AMERICAN GAS INDEX FUND INC
N-30D, 1999-12-08
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semiannual report, September 30, 1999

American Gas Index Fund, Inc.

4922 Fairmont Avenue, Bethesda, Maryland 20814

(800) 622-1386 (301) 657-1510

November 15, 1999

Dear Shareholders:

 

 

During the six-month period ended September 30, 1999, the American Gas Index Fund outperformed the general equity market as represented by the Dow Jones Industrial Average and the S&P 500 Index. In addition, the Fund surpassed its traditional benchmark, the Dow Jones Utility average. The Fund's total return was 10.74% including a dividend of 27 cents per share. The resulting six-month income return was 1.59%. During this period, over seventy percent of the Fund's holdings increased in value.

This was a volatile six months for the equity markets and the Fund. The Fund's net asset value (NAV) on March 31 was $16.28 per share and on September 30 was $17.76. The period's low was $16.26 on April 7 and an all time high NAV of $18.98 was achieved on June 17. The Fund's performance reflected investor uncertainty relating to inflation, interest rates, economic growth, energy prices and the impact of the continuing rush of industry consolidation activity.

 

Top Five Performers

(Price Change: Six Months Ended - Sept. 30, 1999)

Yankee Energy

85.10%

Connecticut Energy

59.54%

Virginia Gas Co.

57.50%

Providence Energy

51.02%

Energynorth

50.91%

 

Bottom Five Performers

(Price Change: Six Months Ended - Sept. 30, 1999)

PECO Energy

-18.92%

Delta Natural Gas

-18.18%

NiSource Industries, Inc.

-18.06%

Montana Power

-17.25%

Pacific Gas & Electric

-16.70%

 

 

Total Return Comparison

(Six Months Ended September 30, 1999)

American Gas Index Fund

10.74%

Dow Jones Industrials

6.48%

Dow Jones Utilities

3.99%

S&P 500

0.37%

The average annual total return was 4.33% for the one-year period, 14.97% for the five-year period, and 9.42% for the ten-year period ended September 30, 1999. 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.

According to the American Gas Association, thirteen "deals" involving at least one of the Fund's holdings were announced between April and September.

The Fund's comparatively strong performance was attributed to several strengths cited by industry analysts. The industry strengths most often mentioned include:

The Fund's performance during the third quarter was an indication of long-term stability and the virtue of a portfolio with dividend paying holdings. Fund shareholders should financially benefit from the forecasted growth of energy utility companies and the continuation of industry consolidation and diversification. Please contact us directly if you have questions regarding the Fund or visit our website at www.rushmorefunds.com. Your support of the Fund is appreciated.

Sincerely,

 

{SIGNATURE}

Richard J. Garvey

Chairman of the Board

 

 

 

2

 

American Gas Index Fund, Inc.  
STATEMENT OF NET ASSETS  
September 30, 1999  
(unaudited)  
      Value   Percent of  
    Shares   (Note 1)   Net Assets  
COMMON STOCKS  
Consolidated Natural Gas Co. 170,000   $ 10,603,750   5.20%
The Coastal Corp. 250,300   10,246,656   5.02  
Duke Energy Corp. 185,000   10,198,125   5.00  
El Paso Energy Corp. 250,000 9,953,125   4.88  
Columbia Energy Group 175,000 9,690,625   4.75  
The Williams Companies, Inc. 250,000   9,359,375   4.59  
PG&E Corp. 325,000   8,409,375   4.12  
Enron Corp. 180,000   7,425,000   3.64  
KeySpan Energy Corp. 255,000   7,299,375   3.58  
Sempra Energy 325,000   6,764,063   3.32  
Reliant Energy, Inc. 220,000   5,953,750   2.92  
Sonat, Inc. 130,000   5,159,375   2.53  
NICOR, Inc. 125,000   4,648,437   2.28  
KN Energy, Inc. 200,000   4,487,500   2.20  
National Fuel Gas Co. 75,000   3,539,062   1.73  
Consolidated Edison, Inc. 85,000   3,527,500   1.73  
Washington Gas Light Co. 130,000   3,526,250   1.73  
Peoples Energy Corp. 95,000   3,342,812   1.64  
Public Service Enterprise Group, Inc. 85,000   3,283,125   1.61  
PECO Energy Co. 75,000   2,812,500   1.38  
Eastern Enterprises 59,583   2,766,886   1.36  
Piedmont Natural Gas Co., Inc. 90,000   2,728,125   1.34  
AGL Resources, Inc. 165,000   2,681,250   1.31  
CMS Energy Corp. 75,900   2,575,856   1.26  
Questar Corp. 140,000   2,537,500   1.24  
NiSource, Inc. 110,000   2,433,750   1.19  
ONEOK, Inc. 75,000   2,273,437   1.11  
MCN Energy Group, Inc. 130,000   2,234,375   1.10  
WICOR, Inc. 75,000   2,179,687   1.07  
Atmos Energy Corp. 85,000   2,050,625   1.01  
Southwest Gas Corp. 75,000   2,020,313   0.99  
Equitable Resources, Inc. 50,000   1,890,625   0.93  
Public Service Co. of North Carolina, Inc. 55,000   1,705,000   0.84  
Indiana Energy, Inc. 83,066   1,666,512   0.82  
New Jersey Resources Corp. 40,000   1,600,000   0.78  
Southern Union Co. 82,687   1,571,053   0.77  
Northwest Natural Gas Co. 60,000   1,548,750   0.76  
The Montana Power Co. 50,000   1,521,875   0.75  
               
   
3  
               
American Gas Index Fund, Inc.  
STATEMENT OF NET ASSETS (continued)  
September 30, 1999  
(unaudited)  
      Value   Percent of  
    Shares   (Note 1)   Net Assets  
COMMON STOCKS (continued)  
New Century Energies, Inc. 42,500   $ 1,421,094   0.70%
Texas Utilities Co. 35,000   1,305,938   0.64  
Yankee Energy System, Inc.   27,500   1,173,906   0.58  
Pennsylvania Enterprises, Inc.   35,000   1,135,313   0.56  
MDU Resources Group, Inc.   50,000   1,125,000   0.55  
Northern States Power Co.   50,000   1,078,125   0.53  
Cinergy Corp.   37,500   1,061,719   0.52  
Constellation Energy Group, Inc.   37,500   1,054,687   0.52  
UtiliCorp United, Inc.   50,000   1,053,125   0.52  
Laclede Gas Co.   46,000   1,046,500   0.51  
Connecticut Energy Corp.   25,000   967,188   0.47  
Energy East Corp.   40,000   950,000   0.47  
Niagara Mohawk Holdings, Inc.*   60,000   926,250   0.45  
CTG Resources, Inc.   25,000   884,375   0.43  
Carolina Power & Light Co.   24,162   854,731   0.42  
Citizens Utilities Co.*   75,000   848,438   0.42  
Dynegy, Inc.   40,000   827,500   0.41  
Energen Corp.   40,600   822,150   0.40  
South Jersey Industries, Inc.   30,000   791,250   0.36  
NUI Corp.   30,000   742,500   0.36  
DPL, Inc.   40,000   705,000   0.35  
Wisconsin Energy Corp.   30,000   703,125   0.34  
Alliant Energy Corp.   25,000   692,188   0.34  
NSTAR   17,850   691,687   0.34  
TECO Energy, Inc.   30,000   633,750   0.31  
UGI Corp.   25,000   581,250   0.28  
Illinova Corp.   20,000   561,250   0.28  
SEMCO Energy, Inc.   36,750   512,203   0.25  
RGS Energy Group, Inc.   20,000   490,000   0.24  
Providence Energy Corp.   17,000   471,750   0.23  
CMS Energy Corp., Class G   20,000   470,000   0.23  
Public Service Co. of New Mexico   22,500   410,625   0.20  
P P & L Resources, Inc.   15,000   405,938   0.20  
Connectiv, Inc.   20,000   392,500   0.19  
EnergyNorth, Inc.   9,000   373,500   0.18  
WPS Resources Corp.   12,500   350,781   0.17  
EnergySouth, Inc.   16,000   340,000   0.17  
MidAmerican Energy Holdings Co.   10,000   295,000   0.14  
               
               
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American Gas Index Fund, Inc.  
STATEMENT OF NET ASSETS (continued)  
September 30, 1999  
(unaudited)  
      Value   Percent of  
  Shares   (Note 1)   Net Assets  
COMMON STOCKS (continued)  
Central Hudson Gas and Electric Corp. 6,500   $255,938.00   0.13%
SIGCORP, Inc. 10,000   255,000   0.12  
Fall River Gas Co. 10,000   209,375   0.10  
Southwestern Energy Resources 22,000   199,375   0.10  
Sierra Pacific Resources 8,640   192,240   0.09  
Berkshire Energy Resources 7,500   192,188   0.09  
Chesapeake Utilities Corp. 10,000   172,500   0.08  
Valley Resources, Inc. 12,000   163,500   0.08  
RGC Resources, Inc. 7,500   148,125   0.07  
Entergy Corp. 5,000   144,687   0.07  
Corning Natural Gas Corp. 4,500   96,750   0.05  
Delta Natural Gas Co., Inc. 6,500   95,062   0.05  
Energy West, Inc. 7,500   60,000   0.03  
Virginia Gas Co. 15,000   59,063   0.03  
USX-Marathon Group 2,000   58,500   0.03  
Minnesota Power, Inc. 2,000   35,125   0.02  
UNITIL Corp. 1,000 24,313   0.01  
Avista Corp. 1,000           17,562        0.01  
Total Common Stocks (Cost $116,565,545)   199,745,038      97.90  
REPURCHASE AGREEMENT        
With Paine Webber dated 9/30/99 at 5.20% to be repurchased at $4,352,344 on 10/1/99, collateralized by $4,331,505 in U.S. Treasury Notes, due 12/31/99 (Cost$4,351,716)          
         
        4,351,716      2.13  
Total Investments (Cost $120,917,261)   204,096,754   100.03  
Liabilities in Excess of Other Assets         (69,596)    (0.03)  
Net Assets   $204,027,158 100.00%
Net Asset Value Per Share (Based on 11,488,256 Shares Outstanding)            $17.76      
Net Assets Consist of:        
Paid-in-Capital   $106,867,828      
Accumulated Undistributed Net Investment Income     48,329      
Accumulated Undistributed Net Realized Gain on Investments   13,931,508      
Net Unrealized Appreciation of Investments   83,179,493      
Net Assets   $204,027,158      
             
             
5  
     

 

American Gas Index Fund, Inc.
STATEMENT OF NET ASSETS (continued)
September 30, 1999
(unaudited)
 
               
Income Tax Information:  
At September 30, 1999, the cost of the investment securities for Federal income tax purposes was $121,999,088. Net unrealized appreciation was $82,097,666 of which $84,694,739 related to appreciated investment securities and $2,597,073 related to depreciated investment securities.
Other Information:  
For the six months ended September 30, 1999, purchases of securities, excluding short-term securities, were $10,576,070 and sales (including maturities) of securities were $26,249,682.
               
               
               
               
               
               
               
               
See Notes to Financial Statements.
6

 

American Gas Index Fund, Inc.
STATEMENT OF OPERATIONS
For the Six Months Ended September 30, 1999
(unaudited)
Investment Income    
Dividends $ 3,892,841  
Interest       85,160  
Total Investment Income  3,978,001  
Expenses    
Investment Advisory Fee (Note 2) 425,742  
Accounting and Administrative Fee (Note 2) 372,525  
Administrative Fee (Note 2)     106,436  
Total Expenses     904,703  
Net Investment Income   3,073,298  
Net Realized Gain on Investment Transactions 9,425,322  
Change in Net Unrealized Appreciation of Investments   9,174,805  
Net Gain on Investments 18,600,127  
Net Increase in Net Assets Resulting from Operations $ 21,673,425  
           
           
           
           
See Notes to Financial Statements.
7

 

American Gas Index Fund, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
     
 
  For the Six  
    Months Ended   For the Year
    September 30, 1999   Ended
    (unaudited)   March 31, 1999
Increase (Decrease) in Net Assets      
Operations        
Net Investment Income $ 3,073,298 $ 6,397,350
Net Realized Gain on Investment Transactions 9,425,322 9,883,696
Change in Net Unrealized Appreciation of Investments 9,174,805 (30,421,779)
Net Increase (Decrease) in Net Assets Resulting from Operations 21,673,425 (14,140,733)
Distributions to Shareholders      
From Net Investment Income (3,102,027)   (6,353,353)
From Net Realized Gain on Investments                    -   (8,531,808)
Total Distributions to Shareholders (3,102,027) (14,885,161)
Share Transactions      
Net Proceeds from Sales of Shares 17,595,398 35,889,754
Reinvestment of Distributions 2,887,632 13,403,164
Cost of Shares Redeemed (35,344,080) (64,317,934)
Net Decrease in Net Assets Resulting from Share Transactions (14,861,050) (15,025,016)
Total Increase (Decrease) in Net Assets 3,710,348 (44,050,910)
Net Assets -- Beginning of Period 200,316,810 244,367,720
Net Assets -- End of Period $ 204,027,158 $ 200,316,810
             
             
Shares      
Sold   968,946 2,006,326
Issued in Reinvestment of Distributions   159,819 764,283
Redeemed   (1,946,416) (3,612,456)
Net Decrease in Shares   (817,651) (841,847)
             
           
     
     
     
See Notes to Financial Statements.
8
     
American Gas Index Fund, Inc.
FINANCIAL HIGHLIGHTS
   
   
       
  For the Six    
  Months Ended    
  September 30,    
          1999   For the Years Ended March 31,
          (unaudited)   1999   1998   1997   1996   1995
Per Share Operating Performance:                      
Net Asset Value -- Beginning of Period  $ 16.28    $ 18.59  $ 14.84    $ 13.25    $ 11.13    $ 11.08
Income from Investment Operations:                    
Net Investment Income 0.27   0.51 0.47   0.45   0.45   0.44
Net Realized and Unrealized Gain                    
(Loss) on Investments     1.48   (1.63)   3.87       1.60       2.13       0.05
Total from Investment Operations     1.75   (1.12)     4.34       2.05       2.58       0.49
Distributions to Shareholders:                      
From Net Investment Income (0.27)   (0.51) (0.47)   (0.46)   (0.46)   (0.44)
From Net Realized Gain          -   (0.68) (0.12)            -            -            -
Total Distributions   (0.27)     (1.19)   (0.59)     (0.46)     (0.46)      (0.44)
Net Increase (Decrease) in Net Asset Value     1.48       (2.31)     3.75       1.59       2.12       0.05
Net Asset Value -- End of Period $ 17.76   $ 16.28 $ 18.59   $ 14.84   $ 13.25   $ 11.13
Total Investment Return 10.74% A (6.35)%   29.62%   15.60%   23.46%   4.72%
Ratios to Average Net Assets:                      
Expenses 0.85% B 0.85%   0.85%   0.85%   0.85%   0.85%
Net Investment Income 2.88% B 2.84%   2.83%   3.06%   3.71%   4.04%
Supplementary Data:                      
Portfolio Turnover Rate 5%   10% 13%   8%   10%   9%
Net Assets at End of Period (in thousands) $204,027   $200,317 $244,368   $213,058   $204,000   $188,544
Number of Shares Outstanding at End of                      
Period (in thousands) 11,488   12,306 13,148   14,353   15,391   16,941
                         
       
  A Total returns for periods of less than one year are not annualized.            
  B Annualized            
                               
                               
                               
                               
                               
                               
                               
See Notes to Financial Statements.
9

 

 

 

 

American Gas Index Fund, Inc.

NOTES TO FINANCIAL STATEMENTS

September 30, 1999

(unaudited)

 

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 Fund invests primarily in the common stock of natural gas distribution and transmission companies. Since the Fund has a specialized focus, it carries more risk than a fund that invests more generally. 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.

  1. 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.

  2. 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. Realized gains and losses from security transactions are computed on an identified cost basis.

  3. Net investment income is computed, and dividends are declared quarterly. Dividends are reinvested in additional shares unless shareholders request payment in cash. Capital gains, if any, are distributed annually.

  4. 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. Certain Officers and Directors of the Fund are affiliated with the Adviser.

Rushmore Trust and Savings, FSB ("Rushmore Trust"), a majority-owned subsidiary of the Adviser, provides transfer agency, dividend-disbursing and shareholder services to the Fund. In addition, Rushmore Trust serves as custodian of the Funds assets and pays the operating expenses of the Fund. For these services, Rushmore Trust receives an annual fee of 0.35% of the average daily net assets of the Fund.

On October 20, 1999, the Adviser and Rushmore Trust reached a definitive agreement to be acquired by Friedman Billings Ramsey Group, Inc. The transaction is subject to various regulatory approvals.

The American Gas Association (A.G.A.) serves as administrator for the Fund. As administrator, A.G.A is responsible for calculating and maintaining the Index and providing 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.

 

 

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Semiannual Report

 

 

 

September 30, 1999



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