<PAGE>
[Logo]
AMERICAN GAS INDEX FUND
-------------------------------------------------------
Semi-Annual Report
September 30, 1996
<PAGE>
[Logo] SEMI-ANNUAL REPORT, SEPTEMBER 30, 1996
AMERICAN GAS INDEX FUND, INC.
4922 FAIRMONT AVENUE, BETHESDA, MARYLAND 20814
(800) 343-3355 (301) 657-1500
- --------------------------------------------------------------------------------
Dear Shareholders:
During the six month period ended September 30, 1996, the total return of the
American Gas Index Fund, Inc. was 8.56%. The net asset value increased by 6.72%
and the income yield was 1.84%. The Fund's positive return surpassed the gains
posted by the Dow Jones Industrial and Utilities Averages and S&P 500 Index for
the six month period. Eighty percent of the Fund's fifteen largest holdings
advanced during this period. Investments in these companies account for more
than fifty percent of the Fund's assets. The Fund has experienced positive total
returns for the past seven consecutive calendar quarters. In addition, during
one week in August, the Fund was the highest performer of the thousands of
equity mutual funds investing exclusively in U.S. stocks. During this six month
period there were no significant changes in the Fund's portfolio.
Industry analysts attribute much of the increased market valuation of most of
the Fund's holdings to merger and acquisition actions announced within the past
several months. Several of the holdings, including some of the largest, have
been part of the restructuring wave buffeting the gas and electric companies.
These major corporate initiatives are motivated by management and investment
community perceptions that the changing structure and regulatory climate that
swept through the gas utilities and pipelines will now engulf the electric
utilities. With this
<TABLE>
<S> <C>
TOP FIVE PERFORMERS
(PRICE CHANGE: MARCH 31, 1996 - SEPT. 30, 1996)
NorAm Energy Corp. 60.81%
ENSERCH Corp. 28.46%
United Cities Gas Co. 26.41%
NICOR, Inc. 26.17%
Southwestern Energy Co. 23.96%
</TABLE>
<TABLE>
<S> <C>
BOTTOM FIVE PERFORMERS
(PRICE CHANGE: MARCH 31, 1996 - SEPT. 30, 1996)
Rochester Gas and Electric Corp. -15.61%
Consolidated Edison Co. of New
York, Inc. -12.94%
Occidental Petroleum Corp. -12.62%
Fall River Gas Co. -11.76%
Mid-American Energy Co. -11.19%
</TABLE>
TOTAL RETURN COMPARISON
(APRIL 1, 1996 - SEPTEMBER 30, 1996)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
American Gas Index Fund 8.56%
DJ Industrials 6.35%
DJ Utilities 4.78%
S&P 500 7.72%
</TABLE>
The average annual total return was 20.63% for the one-year period, 11.31% for
the five-year period, and 9.55% for the period 5/10/89 (inception) through
September 30, 1996. Returns are historical and include changes in principal
and reinvested dividends and capital gains. Your return and principal will
vary and you may have a gain or loss when you sell shares.
<PAGE>
successful experience now part of their culture, gas companies have become
extremely attractive to electric utilities as a vehicle to broaden opportunities
in a competitive and largely deregulated energy marketplace. This intensified
interest in the companies included in the Fund, combined with strong supply and
demand forecasts, provide a solid underpinning to the Fund's performance. For
these and other reasons many analysts continue to recommend investment in the
industry and a robust future for natural gas.
Sincerely,
[SIG]
Richard J. Garvey
Chairman
American Gas Index Fund, Inc.
2
<PAGE>
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
MARKET VALUE PERCENT OF
SHARES (NOTE 1) NET ASSETS
------- ------------ -----------
<S> <C> <C> <C>
COMMON STOCKS
PanEnergy Corp. ........................ 300,000 $10,387,500 4.89%
Williams Companies, Inc. ............... 200,000 10,200,000 4.80%
Consolidated Natural Gas Co. ........... 190,000 10,188,750 4.80%
Enron Corp. ............................ 240,000 9,780,000 4.61%
Occidental Petroleum Corp. ............. 400,000 9,350,000 4.40%
Tenneco, Inc. .......................... 165,000 8,270,625 3.90%
Pacific Enterprises ................... 270,000 8,167,500 3.85%
The Columbia Gas System, Inc. ......... 135,000 7,560,000 3.56%
The Coastal Corp. ..................... 180,000 7,425,000 3.50%
Pacific Gas and Electric Co. .......... 325,000 7,068,750 3.33%
NorAm Energy Corp. .................... 475,000 7,065,625 3.33%
Sonat, Inc. ........................... 125,000 5,531,250 2.61%
NICOR, Inc. ........................... 150,000 5,062,500 2.38%
MCN Corp. ............................. 170,000 4,568,750 2.15%
El Paso Energy Co. .................... 100,000 4,400,000 2.07%
NGC Corp. ............................. 260,000 4,062,500 1.91%
Peoples Energy Corp. .................. 110,000 3,740,000 1.76%
Brooklyn Union Gas Co. ................ 130,000 3,623,750 1.71%
National Fuel Gas Co. ................. 95,000 3,491,250 1.64%
AGL Resources, Inc. ................... 180,000 3,442,500 1.62%
Washington Gas Co. .................... 145,000 3,190,000 1.50%
K N Energy, Inc. ...................... 90,000 3,172,500 1.49%
Questar Corp. ......................... 82,500 2,918,437 1.37%
Public Service Enterprise Group, Inc.
..................................... 95,000 2,541,250 1.20%
Consolidated Edison Co. of New York,
Inc. ................................ 85,000 2,358,750 1.11%
CMS Energy Corp. ...................... 72,500 2,184,062 1.03%
Piedmont Natural Gas Co. .............. 90,000 2,171,250 1.02%
ONEOK, Inc. ............................ 77,500 2,131,250 1.00%
ENSERCH Corp. .......................... 100,000 2,087,500 0.98%
Equitable Resources, Inc. .............. 70,000 1,995,000 0.94%
NIPSCO Industries, Inc. ................ 52,500 1,876,875 0.88%
WICOR, Inc. ............................ 50,000 1,818,750 0.86%
Indiana Energy, Inc. ................... 72,500 1,767,188 0.83%
Public Service Co. of Colorado ......... 45,000 1,597,500 0.75%
Northwest Natural Gas Co. .............. 67,500 1,552,500 0.73%
Eastern Enterprises .................... 40,000 1,510,000 0.71%
New Jersey Resources Corp. ............. 47,500 1,330,000 0.63%
Cinergy Corp. .......................... 43,000 1,327,625 0.63%
Southern Union Co.* .................... 55,000 1,278,750 0.60%
Washington Energy Co. .................. 67,500 1,257,188 0.59%
UtiliCorp United, Inc. ................. 45,000 1,243,125 0.59%
</TABLE>
3
<PAGE>
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE PERCENT OF
SHARES (NOTE 1) NET ASSETS
------- ------------ -----------
COMMON STOCKS (CONTINUED)
<S> <C> <C> <C>
Laclede Gas Co. ........................ 50,000 $ 1,212,500 0.57%
PECO Energy Co. ........................ 50,000 1,187,500 0.56%
Atmos Energy Corp. ..................... 50,000 1,168,750 0.55%
Bay State Gas Co. ...................... 42,500 1,136,875 0.54%
Baltimore Gas and Electric Co. ......... 42,500 1,110,313 0.52%
Enova Corp. ............................ 50,000 1,106,250 0.52%
Public Service Co. of North Carolina,
Inc. ................................. 60,000 1,102,500 0.52%
Southwest Gas Corp. .................... 55,000 962,500 0.45%
MDU Resources Group, Inc. .............. 40,000 860,000 0.41%
Northern States Power Co. .............. 17,500 815,937 0.38%
Wisconsin Energy Corp. ................. 30,000 810,000 0.38%
Western Resources, Inc. ................ 27,500 800,938 0.38%
SCANA Corp. ............................ 30,000 787,500 0.37%
United Cities Gas Co. .................. 35,000 785,313 0.37%
South Jersey Industries, Inc. .......... 32,500 763,750 0.36%
MidAmerican Energy Co. ................. 47,500 754,062 0.35%
Yankee Energy System, Inc. ............. 31,800 727,425 0.34%
Connecticut Natural Gas Corp. .......... 27,500 666,875 0.31%
Energen Corp. .......................... 27,500 660,000 0.31%
Public Service Co. of New Mexico ....... 32,500 633,750 0.30%
Colonial Gas Co. ....................... 27,500 611,875 0.29%
Connecticut Energy Corp. ............... 30,000 600,000 0.28%
Long Island Lighting Co. ............... 35,000 599,375 0.28%
Illinova Corp. ......................... 22,500 596,250 0.28%
North Carolina Natural Gas Corp. ....... 20,000 595,000 0.28%
The Montana Power Co. .................. 27,500 587,813 0.28%
UGI Corp. .............................. 25,000 587,500 0.28%
NUI Corp. .............................. 30,000 570,000 0.27%
L G & E Energy Corp. ................... 25,000 556,250 0.26%
DPL, Inc. .............................. 23,000 537,625 0.25%
Commonwealth Energy System ............. 20,000 465,000 0.22%
Rochester Gas and Electric Corp. ....... 25,000 456,250 0.21%
TPC Corp.* ............................. 52,100 449,362 0.21%
Southwestern Energy Co. ................ 30,000 446,250 0.21%
New York State Electric and Gas
Corp. ................................ 20,000 440,000 0.21%
WPS Resources Corp. .................... 12,500 379,687 0.18%
WPL Holdings, Inc. ..................... 12,500 364,063 0.17%
Citizens Utilities Co., Series B ....... 30,000 363,750 0.17%
Providence Energy Corp. ................ 20,000 350,000 0.16%
Pennsylvania Enterprises, Inc. ......... 8,000 332,000 0.16%
Delmarva Power and Light Co. ........... 15,000 307,500 0.14%
Mobile Gas Service Corp. ............... 11,000 264,000 0.13%
</TABLE>
4
<PAGE>
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE PERCENT OF
SHARES (NOTE 1) NET ASSETS
------- ------------ -----------
COMMON STOCKS (CONTINUED)
<S> <C> <C> <C>
Orange and Rockland Utilities, Inc. .... 7,500 $ 262,500 0.13%
Sigcorp, Inc. .......................... 7,500 255,937 0.13%
Fall River Gas Co. ..................... 12,000 225,000 0.11%
Amoco Corp. ............................ 3,000 211,500 0.10%
Central Hudson Gas and Electric
Corp. ................................ 7,000 208,250 0.10%
EnergyNorth, Inc. ...................... 10,000 191,250 0.09%
Sierra Pacific Resources ............... 7,000 181,125 0.09%
Chesapeake Utilities Corp. ............. 10,000 175,000 0.08%
Essex County Gas Co. ................... 6,000 162,000 0.08%
Valley Resources, Inc. ................. 12,500 159,375 0.08%
Roanoke Gas Co. ........................ 8,800 154,000 0.07%
Northwestern Public Service Co. ........ 5,000 149,375 0.07%
National Gas and Oil Co. ............... 15,000 149,063 0.07%
Entergy Corp. .......................... 5,000 135,000 0.06%
Chevron Corp. .......................... 2,000 125,250 0.06%
Delta Natural Gas Co., Inc. ............ 6,500 117,000 0.06%
Bershire Gas Co. ....................... 7,500 114,375 0.05%
Corning Natural Gas Corp. .............. 5,000 110,000 0.05%
Energy West, Inc. ...................... 7,500 65,625 0.03%
Wisconsin Fuel and Light Co. ........... 1,500 60,000 0.03%
Minnesota Power and Light Co. .......... 1,000 26,625 0.01%
Gulfside Industries* ................... 25,000 1,750 0.01%
------------ -----------
Total Common Stocks (Cost
$146,554,471) ........................ 206,448,038 97.23%
------------ -----------
REPURCHASE AGREEMENTS
With Paine Webber at 5.60%, dated
9/30/96, due 10/1/96, collateralized
by U.S. Treasury Notes, due 7/31/97
(Cost $5,703,117) .................... 5,703,117 2.69%
------------ -----------
TOTAL INVESTMENTS (COST
$152,257,588) ........................ 212,151,155 99.92%
OTHER ASSETS LESS LIABILITIES .......... 168,754 0.08%
------------ -----------
NET ASSETS (NOTE 5) .................... $212,319,909 100.00%
------------ -----------
------------ -----------
NET ASSET VALUE PER SHARE (BASED ON
15,014,033 SHARES OUTSTANDING) ....... $14.14
------------
------------
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
5
<PAGE>
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME (Note 1)
Dividends...................................................... $ 4,159,770
Interest....................................................... 133,478
-----------
Total Investment Income...................................... 4,293,248
-----------
EXPENSES
Investment Advisory Fee (Note 2)............................... 411,935
Accounting and Administrative Service Fee (Note 2)............. 360,443
Administrative Fee (Note 2).................................... 102,984
-----------
Total Expenses............................................... 875,362
-----------
NET INVESTMENT INCOME............................................ 3,417,886
-----------
Net Realized Gain on Investments................................. 1,955,751
Net Change in Unrealized Appreciation of Investments............. 11,322,607
-----------
NET GAIN ON INVESTMENTS.......................................... 13,278,358
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $16,696,244
-----------
-----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
AMERICAN GAS INDEX FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income........................... $ 3,417,886 $ 3,746,075
Net Realized Gain (Loss) on Investments......... 1,955,751 (3,023,029)
Net Change in Unrealized Appreciation of
Investments................................... 11,322,607 19,155,954
------------- -------------
Net Increase in Net Assets Resulting from
Operations.................................. 16,696,244 19,879,000
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income (Note 1)............. (3,566,644) (3,797,575)
From Net Realized Gain on Investments........... -- --
------------- -------------
Total Distributions to Shareholders........... (3,566,644) (3,797,575)
------------- -------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares............... 17,669,234 9,538,177
Reinvestment of Distributions................... 3,192,110 3,224,128
Cost of Shares Redeemed......................... (25,670,693) (29,635,479)
------------- -------------
Net Decrease in Net Assets Resulting from
Share Transactions.......................... (4,809,349) (16,873,174)
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ 8,320,251 (791,749)
NET ASSETS -- Beginning of Period................. 203,999,658 188,543,903
------------- -------------
NET ASSETS -- End of Period....................... $212,319,909 $187,752,154
------------- -------------
------------- -------------
SHARES
Sold............................................ 1,273,717 818,487
Issued in Reinvestment of Distributions......... 228,155 271,409
Redeemed........................................ (1,878,904) (2,543,470)
------------- -------------
Net Decrease.................................. (377,032) (1,453,574)
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
AMERICAN GAS INDEX FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED MARCH 31,
SEPTEMBER 30, ----------------------------------------------------------
1996 1996 1995 1994 1993 1992
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period........................... $ 13.25 $ 11.13 $ 11.08 $ 12.17 $ 9.45 $ 10.20
------------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Income............ 0.230 0.454 0.440 0.410 0.407 0.472
Net Realized and Unrealized Gains
(Losses) on Securities......... 0.900 2.125 0.050 (1.031) 2.853 (0.758)
------------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations................... 1.130 2.579 0.490 (0.621) 3.260 (0.286)
------------- ---------- ---------- ---------- ---------- ----------
Distributions to Shareholders:
From Net Investment Income....... (0.240) (0.455) (0.440) (0.406) (0.410) (0.464)
From Net Realized Capital
Gains.......................... -- -- -- (0.063) (0.130) --
------------- ---------- ---------- ---------- ---------- ----------
Total Distributions to
Shareholders................. (0.240) (0.455) (0.440) (0.469) (0.540) (0.464)
------------- ---------- ---------- ---------- ---------- ----------
Net Increase (Decrease) in Net
Asset Value...................... 0.89 2.12 0.05 (1.09) 2.72 (0.75)
------------- ---------- ---------- ---------- ---------- ----------
Net Asset Value -- End of Period... $ 14.14 $ 13.25 $ 11.13 $ 11.08 $ 12.17 $ 9.45
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
TOTAL INVESTMENT RETURN.............. 8.56%A 23.46% 4.72% (5.37)% 35.38% (2.89)%
RATIOS TO AVERAGE NET ASSETS:
Expenses Less Reimbursement from
Adviser.......................... 0.85%B 0.85% 0.85% 0.84% 0.85% 0.85%
Expenses Before Reimbursement from
Adviser.......................... 0.85%B 0.85% 0.85% 0.84% 0.85% 0.87%
Net Investment Income.............. 3.32%B 3.71% 4.04% 3.33% 3.82% 4.73%
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............ 1.7% 10.0% 8.5% 11.4% 21.5% 30.2%
Net Assets at End of Period (000's
omitted)......................... $212,320 $204,000 $188,544 $209,036 $215,557 $129,182
Number of Shares Outstanding at End
of Period (000's omitted)........ 15,014 15,391 16,941 18,858 17,708 13,669
Average Commission Rate Paid....... $0.0451C
</TABLE>
- ------------------------------
A Total returns for periods of less than one year are not annualized.
B Annualized.
C For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on which
commissions are charged. This amount may vary from period to period and fund
to fund depending on the mix of trades executed in various markets where
trading practices and commission rate structures may differ.
See Notes to Financial Statements.
8
<PAGE>
AMERICAN GAS INDEX FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
American Gas Index Fund, Inc. (the "Fund") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as an open-end,
diversified investment company. The Fund is authorized to issue 1,000,000,000
shares of $0.001 par value capital stock. The financial statements have been
prepared in conformity with generally accepted accounting principles which
permit management to make certain estimates and assumptions at the date of the
financial statements. The following is a summary of significant accounting
policies which the Fund follows.
(a) Securities listed on stock exchanges are valued at the last sales
price of the applicable exchange. Over-the-Counter securities are
valued at the last sales price. If market quotations are not readily
available, the Board of Directors will value the Fund's securities
in good faith.
(b) Security transactions are recorded on the trade date (the date the
order to buy or sell is executed). Interest income is accrued on a
daily basis. Dividend income is recorded on the ex-dividend date.
Realized gains and losses from securities transactions are computed
on an identified cost basis.
(c) Net investment income is computed and dividends are declared
quarterly. Dividends are reinvested in additional shares unless
shareholders request payment in cash. Net realized capital gains, if
any, are distributed annually.
(d) The Fund complies with the provisions of the Internal Revenue Code
applicable to regulated investment companies and distributes all net
investment income to its shareholders. Therefore, no Federal income
tax provision is required.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment advisory and management services are provided by Money Management
Associates, ("the Adviser"). Under an agreement with the Adviser, the Fund pays
a fee for such services at an annual rate of 0.40% of the average daily net
assets of the Fund. Certain Officers and Directors of the Fund are affiliated
with the Adviser.
Rushmore Trust and Savings, FSB ("Trust"), a majority-owned subsidiary of the
Adviser, provides transfer agency, dividend-disbursing and other shareholder
services to the Fund. In addition, the Trust serves as custodian of the Fund's
assets and pays the operating expenses of the Fund. For these services the Trust
receives an annual fee of 0.35% of the average daily net assets of the Fund.
9
<PAGE>
The American Gas Association, (A.G.A.), serves as administrator for the Fund. As
administrator, A.G.A. calculates and maintains the Index and provides the Fund
with information concerning the natural gas industry. For these services the
Fund pays a fee at an annual rate of 0.10% of the average daily net assets of
the Fund.
3. SECURITIES TRANSACTIONS
For the six months ended September 30, 1996, purchases of securities were
$3,450,293, and sales of securities were $11,401,919. These totals exclude
short-term securities.
4. NET UNREALIZED APPRECIATION/DEPRECIATION OF INVESTMENTS
As of September 30, 1996, net unrealized appreciation of investments for Federal
income tax purposes was $57,741,904 of which $60,383,695 related to appreciated
investments and $2,641,791 related to depreciated investments. At September 30,
1996, the cost of the Fund's securities for Federal income tax purposes was
$154,409,251.
5. NET ASSETS
At September 30, 1996 net assets consisted of the following:
<TABLE>
<S> <C>
Paid-in-Capital.......................................................... $164,214,384
Undistributed Net Investment Income...................................... 72,597
Accumulated Realized Loss on Investments................................. (11,860,639)
Net Unrealized Appreciation of Investments............................... 59,893,567
-------------
NET ASSETS............................................................... $212,319,909
-------------
-------------
</TABLE>
6. CAPITAL LOSS CARRYOVERS
At March 31, 1996, for Federal income tax purposes, the Fund had capital loss
carryovers which may be applied against future net taxable realized gains of
each succeeding year until the earlier of its utilization or its expiration:
<TABLE>
<CAPTION>
Expires March 31,
- -----------------------------------------------------------------
<S> <C>
2003............................................................. $ 9,143,031
2004............................................................. 2,420,302
-----------
$11,563,333
-----------
-----------
</TABLE>
10
