May 28, 1998
Dear Shareholder:
We are pleased to present the Bailard Biehl & Kaiser International Equity Fund
semi-annual shareholders' report for the six months ended March 31, 1998. In
this report we discuss the recent performance of the Fund, the market outlook
and the Fund's investment strategy.
Performance and Market Review
Despite volatile market conditions for the six months ending March 31, 1998, we
are pleased to report that the Bailard Biehl & Kaiser International Equity Fund
has performed well returning 8.87%.(1) This has brought the Fund's return for
the year ending March, 1998 to a handsome 24.55%.(1)
In the final quarter of 1997, global stock market volatility increased
dramatically. In October, the financial tremors emanating from the dramatic
collapse of Asia's "Tiger" currencies and stock markets were felt by investors
in the markets of the U.S. and Europe. Most of the world's largest stock markets
which, with the notable exception of Japan, had been rising relentlessly
throughout 1997 fell by between 5% and 10%.(2) By December, an increasing belief
that Asia's financial ills could be contained helped trigger a recovery in the
markets outside of the Far East.
Bolstered by evidence of solid economic growth in the U.S., the first three
months of 1998 brought a resurgence of investor confidence not just in the
developed markets, but even in some of the down-trodden Asian markets, where
Korea, Thailand and the Philippines climbed from their absolute lows. This
resurgence propelled global stock markets sharply higher in the first quarter of
1998 producing strong double digit returns most notably in Europe. There, Italy
and France set the pace with U.S. dollar gains of 36% and 25%2 in their
respective markets.
The increased volatility of global stock market returns over the six month
period covered by this report caused a shift in our investment strategy toward a
value investment style rather than the momentum approach favored during calmer
markets. Not surprisingly, by year end most markets in Asia looked relatively
attractive on the basis of fundamental value measures such as book-to-price.
However, throughout the first quarter of 1998, continued dramatic downward
revisions of earnings forecasts, particularly across emerging Asia, led us to
pursue "relative value" selectively (e.g. in Latin America and developed Asia).
We maintained our overweight positions in most developed and emerging European
markets -- where both market momentum and earnings revisions remained in a
positive trend -- and cut back (in retrospect prematurely) on the most expensive
markets,
<PAGE>
including the U.K. and Switzerland. Our strategy of overweighting Europe was
particularly rewarding. Over the six months ending March 1998, nearly all the
developed European markets showed exceptional relative performance.
Over the six months to March 1998, the dollar continued to strengthen especially
versus the Japanese yen. During this period, in order to offset the effect of
the dollar's strength, we put some modest yen and German mark hedges in place.
These contributed positively to the Fund's return.
Europe
The European stock markets held up relatively well as the "Asian Crisis"
unfolded in the final quarter of 1997. Direct European exposure to the problems
of Asia proved modest in the short run, and the markets were soon focusing on
European rather than global issues. Economic growth across Europe continued to
improve. Inflation remained well under control. Profit margins in the corporate
sector moved higher, suggesting that Europe is catching up on the excellent
profits performance of U.S. corporations. European Monetary Union (EMU) moved
nearer to final closure, despite the aggravating problem of high unemployment
throughout the continent. The financial markets rewarded all of this progress
and, in the first few months of 1998, pushed stock prices to new highs across
much of Europe. The British government's decision not to join EMU in the initial
wave did not prevent U.K. stocks, where approximately 18% of the Fund's assets
are invested, from participating in the European market rally. The British
market rose by over 15%(2) in the first quarter of 1998.
Japan and Asia
For the stock markets of Japan and Hong Kong, the final quarter of 1997 was an
unhappy time. The Japanese equity market declined by nearly 20%(2) in U.S.
dollar terms, with 7%(2) of the fall coming from the strength in the dollar
versus the yen. The Hong Kong authorities successfully fended off speculative
attacks on the Hong Kong dollar. However, the Hong Kong stock market bore the
full brunt of the economy's readjustment by sliding 28%.(2) Our investment
process, wary of markets showing negative momentum, led us to underweight these
markets through the fourth quarter of 1997. In early 1998 the relative
valuations for these markets were compelling enough for us to move back to a
slight overweight position. Although the stock markets of Japan and Hong Kong
have performed better in the early months of 1998, the relative performance has
still been disappointing. Emerging Asia's financial and economic difficulties
have added to the problems of Japan's banks and exporters. The failure of the
Japanese authorities to jump start their economy with permanent (and not
temporary) tax cuts has further undermined confidence in an economic recovery
for Japan. There is a risk that deflation may slow down consumer spending still
more in Japan and, in the absence of permanent tax cuts, postpone once again the
long-awaited recovery in the Japanese economy. Prolonged weakness in the
Japanese economy will certainly hinder the recovery prospects for Asia's
emerging economies.
<PAGE>
Emerging Markets
The emerging stock and currency markets of Asia crashed as 1997 turned into
1998. Thailand, Indonesia and Korea lost over 50%2 of their value during the
fourth quarter. In the first few days of January this year, further huge
declines occurred. Finally, aided by the intervention of the International
Monetary Fund, the situation began to stabilize and improve. With the notable
exception of Indonesia, the Asian patients appear to be at least out of the
emergency room and into intensive care. Korea and Thailand have experienced huge
rebounds in their markets in the first few months of the year. Looking ahead, we
expect continued though uneven progress from the emerging Asian economies. As a
consequence, these markets are likely to remain volatile. Signs of slower growth
in mainland China represent a potential threat to the stability of the region. A
devaluation by China would trigger another round of devaluations and market
declines across the Asian markets.
Developing markets outside of Asia suffered setbacks because of the threat of
contagion. However, some of the emerging markets of Europe held up somewhat
better. Greece, where we were slightly overweight, rose by more than 25%2 in the
first quarter of 1998 on prospects of joining EMU. Overall, our strategy of
diversifying our emerging market holdings through twenty countries in Europe,
Asia and Latin America served the Fund well through this turbulent period.
Market Outlook and Investment Strategy
Our strategy has always recognized that investment "style" matters a great deal.
Throughout 1997, the Fund benefited from leaning the portfolio towards a
momentum style of investing in a relatively calm world. In the final months of
1997 and into the first quarter of 1998, the world markets (and Asian markets in
particular) became more volatile. Our research suggests that, when global
markets are volatile (reflecting above average levels of investor anxiety), the
highest returns over subsequent months are likely to come not from momentum but
from the best relative value investments. Consequently, over the early months of
1998, our strategy has been to look for opportunities to tilt the Fund's
portfolio towards value markets and stocks.
Although value, momentum and volatility are key components of our disciplined
approach to international investing, they are not the only considerations.
Forecasts of corporate earnings in many emerging markets are still suffering
large negative revisions. Conversely, the still positive upward revisions to
analysts' forecasts across Europe indicate that, despite less attractive
valuation ratios, the relative strength of Europe may have further to run.
Taking all factors into account and paying due attention to risk control, we are
currently overweight in developed Europe, particularly the peripheral markets of
Italy, Spain and Portugal, and underweight expensive markets like the U.K.,
Sweden and Germany. In
<PAGE>
Asia, we are overweight Hong Kong and Singapore and underweight the emerging
markets, where continuing earnings downgrades make valuations less compelling.
In Latin America the largest markets, Brazil and Mexico, are the most
attractive.
Most important, the disciplined investment process underlying the management of
the Bailard Biehl & Kaiser International Equity Fund continues to perform well
in terms of returns, risk and consistency. Turbulent global markets have made
the past six months a testing time and yet a rewarding time for investors in the
Fund. Shareholders may be interested to know that the Fund received a favorable
mention in the March 1998 edition of the magazine "Consumer Reports." We remain
confident that our investment process will continue to successfully navigate the
future hurdles and opportunities offered by stock markets outside the U.S.
We appreciate your continued investment in the Bailard Biehl & Kaiser
International Equity Fund. If you have any questions concerning the Fund, please
do not hesitate to call us at 800-882-8383.
Sincerely,
/s/ Peter M. Hill /s/ Burnice E. Sparks, Jr., CFA
Peter M. Hill Burnice E. Sparks, Jr., CFA
Chairman President
- -----------------
(1) Average annual total returns for investment periods ended March 31, 1998: 3
months: 15.18%; 6 months: 8.87%; 12 months: 24.55%; 5 years: 12.64% annualized;
10 years: 4.43% annualized. As required by the Securities and Exchange
Commission, these figures reflect the average compounded return over the period
indicated that would equate an initial amount invested in shares of the Fund to
the ending redeemable value of such shares, assuming that all dividends and
distributions by the Fund were reinvested at net asset value. These figures also
reflect the deduction of an assumed 1% annual investment management fee (0.25%
quarterly) payable by clients of Bailard, Biehl & Kaiser through 9/30/93. Actual
fees varied during this period. As of 10/1/93, the Fund charged a management fee
of 0.95%. The performance data quoted represents past performance, and the
investment return and principal value of an investment in the Bailard, Biehl &
Kaiser International Equity Fund will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
(2) The performance data quoted represents past performance and is no indication
of future results.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
Equity Securities (98.8%)
I. Argentina (0.7%)
Astra Corp. Argentina 20,500 $ 38,956
Banco De Galicia Spns'd. Class B ADR 2,992 73,304
Banco Frances Del Rio Plata ADR 2,200 66,275
Comercial Del Plata 14,530 18,746
Elf Aquitane Sp ADR 1,800 116,550
Ledesma SA Agricola Industrial 25,257 23,492
Perez Companc SA Spon ADR 5,200 69,794
Perez Companc SA 5,591 37,857
Siderar SA A Shares 744 3,646
Siderca 15,952 42,439
Telecom Argentina Stet-France Telecom SA ADR 900 32,231
Telefon De Argentina ADR 2,200 83,738
Transp. Gas Del Sur. ADR 2,500 29,375
YPF SA ADR 10,500 357,000
------------------
Total Argentina 993,403
------------------
II. Australia (1.9%)
Australia & New Zealand Bank Group Ltd. 104,500 699,922
Brambles Industries Ltd. 8,500 177,277
Broken Hill Proprietary Ltd. 35,000 358,366
CSR Ltd. 62,100 216,204
Coles Myer Ltd. 12,500 62,585
Foodland Associated 10,000 75,135
Fosters Brewing Group Ltd. 25,000 54,544
Goodman Fielder Ltd. 75,000 116,681
Lend Lease Corp. Ltd. 13,200 308,126
North Limited 75,959 207,030
QBE Insurance Group Ltd. 12,500 54,710
Southcorp Ltd. 20,000 79,445
The News Corporation Ltd. 43,700 288,927
Westpac Banking Corp. 18,000 120,799
------------------
Total Australia 2,819,751
------------------
III. Austria (0.5%)
Bank Austria 2,000 135,423
Bau Holdings AG Pfd. 750 35,681
Creditanstalt Bankverein 1,300 113,004
EVN Energ-Versorg 600 88,355
Flughafen Wien AG 900 40,631
Mayr-Melnhof Karton AG 1,000 69,172
OMV AG 800 103,112
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
Austria- Continued
VA Technologie AG 650 $ 102,413
Voest-Alpine Stahl AG 900 39,428
Weinerberger Baustoffindustrie 300 61,747
------------------
788,966
------------------
IV. Belgium (1.9%)
D'Ieteren SA 530 172,267
Delhaize Le Lion NPV 1,400 89,908
Electrabel NPV 1,450 369,437
Fortis 2,103 584,320
Fortis Strip VVPR 133 14
Genarale Banque NPV 290 153,552
*Koramic Building Products 1,600 102,752
Kredietbank NPV 750 403,015
Petrofina SA NPV 610 220,256
Tessenderlo Chemie Parts Soc. 4,320 259,313
Tractebel NPV 2,580 271,187
Tractebel NPV Wts. (Ex. 11/30/99) 400 451
UCB NPV 20 83,617
Union Miniere NPV 850 59,266
------------------
Total Belgium 2,769,355
------------------
V. Brazil (2.4%)
Companhia Cervejaria Brahma ADR 7,600 117,800
Companhia Energetica Spon ADR 3,000 141,375
Electrobras Pfd. B ADR 18,800 467,650
Gerdau SA Pfd. 2,200,000 41,212
Iparanga Brasil De Petroleo Pfd. 5,400,000 76,936
Itaubanco Pfd. Reg'd. 445,000 285,695
Light Service Electricidade SA 170,000 65,037
*Makro Atacadista SA GDR 23,400 298,350
Petrobras Pfd. Reg. 570,000 135,852
Petrobras Sponsored ADR 8,300 197,125
Siderurgica Nacional 7,000,000 207,405
Telebras Spon. ADR 10,200 1,324,087
Unibanco PN 4,800,000 162,526
------------------
Total Brazil 3,521,050
------------------
VI. Canada (4.1%)
Abitibi Consolidated Inc. 7,500 114,703
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
Canada- Continued
Alcan Aluminum Ltd. 4,000 $ 125,000
BCE Inc. 8,000 334,000
Bank of Nova Scotia 8,000 216,292
Bombardier Inc. Class B 14,000 345,041
Canadian Imperial Bank of Commerce 19,500 678,726
*Canadian Natural Resources 14,000 290,405
Cott Corp. 15,000 114,439
Falconbridge Ltd. 2,500 36,037
Hudsons Bay Co. Ord. 7,500 158,211
Imasco Ltd. 6,300 252,505
*Imperial Oil Ltd. 5,000 282,813
Ipsco Inc. 3,750 121,954
Maritime Teleg. & Telephone Ltd. 11,000 303,590
Newbridge Networks Corp. 9,500 255,313
Noranda Inc. 6,000 118,553
Northern Telecom 5,000 323,125
Power Financial Corp. 4,000 153,430
Quebecor Inc. Class B 5,000 103,716
Royal Bank of Canada 8,900 526,622
Shell Canada Ltd. 13,000 228,527
Telus Corp. 4,500 131,315
Thomson Corp. 10,000 312,907
Transcanada Pipelines Ltd. 10,000 236,250
*Wajax Ltd. 11,000 166,298
------------------
Total Canada 5,929,772
------------------
VII. Chile (0.1%)
Compania de Tele de Chile Sp ADR 4,500 124,031
------------------
VIII. Denmark (1.1%)
Aarhus Oliefabrik Class A 2,700 139,408
Carlsberg Class B 1,400 91,441
D/S Svendborg Class B 4 272,348
Den Danske Bank AF 2,200 287,531
FLS Industries Class B 1,500 42,554
Novo-Nordisk AS B 2,200 374,479
Teledenmark Class B 3,500 317,740
Tryg Baltica Forsikring 1,800 141,525
------------------
Total Denmark 1,667,026
------------------
IX. Finland (1.1%)
Nokia ADR 15,400 1,662,238
------------------
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
X. France (8.2%)
Air Liquide (L) SA 2,525 $ 427,907
Alcatel Alsthom CGE SA 6,000 1,126,238
Axa SA 7,200 741,399
BIC 2,200 167,525
CLF Dexia France 3,000 401,882
Eridania Beghin Say SA 2,280 456,305
Essilor Intl. 1,700 565,491
Eurafrance 300 148,600
Generale des Eaux 7,700 1,250,224
Generale des Eaux Wts. (Ex. 5/02/01) 3,700 4,150
France Telecom SA 13,000 685,685
LaFarge SA Rts. (Ex. 4/8/98) 8,000 10,459
LaFarge SA 8,000 680,456
Michelin "B" Reg'd. 5,000 298,506
Peugeot SA 2,510 432,657
Promodes 3,000 1,442,417
Rhone Poulenc SA Series A 6,500 330,358
Soc. Nationale Elf Aquitaine 10,880 1,425,884
Societe Generale Paris 4,050 810,543
Usinor Sacilor 14,500 242,453
Vallourec Usin Tub 3,500 276,798
------------------
Total France 11,925,937
------------------
XI. Germany (8.9%)
Alliance AG 1,000 300,376
Allianz AG 29 8,695
AXA Colonia Konzern AG 8,100 987,671
BASF AG 23,500 1,039,446
Bayer AG 9,500 432,274
Commerzbank AG 28,500 1,032,525
Deutsche Bank AG 15,100 1,132,082
Deutsche Telekom AG 30,000 656,177
Douglas Holdings AG 10,000 372,563
Industrie Werke Karlsruhe (IWKA) AG 2,250 492,741
Mannesmann AG 1,000 723,497
Porsche AG Non-Voting Preferred 300 669,965
Sap AG Pfd. 2,000 853,273
Siemens AG Bearer 12,000 800,065
Veba AG 22,800 1,625,533
Viag AG 900 494,931
Volkswagen AG Rts. (Ex. 4/7/98) 1,650 29,978
Volkswagen AG 1,650 1,291,913
------------------
Total Germany 12,943,705
------------------
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
XII. Greece (0.6%)
*Alpha Credit Bank 3,250 $ 251,540
Athens Medical Center Reg'd. 4,200 69,282
Attica Enterprises SA 3,000 44,562
Ergo Bank 2,367 169,505
Goodys SA 2,200 52,286
Hellenic Bottling Co. 1,800 51,786
Hellenic Telecom Organ. 4,500 112,577
*Proodeftiki 3,900 9,391
Titan Cement Ord. 1,000 73,050
------------------
Total Greece 833,979
------------------
XIII. Hong Kong / China (3.4%)
CDL Hotel International Ltd.
CLP Holdings Ltd. 65,000 326,330
Cheung Kong Holdings Ltd. 75,000 532,375
China Resources Enterprise 19,000 38,499
*China Telecom Ltd. 250,000 506,563
Dao Heng Bank 90,000 265,994
Gold Peak Ind. 149,000 68,747
Gold Peak Ind. Wts (Ex.12/31/25) 29,800 1,923
HSBC Holdings Plc. 18,000 550,572
Henderson Land Development Ltd. 25,000 126,157
Hong Kong & China Gas 72 121
Hong Kong Electric 109,000 374,901
Hong Kong Telecommunications 173,000 357,240
*Huaneng Power Int'l. ADR 5,400 126,900
Hutchison Whampoa 71,000 499,400
JCG Holdings Ltd. 600,000 307,809
*Jiangxi Copper Co. 800,000 98,086
Johnson Electric Holdings 40,000 167,262
Peregrine Investment Wts. (Ex. 5/15/98) 4,500 0
Qingling Motor Companies 270,000 125,447
Shanghai Industrial Holdings Ltd. 35,000 143,644
Swire Pacific Ltd. Class A 58,000 306,906
Zhenhai Refining & Chem Co. Ltd. Class H 330,000 103,281
------------------
Total Hong Kong / China 5,028,157
------------------
XIV. Hungary (0.8%)
**Borsodchem Rt. GDR 144A 1,850 59,663
*Danubius Hotel & Spa 1,500 39,380
EGIS Rt. 1,500 80,870
**Gedeon Richter GDR 144A 2,000 209,500
Graboplast Rt. Reg'd. 1,450 59,005
*Magyar Olay Es. Gazipari 10,600 324,999
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
Hungary- Continued
OTP Bank 4,750 $ 241,614
**OTP Bank Ltd. Spons GDR 144A 2,000 101,000
Pick Szeged Rt. Bearer 720 44,759
------------------
Total Hungary 1,160,790
------------------
XV. India (0.4%)
**Hindalco Industry GDR 144A 4,000 70,000
India Fund Inc. 42,500 308,125
India Growth Fund 12,000 111,750
**Ranbaxy GDR 144A 3,400 89,250
------------------
Total India 579,125
------------------
XVI. Indonesia (0.1%)
Bank Danamon Pt. (Fgn. Reg'd.) 33,000 1,526
Bank International Indonesia (Fgn. Reg'd./ Wts.) 5,440 64
Bank Niaga 29,100 1,850
Citra Marga Nusaphala Persada 70,000 6,676
Gudang Garam (Fgn. Reg'd.) 12,000 16,613
Indosat ADR 1,500 23,156
Kalbe Farma (Fgn. Reg'd.) 27,000 2,965
Lippo Bank (Fgn. Reg'd.) 14,000 1,497
Matahari Putra Prima (Fgn. Reg'd.) 32,000 1,757
Mayorah Indah (Fgn. Reg'd.) 51,000 4,275
Sampoerna H.M. (Fgn. Reg'd.) 10,000 9,075
Semen Gresik (Fgn. Reg'd.) 17,000 12,578
*Tambang Timah 5,500 4,610
*Wicaksana Overseas 11,760 578
------------------
Total Indonesia 87,220
------------------
XVII. Ireland (0.7%)
Allied Irish Banks 22,500 276,074
Bank of Ireland 8,000 158,164
CRH Plc. 13,000 195,368
DCC Plc. 2,500 22,081
Greencore Ord. 13,000 73,484
Irish Life Plc. 16,500 150,664
Irish Permanent Plc. 3,500 46,369
Smurfit (Jefferson) Plc. 25,000 71,677
------------------
Total Ireland 993,881
------------------
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
XVIII. Israel (0.4%)
Bank Hapoalim 33,000 $ 90,323
*ECI Telecom 2,300 70,725
*Formula Systems 1985 2,200 89,100
*Nice Systems Ltd. Sponsored ADR 1,500 69,000
Pec Israel Economic Corp. 3,500 80,281
Tadiran Ltd. Sponsored ADR 1,800 75,037
Teva Pharmaceutical Industry Spon. ADR 2,900 123,975
------------------
Total Israel 598,441
------------------
XIX. Italy (5.1%)
Assicurazione Generali 5,640 173,879
Autostrade CEC Pfd. B Shares 55,000 255,853
Banca Popolare di Milano 15,000 136,182
Danieli & Co. 10,000 97,371
Danieli & Co. Di Risp 3,900 22,870
Edison SpA 11,000 92,596
ENI SpA 209,000 1,423,964
Fiat SpA 98,650 411,555
Fiat SpA di Risp. 49,500 130,340
Istituto Mobiliare Italiano 54,000 876,833
Istituto Nazionale delle Assicurazioni SpA 314,400 1,019,298
*Luxottica Group ADR 1,100 103,056
Montedison SpA 225,000 331,404
Parmalat Finanziaria SpA 30,200 64,942
Pirelli SpA 50,000 191,725
Telecom Italia SpA Non Conv 58,139 356,247
Telecom Italia Mobile SpA 100,000 537,323
Telecom Italia SpA 146,022 1,150,681
------------------
Total Italy 7,376,119
------------------
XX. Japan (10.7%)
77th Bank 20,000 170,972
Bank of Tokyo-Mitsubishi 40,000 485,921
Canon Inc. 15,000 338,570
Canon Sales 40,000 554,910
Citizen Watch Co. 81,000 589,179
Daiichi Pharmaceutical 15,000 190,094
Fuji Photo Film Co. 8,000 297,552
Hitachi Ltd. 70,000 509,167
Honda Motor Co. 60,000 2,159,649
Japan Tobacco Inc. 50 373,439
Kyocera Corp. 12,000 629,898
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
Japan- Continued
Long Term Credit Bank of Japan 140,000 $ 243,560
Makino Milling Machine 75,000 509,542
Matsushita Electric Industrial Ltd. 35,000 561,659
Mitsubishi Corporation 60,000 490,420
Mitsubishi Material 200,000 383,938
Mitsubishi Trust & Banking 20,000 196,468
Nippon Tel. and Tel. 142 1,181,958
Promise Co. 18,200 943,062
Sankyo Co. Ltd. 25,000 693,637
Sanwa Bank Ltd. 50,000 446,177
Sony Corp. 7,000 593,154
Sumitomo Bank 50,000 509,917
Tohoku Electric Power 60,000 899,854
Tokyo Electric Power 70 1,323
Tokyo Ohka Kokyo 15,000 371,190
Uniden Corp. 80,000 767,875
Uny Ltd. 32,000 523,115
------------------
Total Japan 15,616,200
------------------
XXI. Malaysia (0.9%)
Commerce Asset Holdings Berhad 100,000 87,363
Genting Berhad 60,000 206,044
Malayan Banking Berhad 20,000 76,923
Petronas Gas Berhad 30,000 79,945
Public Bank Berhad 180,000 106,319
Road Builders 74,000 78,472
Sime Darby Berhad 85,000 95,275
Telekom Malaysia 75,000 259,615
Tenaga Nasional 21,000 53,077
United Engineers 35,000 40,962
YTL Corp. 107,000 179,313
------------------
Total Malaysia 1,263,308
------------------
XXII. Mexico (2.2%)
Alfa SA de CV Class A 6,500 36,704
Carso Global Telecom 19,726 74,685
*Cemex Spon. ADR 18,200 201,906
Cifra SA de CV ADR 28,916 509,644
Comercial Mexicana SA de CV 21,000 25,640
Desc. SA de CV SPN ADR 1,515 46,586
*Empaques Ponderosa Ser. B 57,800 45,464
*Empressa La Moderna ADR 5,500 109,313
Femsa B SA de CV Class B 16,000 116,271
**GRP Bancr Sp ADR 144A 6,000 72,000
Grupo Elektra SA de CV Class C GDR 7,400 113,313
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
Mexico- Continued
Grupo Ind'l. Maseca SA Spon. ADR 2,900 $ 33,350
*,**Grupo Televisa GDR 144A 5,100 186,788
Kimberly Clark De Mexico ADR 9,500 242,250
*Nacional De Drogas SA de CV L Shares 30,000 22,047
Panamerican Beverages Class A ADR 2,000 80,250
*Sigmab/Sigma Alimentos Class B 8,400 129,974
Sistema Argos B 43,000 52,299
Telefonos de Mexico ADR 18,800 1,059,850
------------------
Total Mexico 3,158,334
------------------
XXIII. Netherlands (6.0%)
ABN-AMRO Holdings NV 27,600 636,811
Aegon NV 2,600 316,161
*Baan Co. NV 8,600 411,292
Fortis Amev NV CV A 6,000 354,008
Getronics NV 13,300 570,993
ING Groep NV 31,050 1,761,987
Koninklijke Numico NV 19,000 682,640
OCE - Van Der Grinten NV 2,500 359,524
Royal Dutch Petroleum 39,600 2,241,474
*Samas Groep NV 9,100 534,729
Van Ommeren NV CVA (Pt'g. Cert.) 3,900 164,815
Verenigd Bezit VNU Haarlem 20,000 684,031
------------------
Total Netherlands 8,718,465
------------------
XXIV. Norway (1.2%)
Awilco AS B
Bergesen 8,200 174,234
*Bona Shipholding Ltd. 167 1,752
Christiania Bank OG Kreditkasse 6,500 27,537
Den Norske Bank AS 50,800 276,512
Dyno Industrier 800 14,428
Elkem AS A 2,500 36,069
Kvaerner Industrier 2,800 126,334
Leif Hoegh & Co. 3,800 66,288
Norsk Hydro AS 5,400 267,725
Norske Skogindustier Class A 3,000 96,403
Nycomed ASA 3,801 142,583
Orkla A/S 1,700 173,919
*Petroleum Geo Service 2,400 140,394
Saga Petroleum Class A 8,600 153,405
Storebrand 4,500 37,479
------------------
Total Norway 1,735,062
------------------
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
XXV. Philippines (0.1%)
*Cosmos Bottling Corp. 316,800 $ 43,466
*DMCI Holdings Inc. 50,800 4,021
*Davao Union Cement Corp. 37,138 1,901
*Empire East Land Inc. 225,600 5,000
Far East Bank & Trust 16,200 21,372
*Fortune Cement Corp. 46,350 3,791
Manila Electric Class B 5,343 17,481
*Mondragon Int'l. Philippines Inc. 120,960 4,277
Philippine Long Distance Telephone 3,400 94,644
*Philippine National Bank 1,500 3,681
------------------
Total Philippines 199,634
------------------
XXVI. Poland (0.8%)
Big Bank Gdanski SA 430,000 603,968
Debica SA Class A 1,000 26,064
Elektrim SA 13,700 170,605
Mostostal Export SA 25,000 65,523
*Mostostal Zabrze-Holding SA 7,000 40,544
*Okocimskie Zaklady Piwowarskie 3,500 28,787
*Polifarb Cieszyn 14,300 72,815
*Stalex Port A Shares 20,000 154,648
Zaklady Piwowarski Bearer 650 63,061
------------------
Total Poland 1,226,015
------------------
XXVII. Portugal (1.4%)
Banco Commercial Portugues (Fgn. Reg'd.) 10,250 330,942
Banco Commercial Portugues Rts. (Ex. 4/20/98) 10,250 31,788
*Banco Pinto & Sotto Mayor 11,350 281,660
Cimpor (Cimentos de Portugal) SA 5,500 193,812
*Electric de Portugal Spon ADR 5,000 233,750
Est. Jeronimo Martins Filho 3,996 164,359
Est. Jeronimo Martins Rts. (No expiration) 1 51
*Mundial Confianca 7,500 242,549
Portugal Telecom SA 5,500 288,406
Somague SGPS 11,970 142,203
*Telecel Comuni Pes 750 116,423
------------------
Total Portugal 2,025,943
------------------
XXVIII. Singapore (1.1%)
ACMA Ltd. 20,000 15,480
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
Singapore- Continued
*Creative Technology Ltd. 4,500 $ 99,195
Cycle & Carriage Ltd. 3,000 13,560
Development Bank of Singapore (Fgn. Reg'd.) 32,450 237,096
Development Bank of Singapore Rts. (Ex. 5/4/98) 5,900 12,056
*Elec. & Eltek International ADR 7,700 45,815
*GP (Gold Peak) Batteries 15,000 49,226
Haw Par Corporation Ltd. 18,000 23,071
IPC Corp. Ltd. 200,000 22,910
Jardine Strategic ADR 16,000 43,840
Keppel Land Ltd. 60,000 82,848
*Lindeteves Jacoberg Ltd. 54,000 56,508
*Natsteel Electronics 35,000 68,050
Natsteel Ltd. 15,000 23,313
*Omni Industries Ltd. 155,000 52,786
Overseas Chinese Bank (Fgn. Reg'd.) 7,200 40,570
Singapore Airlines Ltd. (Fgn. Reg'd.) 8,000 56,966
Singapore Land 20,000 64,396
Singapore Press Holdings 7,656 87,700
Singapore Technologies Engineering Ltd. 150,539 133,295
Singapore Telecom 162,000 284,879
United Overseas Land Wts. (Ex. 5/28/01) 10,000 1,889
*Want Want Holdings ADR 42,000 49,560
------------------
Total Singapore 1,565,009
------------------
XXIX. South Africa (0.6%)
Anglo American Gold Corp. of South Africa 2,500 114,507
Anglogood Ltd. 600 24,172
Billiton Plc 28,000 75,015
De Beers Centenary Link Units 4,800 104,592
First National Bank Hld'g. 20,000 275,055
Liberty Life Association of America 4,000 134,947
Sasol Ltd. 6,000 48,581
South Africa Brews 3,500 103,771
South African Iron & Steel 60,000 16,550
------------------
Total South Africa 897,190
------------------
XXX. South Korea (0.4%)
*Daeho Construction 5,250 23,388
*Dongwon Securities 11,200 53,372
*Mirae Corporation 22,500 79,116
*Nhong Shim 2,000 80,866
*Pusan City Gas 3,010 52,594
*Samsung Electronics 4,920 259,321
------------------
Total South Korea 548,657
------------------
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
XXXI. Spain (4.8%)
Aceralia SA 12,500 $ 175,938
Acerinox SA 1,300 213,362
Aumar (Fgn. Reg'd.) 6,000 126,293
Autopistas Cesa (Fgn. Reg'd.) 9,371 155,174
Banco de Santander (Fgn. Reg'd.) 18,000 896,475
BCO Bilbao Vizcaya Reg'd. 25,000 1,173,455
Corporation Mapfre Reg'd. 5,000 187,243
Endesa 42,500 1,021,797
Iberdrola SA 60,000 911,378
Repsol SA 12,000 612,171
Tabacalera SA Ser. A (Fgn. Reg'd.) 1,600 179,550
Telefonica de Espana SA 32,000 1,410,311
------------------
Total Spain 7,063,147
------------------
XXXII. Sweden (1.3%)
Astra AB Series A 13,716 283,087
Electrolux AB Series B 2,000 165,114
Ericsson Telecom Series B 13,900 660,704
*Netcom Systems AB B 7,100 206,930
*Nordbanken 33,600 222,753
Scania AB Wts. (Ex. 6/4/99) 5,100 4,593
Svenska Handelsbanken Series A 5,200 240,665
Volvo AB Class B Free 4,650 148,030
------------------
Total Sweden 1,931,876
------------------
XXXIII. Switzerland (7.5%)
Ciba Geigy AG (Reg'd.) 1,400 179,075
Clariant AG (Reg'd.) 1,000 1,079,042
Credit Suisse Group 7,300 1,460,479
Nestle SA (Reg'd.) 850 1,624,172
Novartis AG Reg'd. 1,750 3,097,081
Roche Holdings AG (Ptg. Cert.) 130 1,407,019
Swiss Bank Corp. (Reg'd.) 2,000 704,493
Swiss Reinsurance (Reg'd.) 340 746,907
Zurich Insurance (Reg'd.) 1,000 580,518
------------------
Total Switzerland 10,878,786
------------------
XXXIV. Taiwan (0.7%)
*Acer Inc. 35,000 71,881
Asia Cement 30,240 33,491
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
Taiwan- Continued
*Bank Sinopac 46,872 $ 34,084
*CMC Magnetics Corp. 27,500 76,559
Cathay Construction Co. 34,980 35,973
Cathay Life Insurance 33,350 140,028
*China Development Corp. 43,500 131,690
China Steel 62,700 41,969
*China Trust Commercial Bank 110,400 142,757
Formosa Plastics Corp. 32,700 61,187
*Inventec Electronics Co. 8,800 45,784
*President Enterprises Corp. 37,200 43,576
*Tuntex Distinct 82,080 40,457
Yue Loong Motor 39,804 81,141
------------------
Total Taiwan 980,577
------------------
XXXV. Thailand (0.4%)
*Advanced Information Services 6,500 50,675
Bangchak Petroleum 150,000 42,038
Bangkok Bank 58,900 154,566
Industrial Finance 120,400 70,553
Krung Thai Bank 216,600 68,981
Shinawatra Comp & Comm Plc. 6,900 42,543
Siam Cement Plc. 3,400 47,123
*Tipco Asphalt Public Co. 76,000 131,669
*United Communication 41,500 37,535
------------------
Total Thailand 645,683
------------------
XXXVI. Turkey (0.6%)
Akbank 1,500,000 109,543
Brisa Bridgestone Sabanci 588,000 29,635
Cimsa Cimento Sanayi Tickaret As 770,000 41,976
*Eczacibasi Ilac 1,000,000 39,909
Eregli Demir Ve Celik 520,000 65,253
Hurriyet Gazette 2,612,000 65,554
Hurriyet Gazette New 98 1,632,500 36,941
*Netas Telekomunik 200,000 63,360
Net Holdings AS 2,500,000 53,486
Turkiye Garanti Bankasi AS 2,300,000 90,844
Vestel Electronik Sanayai 1,579,000 123,433
Yapi Kredi Bank 2,600,000 89,856
------------------
Total Turkey 809,790
------------------
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
----------------- ------------------
<S> <C> <C>
XXXVII. United Kingdom (15.7%)
Abbey National 53,500 $ 1,032,955
Anglian Water Plc. 31,000 485,369
Arcadia Group 28,750 221,941
BAT Industries Ord. 55,000 560,430
BG Plc. 76,411 396,658
Blue Circle Industries Ord. 50,000 307,280
Brammer Plc. 21,300 228,275
British Petroleum Ord. 80,000 1,151,421
British Steel Ord. 400,000 949,470
British Telecom. Ord. 220,000 2,389,082
Caledonia Investments Plc 50,000 738,477
Carlton Communications 60,000 478,252
Debenhams Plc 57,500 354,335
EMAP Publishing Plc. 25,000 470,967
General Accident Ord. 34,700 857,077
General Electric Ord. 44,500 351,908
Glaxo Wellcome Plc. 25,000 671,495
Great Universal Stores Plc. 70,000 868,590
Greene King Plc. 79,400 904,124
Iceland Group Plc 70,000 232,093
Ladbroke Group Ord. 120,000 672,165
Land Securities 28,800 514,583
Peninsular & Oriental Steam Navagation Co. 25,000 371,750
Royal Bank of Scotland Group Ord. 150,000 2,325,951
Royal & Sun Alliance Ins. 40,000 509,064
Smithkline Beecham Ord. 143,928 1,813,636
Taylor Woodrow Ord. 150,000 575,208
Unigate Ord. 110,000 1,335,454
Viridian Group Plc 63,000 550,693
Viridian Group Plc. Unsrd. LN Stk. 70,000 55,538
Zeneca Ord. 13,000 559,250
------------------
Total United Kingdom 22,933,491
------------------
Total Equity Securities (98.8%)
(Identified Cost $109,537,041) $ 144,000,113
------------------
Total Investments (98.8%)
(Identified Cost $109,537,041) $ 144,000,113
Other Assets less Liabilities (1.2%) 1,775,199
------------------
Net Assets (100.0%) $ 145,775,312
==================
</TABLE>
--------------------------------------------------------
* Non-income producing security
** Exempt from registration under Rule 144A of the Securities Act of
1993. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. On March
31, 1998, these securities were valued at $788,201, or 0.54% of
Net Assets.
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
MARCH 31, 1998
UNAUDITED
- --------------------------------------------------------------------------------
Percent of
Industry Net Assets
- -------- ----------
Aerospace 0.24 %
Air Transportation 0.04
Appliances and Household Products 0.64
Automobile 3.80
Banking 18.99
Beverages and Tobacco 1.99
Broadcasting and Publishing 1.53
Building Materials & Components 1.58
Business Services 3.72
Chemicals 2.65
Construction and Housing 0.76
Data Products 0.54
Electrical and Electronics 4.16
Electronic Components and Instruments 2.36
Energy Sources 5.88
Finance/Financial Services 2.59
Food and Housing Products 2.90
Health and Personal Care 7.66
Industrial Components 0.51
Insurance 5.49
Leisure 0.99
Machinery 1.38
Materials 0.12
Merchandising 3.26
Multi-Industry 1.90
Other Industries 0.67
Paper & Allied Products 0.57
Real Estate 1.17
Recreation 0.72
Retail 0.27
Shipping 0.50
Steel 1.72
Telecommunications 10.22
Textiles 0.04
Utilities 6.17
Wholesale and International 1.05
Other Assets Less Liabilities 1.22
-------
Net Assets 100.00 %
=======
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Investments, at value
(Identified cost $109,537,041) $ 144,000,113
Cash 1,542,245
Receivables:
Dividend, interest and recoverable foreign taxes receivable $ 368,658
Fund shares sold 575,000
Unrealized gain on forward currency contracts (Note 5) 52,154 995,812
Prepaid expenses 12,029
-------------
Total assets 146,550,199
-------------
Liabilities
Payables:
Portfolio securities purchased 3,478
Fund shares redeemed 504,700 508,178
Accrued management fees (Note 3) ------------- 125,231
Other accrued expenses 141,478
-------------
Total liabilities 774,887
-------------
Net assets (equivalent to $7.21 per share of $.0001 par value
capital stock, representing the offering and redemption
price for 20,210,721 shares outstanding,
100,000,000 shares authorized) $ 145,775,312
=============
Net assets consist of:
Capital paid in $ 108,324,116
Accumulated overdistributed net investment income (1,133,234)
Accumulated net realized gain on investments
and foreign currency transactions 4,074,665
Unrealized appreciation on:
Investments $ 34,463,072
Foreign currency 46,693 34,509,765
------------- -------------
$ 145,775,312
=============
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income
Dividends (net of foreign taxes withheld of $85,482) $ 718,998
Interest 47,525
------------
766,523
Expenses
Advisory fees $ 631,323
Custodian fees 225,664
Audit and legal fees 32,949
Transfer agent fees 18,844
Administrative fees 15,993
Directors' fees and expenses 10,439
Insurance 2,937
Printing fees 1,898
Registration fees 3,852
Miscellaneous expenses 8,147
------------
Total expenses 952,046
------------
Net investment loss (185,523)
------------
Realized and Unrealized Gain
on Investments and Foreign Currency
Net realized gain on investments 3,789,319
Net change in unrealized gain on investments 7,658,077
------------
Net gain on investments 11,447,396
------------
Net realized gain on foreign currency 211,035
Net change in unrealized loss on foreign currency
and foreign currency denominated assets and
liabilities 7,894
------------
Net gain on foreign currency 218,929
------------
Net gain on investments and foreign currency 11,666,325
------------
Net increase in net assets resulting from operations $ 11,480,802
============
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended March 31, 1998 For the year ended
Increase (Decrease) in Net Assets Unaudited September 30, 1997
-------------------- --------------------
<S> <C> <C>
Operations:
Net investment income $ (185,523) $ 976,335
Net realized gain on investments 3,789,319 3,125,965
Net unrealized gain (loss) on investments 7,658,077 20,077,608
Net realized gain on foreign currency 211,035 960,151
Net unrealized gain (loss) on foreign currency and
foreign currency denominated assets and liabilities 7,894 (108,499)
-------------------- --------------------
Net increase resulting from operations 11,480,802 25,031,560
-------------------- --------------------
Distributions to shareholders:
From net investment income (2,726,489) (953,051)
From net realized gains (2,787,529) (6,861,964)
-------------------- --------------------
Total distributions (5,514,018) (7,815,015)
-------------------- --------------------
Fund share transactions:
Proceeds from shares sold 7,427,834 31,629,863
Net asset value of shares issued on
reinvestment of distributions 4,451,069 6,244,045
Cost of shares redeemed (11,290,349) (16,252,271)
-------------------- --------------------
Net increase resulting from Fund share
transactions 588,554 21,621,637
-------------------- --------------------
Net increase 6,555,338 38,838,182
Net Assets
Beginning of period 139,219,974 100,381,792
-------------------- --------------------
End of period (including undistributed (overdistributed)
net investment income of ($1,133,234) and
$1,778,778, respectively) $ 145,775,312 $ 139,219,974
==================== ====================
Number of Fund Shares
Sold 1,116,960 5,086,504
Issued on reinvestment of distributions 712,171 1,067,358
Redeemed (1,767,610) (2,586,268)
-------------------- --------------------
Net increase 61,521 3,567,594
==================== ====================
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For a share outstanding throughout the period:
For the six For the years ended September 30,
months ended -----------------------------------------------------------
March 31, 1998
Unaudited 1997 1996 1995 1994 1993(1)
--------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 6.91 $ 6.05 $ 6.00 $ 6.10 $ 5.66 $ 4.80
-------------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income (loss) (0.01) 0.04(4) 0.05 0.06(2) 0.01 0.07
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 0.58 1.23 0.37 0.06(3) 0.43 0.79
-------------- -------- -------- -------- -------- --------
Total from Investment Operations 0.57 1.27 0.42 0.12 0.44 0.86
-------------- -------- -------- -------- -------- --------
Less Distributions:
Net Investment Income (0.13) (0.05) (0.06) -- -- --
Capital Gains (0.14) (0.36) (0.31) (0.22) -- --
-------------- -------- -------- -------- -------- --------
Total Distributions (0.27) (0.41) (0.37) (0.22) -- --
-------------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 7.21 $ 6.91 $ 6.05 $ 6.00 $ 6.10 $ 5.66
============== ======== ======== ======== ======== ========
Total Return 8.87%(7) 22.22% 7.33% 2.13% 7.77% 17.92%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $ 145,775 $ 19,220 $100,382 $108,210 $204,788 $182,894
Ratio of Expenses to Average Net Assets 1.43%(6) 1.44% 1.54% 1.53% 1.39% 0.68%
Ratio of Net Investment Income to
Average Net Assets -0.28%(6) 0.79% 0.78% 0.97% 0.29% 1.88%
Portfolio Turnover Rate 28% 67% 103% 174% 176% 131%
Average Commission Rate Paid(5) $ 0.0154 $ 0.0150 $ 0.0268 -- -- --
</TABLE>
- -----------------------------------------------
(1) Prior to February, 1993, the investment managers of the Fund were Nomura
Capital Management, Inc. and certain affiliates (collectively, "Nomura"),
Acadian Asset Management, Inc. ("Acadian"), and, with respect to foreign
currency hedging transactions and allocation of Fund assets to the other
managers, Bailard, Biehl & Kaiser, Inc. The Fund paid Nomura and Acadian fees at
varying rates for their services. Effective February, 1993, Bailard, Biehl &
Kaiser, Inc. (the "Advisor") assumed full responsibility for investment
management services to the Fund.
On October 1, 1993, the Fund and the Advisor entered into a new Investment
Management Agreement pursuant to which the Fund pays management fees to the
Advisor. At all times prior to that date, the Advisor directly charged
management fees to clients and the Fund paid no fees to the Advisor. If fees
directly charged to clients were included as a Fund expense at an assumed 1%
annual rate payable quarterly, pro-forma total returns were 16.74% (unaudited)
for the year ended September 30, 1993.
(2) 1995 amounts are computed on the basis of average shares outstanding.
(3) The amount shown for each share outstanding may not accord with the
change in the aggregate gains and losses in the portfolio securities for the
period because of the timing of purchases and redemptions of shares in relation
to the fluctuating market value of the portfolio.
(4) Net investment income per share has been computed before adjustments for
book/tax differences.
(5) Represents average commission rate paid per share on purchases and sales
of equity securities by the Fund, as computed under SEC rule effective with the
Fund's 1996 fiscal year. Prior year rates have not been presented as permitted
by the rule.
(6) Annualized.
(7) Not annualized.
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
Unaudited
- --------------------------------------------------------------------------------
Note 1 - Summary of Significant Accounting Policies
Bailard, Biehl & Kaiser International Equity Fund (the "Fund") is a
non-diversified series of the Bailard, Biehl & Kaiser International Fund Group,
Inc. (the "Group"), a Maryland corporation and an open-end management investment
company registered under the Investment Company Act of 1940. The following
significant accounting policies are followed by the Fund in the preparation of
its financial statements and are in conformity with generally accepted
accounting principles for investment companies.
Security Valuation
Each listed investment security is valued at the closing price thereof reported
by the principal securities exchange on which the issue is traded, or if no sale
is reported, the mean of the closing bid and asked prices. Securities which are
traded over-the-counter are normally valued at the mean of the closing bid and
asked prices quoted by major dealers of such securities, or in the absence of
such prices, as determined in good faith by, or under procedures determined by,
the Board of Directors of the Fund. Short-term obligations with a maturity of 60
days or less are valued at amortized cost which approximates market.
The Fund's investment in foreign securities may entail risks due to the
potential of political and economic instability in the countries in which
securities are offered or the issuers conduct their operations. It is the Fund's
policy to continuously monitor exposure to these risks.
Foreign Currency
Foreign currency amounts, other than the cost of investments, are translated
into U.S. dollar values at the mean of the bid and offer price of such currency
against U.S. dollars last quoted on the valuation date. The cost of investments
is translated at the rates of exchange prevailing on the dates the portfolio
securities were acquired.
The Fund includes foreign exchange gains and losses from dividends and interest
receivable and other foreign-currency denominated payables and receivables in
realized and unrealized gain (loss) on foreign currency. The Fund does not
isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from fluctuations arising from changes in
the market price of securities for financial reporting purposes. Fluctuations in
foreign exchange rates on investments are included with net realized and
unrealized gain (loss) on investments.
Forward Foreign Currency Exchange Contracts
In connection with portfolio purchases and sales of securities denominated in a
foreign currency, the Fund may enter into forward foreign exchange contracts
("contracts"). Additionally, from time to time the Fund may enter into contracts
to sell foreign currencies to hedge certain foreign currency denominated assets.
All commitments are "marked-to-market" daily at the applicable translation rates
supplied by a quotation service and any resulting unrealized gains or losses are
included in unrealized appreciation (depreciation) on foreign currency
denominated assets and liabilities. The Fund records realized gains or losses at
the time the forward contract is settled. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
Federal Income Taxes
The Fund's policy is to comply with the requirements of the Internal Revenue
Code ("Code") applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. It is also the Fund's intention to
make distributions in amounts sufficient to avoid
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
Unaudited
- --------------------------------------------------------------------------------
imposition of excise tax under the Code. Therefore, no provision is made for
Federal income taxes.
Paid in capital, undistributed net investment income and undistributed realized
net gain have been adjusted for permanent book-tax differences.
Reclassifications between undistributed net investment income and undistributed
realized net gain arose principally from differing book and tax treatments for
foreign currency transactions.
Use of Estimates
The preparation of 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 and 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.
Other
Investment security transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date or when the Fund first becomes aware
of such dividend. Interest income is recorded on the accrual basis.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
uses the identified cost method for determining realized gain or loss on
investments. Certain expenses of the Group are allocated between the series of
the Group in such manner as the Directors deem appropriate.
Note 2 - Purchases and Sales of Securities
For the six months ended March 31, 1998, purchases and sales of securities,
other than short-term investments, aggregated $37,595,633 and $41,872,943,
respectively. There were no purchases or sales of U.S. Government obligations.
Note 3 - Management Fee and Other Transactions with Affiliates
The Fund has entered into an Investment Management Agreement with Bailard, Biehl
& Kaiser, Inc. (the "Advisor") for investment advisory services, under which the
Advisor receives a fee, payable monthly, at the annual rate of 0.95% of the
average net assets of the Fund. Advisory fees paid on shares of the Fund are
taken into account in the computation of fees payable under individual advisory
agreements for advisory clients of the Advisor.
Each outside director is compensated by the Group at the rate of $8,000 per year
plus $1,333 for each meeting of the Board of Directors attended and travel
expenses incurred in attending such meetings.
Note 4 - Tax Basis Appreciation
Unrealized appreciation (depreciation) at March 31, 1998, based on the cost of
securities for federal income tax purposes of $109,537,041, consists of:
Gross unrealized appreciation $ 40,371,645
Gross unrealized depreciation (5,908,573)
----------
Net unrealized appreciation $ 34,463,072
==========
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
Unaudited
- --------------------------------------------------------------------------------
Note 5 - Forward Foreign Currency Contracts
At March 31, 1998 the Fund had entered into forward foreign currency contracts
which obligated the Fund to exchange currencies at specified future dates. At
the maturity of a forward contract, the Fund may either make delivery of the
foreign currency from currency held, if any, or from the proceeds of portfolio
securities sold, or it may terminate its obligation to deliver the foreign
currency at any time by purchasing an offsetting contract. The forward value of
amounts due to the Fund under the contracts, including contracts which have been
offset but remained unsettled, has been netted against the forward value of the
currency to be delivered by the Fund and the remaining amount is shown as
receivable for forward currency contracts in the financial statements. Open
forward foreign currency exchange contracts outstanding at March 31, 1998 were
as follows:
Currency Currency Delivery Unrealized
Receivable Deliverable Date Appreciation/(Depreciation)
- ---------- ----------- ---- ---------------------------
$2,000,000 BEF 75,620,000 04/22/98 $14,475
1,250,000 CHF 1,855,625 04/22/98 29,371
567,232 ITL 1,020,450,000 05/26/98 410
406,519 DKr 2,800,917 06/03/98 7,898
-----
$52,154
=======
Currency Legend:
BEF - Belgian Franc DKr - Danish Krona
CHF - Swiss Franc ITL - Italian Lire
<PAGE>
May 28, 1998
Dear Shareholder:
We are pleased to present your March 31, 1997, semi-annual shareholders' report
for the Bailard, Biehl & Kaiser International Bond Fund. It includes a review of
the Fund's performance and our outlook for the months ahead.
Performance and Market Review
Most international bond markets posted respectable local returns over the six
months ending in March. Inflation expectations remained muted as the markets
concluded that the slowdown in Asia would further restrain inflation pressures.
European Monetary Union (EMU) prospects were generally viewed favorably. This
again allowed some of the higher yielding European bond markets to converge with
the core countries. Ireland, Italy and Portugal all returned more than 6%(1) in
local returns. The possibility of an early EMU-entry for the U.K. contributed to
the 7%(1) U.K. local market return as well as a 3.5%(1) rally in the British
pound. The dollar rallied against all the other major currencies. These gains
greatly reduced the dollar-based returns of foreign bond markets. Our foreign
exchange hedging activity --we were slightly more hedged than our benchmark--
allowed us to limit the negative impact of the dollar's rise on the portfolio.
We also underweighted Japan, which had the lowest local bond return (2%) and
suffered the largest currency loss (9.5%).(1) The sharp losses of many Asian
emerging market currencies did not affect the fund's performance. We avoided
these currencies for most of the period. In fact, the fund's small (less than
5%) emerging market exposure contributed positively (about 15 basis points) to
the overall performance. For the six months ended March 31, 1998, the Bailard,
Biehl & Kaiser International Bond Fund returned 1.95%.(2)
Market Outlook
International bond yields have trended lower since late 1994. Yields could
continue to decline as European inflation prospects are still very good and
there are lingering questions about the scope of the economic recovery in
Europe. Moreover, the impact of the Asian crisis on the world economy and
inflation has yet to be determined. Still, the risks for bonds are growing.
Nominal yields are near historic lows in many countries, real yields are
unattractive and the German central bank may eventually raise short-term
interest rates in anticipation of EMU. The bleak economic situation in Japan has
kept bond yields below 2%. Such low nominal yields continue to make Japanese
bonds unattractive relative to other bond markets. We expect to the portfolio to
maintain an underweight position in Japanese bonds going forward.
<PAGE>
Conclusion
Going forward, we expect moderate international bond returns. Bond yields are
low enough that, barring a significant disinflationary Asian impact, it is
difficult to project sizable capital gains. Also, the relative yields between
countries have narrowed considerably over the past year, leaving less spread
opportunity. On the positive side, it is very unlikely that the dollar will
continue to erase positive local market returns. There are several factors that
may boost the performance of the European currencies. Rising short-term European
interest rates, foreign exchange reserve diversification and the as-scheduled
start of EMU all have the potential to create a favorable currency environment
in Europe. Of course, any depreciation in the dollar would enhance the local
market bond returns.
We appreciate the opportunity to manage your international bond investments and
look forward to continued success. If you have any questions, please call us at
(800) 882-8383.
Sincerely,
Peter M. Hill Burnice E. Sparks, Jr., CFA
Chairman President
- ------------------
(1) The performance data quoted represents past performance and is no indication
of future results.
(2) Average annual total returns for investment periods ended March 31, 1998: 3
months: 1.74%; 6 months: 1.95%; 12 months: 6.21%; 5 years: 3.56% annualized;
Since Inception: 5.93% annualized. As required by the Securities and Exchange
Commission, these figures reflect the average compounded return over the period
indicated that would equate an initial amount invested in shares of the Fund to
the ending redeemable value of such shares, assuming that all dividends and
distributions by the Fund were reinvested at net asset value. These figures also
reflect the deduction of an assumed 1% annual investment management fee (0.25%
quarterly) payable by clients of Bailard, Biehl & Kaiser through 9/30/93. Actual
fees varied during this period. As of 10/1/93, the Fund charged a management fee
of 0.95%. The performance data quoted represents past performance, and the
investment return and principal value of an investment in the Bailard, Biehl &
Kaiser International Bond Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
---------------- ---------------
<S> <C> <C> <C>
Senior Securities (93.1%)
Australian Dollar (3.3%)
FNMA Mtn.
6.500% 07/10/02 A$ 1,400,000 $ 960,375
KFW International Finance Inc.
9.125% 07/26/05 A$ 1,000,000 779,226
---------------
Total Australian Dollar 1,739,601
---------------
Belgium Franc (3.0%)
Government of Belgium
8.750% 06/25/02 BEF 14,000,000 425,211
Government of Belgium
9.000% 03/28/03 BEF 36,000,000 1,124,660
---------------
Total Belgium Franc 1,549,871
---------------
British Pound (13.3%)
Glaxo Wellcome
8.750% 12/01/05 (Pound) 800,000 1,515,983
Quebec Province
8.625% 11/04/11 (Pound) 350,000 670,607
Republic of Austria
9.000% 07/22/04 (Pound) 1,750,000 3,320,474
Tesco Plc. Mtn.
7.500% 07/30/07 (Pound) 300,000 534,979
United Kingdom Treasury
9.750% 08/27/02 (Pound) 500,000 947,953
---------------
Total British Pound 6,989,996
---------------
Canadian Dollar (8.1%)
British Columbia
7.750% 06/16/03 C$ 1,150,000 895,373
Government of Canada
6.500% 06/01/04 C$ 3,000,000 2,246,771
KFW International Finance Inc.
10.000% 03/05/01 C$ 825,000 648,401
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
---------------- ---------------
<S> <C> <C> <C>
Canada- Continued
Kingdom of Sweden
8.000% 05/12/03 C$ 600,000 $ 466,162
---------------
Total Canadian Dollar 4,256,707
---------------
Czech Crown (0.9%)
Generale Electric Mtn.
13.500% 10/01/99 CZK 16,000,000 457,477
---------------
Danish Kroner (3.2%)
Kingdom of Denmark
9.000% 11/15/00 DKr 3,750,000 590,176
Kingdom of Denmark
8.000% 03/15/06 DKr 6,400,000 1,080,587
---------------
Total Danish Kroner 1,670,763
---------------
Finnish Markka (0.9%)
Republic of Finland
9.500% 03/15/04 FIM 2,000,000 443,154
---------------
French Franc (11.7%)
McDonalds
6.750% 07/24/06 FF 10,000,000 1,795,556
Government of France (O.A.T.)
7.750% 04/12/00 FF 7,700,000 1,328,753
Government of France (O.A.T.)
6.750% 10/25/03 FF 8,500,000 1,513,602
Government of France (O.A.T.)
5.500% 10/25/07 FF 9,000,000 1,513,013
---------------
Total French Franc 6,150,924
---------------
German Mark (15.7%)
European Investment Bank
7.500% 11/04/02 DM 1,300,000 784,140
Germany/Deutschland Bundsrepublk
5.250% 01/04/08 DM 2,300,000 1,275,767
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
---------------- ---------------
<S> <C> <C> <C>
German- Continued
German Federal Republic
8.375% 05/21/01 DM 3,700,000 $ 2,234,385
International Bank for Reconstruction & Development
5.875% 11/10/03 DM 2,000,000 1,142,672
LKB Baden Wurttemburg
6.625% 08/20/03 DM 1,100,000 646,305
Republic of Germany
6.875% 05/12/05 DM 3,500,000 2,126,477
---------------
Total German Mark 8,209,746
---------------
Italian Lira (8.2%)
American International Group Inc.
11.700% 12/04/01 ITL 3,500,000,000 2,353,621
Italian Republic
8.500% 08/01/04 ITL 3,000,000,000 1,954,853
---------------
Total Italian Lira 4,308,474
---------------
Japanese Yen (9.5%)
Asian Development Bank
5.625% 02/18/02 (Y) 235,000,000 2,063,993
International Bank For Reconstruction & Development
4.750% 12/20/04 (Y) 113,000,000 1,019,801
Japan Development Bank
6.500% 09/20/01 (Y) 158,000,000 1,405,182
Kingdom of Spain
4.625% 07/22/04 (Y) 55,000,000 489,661
---------------
Total Japanese Yen 4,978,637
---------------
Mexican Peso (1.4%)
Mexican Cetes TBill
0.000% 08/27/98 MXN 650,000 707,850
---------------
Netherlands Guilder (4.9%)
Government of Netherlands
8.500% 03/15/01 NG 1,500,000 801,223
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
---------------- ---------------
<S> <C> <C> <C>
Netherland- Continued
Government of Netherlands
7.750% 03/01/05 NG 3,150,000 $ 1,773,018
---------------
Total Netherlands Guilder 2,574,241
---------------
Philippine Peso (0.9%)
International Bank For Reconstruction & Development
10.250% 04/11/02 PP 22,000,000 478,892
---------------
Spanish Peseta (3.1%)
Government of Spain
7.400% 07/30/99 EP 90,000,000 596,867
Government of Spain
10.000% 02/28/05 EP 125,000,000 1,030,554
---------------
Total Spanish Peseta 1,627,421
---------------
South African Rand (0.8%)
Ford Credit
14.000% 11/13/02 ZR 2,000,000 399,861
---------------
Swedish Krona (3.3%)
Kingdom of Sweden
10.250% 05/05/00 SK 2,600,000 358,899
Kingdom of Sweden
10.250% 05/05/03 SK 8,900,000 1,367,212
---------------
Total Swedish Krona 1,726,111
---------------
Swiss Franc (0.9%)
Inter-American Development Bank
7.250% 01/21/02 CF 600,000 461,462
---------------
Total Senior Securities (93.1%)
(Identified Cost $51,353,875) 48,731,188
---------------
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
---------------- ---------------
<S> <C> <C> <C>
Total Investments (93.1%)
(Identified Cost $51,353,875) $ 48,731,188
Other Assets Less Liabilities (6.9%) 3,617,966
---------------
Net Assets 100.0% $ 52,349,154
===============
Currency Legend:
A$ - Australian Dollar ITL - Italian Lira
BEF - Belgium Franc (Y) - Japanese Yen
(Pound) - British Pound MXN - Mexico Peso
C$ - Canadian Dollar NLG - Netherlands Guilder
CZK - Czech Crown PHP - Philippine Peso
DKr - Danish Kroner ESP - Spanish Peseta
FIM - Finnish Markka ZAR - South Africa Rand
FF - French Franc SEK - Swedish Krona
DM - German Mark CHF - Swiss Franc
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at value
(Identified cost $51,353,875) $ 48,731,188
Cash 2,393,205
Receivables:
Securities sold $ 1,180,839
Interest and recoverable foreign taxes receivable 1,604,101
Unrealized gain on forward currency contracts open (Note 5) 361,058
Fund shares sold 55,000 3,200,998
Prepaid expenses 15,071
------------
Total assets 54,340,462
------------
Liabilities
Payable for securities purchased 1,890,532
Accrued management fees (Note 3) 33,449
Other accrued expenses 67,327
------------
Total liabilities 1,991,308
------------
Net assets (equivalent to $7.62 per share,
representing the offering and redemption
price for 6,868,518 shares outstanding,
100,000,000 shares authorized) $ 52,349,154
============
Net assets consist of:
Capital paid in $ 70,831,312
Distribtuions in excess of net investment income (100,921)
Accumulated net realized loss on investments
and foreign currency transactions (16,090,380)
Unrealized appreciation (depreciation):
Investments $ (2,622,687)
Foreign currency 331,830 (2,290,857)
------------ ------------
$ 52,349,154
============
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Interest (net of foreign taxes withheld of $6,001) $ 1,564,609
Expenses
Advisory fees $ 193,598
Custodian fees 53,799
Audit and legal fees 33,582
Transfer agent fees 19,164
Administrative fees 16,260
Directors' fees and expenses 9,429
Registration fees 3,514
Insurance 1,430
Miscellaneous expenses 10,877
-----------
Total expenses 341,653
-----------
Net investment income 1,222,956
-----------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized loss on investments (332,694)
Net change in unrealized loss on investments (1,109,805)
----------
Net loss on investments (1,442,499)
-----------
Net realized loss on foreign currency (42,770)
Net change in unrealized gain on foreign currency
and foreign currency denominated assets and
liabilities 440,725
-----------
Net gain on foreign currency 397,955
-----------
Net loss on investments and foreign currency (1,044,544)
-----------
Net increase in net assets resulting from operations $ 178,412
===========
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended March 31, 1998 For the year ended
Increase (Decrease) in Net Assets Unaudited September 30, 1997
-------------------- -------------------
<S> <C> <C>
Operations:
Net investment income $ 1,222,956 $ 2,382,568
Net realized loss on investments (332,694) (126,786)
Net unrealized loss on investments (1,109,805) (2,533,114)
Net realized gain on foreign currency (42,770) 3,827,614
Net unrealized gain (loss) on foreign currency and
foreign currency denominated assets and liabilities 440,725 (562,309)
-------------------- -------------------
Net increase resulting from operations 178,412 2,987,973
-------------------- -------------------
Distributions to shareholders:
From net investment income (1,222,956) (1,067,736)
For tax purposes in excess of
net investment income (2,565,637) (2,957,718)
-------------------- -------------------
Total distributions (3,788,593) (4,025,454)
-------------------- -------------------
Fund share transactions:
Proceeds from shares sold 2,640,306 5,969,520
Net asset value of shares issued on
reinvestment of distributions 3,428,965 2,919,000
Cost of shares redeemed (2,012,517) (21,329,162)
-------------------- -------------------
Net increase (decrease) resulting from
Fund share transactions 4,056,754 (12,440,642)
-------------------- -------------------
Net increase (decrease) 446,573 (13,478,123)
Net Assets
Beginning of period 51,902,581 65,380,704
-------------------- -------------------
End of period (including undistributed (distributions in
excess of) net investment income of ($100,921) and
$2,464,716, respectively) $ 52,349,154 $ 51,902,581
==================== ===================
Number of Fund Shares
Sold 343,444 739,040
Issued on reinvestment of distributions 452,621 359,632
Redeemed (257,895) (2,568,863)
-------------------- -------------------
Net increase (decrease) 538,170 (1,470,191)
==================== ===================
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout the period:
For the six Year Ended September 30,
months ended ------------------------------------------------------------
March 31, 1998(2)
Unaudited 1997(2) 1996 1995(2) 1994(2) 1993(1)
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 8.20 $ 8.38 $ 8.78 $ 8.02 $ 10.85 $ 11.29
-------------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income 0.33 0.42 0.59 0.47 0.61 0.67
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency (0.18) 0.04 0.16 0.86 (2.39) 0.39
-------------- -------- -------- -------- -------- --------
Total from Investment Operations 0.15 0.46 0.75 1.33 (1.78) 1.06
-------------- -------- -------- -------- -------- --------
Less Distributions:
Net Investment Income (0.33) (0.17) (0.45) (0.45) (0.26) (1.08)
For Tax Purposes in Excess of Book
Net Investment Income (0.40) (0.47) (0.70) (0.12) -- --
Capital Gains -- -- -- -- (0.27) (0.42)
Return of Capital -- -- -- -- (0.52) --
-------------- -------- -------- -------- -------- --------
Total Distributions (0.73) (0.64) (1.15) (0.57) (1.05) (1.50)
-------------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 7.62 $ 8.20 $ 8.38 $ 8.78 $ 8.02 $ 10.85
============== ======== ======== ======== ======== ========
Total Return 1.95%(4) 5.75% 9.32% 17.33% (17.90%) 10.65%
Ratios/Supplemental Data:
Net Assets, End of Year (000's) $ 52,349 $ 51,903 $ 65,381 $ 64,640 $136,366 $165,484
Ratio of Expenses to Average Net Assets 1.33%(3) 1.35% 1.22% 1.16% 1.12% 0.42%
Ratio of Net Investment Income to
Average Net Assets 4.75%(3) 4.72% 5.41% 5.66% 5.87% 6.25%
Portfolio Turnover Rate 10% 33% 61% 179% 319% 157%
</TABLE>
- --------------------------------------
(1) On October 1, 1993, the Fund and the Advisor entered into a new Investment
Management Agreement pursuant to which the Fund is required to pay certain
management fees to the Advisor. Prior to that date, advisory fees were
directly charged to clients of Bailard, Biehl & Kaiser, Inc. and the Fund
did not pay any management fees. If such directly charged fees were included
as Fund expense at an assumed 1% annual rate payable quarterly, pro-forma
total return (unaudited) was 9.55% for the year ended September 30, 1993.
(2) Net investment income per share has been computed before adjustments for
book/tax differences. "Distributions for Tax Purposes in Excess of Net
Investment Income" represent amounts paid from foreign currency gains
reclassified to net investment income under the Internal Revenue Code.
(3) Annualized.
(4) Not annualized.
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
Unaudited
- --------------------------------------------------------------------------------
Note 1 - Summary of Significant Accounting Policies
The Bailard, Biehl & Kaiser International Bond Fund (the "Fund") is a series of
the Bailard, Biehl & Kaiser International Fund Group, Inc. (the "Group"), which
was organized as a Maryland corporation in June 1990 and is registered under the
Investment Company Act of 1940 as a non-diversified, open-end management
investment company. The following significant accounting policies are followed
by the Fund in the preparation of its financial statements and are in conformity
with generally accepted accounting principles.
Security Valuation
Investments in securities traded on an exchange or quoted on the
over-the-counter market are valued at the last transaction price reported on the
principal exchange or market on which the issue is traded, or, if no transaction
occurred during the day, at the mean between the current closing bid and asked
prices, except U.S. Government obligations which in all cases are stated at the
mean between the current closing bid and asked price, as last reported by a
pricing service approved by the Board of Directors.
When market quotations are not readily available, or when restricted securities
or other assets are being valued, such assets are valued at fair value as
determined in good faith by or under procedures established by the Board of
Directors. Short-term investments denominated in U.S. dollars that will mature
in 60 days or less are stated at amortized cost; such investments denominated in
foreign currencies are stated at amortized cost as determined in the foreign
currency and translated to U.S. dollars at the current day's exchange rate.
The Fund's investment in foreign securities may entail risks due to the
potential of political and economic instability in the countries in which the
securities are offered or the issuers conduct their operations. It is the Fund's
policy to continuously monitor exposure to these risks.
Foreign Currency
Foreign currency amounts, other than the cost of investments, are translated
into U.S. dollar values at the mean of the bid and offer price of such currency
against U.S. dollars last quoted on the valuation date. The cost of investments
is translated at the rates of exchange prevailing on the dates the portfolio
securities were acquired.
The Fund includes foreign exchange gains and losses from interest receivable and
other foreign-currency denominated payables and receivables in realized and
unrealized gain (loss) on foreign currency. The Fund does not isolate that
portion of realized and unrealized gain (loss) on investments resulting from
changes in foreign exchange rates on investments from fluctuations arising from
changes in the market price of securities for financial reporting purposes.
Fluctuations in foreign exchange rates on investments are thus included with net
realized and unrealized gain (loss) on investments.
Forward Foreign Currency Exchange Contracts
In connection with purchases and sales of securities denominated in a foreign
currency the Fund may enter into forward foreign currency exchange contracts
("contracts"). Additionally, from time to time the Fund may enter into contracts
to sell foreign currencies to hedge certain foreign currency denominated assets.
All commitments are "marked-to-market" daily at the applicable translation rates
supplied by a quotation service and any resulting unrealized gains or losses are
included as unrealized appreciation (depreciation) on foreign currency
denominated assets and liabilities. The Fund records realized gains or losses at
the time the forward contract is settled. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
Federal Income Taxes
The Fund's policy is to comply with the requirements of the Internal Revenue
Code ("Code") applicable to regulated investment companies and to distribute all
of its income to its shareholders. It is also the Fund's intention to make
distributions in amounts sufficient to avoid imposition of excise tax under the
Code. Therefore, no provision is made for Federal income or excise taxes.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (continued)
Unaudited
- --------------------------------------------------------------------------------
NOTE 1 - Continued
At March 31, 1998, the Fund had a capital loss carryforward of approximately
$16,401,000, which may be carried forward through the fiscal year ending
September 30, 2003.
Paid in capital, undistributed net investment income and accumulated net
realized loss have been adjusted for permanent book-tax differences.
Reclassifications between undistributed net investment income and accumulated
net realized loss arose principally from differing book and tax treatments for
foreign currency transactions.
Use of Estimates
The preparation of 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 and 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.
Other
Investment security transactions are accounted for on the trade date (the date
the order to buy or sell is executed). Interest income is recorded on the
accrual basis. Distributions to shareholders are recorded on the ex-dividend
date. The Fund uses the identified cost method for determining realized gain or
loss on investments. Certain expenses of the Group are allocated between the
series of the Group in such manner as the Directors deem appropriate.
Note 2 - Purchases and Sales of Securities
For the six months ended march 31, 1998, purchases and sales of investment
securities other than short-term investments aggregated $8,455,524 and
$4,570,472, respectively. There were no purchases and sales of U.S. Government
obligations during the six months ended March 31, 1998.
Note 3 - Management Agreement and Other Transactions with Affiliates
The Fund has entered into an Investment Management Agreement with Bailard, Biehl
& Kaiser, Inc. (the "Advisor") for investment advisory services. Under the
agreement, the Advisor receives a fee, payable monthly, at the annual rate of
0.75% of the average net assets of the Fund. Advisory fees paid on shares of the
Fund owned are taken into account in the computation of fees payable under
individual advisory agreements for advisory clients of the Advisor.
Each outside director is compensated by the Group at the total rate of $8,000
per year plus $1,333 for each meeting of the Board of Directors attended and
travel expenses incurred for such meetings.
Note 4 - Unrealized Appreciation (Depreciation) on a Tax Basis
Unrealized appreciation (depreciation) on March 31, 1998, based on the cost of
securities of $51,353,875 for federal income tax purposes, consists of the
following:
Gross unrealized appreciation $ 1,375,088
Gross unrealized depreciation (3,997,775)
------------
Net unrealized depreciation $ (2,662,687)
============
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (continued)
Unaudited
- --------------------------------------------------------------------------------
Note 5 - Forward Foreign Currency Contracts
At March 31, 1998 the Fund had entered into forward foreign currency contracts
which obligated the Fund to exchange currencies at specified future dates. At
the maturity of a forward contract, the Fund may either make delivery of the
foreign currency from currency held, if any, or from the proceeds of portfolio
securities sold, or it may terminate its obligation to deliver the foreign
currency at any time by purchasing an offsetting contract. The forward value of
amounts due to the Fund under the contracts, including contracts which have been
offset but remained unsettled, has been netted against the forward value of the
currency to be delivered by the Fund and the remaining amount is shown as
payable for forward currency contracts in the financial statements. Open forward
foreign currency exchange contracts outstanding at March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
Currency Currency Delivery Unrealized
Receivable Deliverable Date Appreciation/(Depreciation)
---------- ----------- -------- ---------------------------
<S> <C> <C> <C> <C>
$1,000,000 BEF 37,828,000 04/22/98 $6,765
1,000,000 DM 1,833,500 04/22/98 (15,873)
488,567 (Y) 60,680,000 05/06/98 31,070
1,669,352 (Y) 203,661,000 05/12/98 132,686
704,040 ESP 108,709,800 05/19/98 10,540
2,079,850 ITL 3,741,650,000 05/26/98 25,788
873,354 A$ 1,309,377 05/29/98 3,578
1,133,487 SEK 9,137,040 05/29/98 (12,265)
423,394 FIM 2,320,200 06/03/98 8,195
500,000 CHF 737,500 06/10/98 12,161
2,400,000 DM 4,377,360 06/10/98 23,254
4,288,758 FF 26,208,600 06/10/98 41,276
619,711 BEF 23,140,000 06/17/98 10,265
2,964,873 (pound) 1,787,145 06/17/98 (17,693)
1,517,694 NLG 3,093,060 06/17/98 26,849
970,523 DM 1,758,200 06/18/98 15,450
2,169,386 C$ 3,071,850 06/23/98 4,742
1,401,315 DKr 9,730,733 06/23/98 15,116
1,000,000 DM 1,838,000 07/01/98 837
500,000 (Y) 65,170,000 07/01/98 4,957
MYR 1,962,500 $ 500,000 05/11/98 33,360
---------
$ 361,058
=========
</TABLE>
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (continued)
Unaudited
- --------------------------------------------------------------------------------
Note 5 - continued
Currency Legend:
A$ - Australian Dollar FIM - Finnish Markka
BEF - Belgian Franc ITL - Italian Lira
C$ - Canadian Dollar MYR - Malaysian Ringitt
CHF - Swiss Franc NLG - Netherlands Guilder
DKr - Danish Kroner (pound) - British Sterling
DM - German Mark SEK - Swedish Krona
ESP - Spanish Peseta (Y) - Japanese Yen
FF - French Franc
