9) (9,190)
--- -------
Options outstanding at April 30, 2000 2 $ 5,080
=== =======
<PAGE>
CAPSTONE JAPAN 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.
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEARS ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------
2000 1999 1998 1997 1996 1995
----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period $ 6.88 $ 4.55 $ 5.21 $ 6.76 $ 6.76 $ 8.03
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment loss (0.13) (0.21) (0.07) (0.28) (0.19) (0.21)
Net realized and unrealized gain (loss) 0.49 2.54 (0.59) (1.27) 0.25 (1.06)
------ ------ ------ ------ ------ ------
Total from investment operations 0.36 2.33 (0.66) (1.55) 0.06 (1.27)
------ ------ ------ ------ ------ ------
Less distributions from:
Net investment income -- -- -- -- (0.06) --
------ ------ ------ ------ ------ ------
Net asset value at end of period $ 7.24 $ 6.88 $ 4.55 $ 5.21 $ 6.76 $ 6.76
====== ====== ====== ====== ====== ======
TOTAL RETURN (%)(1) 5.23% 51.21% (12.67)% (22.93)% 0.75% (15.82)%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $5,515 $5,305 $2,604 $1,902 $2,975 $2,908
Ratio of total expenses to average net assets 4.24%(2) 4.61% 2.50% 4.55% 3.30% 3.61%
Ratio of net investment loss to average net assets (3.67)%(2) (3.94)% (1.87)% (3.87)% (2.59)% (2.93)%
Ratio of total expenses to average net assets,
before reimbursements and waivers of expenses N/A N/A 6.32% 5.46% 3.90% 4.21%
Ratio of net investment loss to average net assets,
before reimbursements and waivers of expenses... N/A N/A (5.67)% (4.78)% (3.19)% (3.53)%
Portfolio turnover rate 11% 17% 35% 73% 47% 27%
</TABLE>
(1) Calculated without sales charge. Sales charge eliminated on August 21, 1995.
(2) Annualized.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
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<PAGE>
This page left blank intentionally.
<PAGE>
CAPSTONE JAPAN FUND
5847 SAN FELIPE, SUITE 4100
HOUSTON, TEXAS 77057
1-800-262-6631
<TABLE>
<CAPTION>
SEMIANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 2000
----------------------------------------------------------------------------------------------------------
<S> <C>
TRUSTEES OFFICERS
Edward L. Jaroski Edward L. Jaroski
President-Capstone International Series Trust
James F. Leary
Robert W. Scharar
John R. Parker President-Capstone Japan Fund
Bernard J. Vaughan Linda G. Giuffre
Secretary/Treasurer
----------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER TRANSFER AGENT
FCA Corp. PFPC, 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
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
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<PAGE>
SEMIANNUAL REPORT
APRIL 30, 2000
CAPSTONE
JAPAN FUND
A Member Of
THE CAPSTONE GROUP
of Mutual Funds
[Capstone Pyramid logo]
A Member Of
THE CAPSTONE GROUP
of Mutual Funds
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[Capstone Pyramid logo]
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 Japan Fund
CAPSTONE ASSET PLANNING COMPANY
5847 SAN FELIPE, SUITE 4100
HOUSTON, TEXAS 77057
1-800-262-6631
<PAGE>
CAPSTONE JAPAN FUND
5847 SAN FELIPE, SUITE 4100
HOUSTON, TX 77057
