May 28, 1999
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, 1999. In
this report we discuss recent fund and market performance, the market outlook
and the Fund's investment strategy.
FUND PERFORMANCE AND MARKET OVERVIEW
Following last summer's steep declines, the past six months has seen a welcome
recovery in many of the world's equity markets. Bailard Biehl & Kaiser
International Equity Fund shareholders have participated fully in this advance,
earning a 19.36% return from September 30, 1998 through March 31, 1999. (1)
Among developed countries, a surging U.S. market (up 28%) was outpaced by Hong
Kong (up 37%), Japan (up 42%), Singapore (up 48%), and Finland (up 66%).(2) Yet
it was the emerging markets, especially those hit hardest by last year's
financial crisis, that enjoyed the most dramatic gains: Indonesia's stock index
more than doubled, as did Korea's, while Russia's nearly tripled.(2)
The performance of much of Europe was lackluster by comparison. Euroland
countries, notably Germany (up just 1%), took five of the bottom six slots in
the developed market rankings. The Czech Republic (down 10%) and Denmark (down
3%) were the only international markets to actually fall.(2)
Global stock markets continued to show above-average volatility during the past
six months. Our strategy has therefore been tilted toward a value investment
style, to take advantage of investors' tendency to over-react during volatile
periods, rather than the momentum approach we favor in calmer markets. The
decision to underweight expensive Europe in favor of attractive Asia was timely:
overweights in Japan and Korea have paid off handsomely. On the other hand, a
negative earnings outlook led us to underweight Indonesia for too long, while
concern over extreme political and financial instability kept us out of Russia
entirely.
EUROPE
Currency convergence was the driving force in Europe at the end of 1998. Despite
slowing economic growth and falling prices, a series of coordinated interest
rate cuts and cross-border mergers pushed stock markets to new highs in the
fourth quarter. Since the euro's debut on January 1, interest rates have
continued to come down, but stock prices--with the veil of euro-phoria
lifted--have begun to react to negative earnings surprises. As the combined
Euroland economy is responsible for a third more exports than the U.S., and
twice as many as Japan, the region is very sensitive to global conditions. The
slowing global economy has dragged mightily on corporate earnings, and hence
stock returns: European markets lagged the rest of the developed world during
the first quarter of 1999. (Finland, the one exception, was powered by the
performance of just one company--market heavyweight Nokia.) And the euro itself
has steadily weakened against the U.S. dollar since the start of the year.
Underweighting Germany helped the Fund's performance in Europe, while stock
selection within European countries yielded mixed results. Superior stock
selection in non-euro markets, especially the U.K., Switzerland and Finland, was
offset by weak performance in the core Euroland markets of Germany, France and
the Netherlands. Much like the U.S. stock market in 1997 and 1998, Euroland
<PAGE>
market performance has been dominated by a few very large capitalization stocks,
making active stock selection very difficult.
JAPAN AND ASIA
After years of stagnation, the Japanese economy may finally be close to
bottoming out. Restructuring plans announced by Sony and other large
multinationals have given investors hope that corporate Japan is, after all,
serious about reform. And important changes are being made, albeit slowly, in
the Japanese banking system. This sea change in sentiment is evident in the
yen's 15% rise vs. the dollar over the past six months.
Although the economies of Asia still suffer effects of the recent crisis,
investors are optimistic about recovery, encouraged by government efforts in
several markets. Singapore share prices surged in the fourth quarter of 1998
after the government announced its stimulus package. Hong Kong's market was
boosted by the government's share purchase program, as speculators scrambled to
cover their short positions. The interest rate-sensitive property sector led the
market, as rates fell and residential prices stabilized. The Fund was
underweight these government-favored property companies, so our Hong Kong
holdings lagged the market index. Nonetheless, our holdings throughout Asia,
which we began increasing back in September 1998, made a strong contribution to
fund performance.
EMERGING MARKETS
The fall of the Brazilian real in January reverberated throughout Latin America
and rekindled fears of a relapse into global emerging-market sickness. The
currency lost nearly half its value against the dollar before reversing course,
but timely intervention by the IMF and a relatively healthy banking system
helped minimize the impact of the collapse.
Troubling economic data and nervousness over the Kosovo conflict caused
investors to shy away from the Czech Republic. Slower economic growth in Western
Europe hampered the performance of all of Eastern Europe's exporting companies.
The Fund's performance in emerging markets was generally good. Overweighting
Greece and Korea while underweighting the Czech Republic, India and Peru proved
to be good decisions. Avoiding the myriad fundamental risks in Russia, however,
came at a high opportunity cost.
MARKET OUTLOOK AND INVESTMENT STRATEGY
Long term, the euro brings with it several positives for European equities
beyond lower interest rates. Lower banking costs and cheaper access to capital
should ultimately improve corporate profitability. Exchange rate stability and
increased price transparency will increase competition and improve efficiency;
strong firms are likely to get stronger, weak ones to be taken over or go under
as industries consolidate.
<PAGE>
The near-term outlook for economic growth in Europe is more problematic. Growth
in the larger economies is likely to remain sluggish and yet stock valuations
are still relatively high. In contrast, the Asian economies look more likely to
exceed expectations -- after all, the Asian economies are recovering from a very
low base.
Taking into account compelling valuations, stabilization of exchange rates, and
troughing of earnings estimates, and paying due attention to risk control, we
are currently overweight in Asia, Japan, and Australia at the expense of Europe.
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. 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,
Peter M. Hill Burnie E. Sparks, Jr., CFA
Chairman President
- ----------
(1) Total returns for investment periods ended March 31, 1999: 3 months: 0.77%;
6 months: 19.36%; 12 months: -2.00%; 5 years: 7.51% annualized; 10 years:
3.94% 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 Equity Fund will
fluctuate so that an investor's shares when redeemed, may be worth more or
less than their original cost. The performance data quoted represents past
performance and is no indication of future results.
(2) Index return data is based on the respective ING Barings (US$) indices for
the emerging market countries mentioned, and the Morgan Stanley Capital
International (US$) indices for the developed market countries. The past
performance of these indices is no indication of future results.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
EQUITY SECURITIES (97.3%)
I ARGENTINA (0.2%)
Banco De Galicia Spns'd. ADR Class B 3,261 $ 52,380
* Comercial Del Plata 14,530 6,103
Perez Companc SA Spon ADR 2,600 24,375
Siderca 15,952 17,548
Siderar SA A Shares 638 1,034
Telecom Argentina Stet-France Telecom SA ADR 900 24,694
Telefon De Argentina Spns'd ADR 1,100 33,275
Transp. Gas Del Sur. Spns'd ADR 2,500 23,438
---------
Total Argentina 182,847
---------
II AUSTRALIA (2.4%)
Australia & New Zealand Bank 20,000 144,613
Brambles Industries Ltd. 8,500 215,166
CSR Ltd. 62,100 134,080
Coles Myer Ltd. 12,500 67,547
Fosters Brewing Group Ltd. 25,000 73,270
Lend Lease Corp. Ltd. 26,400 334,949
National Australia Bank Ltd. 35,000 633,237
National Mutual Holdings 70,000 112,723
QBE Insurance Group Ltd. 12,500 51,712
Southcorp Ltd. 20,000 80,971
Telstra Corporation 82,000 427,469
* The News Corporation Ltd. 36,700 270,511
Woodside Petroleum 25,000 150,628
---------
Total Australia 2,696,876
---------
III AUSTRIA (0.8%)
Austria Tabakwerke AG 656 44,193
Bank Austria AG 5,696 338,832
Bau Holdings AG Pfd. 750 21,295
Brau-Union Hungaira Pfd. 2,310 36,161
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
AUSTRIA- CONTINUED
Brau-Union AG 1,125 $ 58,663
EVN Energ-Versorg AG 600 78,023
Flughafen Wien AG 900 38,069
Mayr-Melnhof Karton AG 2,072 91,692
OMV AG 1,360 120,250
VA Technologie AG 650 46,771
Voest-Alpine Stahl AG 900 27,896
Weinerberger Baustoffindustrie 300 52,662
---------
Total Austria 954,507
---------
IV BELGIUM (1.5%)
Delhaize "Le Lion" SA NPV 1,400 129,681
Electrabel NPV 1,450 519,719
Fortis NV 14,227 525,294
Fortis Strip VVPR 1,197 13
KBS Bancassurance Holding SA 3,000 199,996
Tractebel NPV 1,720 271,109
Tractebel NPV Wts. (Ex. 11/30/99) 400 35
UCB NPV 2,000 89,629
---------
Total Belgium 1,735,476
---------
V BRAZIL (0.6%)
Companhia Cervejaria Brahma Spns'd ADR 2,600 24,212
Companhia Energetica Spns'd ADR 3,671 82,598
Centrais Electricas Pf'd. B ADR 9,000 94,500
CIA Paran Energy Copel 16,530,000 124,722
Itaubanco Pfd. Reg'd 200,000 102,040
Gerdau S.A. Pfd. 2,200,000 22,705
Telebras Spns'd. ADR 3,400 274,125
--------
Total Brazil 724,902
--------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
VI. CANADA (3.5%)
Abitibi Consolidated Inc. 7,500 $ 66,929
Alcan Aluminum Ltd. 9,000 232,312
BCE Inc. 8,000 354,500
* BCT Telus Communication Inc. 2,623 64,153
* BCT Telus Communication Non Voting 874 20,654
Bank of Nova Scotia 14,000 296,602
Bombardier Inc. Class B 16,000 209,942
Cambior Inc. 25,000 100,000
Canadian Imperial Bank of Commerce 14,500 369,976
* Canadian Natural Resources 7,000 120,307
Imasco Ltd. 12,600 272,772
Imperial Oil Ltd. 3,000 57,375
Ipsco Inc. 3,750 73,746
Maritime Teleg. & Telephone Ltd. 11,000 291,942
National Bank of Canada Montreal 18,000 262,361
Northern Telecom 10,000 621,250
Quebecor Inc. Class B 18,000 395,624
Shell Canada Ltd. Class A 13,000 210,537
---------
Total Canada 4,020,982
---------
VII CZECH CROWN (0.1%)
Tabak 366 80,193
---------
VIII DENMARK (0.6%)
Aarhus Oliefabrik Class A 1,400 33,554
Carlsberg Class B 900 36,342
D/S Svendborg Class B 10 106,035
Den Danske Bank AF 1,600 168,081
FLS Industries Class B 1,500 29,414
Novo-Nordisk AS Class B 800 89,476
Teledenmark Class B 2,000 198,127
Tryg Baltica Forsikring 1,800 50,984
---------
Total Denmark 712,013
---------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
IX FINLAND (0.5%)
Nokia Class A ADR 3,900 $ 607,425
-----------
X FRANCE (9.1%)
AXA- UAP SA 5,400 715,904
Banque Paribas Class A 13,000 1,451,198
Cap Gemini SA 2,000 334,892
Casino Guichard Perrachon et Cie 6,700 594,579
Eiffage SA 4,000 264,718
Eridania Beghin Say SA 2,280 337,716
Essilor Int'l 1,000 333,596
Eura France 630 302,666
France Telecom SA 15,000 1,212,931
Lafarge SA 3,000 270,440
L'Oreal 800 506,116
PSA Peugeot Citroen 1,510 217,142
Renault SA 8,000 281,819
Sanofi 3,000 505,253
Schneider SA 6,000 331,977
Scor 6,000 301,856
Societe Nationale Elf Aquitaine 4,880 662,771
Suez Lyonnaise Des Eaux 5,000 925,217
St. Gobain 1,000 158,701
Vivendi 2,400 590,498
Vivendi Wts ( Ex. 5/2/2001) 3,700 9,108
-----------
Total France 10,309,098
-----------
XI GERMANY (7.7%)
Aachener Und Munchener Beteil 2,819 331,730
Agiv AG 24,000 452,136
Allianz AG 2,729 830,836
BASF AG 16,500 603,874
BHF Bank 14,500 594,860
Daimlerchrysler AG 10,050 874,508
Depfa Deutsche Pfandbriefban 3,500 309,656
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
GERMANY- CONTINUED
Deutsche Bank AG 6,400 $ 329,235
Deutsche Telekom AG 17,000 692,833
Douglas Holdings New Shs 1,000 42,482
Douglas Holdings AG 10,000 424,823
Hannover Rueckversicherung 3,200 269,468
Mannesmann AG 6,000 766,300
Phoenix AG 20,000 323,880
* Sap AG Pf'd 500 160,860
Viag AG 1,100 606,725
Volkswagenwerk AG 6,000 399,669
Vossloh AG 27,000 708,326
---------
Total Germany 8,722,201
---------
XII GREECE (1.3%)
Alpha Credit Bank 3,222 213,785
Attica Enterprises SA 7,200 61,293
Ergo Bank 3,077 229,900
Hellenic Bottling Co. 1,800 53,379
Hellenic Telecom Organ 10,000 242,495
National Bank of Greece 6,800 459,733
* Panafon Hellenic Telecom 3,230 83,825
Titan Cement 1,100 83,642
---------
Total Greece 1,428,052
---------
XIII HONG KONG/CHINA (2.3%)
CLP Holdings Ltd. 30,000 144,008
Cheung Kong Holdings 35,000 266,467
* China Telecom Ltd. Class H 256,000 426,141
Dao Heng Bank 100,000 329,696
Gold Peak Ind 299,000 49,772
Gold Peak Ind. Rts. 04/01/99 74,750 2,219
Gold Peak Ind. Wts (Ex. 08/06/00) 29,800 1,038
Hong Kong & China Gas Wts. Exp. (Ex. 9/30/99) 3 0
Hong Kong Electric 55,000 166,429
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
HONG KONG- CONTINUED
Hong Kong Telecommunications 95,000 $ 186,946
* Huaeng Power Intl. ADR 5,000 49,687
Hutchison Whampoa 36,000 283,371
JCG Holdings Ltd. 300,000 85,166
Sun Hung Kai Properties 25,000 186,301
Swire Pacific 70,000 325,181
Vtech Holdings Ltd 30,000 86,522
---------
Total Hong Kong/China 2,588,944
---------
XIV HUNGARY (0.6%)
Magyar Olay Es. Gazipari 10,710 229,761
Matav Rt. Regd Shs 29,860 159,133
Matav Rt. ADR 1,400 37,450
* OTP Bank Ltd. Spons GDR 144A 2,525 97,579
* OTP Bank Ltd. Spons GDR 144A 1,500 58,125
Pick Szeged Ord 1,780 53,959
Richter Gedeon Vegyeszeti 2,380 77,192
---------
Total Hungary 713,199
---------
XV INDIA (0.7%)
* India Tobacco Ltd. GDR 144A 4,700 128,075
Industrial Credit & Inv. GDR 9,800 61,005
Gujarat Amjua Cements GDR 17,000 117,725
* Mahanagar Tel 144A Spons GDR 13,600 144,500
Ranbaxy Labs Ltd. GDR 19,200 323,520
---------
Total India 774,825
---------
XVI INDONESIA (0.4%)
Gudang Garam 50,000 66,426
Indosat ADR 6,000 77,625
* Indofood Sukes Makmur 100,000 62,248
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
INDONESIA- CONTINUED
* Pabrik Kert Tjiwi Kimia 270,000 $ 59,914
Semen Gresik 65,000 72,680
Tambang Timah 40,000 26,743
Telekomunikasi Indo 220,000 71,643
---------
Total Indonsia 437,279
---------
XVII IRELAND (1.3%)
Allied Irish Banks 44,000 760,038
CRH Plc 25,000 431,570
Fyffes Ord 37,000 87,081
Irish Permanent Plc 9,672 147,231
Smurfit (Jefferson) Plc 40,000 80,754
---------
Total Ireland 1,506,674
---------
XVIII ISRAEL (0.8%)
* Bank Hapoalim 50,700 119,136
* Bezek-The Israel Telecommunication 15,000 61,887
* DSP Group Inc. ADR 4,700 69,031
* ECI Telecom ADR 3,800 133,000
* Formula Systems 1985 Ltd. ADR 2,200 56,513
* Gilat Communications Ltd. 2,500 34,844
* Gilat Satellite Networks Ltd. ADR 2,800 168,000
Koor Industries Ltd. ADR 1,000 21,125
* Nice Systems Ltd. Sponsored ADR 1,500 44,250
* PEC Israel Economic Corp. ADR 3,500 105,437
Teva Pharmaceutical Industry Spns'd. ADR 2,900 137,569
---------
Total Israel 950,792
---------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
XIX. ITALY (5.8%)
* Autostrade Concession Auto 55,000 $ 400,801
* Banco Di Roma 100,000 161,940
Danieli & Co. 10,000 54,844
Danieli & Co. di Risp 3,900 10,863
Edison SpA 11,000 101,299
ENI SpA 180,000 1,146,535
Fiat SpA 98,650 325,898
Fiat SpA di Risp 49,500 88,711
Instituto Nazionale delle Assicurazioni SpA 464,400 1,403,825
Montedison SpA 125,000 129,552
Sanpaolo Imi SpA Ord 65,530 1,064,730
Telecom Italia SpA Non Conv 58,139 345,218
Telecom Italia SpA 50,022 531,397
Telecom Italia Mobile SpA 100,000 672,591
* Unione Immobiliaer SpA 264,400 138,441
-----------
Total Italy 6,576,645
-----------
XX JAPAN (12.3%)
Bank of Tokyo-Mitsubishi 75,000 1,033,522
* DDI Corporation 100 472,853
Fuji Heavy Industries 80,000 495,145
Fuji Photo Film Co. 8,000 302,626
Hitachi Ltd. 100,000 740,522
* Honda Motor Co. 25,000 1,129,359
Jusco Co. 10,000 173,942
Kirin Brewery Co. Ltd. 30,000 351,600
Konami Co. 21,000 776,661
Makino Milling Machine 75,000 461,032
Meiwa Estate Company Ltd. 35,000 925,019
Mitsui Chemicals 150,000 721,945
Mos Food Services 30,000 355,906
Nichicon Corp. 25,000 339,863
Nintendo Co. 5,000 431,478
Nippon Tel. and Tel 60 587,689
Sankyo Co. Ltd. 35,000 750,654
Sekisui House 75,000 797,940
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
JAPAN- CONTINUED
Snow Brand Milk 80,000 $439,078
Sony Corp. 4,000 369,839
SunDrug Co. Ltd. 400 12,125
Takeda Chemical Industries 10,000 387,571
Takefuji Corp. 7,000 537,871
Tokyo Electric Power 20,070 432,142
Toyota Motor Corp. 14,000 405,472
Uniden Corp. 48,000 482,310
----------
Total Japan 13,914,164
----------
XXI MALAYSIA (0.1%)***
Genting Berhad 15,000 26,842
Malayan Banking Berhad 16,000 23,916
Telekom Malaysia 35,000 56,368
Tenaga Nasional 21,000 24,758
----------
Total Malaysia 131,884
----------
XXII MEXICO (1.3%)
Alfa SA de CV Class A 6,500 19,686
Carso Global Telecom 19,726 102,192
Cemex Spns'd. ADR 9,200 77,050
Desc. SA de CV Spns'd ADR 1,515 40,432
Empresas ICA Soc. Controladora 50,000 43,040
* Empressa La Moderna ADR 5,500 130,625
Femsaubd 18,900 57,736
Grupo Ind. Maseca 119,000 96,189
* Panamerican Beverages Class A ADR 2,000 35,125
* Soriana SA Series B 33,000 113,972
Telefonos de Mexico Series L ADR 11,900 779,450
----------
Total Mexico 1,495,497
----------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
XXIII NETHERLANDS (5.4%)
ABN-AMRO Holdings NV 30,000 $ 625,088
Fortis Amev NV 20,000 767,596
* Getronics NV 10,300 380,300
Heineken NV 7,000 352,922
ING Groep NV 22,050 1,215,254
Koninklijke Numico NV 13,000 498,235
OCE - Van Der Grinten NV 11,000 273,139
Royal Dutch Petroleum 29,600 1,573,841
Samas Groep NV 24,250 314,164
Verenigd Bezit VNU Haarlem 4,000 155,894
-----------
Total Netherlands 6,156,433
-----------
XXIV NEW ZEALAND (0.6%)
* Auckland Intl. Airport Ltd. 50,000 73,062
Flecther Challenge Buildings 45,000 60,716
* Guinness Peat Group 68,000 64,188
Kiwi Income Property Units 54,000 29,374
Telecom Corp. of New Zealand 85,000 413,415
-----------
Total New Zealand 640,755
-----------
XXV NORWAY (0.7%)
Bergesen dy AS A 4,000 54,860
Den Norske Bank AS 38,100 139,509
Elkem A/S 2,500 36,875
Kvaerner Industrier 1,900 33,802
Norsk Hydro AS 3,300 134,498
Norske Skogindustier Class A 3,000 97,817
Nycomed Amersham AS A 18,350 156,701
Orkla A/S 3,200 49,063
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
NORWAY- CONTINUED
* Petroleum Geo Service 3,200 $ 48,857
Saga Petroleum Class A 5,600 61,226
* Storebrand A/S 4,500 33,188
--------
Total Norway 846,396
--------
XXVI PHILIPPINES (0.8%)
* Ayala Corp. 360,000 109,161
* Bankard Inc. 60,000 2,942
Bank of the Phillipine Island 44,000 110,142
* C & P Homes Inc. 2,167,000 36,350
* DMCI Holdings Inc. 50,800 2,176
* Davao Union Cement Corp. 37,138 1,035
* Empire East Land Inc. 225,600 4,075
Far East Bank & Trust 16,200 22,366
* Filinvest Land 1,800,000 148,645
* Fortune Cement Corp. 57,937 1,764
Manila Electric Class B 5,343 17,649
Metro Bank & Trust 15,000 119,032
* Mondragon Int'l. Philippines Inc. 120,960 1,904
Philippine Long Distance Telephone 7,000 184,258
* Philippine National Bank 1,500 2,072
San Miguel Corp. Class B 60,000 99,872
SM Prime Holdings 350,000 72,258
--------
Total Philippines 935,701
--------
XXVII POLAND (0.8%)
Big Bank Gdanski SA 250,000 481,130
Debica SA Class A 1,000 11,997
Elektrim SA 13,700 154,086
Mostostal Export SA 25,000 29,993
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
POLAND- CONTINUED
* Okocimskie Zaklady Piwowarskie 3,500 $ 17,496
* Stalex Port A Shares 20,000 98,475
* Telekomunikacja Polska SA 20,000 108,972
--------
Total Poland 902,149
--------
XXVIII. PORTUGAL (0.7%)
Banco Pinto & Sotto Mayor 5,985 118,050
BPI SGPS SA 4,500 136,758
Electric de Portugal Spns'd ADR 3,000 118,688
Jeronimo Martins, SGPS, SA 2,496 88,924
* Mundial Confianca 4,500 128,305
Portugal Telecom Spns'd ADR 1,800 80,627
Telecel Comuni Pes 700 111,469
--------
Total Portugal 782,821
--------
XXIX SINGAPORE (1.6%)
* Asia Pulp and Paper ADR 3,000 25,125
Creative Technology Ltd. 8,500 98,843
DBS Land Ord 63,000 92,942
Development Bank of Singapore (Fgn. Reg'd.) 12,450 94,356
Elec. & Eltek International 7,700 28,336
GP (Gold Peak) Batteries Int'l 30,000 43,911
* Hong Leong Finance (Fgn. Reg'd) 65,000 106,046
Keppel Land Ltd. 60,000 71,160
Lindeteves Jacoberg Ltd. 69,000 53,491
* Natsteel Electronics 35,000 95,574
Omni Industries Ltd. 155,000 56,046
Overseas Chinese Bank (Fgn. Reg'd.) 35,200 238,264
Overseas Union Bank (Fgn. Reg'd) 35,000 123,518
Rothmans Industries Ltd. 8,000 41,192
* Sembcorp Industries Limited 89,000 97,316
Singapore Airlines Ltd. (Fgn. Reg'd.) 8,000 57,854
Singapore Press Holdings (Fgn. Reg'd) 15,000 165,751
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
SINGAPORE- CONTINUED
Singapore Technologies Engineering Ltd. 150,539 $135,864
Singapore Telecom 102,000 145,165
United Overseas Land Wts. (Ex. 5/28/01) 10,000 2,227
Want Want Holdings 50,400 50,904
---------
Total Singapore 1,823,885
---------
XXX SOUTH AFRICA (0.4%)
Bidvest Group Ltd. 13,200 107,777
Impala Platinum Holdings Ltd. 4,300 73,694
Imperial Holdings Ltd. 15,202 122,894
Rembrandt Group Ltd. 15,000 107,438
---------
Total South Africa 411,803
---------
XXXI SOUTH KOREA (2.1%)
* Dongwon Securities 11,200 180,734
* Housing & Commercial Bank 6,130 122,400
* Kookmin Bank 12,000 118,337
* Korea Electric Power Corp. 13,000 313,610
* Korea Telecom Corp. 2,500 84,760
* LG Caltex Gas Co. Ltd. 4,780 68,954
* Lotte Confectionary 1,270 93,051
* Mirae Corporation 30,000 108,557
Nhong Shim 1,000 54,605
* Pohang Iron & Steel 760 46,890
* Samsung Corporation 36,598 250,250
* Samsung Electronics 9,000 696,821
* SK Corp. 5,790 86,590
* Shinsegae Dept. Store 2,000 51,019
* Ssangyong Oil Refining 8,000 123,879
---------
Total South Korea 2,400,457
---------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
XXXII. SPAIN (3.8%)
Aceralia SA 12,500 $ 140,348
Argentaria Corporation 30,000 720,957
Autopistas C.E.S.A 9,371 120,088
Banco de Santander SA 35,000 717,934
Corporation Mapfre Reg'd 5,000 98,729
Iberdrola SA 35,000 518,424
Repsol SA 8,000 411,975
Sevillana de Electricidad 46,000 623,253
Tabacalera SA 7,000 141,849
Telefonica de Espana SA 20,209 857,215
----------
Total Spain 4,350,772
----------
XXXIII. SWEDEN (2.3%)
Astra AB Series A 13,716 314,419
Electrolux AB Series B Free 12,000 237,869
Ericsson (L M) Telecom Co. ADR 19,300 459,581
Ericsson (L M) Telecom Series B Free 22,800 554,542
* Hennes & Mauritz B Free 2,500 188,496
* Netcom Systems AB B 7,100 241,761
Nordbanken Holdings AB 33,600 192,047
Scania AB Wts. (Ex. 6/4/99) 5,100 5,582
* Stora Enso 10,000 97,896
Svenska Handelsbanken Series A 5,200 181,175
Volvo AB Class B Free 4,650 121,862
----------
Total Sweden 2,595,230
----------
XXXIV SWITZERLAND (6.2%)
Julius Baer Holdings 470 1,523,904
Nestle SA (Reg'd.) 350 635,869
Novartis AG (Reg'd.) 650 1,054,422
* Roche Holdings Genusscheine 168 2,048,780
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
SWITZERLAND- CONTINUED
Swiss Reinsurance (Reg'd.) 449 $993,498
Vontobel Holdings AG 400 718,870
---------
Total Switzerland 6,975,343
---------
XXXV THAILAND (1.1%)
* Advanced Information Services (Fgn. Reg'd) 6,500 47,065
* Bangchak Petroleum (Fgn. Reg'd) 150,000 24,358
* Bangkok Bank (Fgn. Reg'd) 94,900 194,524
* Electricity Generating (Fgn. Reg'd) 51,000 101,823
* Hana Microelectron 20,000 34,607
Industrial Finance (Fgn. Reg'd) 120,400 37,660
* Lanna Lignite PCL Ltd. (Fgn. Reg'd) 29,000 26,055
* National Finance Public 250,000 73,206
* National Petro Chemical 75,000 33,941
* PTT Exploration (Fgn. Reg'd) 11,500 89,392
* Shinawatra Comp & Comm Pcl (Fgn. Reg'd) 13,800 36,002
* Siam Cement PCL (Fgn. Reg'd) 9,400 190,177
* Siam City Cement (Fgn. Reg'd) 16,000 54,093
* Thai Farmers Bank 65,000 131,505
* Tipco Asphalt Public Co. (Fgn. Reg'd) 21,000 36,058
* United Broadcasting (Fgn. Reg'd) 125,000 49,913
* United Communication Industries (Fgn. Reg'd) 79,500 38,623
---------
Total Thailand 1,199,002
---------
XXXVI TURKEY (0.6%)
Adana Cimento Sanayi 13,680,000 60,507
Akbank 2,400,000 77,201
Aksigorta SA 3,000,000 156,815
Carsi Buyuk Magazacilik 1,298,000 69,589
Dogan Holdings 10,500,000 94,290
* Eregli Demir Ve Celik 520,000 7,248
* Eregli Demir Ve Celik Rts. 4/9/99 520,000 5,297
Ergli Demir Ve Celik New 99 Shs 2,080,000 27,321
* Hurriyet Gazette 750 13
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
TURKEY- CONTINUED
* Netas Telekomunik 200,000 $ 4,182
* Vestel Electronik Sanayai 1,579,000 150,260
Yapi Kredi Bank 1,543,960 28,557
------------
Total Turkey 681,280
------------
XXXVII. UNITED KINGDOM (16.3%)
BP Amoco Plc 65,000 1,117,762
British Aerospace 70,000 467,824
British American Tobacco 57,500 477,645
British Energy Plc 45,000 432,229
British Telecom 90,000 1,471,757
Cadbury Schwepps Ord 25,000 364,832
Diageo Plc 80,000 894,968
Dixons Group 50,000 1,055,615
Glaxo Wellcome Plc 43,000 1,435,271
Hanson Plc 100,000 894,322
HSBC Holdings 20,000 645,720
Legal & General Group 42,000 498,334
Lloyds TSB Group 90,000 1,385,675
* Logica Plc 60,000 617,470
National Grid Group Plc 60,000 436,829
National Westminster Bank 40,000 931,128
Reuters Group Plc 90,000 1,320,659
Smithkline Beecham Plc 120,928 1,745,214
Somerfield Plc 85,000 435,659
Unilever 40,000 373,924
Vodafone Group Plc 78,000 1,456,627
------------
Total United Kingdom 18,459,464
------------
TOTAL INVESTMENTS (97.3%)
(IDENTIFIED COST $91,782,052) $110,425,966
OTHER ASSETS LESS LIABILITIES (2.7%) 3,052,038
------------
NET ASSETS (100.0%) $113,478,004
============
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
- ----------
* 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, 1999, these
securities were valued at $428,279 or 0.38% of Net Assets.
*** On February 4, 1999, Bank Negara Malaysia, the central bank, announced a
levy on repatriation of Malaysian ringgit (MYH) held by foreign
investors. The levy, intended to replace the restriction on repatriation
of investment capital that had been in place since September 1, 1998,
was implemented on February 15, 1999.
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
Aerospace 0.6%
Airline 0.1
Appliances and Household Products 1.5
Automobile 18.2
Banking 3.2
Beverages and Tobacco 2.4
Broadcasting and Publishing 1.0
Building Materials & Components 2.4
Business Services 5.7
Chemicals 0.7
Construction and Housing 1.3
Data Products 0.7
Electrical and Electronics 4.2
Electronic Components and Instruments 0.6
Energy Sources 4.5
Finance/Financial Services 3.7
Food and Housing Products 2.0
Health and Personal Care 8.8
Industrial Components 0.6
Insurance 6.4
Leisure 0.5
Machinery 0.9
Merchandising 3.0
Multi-Industry 1.7
Other Industries 0.1
Paper & Allied Products 0.4
Real Estate 3.3
Recreation 0.5
Shipping 0.3
Steel 0.2
Telecommunications 12.5
Utilities 4.8
Wholesale and International 0.5
Other Assets Less Liabilities 2.7
------
NET ASSETS 100.00%
======
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
Investments, at value
<S> <C> <C>
(Identified cost $91,782,052) $ 110,425,966
Foreign currency, at value
(Identified cost $4,105) 4,196
Cash 2,594,994
Receivables:
Investment securities sold $ 157,447
Dividend, interest and recoverable foreign
taxes receivable 408,280
Unrealized gain on forward currency
contracts (Note 5) 241,962
Fund shares sold 205,811 1,013,500
-------------
Prepaid expenses 9,449
-------------
Total assets 114,048,105
-------------
Liabilities
Payables:
Portfolio securities purchased 287,996
Fund shares redeemed 10,000 297,996
-------------
Accrued management fees (Note 3) 100,503
Other accrued expenses 171,602
-------------
Total liabilities 570,101
-------------
Net assets (equivalent to $6.51 per share of $.0001
par value capital stock, representing the offering
and redemption price for 17,423,885 shares
outstanding, 100,000,000 shares authorized) $ 113,478,004
=============
Net assets consist of:
Capital paid in $ 88,628,504
Accumulated net investment loss (474,111)
Accumulated net realized gain on investments
and foreign currency transactions 6,430,978
Unrealized appreciation on:
Investments $ 18,643,914
Foreign currency 248,719 18,892,633
------------- -------------
$ 113,478,004
=============
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
STATEMENT OF OPERATIONS
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment Income
<S> <C> <C>
Dividends (net of foreign taxes withheld of $73,271) $ 612,809
Interest 74,252
------------
687,061
Expenses
Advisory fees (See note 3) $ 549,262
Custodian fees 248,305
Audit and legal fees 66,628
Transfer agent fees 16,000
Administrative fees 16,205
Directors' fees and expenses (See note 3) 4,079
Insurance 3,410
Registration fees 4,052
Miscellaneous expenses 606
------------
Total expenses 908,547
Net investment income (221,486)
------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain on investments 7,088,764
Net change in unrealized gain on investments 13,771,059
------------
Net gain on investments 20,859,823
------------
Net realized loss on foreign currency (634,300)
Net change in unrealized gain on foreign currency
and foreign currency denominated assets and
liabilities 690,411
------------
Net gain on foreign currency 56,111
------------
Net gain on investments and foreign currency 20,915,934
------------
Net increase in net assets resulting from operations $ 20,694,448
============
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
STATEMENT OF CHANGES IN NET ASSETS
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended March 31, 1999 For the year ended
Increase (Decrease) in Net Assets Unaudited September 30, 1998
-------------------- ------------------
<S> <C> <C>
Operations:
Net investment income (loss) $ (221,486) $ 668,016
Net realized gain on investments 7,088,764 9,273,505
Net unrealized gain (loss) on investments 13,771,059 (21,932,140)
Net realized gain (loss) on foreign currency (634,300) 116,379
Net unrealized gain (loss) on foreign currency and
foreign currency denominated assets and liabilities 690,411 (480,491)
------------- -------------
Net increase (decrease) resulting from operations 20,694,448 (12,354,731)
------------- -------------
Distributions to shareholders:
From net investment income (1,091,609) (2,726,489)
From net realized gains (8,369,002) (2,787,529)
------------- -------------
Total distributions (9,460,611) (5,514,018)
------------- -------------
Fund share transactions:
Proceeds from shares sold 7,032,447 11,431,649
Net asset value of shares issued on
reinvestment of distributions 7,833,513 4,451,069
Cost of shares redeemed (20,918,887) (28,936,849)
------------- -------------
Net decrease resulting from Fund share
transactions (6,052,927) (13,054,131)
------------- -------------
Net increase (decrease) 5,180,910 (30,922,880)
Net Assets
Beginning of period 108,297,094 139,219,974
------------- -------------
End of period (including accumulated net investment
income (loss) of ($474,111) and
$838,984 respectively) $ 113,478,004 $ 108,297,094
============= =============
Number of Fund Shares
Sold 1,101,021 1,676,106
Issued on reinvestment of distributions 1,261,435 712,171
Redeemed (3,235,391) (4,240,657)
------------- -------------
Net decrease (872,935) (1,852,380)
============= =============
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout the period:
<TABLE>
<CAPTION>
For the six
months ended For the years ended September 30,
March 31, 1999 --------------------------------------------------------
Unaudited 1998 1997 1996 1995 1994
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 5.92 $ 6.91 $ 6.05 $ 6.00 $ 6.10 $ 5.66
-------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income (0.01) 0.09(3) 0.04(3) 0.05 0.06(1) 0.01
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 1.14 (0.81) 1.23 0.37 0.06(2) 0.43
-------- -------- -------- -------- -------- --------
Total from Investment Operations 1.13 (0.72) 1.27 0.42 0.12 0.44
-------- -------- -------- -------- -------- --------
Less Distributions:
Net Investment Income (0.06) (0.13) (0.05) (0.06) -- --
Capital Gains (0.48) (0.14) (0.36) (0.31) (0.22) --
-------- -------- -------- -------- -------- --------
Total Distributions (0.54) (0.27) (0.41) (0.37) (0.22) --
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 6.51 $ 5.92 $ 6.91 $ 6.05 $ 6.00 $ 6.10
======== ======== ======== ======== ======== ========
Total Return 19.36%(4) -10.61% 22.22% 7.33% 2.13% 7.77%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $113,478 $108,297 $139,220 $100,382 $108,210 $204,788
Ratio of Expenses to Average Net Assets:
Before Expenses Paid Indirectly 1.57%(5) 1.44% 1.44% 1.54% 1.53% 1.39%
After Expenses Paid Indirectly 1.57%(5) 1.41% 1.44% 1.54% 1.53% 1.39%
Ratio of Net Investment Income to
Average Net Assets -0.38%(5) 0.49% 0.79% 0.78% 0.97% 0.29%
Portfolio Turnover Rate 30% 78% 67% 103% 174% 176%
</TABLE>
- ----------
1. 1995 amounts are computed on the basis of average shares outstanding.
2. The amount shown for each share outstanding may not accord with the change
in the aggregate gains and losses in the portfolio securities during the
period because of the timing of purchases and redemptions of shares in
relation to the fluctuating market value of the portfolio.
3. Net investment income per share has been computed before adjustments for
book/tax differences.
4. Not annualized
5. Annualized
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 imposition of excise tax under
the Code. Therefore, no provision is made for Federal income or excise 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, 1999, purchases and sales of securities,
other than short-term investments, aggregated $33,320,746 and $46,863,049,
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, 1999, based on the cost of
securities for federal income tax purposes of $91,782,052, consists of:
Gross unrealized appreciation $24,668,408
Gross unrealized depreciation (6,024,494)
-----------
Net unrealized appreciation $18,643,914
===========
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS
At March 31, 1999 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, 1999 were
as follows:
Currency Currency Delivery Unrealized
Receivable Deliverable Date Appreciation/(Depreciation)
---------- ----------- ---- ---------------------------
(pound)1,516,190 $ 2,506,793 04/06/99 $(60,000)
1,400,000 CHF 1,920,000 04/26/99 98,969
2,000,000 CHF 2,833,300 05/18/99 76,325
4,000,000 EUR 3,559,732 05/18/99 109,700
3,000,000 (Y) 351,036,000 05/18/99 16,968
--------
$241,962
========
CURRENCY LEGEND:
CHF - Swiss Franc (Y) - Japanese Yen
EUR - Euro $ - U.S. Dollars
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS OF
BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Bailard, Biehl & Kaiser
International Equity Fund (the "Fund") (a series of Bailard, Biehl & Kaiser
International Fund Group, Inc.) at September 30, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 1998 by correspondence with the custodian and brokers and
application of alternative procedures where broker confirmations were not
received, provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
San Francisco, California
November 18, 1998
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUTY FUND
- --------------------------------------------------------------------------------
Federal Income Tax Information: (Unaudited)
For the fiscal year ended September 30, 1998, the Fund accrued foreign source
income of $2,807,188 and the Fund accrued foreign taxes amounting to $304,493,
which are expected to be passed through to shareholders as foreign tax credits
on Form 1099-DIV for the year ending December 31, 1998.
<PAGE>
May 28, 1999
Dear Shareholder:
We are pleased to present your March 31, 1999, 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
Foreign bond markets generally outperformed the U.S. in local terms over the six
months ended March 31, 1999. Economic sluggishness abroad contrasted with the
ongoing U.S. expansion. Still, both European central banks and the Federal
Reserve did lower interest rates in the fourth quarter of last year. The
preemptive easing by the members of EMU reduced interest rates by 50 basis
points (Italian rates dropped by 25 basis points) in early December. This
surprised the market as many had expected steady interest rate policy amid the
arrival of the Euro. European bond markets returned between 2.5% and 5%1 in
local terms during the period. Returns would have been even stronger but the
poor performance by U.S. treasuries (-1.6%)(1) in the first quarter limited the
upside for European bonds. The Japanese bond market was the only other major
market to post negative local returns (-1.7%)(1). Expectations of increased
budget deficits and hopes for an economic bottom weighed on Japanese bonds
initially. The bonds retraced some of the losses as deflation remained intact
and the hoped-for economic recovery never materialized.
While the technical transition to the single currency was smooth, the Euro soon
became pressured amid talk of growing political pressure to ease and perceptions
of fiscal gridlock. The dollar rallied nearly 9% against the Euro, wiping out
the local currency gains in the bond markets. This dollar strength undermined
overall returns, though the impact was limited by our hedging policy. On
average, the portfolio was more than 50% hedged over the six months. The
Brazilian currency devaluation did not have a negative impact on the fund. Our
only Latin American holdings were in Mexico. Our exposure there actually
increased the Fund's return by more than 60 basis points. For the six months
ended March 31, 1999, the Bailard, Biehl & Kaiser International Bond Fund
returned 1.00%.(2)
MARKET OUTLOOK
International bond yields have trended lower for nearly five years and remain in
a cyclical and secular downtrend. While the recent rise in rates is cause for
concern, it would be premature to write off the bull market in bonds. Real
yields are still at low levels not seen since the early 1980s. As long as
inflation expectations and foreign economic growth remain low, real yields could
<PAGE>
drop as low as 2%. The best values are found in the dollar bloc countries of
Canada, Australia, New Zealand and the United States, an area where we expect to
remain overweight. We have also increased the fund's yield by investing in
higher yielding developed countries like Norway, Greece and New Zealand that are
not found in our benchmark.
CONCLUSION
Going forward, we expect moderate international bond returns. Generally low
nominal bond yields make it unlikely that we will witness sizable capital gains.
In addition, relative yields have narrowed between many developed markets,
leaving less spread opportunities. Still, the economic backdrop is favorable.
Currency risk remains significant for the near term and we expect to remain more
hedged than our 50% hedged benchmark. As the year progresses, it is likely that
the Euro will stabilize and even recover some of its recent declines.
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 Burnie E. Sparks, Jr., CFA
Chairman President
- ----------
1 The performance quoted represents past performance and is no indication of
future results.
2 Average annual total returns for investment periods ended March 31, 1999, 3
months: -1.72%; 6 months: 1.00%; 12 months: 7.74%; 5 years: 5.64%
annualized; Since Inception: 6.14% 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
0.75%. 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, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
COUNTRY OF
ORIGIN PAR VALUE VALUE
------ --------- -----
SENIOR SECURITIES (90.1%)
AUSTRALIAN DOLLAR (1.3%)
KFW International Finance Inc.
9.125% 07/26/05 United States 1,000,000 $ 739,407
-----------
BRITISH POUND (10.8%)
United Kingdom Treasury
9.750% 08/27/02 United Kingdom 500,000 932,016
Republic of Austria
9.000% 07/22/04 Austria 1,350,000 2,529,901
Glaxo Wellcome Plc.
8.750% 12/01/05 United Kingdom 800,000 1,512,702
Tesco Plc.
7.500% 07/30/07 United Kingdom 300,000 548,208
Quebec Province
8.625% 11/04/11 Canada 350,000 690,244
-----------
Total British Pound 6,213,071
-----------
CANADIAN DOLLAR (5.0%)
Province of British Columbia
7.750% 06/16/03 Canada 1,150,000 830,679
Government of Canada
6.000% 06/01/08 Canada 2,300,000 1,625,264
Kingdom of Sweden
8.000% 05/12/03 Sweden 600,000 433,386
-----------
Total Canadian Dollar 2,889,329
-----------
CZECH CROWN
General Electric
13.500% 10/01/99 United States 16,000,000 461,406
-----------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
COUNTRY OF
ORIGIN PAR VALUE VALUE
------ --------- -----
DANISH KRONER (4.2%)
Kingdom of Denmark
9.000% 11/15/00 Denmark 3,750,000 $ 592,527
Kingdom of Denmark
8.000% 03/15/06 Denmark 10,300,000 1,843,437
----------
Total Danish Kroner 2,435,964
----------
Euro (42.9%)
Government of France (O.A.T.)
7.750% 04/12/00 France 1,173,857 1,329,241
Government of France (O.A.T.)
4.500% 07/12/03 France 1,600,714 1,812,199
Government of France (O.A.T.)
6.750% 10/25/03 France 1,295,816 1,604,331
Government of France (O.A.T.)
5.500% 10/25/07 France 1,372,041 1,646,712
Republic of Germany
6.875% 05/12/05 Germany 4,141,464 5,250,621
Germany/Deutschland Bundsrepublk
5.250% 01/04/08 Germany 1,175,971 1,384,920
Federal Republic of Germany
6.000% 06/20/16 Germany 1,022,584 1,294,551
Republic of Italy
6.500% 11/01/27 Italy 2,427,343 3,126,983
International Bank For
Reconstruction & Development
4.750% 12/20/04 Multi National 113,000,000 1,155,163
International Bank For
Reconstruction & Development
7.250% 04/09/01 Multi National 1,250,000 689,700
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
COUNTRY OF
ORIGIN PAR VALUE VALUE
------ --------- -----
EURO- CONTINUED
International Bank For
Reconstruction & Development
7.250% 05/27/03 Multi National 1,400,000 $ 779,156
Government of the Netherlands
8.500% 03/15/01 Netherlands 3,085,706 3,673,789
International Finance Corporation
14.750% 03/07/00 South Africa 2,500,000 404,951
Inter-American Development Bank
7.250% 01/21/02 Switzerland 600,000 463,955
----------
Total Euro 24,616,272
----------
French Franc (3.3%)
McDonalds
6.750% 07/24/06 United States 10,000,000 1,909,182
----------
GERMAN MARK (3.4%)
European Investment Bank
7.500% 11/04/02 Germany 2,000,000 1,257,545
LKB Baden Wurttemburg
6.625% 08/20/03 Germany 1,100,000 681,267
----------
Total German Mark 1,938,812
----------
GREEK DRACHMAS (2.0%)
Republic of Hellenic
8.600% 03/26/08 Greece 300,000,000 1,161,399
----------
ITALIAN LIRA (3.8%)
Abbey National Treasury
Services Plc.
6.000% 08/08/02 United Kingdom 3,600,000,000 2,166,894
----------
JAPANESE YEN (7.8%)
Japan Development Bank
6.500% 09/20/01 Japan 158,000,000 1,533,847
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
COUNTRY OF
ORIGIN PAR VALUE VALUE
------ --------- -----
JAPANESE- CONTINUED
Kingdom of Spain
4.625% 07/22/04 Spain 55,000,000 $ 553,457
Asian Development Bank
3.125% 06/29/05 Japan 250,000,000 2,357,728
-----------
Total Japanese Yen 4,445,032
-----------
NORWEGIAN KRONER (1.8%)
Kingdom of Norway
5.750% 11/30/04 Norway 7,500,000 1,018,438
-----------
SWEDISH KRONA (3.0%)
Kingdom of Sweden
10.250% 05/05/00 Sweden 2,600,000 340,073
Kingdom of Sweden
6.500% 10/25/06 Sweden 10,000,000 1,399,015
-----------
Total Swedish Krona 1,739,088
-----------
TOTAL SENIOR SECURITIES (90.1%)
(Identified Cost $51,959,110) 51,734,294
-----------
Short-Term Investments (1.8%)
Mexican Cetes TBill
0.00% 05/06/99
(Identified Cost $975,400) Mexico 10,000,000 1,027,189
-----------
TOTAL INVESTMENTS (91.9%)
(IDENTIFIED COST $52,934,510) 52,761,483
OTHER ASSETS LESS LIABILITIES (8.1%) 4,627,058
-----------
NET ASSETS 100.0% $57,388,541
===========
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
Assets
Investments, at value
(Identified cost $52,934,510) $ 52,761,483
Cash 2,559,475
Receivables:
Interest and recoverable foreign
taxes receivable $ 1,479,869
Unrealized gain on forward currency
contracts open (Note 5) 684,338
Fund shares sold 135 2,164,342
------------
Prepaid expenses 13,007
------------
Total assets 57,498,307
------------
Liabilities
Distributions payable 245
Accrued management fees (Note 3) 35,407
Other accrued expenses 74,114
------------
Total liabilities 109,766
------------
Net assets (equivalent to $7.98 per share,
representing the offering and redemption
price for 7,195,490 shares outstanding,
100,000,000 shares authorized) $ 57,388,541
============
Net assets consist of:
Capital paid in $ 73,450,807
Accumulated net investment loss (999,865)
Accumulated net realized loss on investments
and foreign currency transactions (15,514,777)
Unrealized appreciation (depreciation):
Investments $ (173,027)
Foreign currency 625,403 452,376
------------ ------------
$ 57,388,541
============
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
Investment Income
Interest (net of foreign taxes withheld of $13,854) $ 1,537,486
Expenses
Advisory fees (See note 3) $ 212,954
Audit and legal fees 66,527
Custodian fees 57,161
Transfer agent fees 13,496
Administrative fees 15,938
Directors' fees and expenses (See note 3) 3,938
Registration fees 3,573
Insurance 1,595
-----------
Total expenses 375,182
-----------
Net investment income 1,162,304
-----------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain on investments 1,031,456
Net change in unrealized loss on
investments (2,614,845)
-----------
Net loss on investments (1,583,389)
-----------
Net realized loss on foreign currency (682,894)
Net change in unrealized gain on foreign
currency and foreign currency denominated
assets and liabilities 1,587,713
-----------
Net gain on foreign currency 904,819
-----------
Net loss on investments and foreign
currency (678,570)
-----------
Net increase in net assets resulting
from operations $ 483,734
===========
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended March 31, 1999 For the year ended
Increase (Decrease) in Net Assets Unaudited September 30, 1998
-------------------- ------------------
<S> <C> <C>
Operations:
Net investment income $ 1,162,304 $ 2,422,922
Net realized gain on investments 1,031,456 1,394,398
Net unrealized gain (loss) on investments (2,614,845) 3,954,700
Net realized loss on foreign currency (682,894) (2,455,379)
Net unrealized gain (loss) on foreign
currency and foreign currency denominated
assets and liabilities 1,587,713 (853,415)
------------ ------------
Net increase resulting from operations 483,734 4,463,226
------------ ------------
Distributions to shareholders:
From net investment income (619,641) (5,517,608)
For tax purposes in excess of
net investment income -- 0
------------ ------------
Total distributions (619,641) (5,517,608)
------------ ------------
Fund share transactions:
Proceeds from shares sold 5,037,988 4,758,355
Net asset value of shares issued on
reinvestment of distributions 479,578 4,342,236
Cost of shares redeemed (3,021,482) (4,920,426)
------------ ------------
Net increase resulting from
Fund share transactions 2,496,084 4,180,165
------------ ------------
Net increase 2,360,177 3,125,783
Net Assets
Beginning of period 55,028,364 51,902,581
------------ ------------
End of period (including accumulated
net investment loss of ($999,865)
and $(1,542,528), respectively $ 57,388,541 $ 55,028,364
============ ============
Number of Fund Shares
Sold 629,077 620,554
Issued on reinvestment of distributions 59,828 573,511
Redeemed (378,311) (639,517)
------------ ------------
Net increase 310,594 554,548
============ ============
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
MARCH 31, 1999
- --------------------------------------------------------------------------------
For a share outstanding throughout the period:
<TABLE>
<CAPTION>
For the six-months Year Ended September 30,
ended March 31, 1999 ----------------------------------------------------
(Unaudited) 1998(1) 1997(1) 1996 1995(1) 1994(1)
----------- ------- ------- ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 7.99 $ 8.20 $ 8.38 $ 8.78 $ 8.02 $ 10.85
-------- ------- ------- ------- ------- --------
Income from Investment Operations:
Net Investment Income 0.94 0.25 0.42 0.59 0.47 0.61
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency (0.09) 0.4 0.04 0.16 0.86 (2.39)
-------- ------- ------- ------- ------- --------
Total from Investment Operations 0.85 0.65 0.46 0.75 1.33 (1.78)
-------- ------- ------- ------- ------- --------
Less Distributions:
Net Investment Income (0.86) (0.86) (0.17) (0.45) (0.45) (0.26)
For Tax Purposes in Excess of Book
Net Investment Income -- 0 (0.47) (0.70) (0.12) --
Capital Gains -- -- -- -- -- (0.27)
Return of Capital -- -- -- -- -- (0.52)
-------- ------- ------- ------- ------- --------
Total Distributions (0.86) -0.86 (0.64) (1.15) (0.57) (1.05)
-------- ------- ------- ------- ------- --------
Net Asset Value, End of Period $ 7.98 $ 7.99 $ 8.20 $ 8.38 $ 8.78 $ 8.02
======== ======= ======= ======= ======= ========
Total Return 1.00%(2) 8.75% 5.75% 9.32% 17.33% (17.90%)
Ratios/Supplemental Data:
Net Assets, End of Year (000's) $ 57,389 $55,028 $51,903 $65,381 $64,640 $136,366
Ratio of Expenses to Average Net Assets
Before Expenses Paid Indirectly 1.32%(3) 1.33% 1.35% 1.22% 1.16% 1.12%
After Expenses Paid Indirectly 1.32%(3) 1.26% 1.35% 1.22% 1.16% 1.12%
Ratio of Net Investment Income to
Average Net Assets 4.09%(3) 4.63% 4.72% 5.41% 5.66% 5.87%
Portfolio Turnover Rate 24% 40% 33% 61% 179% 319%
</TABLE>
- ----------
1. 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.
2. Not annualized
3. Annualized
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
NOTE 1 - CONTINUED
At September 30, 1998, the Fund had a capital loss carryforward of approximately
$15,863,000, which may be carried forward through the fiscal year ending
September 30, 2003. During the year ended September 30, 1998, the Fund utilized
previously deferred capital losses of approximately $56,000. The Fund does not
intend to make any capital gains distributions until the capital loss
carryforwards have been extinguished.
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, 1999, purchases and sales of investment
securities other than short-term investments aggregated $14,734,870 and
$12,779,492, respectively. There were no purchases and sales of U.S.
Government obligations during the six months ended March 31, 1999.
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, 1999, based on the cost of
securities of $52,934,510 for federal income tax purposes, consists of the
following:
Gross unrealized appreciation $ 2,028,648
Gross unrealized depreciation (2,201,675)
-----------
Net unrealized appreciation $ (173,027)
===========
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS
At March 31, 1999 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, 1999 were
as follows:
Currency Currency Delivery Unrealized
Receivable Deliverable Date Appreciation/(Depreciation)
---------- ----------- ---- ---------------------------
$ 1,500,000 (Y) 169,275,000 04/26/99 $ 65,767
2,500,000 EUR 2,157,926 04/30/99 166,318
543,144 (Y) 60,680,000 05/10/99 27,989
1,565,420 (Y) 176,892,500 05/12/99 63,299
552,934 A$ 850,000 05/17/99 15,625
441,234 NZD 796,020 05/17/99 16,102
6,000,000 EUR 5,339,598 05/18/99 170,662
234,961 CZK 8,202,500 05/28/99 5,244
530,835 NOK 4,216,000 05/28/99 (12,807)
926,467 SEK 7,504,380 05/28/99 10,519
12,112,760 EUR 11,070,779 06/10/99 112,258
3,873,235 (pound) 2,388,070 06/17/99 18,938
1,623,632 C$ 2,458,000 06/22/99 (2,202)
954,885 DKr 6,488,156 06/23/99 8,491
1,000,000 GRD 299,950,000 06/28/99 18,135
---------
$ 684,338
=========
CURRENCY LEGEND:
A$ - Australian Dollar GRD - Greek Drachma
C$ - Canadian Dollar NOK - Norwegian Kroner
CZK - Czech Crown NZD - New Zealand Dollar
DKr - Danish Kroner SEK - Swedish Krona
EUR - Euro (pound) - British Sterling
(Y) - Japanese Yen
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS OF
BAILARD, BIEHL & KAISER INTERNATIONAL BOND FUND
(FORMERLY BAILARD, BIEHL & KAISER INTERNATIONAL FIXED-INCOME FUND)
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Bailard, Biehl & Kaiser
International Bond Fund (the "Fund") (a series of Bailard, Biehl & Kaiser
International Fund Group, Inc.) at September 30, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 1998 by correspondence with the custodian and brokers and
application of alternative procedures where broker confirmations were not
received, provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
San Francisco, California
November 18, 1998
