CAPSTONE NIKKO JAPAN FUND
A SERIES OF CAPSTONE INTERNATIONAL SERIES TRUST
SUPPLEMENT DATED JUNE 23, 1995
TO
PROSPECTUS DATED MARCH 1, 1995
AND
SUPPLEMENTED MARCH 17, 1995 AND MAY 24, 199
THE FOLLOWING PARAGRAPH REPLACES THE FIRST PARAGRAPH UNDER THE INVESTMENT
OBJECTIVE AND POLICIES SECTION ON PAGE 8 OF THE PROSPECTUS:
The objective of the Fund is to seek an average annual total return from a
portfolio of shares in Japanese companies which exceeds the average annual total
return of the First Section of the Tokyo Stock Exchange ("TSE1") as measured by
the Tokyo Stock Price Index ("TOPIX"). The Fund will seek to achieve this
objective by use of the Adviser's proprietary Return Reversal Strategy (the
"Reversal Strategy") as the source of greater returns. The Reversal Strategy
identifies the bottom 25% of the TOPIX issues according to the past 96-month
performance period and then ranks them in accordance to their exposure to Sales
Revenue to Price.
THE FOLLOWING PARAGRAPH REPLACES THE SIXTH PARAGRAPH UNDER THE RISK FACTORS
SECTION ON PAGE 11 OF THE PROSPECTUS:
We expect the steady performance in the stock market will continue
throughout this year. We will continue to manage the Fund using the Return
Reversal Strategy which, in the opinion of the Adviser, is extremely effective
in selecting promising under-performing and under-valued stocks in the recovery
phase of the Japanese economy. (See page 8).
THE FOLLOWING PARAGRAPH REPLACES THE PARAGRAPH UNDER THE PORTFOLIO TRANSACTIONS
AND BROKERAGE SECTION ON PAGE 23 OF THE PROSPECTUS:
Subject to policies established by the Fund's Board of Trustees, the
Adviser is primarily responsible for the execution of the Fund's portfolio
transactions and the allocation of brokerage. The policies established by the
trustees require that the Adviser seek to obtain the best net results in
executing transactions for the Fund, except that the Fund is authorized to pay
higher commissions in return for brokerage and research services in accordance
with certain regulatory conditions. Subject to the Funds' policy of seeking
best execution, the Fund may consider sales of Fund shares when allocating
portfolio brokerage and will execute transactions through Nikko Securities, an
affiliate of the Adviser, and through broker-dealer affiliates of the
Administrator. Since commission rates in Japan are fixed, the Adviser is not
able to negotiate commission rates on its Japanese securities transactions.
