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BERKELEY MONEY MARKET FUND
SEMI-ANNUAL REPORT
April 30, 1998
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Dear Shareholder:
We welcome the opportunity to provide you with a summary of the economic
developments that have affected the performance of the Berkeley Money Market
Fund (the "Fund") and our investment strategy.
Since the Fund was launched on March 23, 1998, developments in foreign economies
have had a greater than usual impact on the U.S. financial markets. In
particular, the ebbs and flows of investor anxiety regarding the Asian crisis
have played a large role in determining long-term interest rate movements in
this country. When worries rose that the Asian crisis might spread, a "flight to
quality" was triggered that resulted in large investment flows into the U.S.
Treasury market, driving interest rates lower. When these fears eased, a
reversal of the flows resulted in higher U.S. interest rates. Throughout this
period, and in subsequent months, concern over the potential impact of the Asian
crisis on our economy led the Federal Reserve Bank to follow a "hands off"
approach to monetary policy. Thus, short-term interest rates have been
relatively stable despite robust economic growth over the last year.
We continue to believe that ultimately a strong domestic economy will shrug off
the impact from the Asian slump. We expect it is likely, however, that while the
Asian crisis persists the Federal Reserve Board will adopt a passive strategy
with respect to monetary policy, neither raising or lowering short-term interest
rates. Based on this current investment outlook, we are keeping the average
maturity of the Fund at a relatively neutral position.
As of April 30, 1998, the SEC 7 day effective yield was 4.94% and the 7 day
yield was 4.82%. The current SEC 7 day effective yield of 5.17% and the 7 day
yield of 5.04%, as of June 22, 1998, are more representative of what the Fund
may earn until the next action by the Federal Reserve Board changes the level of
short-term interest rates.
Thank you for your investment in Berkeley Money Market Fund.
Sincerely,
/s/ William F. Cox
William F. Cox
Portfolio Manager
June 22, 1998
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BERKELEY MONEY MARKET FUND
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Schedule of Investments
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
----------- ----------
<S> <C> <C>
COMMERCIAL PAPER - 89.5%
ASSET BACKED SECURITIES - 10.3%
Frigate Funding Corp., 5.54%, 5/19/98 $4,000,000 $3,988,920
KZH Holding Corp III, 5.60%, 5/4/98 3,516,000 3,514,359
Market Street Funding, 5.56%, 5/12/98 4,000,000 3,993,204
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11,496,483
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AUTOMOTIVE - 12.3%
Ford Motor Credit Co., 5.51%, 5/11/98 4,000,000 3,993,878
General Motors Acceptance Corp., 5.53%, 5/8/98 4,000,000 3,995,699
Paccar Financial Corp., 5.52%, 5/4/98 1,500,000 1,499,310
TRW, Inc., 5.51%, 5/26/98 2,400,000 2,390,817
TRW, Inc., 5.52%, 5/18/98 2,000,000 1,994,787
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13,874,491
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BANKING - 3.6%
UBS Finance, Inc., 5.49%, 5/22/98 4,000,000 3,987,190
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BROKERAGE FIRM - 7.2%
Goldman Sachs Group, L.P., 5.53%, 5/15/98 4,000,000 3,991,398
Merrill Lynch & Co., Inc., 5.50%, 6/12/98 3,000,000 2,980,750
Merrill Lynch & Co., Inc., 5.52%, 5/15/98 1,000,000 997,853
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7,970,001
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CONSUMER PRODUCTS - 6.3%
Conagra, Inc., 5.62%, 5/15/98 1,000,000 997,815
Nike, Inc., 5.51%, 5/18/98 2,000,000 1,994,796
Procter & Gamble Co., 5.48%, 5/12/98 4,035,000 4,028,244
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7,020,855
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</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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2
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BERKELEY MONEY MARKET FUND
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SCHEDULE OF INVESTMENTS
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
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<S> <C> <C>
ENERGY - 3.6%
Chevron USA, Inc., 5.50%, 5/7/98 $4,000,000 $3,996,333
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FINANCIAL SERVICES - 16.9%
American Express Credit, 5.49%, 6/8/98 4,000,000 3,976,820
Associates First Capital, 5.51%, 5/8/98 4,000,000 3,995,714
CIT Group, Inc., 5.40%, 5/20/98 1,330,000 1,326,210
General Electric Capital Corp., 5.50%, 5/22/98 3,500,000 3,488,771
General Electric Capital Corp., 5.54%, 5/1/98 1,000,000 1,000,000
Heller Financial, 5.72%, 5/18/98 1,000,000 997,299
Household Finance Corp., 5.52%, 5/5/98 2,000,000 1,998,773
Household Finance Corp., 5.52%, 5/6/98 2,000,000 1,998,467
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18,782,054
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HEALTH CARE - 3.6%
Holy Cross Health Systems, 5.53%, 5/1/98 4,000,000 4,000,000
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MANUFACTURING - 3.6%
Deere & Company, 5.50%, 5/12/98 4,000,000 3,993,278
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MEDICAL-DRUGS - 2.8%
Merck & Co., Inc., 5.52%, 5/18/98 3,100,000 3,091,919
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RETAIL - 3.6%
Sears Credit Corp., 5.53%, 5/15/98 4,000,000 3,991,398
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TECHNOLOGY - 6.3%
IBM Credit Corp, 5.50%, 5/7/98 4,000,000 3,996,333
Motorola, Inc., 5.49%, 5/7/98 3,000,000 2,997,255
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6,993,588
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</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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3
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BERKELEY MONEY MARKET FUND
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SCHEDULE OF INVESTMENTS
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
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<S> <C> <C>
TRANSPORTATION - 4.0%
International Lease Finance Corp., 5.50%, 5/14/98 $3,500,000 $3,493,049
United Parcel Service, 5.47%, 5/15/98 1,000,000 997,873
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4,490,922
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UTILITY - 5.4%
Airtouch Communications, Inc., 5.66%, 6/1/98 1,000,000 995,126
GTE Corporation, 5.64%, 5/8/98 4,000,000 3,995,613
PG&E Corporation, 5.55%, 5/6/98 1,000,000 999,229
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5,989,968
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TOTAL COMMERCIAL PAPER 99,678,480
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CORPORATE NOTES/BONDS - 8.1%
BANKING - 7.2%
Banco Latinoamericano, 6.50%, 10/19/98 1,000,000 1,001,329
First Union Corp., 5.83%, 4/29/99 4,000,000 4,000,000
Keycorp, 8.40%, 4/1/99 3,000,000 3,064,849
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8,066,178
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TRANSPORTATION - 0.9%
Quantas Airlines, 6.63%, 6/30/98 1,000,000 1,000,978
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TOTAL CORPORATE NOTES/BONDS 9,067,156
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U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.3%
FHLMC Discount Note, 5.30%, 5/7/98 1,500,000 1,498,675
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TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 1,498,675
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</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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BERKELEY MONEY MARKET FUND
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SCHEDULE OF INVESTMENTS
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
NUMBER OF AMORTIZED
SHARES COST
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<S> <C> <C>
INVESTMENT COMPANIES - 1.5%
Fidelity Institutional Money Market Fund 1,635,525 $1,635,525
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TOTAL INVESTMENT COMPANIES 1,635,525
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TOTAL INVESTMENTS - 100.4% 111,879,836
LIABILITIES LESS OTHER ASSETS - (0.4)% (466,985)
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NET ASSETS - 100.0% $111,412,851
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</TABLE>
Abbreviation
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FHLMC Federal Home Loan Mortgage Corporation
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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5
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BERKELEY MONEY MARKET FUND
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Statement of Assets and Liabilities
April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value based on amortized cost $111,879,836
Interest receivable 59,501
Organization expenses, net 92,525
Cash 989
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TOTAL ASSETS 112,032,851
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LIABILITIES
Dividends payable 461,464
Payable to Investment Manager 127,648
Accrued expenses and other liabilities 30,888
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TOTAL LIABILITIES 620,000
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NET ASSETS $111,412,851
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CAPITAL STOCK
$0.01 par value; unlimited number shares authorized
Shares issued and outstanding 111,412,851
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NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $1.00
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</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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6
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BERKELEY MONEY MARKET FUND
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Statement of Operations
For the Period Beginning March 23, 1998(1) through April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 675,961
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EXPENSES:
Investment management fees 29,950
Shareholder servicing fees 29,950
Fund accounting and administration fees 13,806
Transfer agent fees 2,067
Custodian fees 1,053
Registration and filing fees 7,293
Professional fees 3,042
Amortization of organization costs 2,020
Trustees' fees and expenses 624
Other 3,003
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TOTAL EXPENSES BEFORE REDUCTION 92,808
Less fee reduction and reimbursable expenses by Manager (17,335)
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NET EXPENSES 75,473
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NET INVESTMENT INCOME $ 600,488
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</TABLE>
(1) COMMENCEMENT OF OPERATIONS
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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7
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BERKELEY MONEY MARKET FUND
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Statement of Changes in Net Assets
For the Period March 23, 1998(1) through April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
OPERATIONS:
Net investment income $ 600,488
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Net increase in net assets resulting from operations 600,488
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DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (600,488)
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FUND SHARE TRANSACTIONS:
Proceeds from shares sold 133,195,246
Reinvestment of dividends 139,023
Cost of shares redeemed (22,021,418)
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Increase in net assets resulting from fund share transactions 111,312,851
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TOTAL INCREASE IN NET ASSETS 111,312,851
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NET ASSETS:
Beginning of period 100,000
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End of period $111,412,851
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</TABLE>
(1) COMMENCEMENT OF OPERATIONS
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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8
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BERKELEY MONEY MARKET FUND
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Financial Highlights for a Share Outstanding Throughout Each Period
For the Period Beginning March 23, 1998(1) through April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $1.00
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INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01
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Total from investment operations 0.01
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LESS DISTRIBUTION TO SHAREHOLDERS:
Dividends from net investment income ($0.01)
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Total distributions ($0.01)
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NET ASSET VALUE AT END OF PERIOD $1.00
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TOTAL RETURN (NOT ANNUALIZED) 0.54%
SUPPLEMENTAL DATA AND RATIOS:
Net assets at end of period $111,412,851
Ratio of net expenses to average net assets(2) 0.63%
Ratio of net investment income to average net assets(2) 5.01%
</TABLE>
(1) COMMENCEMENT OF OPERATIONS.
(2) ANNUALIZED. NET OF FEES WAIVED AMOUNTING TO 0.14% OF AVERAGE NET ASSETS.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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9
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BERKELEY FUNDS
BERKELEY MONEY MARKET FUND
Notes to the Financial Statements (Unaudited)
April 30, 1998
1. ORGANIZATION
Berkeley Money Market Fund (the "Fund"), formerly named Berkeley Capital
Management Money Market Fund, is a diversified investment portfolio of
Berkeley Funds (the "Trust"), an open-end, management investment company.
The Trust, formerly named Berkeley Capital Management Funds, is a business
trust organized under the laws of Delaware on October 28, 1996 and is
registered under the Investment Company Act of 1940, as amended. Berkeley
Money Market Fund commenced operations on March 23, 1998.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements, and
such policies are in conformity with generally accepted accounting
principles ("GAAP") for investment companies. The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
VALUATION OF SECURITIES
Securities are stated at amortized cost, which approximates market value.
Under this method, all investments purchased at a discount or premium are
valued by amortizing the difference between the original purchase price and
maturity value of the issue over the period to maturity.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
The Fund recognizes interest income on an accrual basis. Discounts and
premiums are amortized over the life of the respective securities.
Investment and shareholder transactions are recorded on trade date. Realized
gains and losses from investment transactions are reported on an identified
cost basis. Permanent book and tax basis differences relating to shareholder
distributions will be reclassified to capital stock.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Distributions of net realized capital gains, if any, will be declared at
least annually.
FEDERAL INCOME TAXES
The Fund intends to comply with the requirements necessary to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended, and to make the requisite distributions of income and
realized net capital gains, if any, to shareholders sufficient to
10
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BERKELEY FUNDS
BERKELEY MONEY MARKET FUND
Notes to the Financial Statements (Unaudited) (Continued)
April 30, 1998
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
relieve it from all or substantially all federal income taxes. Accordingly,
no federal income tax provision is required.
ORGANIZATION COSTS
Costs incurred by the Fund in connection with the organization, registration
and the initial public offering of shares, are being deferred and amortized
on a straight line basis over the period of benefit, but not to exceed 60
months from the Fund's commencement of operations. These costs were advanced
by Berkeley Capital Management (the "Manager") and are to be reimbursed by
the Fund. In the event that any of the initial shares purchased by Berkeley
International Securities Corporation, an affiliate of the Manager, are
redeemed during the amortization period, the Fund will be reimbursed for any
remaining unamortized costs in the same proportion as the number of initial
shares redeemed bears to the total number of initial shares outstanding at
the time of such redemption.
3. INVESTMENT MANAGEMENT AND SHAREHOLDER SERVICE AGREEMENTS
The Trust has an agreement with the Manager, with whom certain officers and
trustees of Berkeley Funds are affiliated, to furnish investment management
services to the Fund. Under the terms of this agreement, the Manager will
receive an annual fee of 0.25% of the Fund's average daily net assets. The
investment management agreement (the "Agreement") allows the Manager to
voluntarily reduce any portion of its management fee under the Agreement and
to reimburse all or a portion of the Fund's expenses. The Agreement permits
the Manager to seek reimbursement of any reductions made to its management
fee and payments made to limit expenses which are the responsibility of the
Fund within the three-year period following such reduction, subject to the
Fund's ability to effect such reimbursement and remain in compliance with
applicable expense limitations. At such time as it appears probable that the
Manager will seek such reimbursement, the amount of reimbursement that the
Fund is able to effect will be accrued as an expense of the Fund for that
current period. On April 30, 1998, the amount of expense reductions eligible
for reimbursement was $17,335.
Pursuant to a shareholder services agreement, the Manager will provide, or
arrange for others to provide, certain specified shareholder services to
shareholders of the Fund. As compensation for the provision of shareholder
services, the Fund will pay the Manager up to 0.25% of the Fund's average
daily net assets on an annual basis, payable monthly.
4. FEE REDUCTION AND REIMBURSABLE EXPENSES
For the period beginning March 23, 1998 through April 30, 1998, the Manager
voluntarily reduced its management fee by $17,335.
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BERKELEY MONEY MARKET FUND
This report and the financial statements
contained herein are provided for the
general information of the shareholders of
the Berkeley Funds. This report is not
authorized for distribution to prospective
investors in the Berkeley Funds unless
preceded or accompanied by an effective
prospectus.
Please remember that money market yields
fluctuate and past performance is no
guarantee of future results. The Fund
seeks to maintain a stable $1.00 share
price to protect your principal; as with
all money funds, there can be no assurance
that the Fund will be able to maintain a
$1.00 net asset value per share. It is
also important to understand that your
investment in the Fund is not insured or
guaranteed by the U.S. Government.
For more information on Berkeley Funds,
including charges and expenses, please
call 888-889-0799 for a free prospectus.
Read it carefully before you invest or
send money.
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Berkeley Funds
650 California Street, Suite 2800
San Francisco, CA 94108
