May 23, 2000
Dear Shareholder:
We are pleased to present your March 31, 2000, semi-annual shareholder's 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
For the six months ended March 31, 2000, the Bailard Biehl & Kaiser
International Bond Fund returned -1.55%.(2) This return is in line with global
bond market environment and very competitive with other international bond
funds.
International bond yields have been moving in tandem with U.S. bond yields.
After rising for most of last year, international bond yields fell in the first
quarter. Despite signs of stronger growth, rising inflation pressure and tighter
monetary policy, international bond yields were pulled lower by U.S. yields. A
growing budget surplus and a contraction in the supply of new government bond
issuance has supported U.S. bond prices. In addition, bond investors believe
that the Fed will ultimately be successful in slowing the booming economy and
maintain control over inflation. Volatility in the global equity markets has
also helped to lure more money into bonds as investors have begun to
re-appreciate the merits of diversification.
International bond returns have been a mixed bag with dollar-bloc countries
continuing to dominate returns. In the first quarter, after posting small
negative returns in the fourth quarter of last year, Canada and Australia
experienced local currency returns of 3.5%. Over the last six months, local
returns have ranged from 4.69% in the UK to 0.34% in Japan. European returns
averaged around 1.25%.(1)
Currency fluctuations as always had a significant impact on dollar returns.
During the last six months, the Euro continued to slide, falling about 10% and
turning a positive local bond return into an 8.5% loss. Japanese bond returns
benefited from a stronger yen and rose 4.2% in dollar terms.(1)
In the Fund we have been underweight Euro denominated bonds, overweight in the
dollar bloc countries and have been holding a portion of the fund in U.S.
short-term paper. The Fund has also had a hedged bias, which has helped to mute
the weakness in the Euro. Unfortunately, we have also been underweight Japanese
bonds, which had the highest dollar return over the last six months. As
mentioned above, almost all of the return came from the stronger yen. With
yields of less than 2% we find Japanese bonds to be unattractive and do not want
to have to rely on continued strength in the yen to enhance returns.
MARKET OUTLOOK
International bond yields should continue to take their cue from the U.S. bond
market. If the U.S. economy slows and/or stock prices decline significantly, the
Fed will move to the sidelines and bond prices will rally. However, given the
1
<PAGE>
ongoing strength in the U.S. economy and growing inflation pressure, the Fed is
likely to remain restrictive in the near term. With the global economic recovery
in full swing, it will be difficult for bonds to rally much in the near term.
Ultimately, the Fed will be successful in slowing the economy and yields will
fall from generally attractive levels.
In addition to bond appreciation, international bonds are likely to benefit from
weakness in the dollar. At some point, European officials have to abandon their
policy of benign neglect and attempt to stabilize the Euro. In addition, given
the large trade deficit and growing dependence on foreign capital, anything that
shakes foreign investor confidence should lead to weakness in the dollar, and
increase the attractiveness of foreign bonds. A slowing in economic activity or
a drop in stock prices have historically been the catalysts for international
bond outperformance.
CONCLUSION
We continue to see international bonds as playing a valuable role in diversified
portfolios. International bonds remain an excellent portfolio diversifier in
periods of U.S. economic or stock market stress. With stock market volatility
and uncertainty on the rise, we may be entering just such a period.
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 data quoted represents past performance and is no indication
of future results.
(2) Total returns for investment periods ended March 31, 2000: 3 months: -0.13%;
6 months: -1.55%; 12 months: -3.16%; 5 years: 5.36% annualized; since inception
(10/1/90): 5.12% annualized. 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.
2
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
Country of Par Value
Origin (Local Currency) Value
---------- -------------- -----------
FIXED INCOME SECURITIES (90.7%)
AUSTRALIAN DOLLAR (0.9%)
KFW International Finance, Inc.
9.125% 07/26/05 Australia 1,000,000 $ 658,038
-----------
BRITISH POUND (10.1%)
Glaxo Wellcome Plc
8.750% 12/01/05 United Kingdom 800,000 1,393,087
National Westminster Bank
7.875% 09/09/15 United Kingdom 1,000,000 1,763,556
Quebec Province
8.625% 11/04/11 Canada 350,000 639,333
Republic of Austria
9.000% 07/22/04 Austria 850,000 1,460,859
Tesco Plc
7.500% 07/30/07 United Kingdom 300,000 497,835
UK Treasury Bill
8.500% 12/07/05 United Kingdom 1,000,000 1,794,234
-----------
Total British Pound 7,548,904
-----------
CANADIAN DOLLAR (5.3%)
Government of Canada
7.250% 06/01/07 Canada 1,500,000 1,106,454
Government of Canada
6.000% 06/01/08 Canada 2,300,000 1,587,567
Kingdom of Sweden
8.000% 05/12/03 Sweden 600,000 431,121
Province of British Columbia
7.750% 06/16/03 Canada 1,150,000 826,538
-----------
Total Canadian Dollar 3,951,680
-----------
3
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Country of Par Value
Origin (Local Currency) Value
---------- -------------- -----------
DANISH KRONER (3.6%)
Kingdom of Denmark
7.000% 12/15/04 Denmark 5,000,000 $ 685,946
Kingdom of Denmark
8.000% 03/15/06 Denmark 10,300,000 1,493,801
Kingdom of Denmark
9.000% 11/15/00 Denmark 3,750,000 494,409
-----------
Total Danish Kroner 2,674,156
-----------
EURO (44.3%)
Euro
4.000% 04/27/09 Germany 1,350,000 1,142,275
Federal Republic of Germany
6.000% 06/20/16 Germany 4,422,584 4,543,444
Government of France
7.750% 04/12/00 France 1,173,857 1,123,612
Government of France (T Bill)
4.500% 07/12/03 France 1,600,714 1,522,380
Government of France
6.750% 10/25/03 France 1,295,816 1,320,564
Government of France (O.A.T.)
5.500% 10/25/07 France 1,372,041 1,338,298
Government of France (O.A.T.)
5.250% 04/25/08 France 5,000,000 4,792,586
Government of Netherlands
8.500% 03/15/01 Netherlands 3,900,000 3,875,215
Republic of Finland
8.750% 10/17/01 Finland 1,980,000 2,009,092
Republic of Germany
6.500% 10/14/05 Germany 4,300,000 4,401,051
4
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Country of Par Value
Origin (Local Currency) Value
---------- -------------- -----------
EURO - (CONTINUED)
Republic of Italy
4.500% 07/01/01 Italy 2,200,000 $ 2,108,864
Republic of Italy
8.750% 07/01/06 Italy 2,000,000 2,265,040
Republic of Italy
7.250% 11/01/26 Italy 2,500,000 2,829,553
-----------
Total Euro 33,271,974
-----------
GERMAN MARK (2.1%)
European Investment Bank
7.500% 11/04/02 Multi-National 1,022,584 1,041,233
LKB Baden Wurttemburg
6.625% 08/20/03 Germany 1,100,000 564,175
-----------
Total German Mark 1,605,408
-----------
GREEK DRACHMAS (1.3%)
Republic of Hellenic
8.600% 03/26/08 Greece 300,000,000 984,749
-----------
ITALIAN LIRA (2.4%)
Abbey National Treasury
Services Plc
6.000% 08/08/02 United Kingdom 3,600,000,000 1,817,807
-----------
JAPANESE YEN (11.4%)
Asian Development Bank
3.125% 06/29/05 Japan 250,000,000 2,672,956
KFW International Finance, Inc.
1.000% 12/20/04 Japan 240,000,000 2,334,691
Kingdom of Spain
4.625% 07/22/04 Spain 55,000,000 619,117
International Bank For
Reconstruction & Development
4.750% 12/20/04 Multi National 113,000,000 1,287,683
5
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Country of Par Value
Origin (Local Currency) Value
---------- -------------- -----------
JAPANESE YEN - (CONTINUED)
Japan Development Bank
6.500% 09/20/01 Japan 158,000,000 $ 1,679,040
-----------
Total Japanese Yen 8,593,487
-----------
NEW ZEALAND DOLLAR (1.7%)
International Bank For
Reconstruction & Development
7.250% 04/09/01 Multi-National 1,250,000 621,185
International Bank For
Reconstruction & Development
7.250% 05/27/03 Multi-National 1,400,000 690,339
-----------
Total New Zealand Dollar 1,311,524
-----------
NORWEGIAN KRONER (1.2%)
Kingdom of Norway
5.750% 11/30/04 Norway 7,500,000 870,491
-----------
SWEDISH KRONA (3.8%)
Kingdom of Sweden
10.250% 05/05/00 Sweden 2,600,000 301,682
Kingdom of Sweden
6.500% 10/25/06 Sweden 10,000,000 1,228,924
Spintab AB
7.500% 06/04/04 Sweden 11,000,000 1,341,961
-----------
Total Swedish Krona 2,872,567
-----------
SWISS FRANC (0.5%)
Inter-American Development Bank
7.250% 01/21/02 Multi-National 600,000 382,330
-----------
UNITED STATES DOLLARS (2.1%)
Federal National Mortgage
Association
6.000% 05/15/08 United States 1,200,000 1,114,265
Federal Home Loan Mortgage Corp.
7.000% 03/15/10 United States 500,000 493,645
-----------
Total United States Dollars 1,607,910
-----------
6
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Par Value
(Local Currency) Value
-------------- -----------
TOTAL FIXED INCOME SECURITIES (90.7%)
(IDENTIFIED COST $72,904,172) $68,151,025
-----------
SHORT-TERM INVESTMENTS (2.5%)
Mexican Cetes TBill
0.00% 01/25/01
(Identified Cost $1,871,642) Mexico 20,000,000 1,907,122
-----------
TOTAL INVESTMENTS (93.2%)
(IDENTIFIED COST $75,775,814) 70,058,147
OTHER ASSETS LESS LIABILITIES (6.8%) 5,057,051
-----------
NET ASSETS 100.0% $75,115,198
===========
(See "Notes to Financial Statements")
7
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
Investments, at value
(Identified cost $75,775,814) $ 70,058,147
Cash 2,935,019
Unrealized gain on forward currency contracts
(Note 5) 253,850
Receivables:
Interest and recoverable foreign taxes receivable 1,976,555
Prepaid expenses 16,486
------------
Total assets 75,240,057
------------
LIABILITIES
Payables:
Advisory fees (Note 3) $ 46,931
Fund shares repurchased 20,000 66,931
-----------
Accrued expenses 57,928
------------
Total liabilities 124,859
------------
Net assets (equivalent to $7.48 per share of no
par value capital stock, representing the
offering and redemption price for 10,036,047
shares outstanding, 100,000,000 shares
authorized) $ 75,115,198
============
Net assets consist of:
Capital paid in $ 95,679,990
Accumulated net investment loss (466,685)
Accumulated net realized loss on investments
and foreign currency transactions (14,557,097)
Unrealized appreciation (depreciation):
Investments $(5,717,667)
Foreign currency 176,657 (5,541,010)
----------- ------------
$ 75,115,198
============
(See "Notes to Financial Statements")
8
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (inclusive of foreign taxes
recovered of $17,956) $ 1,929,585
EXPENSES
Advisory fees (See Note 3) $ 290,972
Custodian fees 60,767
Audit and legal fees 32,308
Transfer agent fees 19,050
Administrative fees 16,324
Director fees and expenses (See Note 3) 12,071
Registration expense 4,368
Insurance expense 1,326
Miscellaneous expenses 10,820
---------
Total expenses 448,006
-----------
Net investment income 1,481,579
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (411,549)
Net unrealized loss on investments (4,119,405)
-----------
Net loss on investments (4,530,954)
-----------
Net realized gain on foreign currency 1,111,939
Net unrealized gain on foreign currency
and foreign currency denominated assets
and liabilities 775,378
-----------
Net gain on foreign currency 1,887,317
-----------
Net loss on investments and foreign currency (2,643,637)
-----------
Net decrease in net assets resulting from operations $(1,162,058)
===========
(See "Notes to Financial Statements")
9
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended For the Year Ended
March 31, 2000 September 30, 1999
-------------- ------------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 1,481,579 $ 2,420,853
Net realized gain (loss) on investments (411,549) 1,154,631
Net unrealized loss on investments (4,119,405) (4,040,080)
Net realized gain (loss) on foreign currency 1,111,939 (217,507)
Net unrealized gain on foreign currency and
foreign currency denominated assets and liabilities 775,378 363,589
------------ ------------
Net decrease resulting from operations (1,162,058) (318,514)
------------ ------------
Distributions to shareholders:
From net investment income (2,538,220) (619,641)
------------ ------------
Total distributions (2,538,220) (619,641)
------------ ------------
Fund share transactions:
Proceeds from shares sold 6,172,002 28,939,379
Net asset value of shares issued on
reinvestment of distributions 405,598 479,578
Cost of shares redeemed (6,952,862) (4,318,428)
------------ ------------
Net increase (decrease) resulting from
Fund share transactions (375,262) 25,100,529
------------ ------------
Net increase (decrease) (4,075,540) 24,162,374
NET ASSETS
Beginning of period 79,190,738 55,028,364
------------ ------------
End of period (including accumulated net investment
income (loss) of $(466,685) and $589,956, respectively) $ 75,115,198 $ 79,190,738
============ ============
NUMBER OF FUND SHARES
Sold 816,244 3,692,507
Issued on reinvestment of distributions 51,996 59,828
Redeemed (925,853) (543,571)
------------ ------------
Net increase (decrease) (57,613) 3,208,764
============ ============
</TABLE>
(See "Notes to Financial Statements")
10
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For a share outstanding throughout the period:
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended September 30,
March 31, 2000 -------------------------------------------------------
(Unaudited) 1999(1) 1998(1) 1997(1) 1996 1995(1)
----------- ------- ------- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 7.85 $ 7.99 $ 8.20 $ 8.38 $ 8.78 $ 8.02
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.15 0.34 0.25 0.42 0.59 0.47
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency (0.27) (0.39) 0.40 0.04 0.16 0.86
------- ------- ------- ------- ------- -------
Total from Investment Operations (0.12) (0.05) 0.65 0.46 0.75 1.33
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Net Investment Income (0.25) (0.09) (0.86) (0.17) (0.45) (0.45)
For Tax Purposes in Excess of Book
Net Investment Income -- -- -- (0.47) (0.70) (0.12)
Capital Gain -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions (0.25) (0.09) (0.86) (0.64) (1.15) (0.57)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $ 7.48 $ 7.85 $ 7.99 $ 8.20 $ 8.38 $ 8.78
======= ======= ======= ======= ======= =======
TOTAL RETURN (1.55%)(2) (0.65%) 8.75% 5.75% 9.32% 17.33%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000's) $75,115 $79,191 $55,028 $51,903 $65,381 $64,640
Ratio of Expenses to Average Net Assets
Before Expenses Paid Indirectly 1.16%(3) 1.26% 1.33% 1.35% 1.22% 1.16%
After Expenses Paid Indirectly 1.16%(3) 1.26% 1.26% 1.35% 1.22% 1.16%
Ratio of Net Investment Income to
Average Net Assets 3.82%(3) 4.03% 4.63% 4.72% 5.41% 5.66%
Portfolio Turnover Rate 20%(2) 31% 40% 33% 61% 179%
</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" represents 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")
11
<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.
12
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTEST OF FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
NOTE 1 - CONTINUED
At September 30, 1999, the Fund had a capital loss carryforward of approximately
$15,257,486, which may be carried forward through the fiscal year ending
September 30, 2003. The Fund does not intend to make any capital gains
distributions until the capital loss carryforwards have been extinguished.
At the end of each year, capital paid in, accumulated net investment loss and
accumulated net realized loss on investments will be adjusted for permanent
book-tax differences. Reclassifications between accumulated net investment loss
and accumulated net realized loss on investments arise 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, 2000, purchases and sales of investment
securities other than short-term investments aggregated $15,008,424 and
$14,033,593, respectively. There were no purchases and sales of U.S. Government
obligations during the six months ended March 31, 2000.
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.
As approved by the Board of Directors, the Fund has entered into an agreement
with its custodian, Brown Brothers Harriman & Co. ("BBH & Co."), whereby
brokerage commissions charged on U.S. equity trades executed through BBH & Co.
are available to offset custody transaction charges. There were no such credits
during the six months ended March 31, 2000.
NOTE 4 - TAX BASIS UNREALIZED APPRECIATION (DEPRECIATION)
Gross and net unrealized appreciation (depreciation) on March 31, 2000, based on
a cost of $75,775,814 for federal income tax purposes, is as follows:
Gross unrealized appreciation $ 1,362,982
Gross unrealized depreciation (7,080,649)
------------
Net unrealized depreciation $ (5,717,667)
============
13
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS
At March 31, 2000 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
unrealized gain on forward currency contracts in the financial statements. Open
forward foreign currency exchange contracts outstanding at March 31, 2000 are as
follows:
Unrealized
Currency Currency Delivery Appreciation/
Receivable Deliverable Date (Depreciation)
---------- ----------- -------- --------------
$1,238,903 SEK 10,439,000 04/19/00 $ 28,830
562,852 GRD 185,910,000 04/25/00 32,003
488,727 NOK 3,908,250 04/25/00 25,460
1,979,370 JPY 212,228,000 05/16/00 (106,095)
1,064,212 JPY 114,190,000 05/16/00 (57,879)
237,551 JPY 26,000,000 05/16/00 (17,939)
1,136,257 JPY 121,000,000 05/16/00 (52,753)
535,789 AUD 850,000 05/17/00 19,145
9,163,975 EUR 9,245,800 05/17/00 288,392
993,074 GBP 622,312 05/17/00 (97)
387,694 NZD 796,020 05/17/00 (8,077)
1,191,681 EUR 1,203,767 05/18/00 36,033
699,985 DKK 5,304,000 05/31/00 15,670
988,563 SEK 8,548,500 05/31/00 (5,087)
465,195 NZD 951,475 06/07/00 (7,847)
4,937,828 EUR 5,127,814 06/12/00 6,307
4,719,837 EUR 4,818,766 06/20/00 82,963
2,763,329 GBP 1,752,270 06/20/00 (33,557)
1,064,019 CAD 1,558,000 06/22/00 (11,678)
850,259 DKK 6,488,156 06/23/00 12,137
--------
$245,931
========
Currency
Payable
---------
1,992,081 MXN 19,370,000 05/08/00 7,919
--------
Net Unrealized Appreciation $253,850
========
14
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
CURRENCY LEGEND:
AUD - Australian Dollar JPY - Japanese Yen
CAD - Canadian Dollar MNX - Mexican Peso
DKK - Danish Kroner NOK - Norwegian Kroner
EUR - Euro NZD - New Zealand Dollar
GBP - British Sterling SEK - Swedish Krona
GRD - Greek Drachma
15
<PAGE>
May 23, 2000
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, 2000.
FUND PERFORMANCE AND MARKET OVERVIEW
The past six months have been an exciting if rather turbulent time for the
world's equity markets, as stock prices surged at the end of 1999 then faltered
during the first quarter of this year. Overall, the advance has earned Bailard
Biehl & Kaiser International Equity Fund shareholders a 24.66% return from
September 30, 1999 through March 31, 2000(1).
As the millennium drew to a close, shares in technology, media, and
telecommunications (collectively "TMT") companies led exchanges around the world
to record highs. The feared Y2K-related disruptions didn't happen; instead the
new year saw faster than expected economic growth and rising inflationary
pressures. Two interest rate hikes each by the U.S. Federal Reserve and the
European Central Bank contributed to an atmosphere of nervousness and an
extremely volatile first quarter for equities. In January and February,
investors continued to favor TMT shares to the exclusion of nearly everything
else, but in March these same shares tumbled, as skittish investors rotated out
of precipitously priced new economy sectors into the neglected old economy. In
the end, the activity left most markets only slightly above where they began the
year. U.S. dollar strength, particularly versus the Euro, further eroded returns
from overseas.
Markets showed a very wide disparity in returns over the six months, with the
top-performers (Finland, Russia, and Turkey) doubling in value and the laggards
(Belgium, Austria, Greece, and the Philippines) suffering double-digit losses.
Among developed markets, the winners were Scandinavian and large Euroland
markets, as well as Canada; smaller European and Pacific Rim markets were the
losers. Among emerging markets, Eastern European and large Latin American
markets finished at the top, while smaller Asian markets slid toward the bottom
ranks.
EUROPE
Europe as a whole benefited from an improving economic picture, with healthy
reflation, stronger GDP growth, and a pickup in industrial production. Corporate
profits were also on the rise. The single currency continued its steady slide,
however, reaching parity with the dollar at the end of 1999 and weakening still
further in 2000. Despite the Euro's weakness, Germany (up 32.5%) and France (up
24.4%) both managed six-month U.S. dollar returns that outpaced the 17.6% seen
in the U.S.(2)
Finland and Sweden were the standouts among all developed markets, due in large
part to outsize gains by wireless telecom giants Nokia and Ericsson. The German
market reacted positively to the government's announcement late last year that
it would abandon a tax on corporate asset sales, setting the stage for companies
to unwind their large networks of cross-shareholdings. In Belgium, banks and
insurance companies dragged down the market on concerns about their ability to
compete in a rapidly consolidating Europe-wide financial sector. Switzerland,
dominated by old-economy financial and pharmaceutical firms, was out of favor
for most of the period.
16
<PAGE>
Our country selection in Europe was on the money, with overweights in the Nordic
countries and underweights in Switzerland and the U.K. adding the most value.
Stock selection in the region was mixed. In Finland, the Fund was penalized for
holding names other than Nokia. France was negative while Germany and Spain were
positive.
JAPAN AND ASIA
After surprisingly vigorous GDP growth in the first half of 1999, the Japanese
economy shrank during the third and fourth quarters, putting the country
technically back into recession. Industrial production numbers, however,
generally more reliable than the oft revised GDP numbers, continue to indicate
recovery, and the yen has remained strong. Aided by the resilient currency,
Japan's 16.2%(2) U.S. dollar return was respectable if not spectacular. Just as
most everywhere else, the market was led by technology and telecom shares, with
high sensitivity to daily movements in the NASDAQ index.
Elsewhere in Asia, countries with a heavy high-tech emphasis did the best. Hong
Kong was the top-performing developed market in the region, helped by strong
economic growth numbers and China's agreement with the World Trade Organization.
Korea's market added to an already incredible run-up, cheered by sizzling GDP
growth and optimism over restructuring efforts of the big CHAEBOL. Taiwanese
stocks advanced despite increased tensions with China following the election in
Taiwan of a pro-independence presidential candidate.
Where there was no compelling TMT story, bad news and old problems hit markets
hard. The Philippines was virtually abandoned by foreign investors in the wake
of a stock scandal that raised doubts about the fairness and transparency of the
stock exchange. In Indonesia, political tensions and religious violence
contributed to currency volatility and stock market weakness. In Thailand,
stocks were sold off this year by investors impatient for quicker action in
dealing with the country's bad debts, which now stand at around 40% of total
lending in the financial system.
Stock selection overwhelmed country selection in Asia. While overexposure to
Japan and India hurt the Fund somewhat, and an emphasis on Hong Kong, Korea and
Taiwan helped, the overall effect of country selection was neutral. On the other
hand, stock picks in Japan and Hong Kong alone added 2 1/2 % to active return,
thanks to successful bets on certain electronics, wireless telecom, and software
companies.
AMERICAS
A booming U.S. economy and higher commodity prices helped lift the larger
markets of North and South America. The TMT theme also played well in Canada, as
telecom heavyweights BCE and Nortel Networks benefited from expanding global
demand for wireless services. Rising oil prices and an investment-grade debt
rating from Moody's boosted the Mexican market, while better than expected
economic results helped Brazil.
Country selection in the region was modestly beneficial, while stock selection
in Canada was positive thanks to successful bets on the big telecom highfliers.
EMERGING EUROPE
This volatile region was home to the world's top- and bottom- performing
markets: Russia and Turkey continued to climb at a blistering pace, despite
weakening currencies, but investors in Greece had a very unrewarding six months.
17
<PAGE>
Russian stocks rose on the continued upturn in oil prices and on signs of
greater political stability under the Putin presidency. Turkey's market cheered
the government's progress on its reform and privatization programs as well as
the country's potential membership in the European Union. The Polish market also
performed well, led higher by the country's burgeoning software industry. Greek
stocks, already overvalued, received no good news to stop the selling.
Turkey was a big source of added value for the Fund, thanks to an overweight
position and favorable stock selection. Delay in re-entering the Russian market
was an opportunity cost, as the Fund waited until fundamental risk indicators
improved.
MARKET OUTLOOK AND INVESTMENT STRATEGY
The worldwide selloff in TMT stocks that began in March has continued through
April, bringing nearly every market down. The dollar has grown still stronger.
Yet as global economic recovery continues and the pace of corporate
restructuring accelerates, international stocks remain very attractive on the
basis of valuation and earnings potential.
Looking forward, we favor smaller markets in Europe, preferring Finland, Sweden,
Portugal, Spain and Italy over the core markets of Germany, France, Switzerland
and the Netherlands. In Asia, Korea and Hong Kong remain the most attractive
markets. Japan, on the other hand, has fallen in our rankings from very
attractive to neutral.
We appreciate your continued support of the Bailard Biehl & Kaiser International
Equity Fund. As always, if you have any questions concerning the Fund, please do
not hesitate to call us at 1-800-882-8383.
Sincerely,
Peter M. Hill Burnie E. Sparks, Jr., CFA
Chairman President
----------
(1) Total returns for investment periods ended March 31, 2000: 3 months: 0.26%;
6 months: 24.66%; 12 months: 31.73%; 5 years: 12.65% annualized; 10 years: 6.76%
annualized. 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) Index return data is based on the respective Morgan Stanley Capital
International (US$) indices for developed market countries and ING Barings (US$)
indices for emerging market countries. The performance data quoted represents
past performance and is no indication of future results.
18
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
Shares Value
----------- ------------
EQUITY SECURITIES (98.0%)
I. ARGENTINA (0.6%)
Banco De Galicia y Buenos Aires ADR 5,300 $ 107,325
Banco De Galicia y Buenos Aires (Local) 46,650 236,622
Perez Companc SA ADR 38,000 152,449
Siderar SA A Shares 59,900 251,693
Telecom Argentina 7,800 271,050
------------
Total Argentina 1,019,139
------------
II. AUSTRALIA (0.9%)
Australia & New Zealand Bank 10,000 63,128
Broken Hill Proprietary Ltd. 15,000 162,451
Colonial Ltd. 49,000 225,184
Commonwealth Bank of Australia 4,600 62,936
Fairfax (John) Holdings Ltd. 23,545 85,036
Jupiters Ltd. 80,000 125,285
* Pasminco Ltd. 100,000 60,700
Qantas Airways Ltd. 68,000 141,989
Telstra Corporation 55,000 253,726
The News Corporation Ltd. 23,268 325,127
Woodside Petroleum 15,000 90,140
------------
Total Australia 1,595,702
------------
III. BRAZIL (2.3%)
Banco Bradesco SA 30,600 252,165
* Banco Estado de Sao Paulo 3,700 149,060
Brasileira Distribuicao Pao de Acucar 7,800 278,850
Centrais Electricas Pf'd. B ADR 16,000 154,500
CIA Paranaense de Energia Copel 16,530 139,724
CIA Vale Do Rio Doce 7,100 193,919
Companhia Cervejaria Brahma Spns'd ADR 2,600 42,250
* Electropaulo Metropolitana 1,900 142,200
Gerdau S.A. Pfd. 2,200 57,364
* Globo Cabo SA 6,700 125,625
Itaubanco Pfd. 3,100 275,358
Lojas Americanas SA 30,600 150,808
Petrobras Spns'd ADR 17,800 485,050
Tele Centro Sul Participacoes 1,000 81,000
Tele Norte Leste Participacoes 20,100 535,163
* Telebras Holders Pfd ADR 6,200 928,063
* Telebras Spns'd. ADR 5,500 216
Unibanco Holdings 6,700 212,725
------------
Total Brazil 4,204,040
------------
IV. CANADA (2.5%)
Aliant Inc. 6,019 161,690
BCE Inc. 6,000 752,625
Bombardier Inc. Class B 8,000 200,854
* Canadian Natural Resources 5,000 132,250
Imperial Oil Ltd. 6,000 125,625
19
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 2000 (UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Shares Value
----------- ------------
CANADA - CONTINUED
National Bank of Canada Montreal 18,000 $ 263,466
Nortel Networks Corp. 17,000 2,142,000
Quebecor Inc. Class B 10,000 261,744
Seagram Ltd. 4,500 266,876
Toronto Dominion Bank 10,000 266,875
------------
Total Canada 4,574,005
------------
V. DENMARK (0.8%)
Den Danske Bank AF 2,810 294,345
Novo-Nordisk AS 2,048 276,383
Tele Denmark As Class B 7,452 670,445
* Vestas Wind Systems 425 154,585
------------
Total Denmark 1,395,758
------------
VI. FINLAND (5.1%)
Enso Oy 30,000 328,695
Nokia Class A ADR 33,300 7,234,425
Sonera OYJ 17,000 1,159,858
UPM-Kymmene Oy 15,000 423,428
------------
Total Finland 9,146,406
------------
VII. FRANCE (10.3%)
Alcatel 7,500 1,645,629
Aventis SA 7,000 383,143
AXA SA 5,400 765,270
Banque Nationale De Paris 18,490 1,459,679
Banque Nationale De Paris Wts. (Ex. 7/15/02) 3,900 27,392
Canal Plus 4,000 880,348
Eura France 661 300,443
France Telecom SA 23,000 3,961,566
Havas Advertising 3,000 1,621,946
L'Oreal 800 516,726
Peugeot SA 3,510 759,070
Sanofi Synthelabo 24,000 915,179
Scor 6,000 281,731
Societe Nationale Elf Aquitaine 10,480 1,875,294
* Stmicroelectronics 4,000 734,899
TV Francaise 2,500 1,842,033
Vivendi 5,000 576,532
------------
Total France 18,546,880
------------
VIII. GERMANY (6.2%)
Alliance AG 5,029 2,047,612
BASF AG 23,500 1,115,363
Daimlerchrysler AG 17,200 1,125,774
Depfa Deutsche Pfandbriefban 5,000 478,450
20
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Shares Value
----------- ------------
GERMANY - CONTINUED
Deutsche Bank AG 14,000 $ 930,394
Deutsche Telekom AG 35,000 2,819,984
Marscholleck & Lauten Nonvtg. Pfd. 1,590 943,312
Marscholleck & Lautenschager 1,000 392,329
Siemens AG 9,500 1,368,128
------------
Total Germany 11,221,346
------------
IX. HONG KONG / CHINA (6.3%)
Cathay Pacific Airways 310,000 465,806
Cheung Kong Holdings 147,000 2,199,384
* China Telecom Ltd. Class H 230,000 2,023,374
Dao Heng Bank 100,000 437,937
Giordano International Ltd. 600,000 728,183
Gold Peak Ind. Wts (Ex. 08/06/00) 29,800 337
HSBC Holdings Plc 14,400 168,291
Hutchison Whampoa 45,000 811,982
Legend Holders Ltd. 1,264,000 1,972,337
Shangri La Asia 540,000 606,820
South China Morning Post 400,000 385,282
Sun Hung Kai Properties 100,000 876,517
Swire Pacific 120,000 617,993
------------
Total Hong Kong / China 11,294,243
------------
X. HUNGARY (0.2%)
Matav Rt. Regd Shs 7,860 69,004
Matav Rt. ADR 1,400 62,475
OTP Bank Ltd. 525 28,315
OTP Bank Ltd. Spons GDR 144A** 1,500 81,000
Pick Szeged Ord. 1,280 54,977
Richter Gedeon Vegyeszeti 1,000 65,750
Tiszai Vegyi Kombinat Rt 5,000 91,680
------------
Total Hungary 453,201
------------
XI. INDIA (1.0%)
Gujarat Amjua Cements GDR 144A** 34,000 161,500
ICICI Ltd. 144A** 9,800 222,950
India Tobacco Ltd. GDR 144A** 4,700 91,063
* Infosys Technologies Spn'd ADR 1,950 376,350
* Mahanagar Tel Spons GDR 144A** 18,780 267,615
Ranbaxy Labs Ltd. GDR 144A** 15,900 339,465
State Bank of India GDR 144A** 7,000 68,775
Videsh Sanchar Nigam GDR 144A** 5,750 153,956
------------
Total India 1,681,674
------------
XII. INDONESIA (0.3%)
Indosat ADR 3,000 51,563
* PT HM Sampoerna 155,000 257,992
PT Telekomunikasi 600,000 291,281
------------
Total Indonsia 600,836
------------
21
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Shares Value
----------- ------------
XIII. IRELAND (0.2%)
Bank of Ireland 20,000 $ 141,621
CRH Plc 7,000 125,593
Eircom Plc 15,000 66,600
Smurfit (Jefferson) Plc 30,000 70,332
------------
Total Ireland 404,146
------------
XIV. ISRAEL (0.6%)
Bank Hapoalim 50,700 161,490
* DSP Group Inc. ADR 4,800 316,800
* Elbit Computers Ltd.ADR 16,900 219,700
* Gilat Satellite Networks Ltd. ADR 2,800 328,300
* Nice Systems Ltd. Sponsored ADR 1,500 106,875
------------
Total Israel 1,133,165
------------
XV. ITALY (3.4%)
* Acea SpA 30,000 541,988
Arnoldo Mondadori Editore 20,000 510,028
Autostrade Concession Auto A Shares 50,000 361,708
ENI SpA 80,000 400,367
Fiat SpA 8,000 210,901
Instituto Nazionale delle Assicurazioni SpA 10,528 291,952
Mediolanum SpA 43,000 759,980
Sanpaolo Imi 50,000 684,662
Telecom Italia Mobile SpA 75,500 926,193
Telecom Italia SpA 55,000 821,020
Telecom Italia SpA Non Conv 99,139 675,447
------------
Total Italy 6,184,246
------------
XVI. JAPAN (20.1%)
Bank of Tokyo-Mitsubishi 130,000 1,859,406
Daiwa House Ind Co. 85,000 582,606
Daiwa Securities Group Inc. 155,000 2,916,687
* Don Quijote Co. Ltd. 3,300 569,493
Fast Retailing Co. Ltd. 3,000 1,320,626
* Hikari Tsushin, Inc. 1,000 768,293
Homac Corp. 36,750 809,779
Honda Motor Co. 42,000 1,736,265
House Food Corporation 32,000 474,236
Kojima Co. Ltd. 16,000 460,976
Konami Co. 26,000 1,774,484
Kyocera Corp. 10,000 1,673,085
Murata Mfg. 8,000 1,946,083
Nintendo Co. 5,000 879,930
Nippon Television Network 1,200 847,657
* NTT Mobile Communications Network Inc. 100 4,104,714
Ricoh Co. 60,000 1,286,989
Sankyo Co. Ltd. 60,000 1,512,212
Shin-Etsu Chemical Co. 30,000 1,822,259
Sony Corp. 21,000 2,979,087
Taisho Pharmaceutical 23,000 793,838
Takefuji Corp. 8,500 911,617
Tokai Bank 180,000 1,088,090
Tomy Co. Ltd. 13,500 591,759
Toyota Motor Corp. 48,000 2,513,138
------------
Total Japan 36,223,309
------------
22
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Shares Value
----------- ------------
XVII. MALAYSIA (0.7%)
Genting Berhad 48,000 $ 199,579
Malayan Banking Berhad 71,000 312,026
Public Bank Berhad 80,000 106,316
Resorts World Berhad 15,000 49,737
Telekom Malaysia 60,000 246,316
Tenaga Nasional 81,000 272,842
------------
Total Malaysia 1,186,816
------------
XVIII. MEXICO (1.0%)
* Carso Global Telecom 78,904 242,723
* Cemex Spns'd. ADR 4,480 101,360
Formento Economico Mexica-UBD 21,900 98,398
* Grupo Financiero Banamex 25,000 114,481
* Grupo Televisa GDR 144A** 4,550 309,400
Telefonos de Mexico Series L ADR 14,300 958,100
------------
Total Mexico 1,824,462
------------
XIX. NETHERLANDS (5.1%)
ABN Amro Holdings 33,000 735,445
* ASM Lithography 4,500 502,516
Axxicon Group NV 24,300 372,043
DSM NV 11,000 397,563
Fortis (NL) NV 20,000 511,942
Getronics NV 4,000 305,825
ING Groep NV 25,050 1,356,722
Koninklijke KPN NV 8,500 973,191
Koninklijke Philips Electronic NV 9,000 1,512,285
OCE - Van Der Grinten NV 11,000 149,468
Royal Dutch Petroleum 37,000 2,160,077
Vendex KBB NV 15,000 246,880
------------
Total Netherlands 9,223,957
------------
XX. NEW ZEALAND (0.7%)
Fletcher Challenge Buildings 200,000 216,561
* Sky Network Television Ltd. 120,000 309,941
Telecom Corp of New Zealand 153,500 694,578
------------
Total New Zealand 1,221,080
------------
XXI. NORWAY (0.2%)
Christiania Bank 40,000 207,603
Norsk Hydro AS 6,000 227,154
------------
Total Norway 434,757
------------
XXII. POLAND (0.3%)
* Budimex 20,000 183,073
Debica SA Class A 1,000 9,323
KGHM Polska Midez SA 30,000 227,388
Telekomunikacja Polska SA 20,000 189,853
------------
Total Poland 609,637
------------
23
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Shares Value
----------- ------------
XXIII. RUSSIA (0.5%)
* AO Mosenergo 36,000 $ 229,500
* Lukoil Oil Co. 4,500 285,750
RAO Unified Energy System 11,000 218,625
* Vimpel Communications 3,300 139,631
------------
Total Russia 873,506
------------
XXIV. SINGAPORE (1.0%)
DBS Group Holdings Ltd. 20,424 269,852
DBS Land Ord. 98,000 127,764
Keppel Land Ltd. 65,000 152,762
Omni Industries Ltd. 95,000 223,268
Robinson & Co. 63,000 176,790
Singapore Airlines Ltd. (Fgn. Reg'd.) 40,000 374,160
Singapore Press Holdings (Fgn. Reg'd) 7,000 111,722
United Overseas Bank 42,240 259,293
United Overseas Land Wts. (Ex. 5/28/01) 10,000 1,111
Venture Manufacturing 12,000 164,864
------------
Total Singapore 1,861,586
------------
XXV. SOUTH AFRICA (0.7%)
Anglo-American Corp. 5,100 235,481
Anglogold Ltd. 2,000 95,646
Billiton Plc 30,000 141,176
Impala Platinum Holdings Ltd. 4,000 138,732
Imperial Holdings Ltd.
Rembrandt Group Ltd. 30,000 265,852
Sappi Ltd. 9,000 69,580
Sasol Ltd. 20,000 124,675
Standard Bank Invest Corp. 55,000 226,891
------------
Total South Africa 1,298,033
------------
XXVI. SOUTH KOREA (2.2%)
* Cheil Jedang Corp. 2,880 189,438
Hankook Tire Co. Ltd. 41,200 86,482
* Hankuk Electric Glass Co. 4,200 114,381
* Hyundai Electronics Industrial 16,680 371,254
* Hyundai Motor 20,000 242,479
* Korea Telecom Corp. 3,000 266,003
* Korean Air 12,600 119,701
* Medison Ltd. 30,000 389,505
* Pohang Iron & Steel 4,260 422,801
Samsung Electronics 4,000 1,212,395
* SK Corp. 12,437 286,943
* SK Telecom 90 293,146
------------
Total South Korea 3,994,528
------------
XXVII. SPAIN (2.0%)
Aceralia SA 18,000 214,441
Banco Bilboa Vizcaya 81,666 1,200,326
Repsol SA 21,000 460,374
Telefonica de Espana SA 53,749 1,357,816
Union Electrica Fenosa 20,000 410,701
------------
Total Spain 3,643,658
------------
24
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Shares Value
----------- ------------
XXVIII. SWEDEN (4.4%)
Electrolux AB Series B Free 30,000 $ 567,708
Ericsson (L M) Telecom Co. ADR 19,300 1,810,581
Ericsson (L M) Telecom Series B Free 35,800 3,144,931
Hennes & Mauritz B Free 13,000 361,111
* Netcom Systems AB B 7,100 612,211
Sandvik AB Series B 10,000 259,259
Skandia Forsakrings AB 10,000 473,380
SKF AB 12,000 266,667
Svenska Handelsbanken Series A 15,600 192,292
Volvo AB Class B Free 11,150 300,689
------------
Total Sweden 7,988,829
------------
XXIX. SWITZERLAND (0.6%)
Abb Ltd. 1,000 114,873
Credit Suisse Group 1,400 278,703
* Kudelski AS 30 374,391
Roche Holdings Genusscheine 30 325,856
------------
Total Switzerland 1,093,823
------------
XXX. TAIWAN (0.5%)
* Taiwan Semiconductor 50,000 336,839
* United Microelectronics Corp. 60,000 232,665
* Via Technologies, Inc. 25,000 373,809
------------
Total Taiwan 943,313
------------
XXXI. THAILAND (0.3%)
Ban Pu Coal (Fgn. Reg'd) 60,000 38,482
Delta Electric Public Co. 12,000 151,706
* Hana Microelectron 20,000 178,789
* National Petro Chemical 75,000 79,344
------------
Total Thailand 448,321
------------
XXXII. TURKEY (1.5%)
* Eregli Demir Ve Celik 3,640,000 166,873
Finansbank 81,375,000 587,221
Hurriyet Gazette 13,500,000 303,718
* Lio Yag Sanayi Ve Ticaret 7,896,000 122,003
* Turkiye Garanti Bankasi 33,584,000 427,676
* Vestel Electronik Sanayai 2,815,000 943,989
Yapi Kredi Bank 5,463,188 146,099
------------
Total Turkey 2,697,579
------------
XXXIII. UNITED KINGDOM (15.5%)
Allied Domeq Plc. 170,000 894,285
Astrazeneca Group Plc 35,000 1,417,663
Barclays Bank 90,000 2,386,250
BP Amoco Plc 140,000 1,280,866
BP Amoco Plc ADR 10,000 530,625
British Aerospace 42,879 242,153
British Sky Broadcasting Group Plc 30,000 794,459
British Telecom. 70,000 1,312,134
Cadbury Schweppes Plc 115,000 772,823
Compass Group Plc 75,000 978,717
25
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
MARCH 31, 2000
(UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
Shares Value
----------- ------------
UNITED KINGDOM - CONTINUED
GKN Plc 60,000 $ 748,036
Hilton Group Plc 200,000 930,858
Kingfisher Plc 70,000 575,106
National Grid Group Plc 70,000 639,875
Norwich Union Plc 110,000 737,906
* Orange Plc 45,000 1,847,329
Pearson Plc 32,000 1,113,392
Powergen Plc 100,000 585,076
Psion Plc 700 46,477
Reuters Group Plc 35,000 710,228
Rolls-Royce 300,000 972,734
Royal Bank of Scotland Group 60,000 883,477
Sage Group 100,000 1,122,294
Smithkline Beecham Plc 80,000 1,056,727
Vodafone Group Plc 827,133 4,598,546
WPP Group 40,000 703,208
------------
Total United Kingdom 27,881,244
------------
Par Value Value
----------- ------------
FIXED INCOME SECURITIES (0.0%)
British Aerospace
7.450% 11/30/03 $ 13,542 $ 21,171
------------
TOTAL INVESTMENTS (98.0%)
(IDENTIFIED COST $136,301,779) 176,924,396
OTHER ASSETS LESS LIABILITIES (2.0%) 3,576,489
------------
NET ASSETS (100.0%) $180,500,885
============
----------
* Non-income producing security.
** Exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. On March 31, 2000, these
securities were valued at $1,695,724 or 0.94% of Net Assets.
(See "Notes to Financial Statements")
26
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
MARCH 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
Percent of
Industry Net Assets
-------- ----------
Aerospace 0.6%
Airline 0.7
Appliances and Household Products 3.6
Automobile 4.1
Banking 10.5
Beverages and Tobacco 1.2
Building Materials & Components 0.4
Broadcasting and Publishing 4.0
Business Services 4.1
Chemicals 2.2
Construction and Housing 0.5
Data Products 2.0
Electrical and Electronics 10.4
Electronic Components 5.0
Energy 5.1
Finance/Financial Services 4.1
Food and Housing Products 0.5
Health 4.2
Industrial Components 0.2
Insurance 3.4
Leisure 0.9
Machinery 0.7
Merchandising 2.8
Muli-Industry 1.7
Other Industries 0.4
Paper 0.6
Real Estate 1.9
Recreation 0.9
Steel 0.8
Telecommunications 18.8
Utilities 1.7
Total Investments 98.0
Other Assets less Liabilities 2.0
-----
NET ASSETS 100.0%
=====
(See "Notes to Financial Statements")
27
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
Investments, at value
(Identified cost $136,301,779) $ 176,924,396
Foreign currency, at value
(Identified cost $294,091) 299,224
Cash 5,329,989
Receivables:
Dividend, interest and recoverable
foreign taxes receivable $ 538,762
Fund shares sold 262,000 800,762
-------------
Prepaid expenses 11,340
-------------
Total assets 183,365,711
-------------
LIABILITIES
Payables:
Portfolio securities purchased 2,460,121
Advisory fees (Note 3) 156,492
Unrealized loss on forward currency
contracts (Note 5) 102,333
Fund shares repurchased 20,000 2,738,946
-------------
Accrued expenses 125,880
-------------
Total liabilities 2,864,826
-------------
Net assets (equivalent to $7.86 per share
of $.0001 par value capital stock,
representing the offering and redemption
price for 22,973,689 shares outstanding,
100,000,000 shares authorized) $ 180,500,885
=============
Net assets consist of:
Capital paid in $ 127,973,335
Accumulated net investment loss (551,021)
Accumulated net realized gain on investments
and foreign currency transactions 12,573,693
Unrealized appreciation (depreciation) on:
Investments $ 40,622,617
Foreign currency (117,739) 40,504,878
------------- -------------
$ 180,500,885
=============
(See "Notes to Financial Statements")
28
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH31,2000
(UNAUDITED)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $98,809) $ 741,590
Interest 58,732
------------
Total income 800,322
------------
EXPENSES
Advisory fees (See note 3) $ 780,414
Custodian fees 243,142
Audit and legal fees 38,872
Transfer agent fees 16,679
Administrative fees (See Note 3) 16,265
Director fees and expenses (See Note 3) 9,432
Insurance expense 2,927
Registration expense 2,876
Report to shareholders 2,170
Miscellaneous expenses 14,946
------------
Total expenses 1,127,723
------------
Net investment loss (327,401)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 12,962,624
Net unrealized appreciation on investments 22,496,267
------------
Net gain on investments 35,458,891
------------
Net realized loss on foreign currency (339,562)
Net unrealized depreciation on foreign currency
and foreign currency denominated assets and
liabilities (36,067)
------------
Net loss on foreign currency (375,629)
------------
Net gain on investments and foreign currency 35,083,262
------------
Net increase in net assets resulting from operations $ 34,755,861
============
(See "Notes to Financial Statements")
29
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended For the Year Ended
March 31, 2000 September 30, 1999
-------------- ------------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $ (327,401) $ 441,744
Net realized gain on investments 12,962,624 13,815,115
Net unrealized gain on investments 22,496,267 13,252,766
Net realized loss on foreign currency (339,562) (303,129)
Net unrealized gain (loss) on foreign currency and
foreign currency denominated assets and liabilities (36,067) 360,749
------------- -------------
Net increase resulting from operations 34,755,861 27,567,245
------------- -------------
Distributions to shareholders:
From net investment income (369,422) (1,091,609)
From net realized gain (13,278,658) (8,369,002)
------------- -------------
Total distributions (13,648,080) (9,460,611)
------------- -------------
Fund share transactions:
Proceeds from shares sold 20,936,102 29,963,681
Net asset value of shares issued on
reinvestment of distributions 11,379,052 7,833,513
Cost of shares redeemed (12,394,066) (24,728,906)
------------- -------------
Net increase resulting from Fund share transactions 19,921,088 13,068,288
------------- -------------
Net increase 41,028,869 31,174,922
NET ASSETS
Beginning of period 139,472,016 108,297,094
------------- -------------
End of period (including accumulated net investment
income (loss) of $(551,021) and
$145,802, respectively) $ 180,500,885 $ 139,472,016
============= =============
NUMBER OF FUND SHARES
Sold 2,767,318 4,475,867
Issued on reinvestment of distributions 1,587,037 1,261,435
Redeemed (1,628,095) (3,786,693)
------------- -------------
Net increase 2,726,260 1,950,609
============= =============
</TABLE>
(See "Notes to Financial Statements")
30
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For a share outstanding throughout the period:
<TABLE>
<CAPTION>
For the Six For the Year Ended September 30,
Months ended --------------------------------------------------------
March 31, 2000 1999 1998 1997 1996 1995
-------------- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 6.89 $ 5.92 $ 6.91 $ 6.05 $ 6.00 $ 6.10
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (0.01) 0.02(3) 0.09(3) 0.04(3) 0.05 0.06(1)
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 1.65 1.47 (0.81) 1.23 0.37 0.06(2)
-------- -------- -------- -------- -------- --------
Total from Investment Operations 1.64 1.49 (0.72) 1.27 0.42 0.12
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Net Investment Income (0.02) (0.06) (0.13) (0.05) (0.06) --
Net Realized Gain (0.65) (0.46) (0.14) (0.36) (0.31) (0.22)
-------- -------- -------- -------- -------- --------
Total Distributions (0.67) (0.52) (0.27) (0.41) (0.37) (0.22)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 7.86 $ 6.89 $ 5.92 $ 6.91 $ 6.05 $ 6.00
======== ======== ======== ======== ======== ========
TOTAL RETURN 24.66%(4) 26.13% -10.61% 22.22% 7.33% 2.13%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000's) $180,501 $139,472 $108,297 $139,220 $100,382 $108,210
Ratio of Expenses to Average Net Assets:
Before Expenses Paid Indirectly 1.37%(5) 1.49% 1.44% 1.44% 1.54% 1.53%
After Expenses Paid Indirectly 1.37%(5) 1.49% 1.41% 1.44% 1.54% 1.53%
Ratio of Net Investment Income to
Average Net Assets (0.40%)(5) 0.37% 0.49% 0.79% 0.78% 0.97%
Portfolio Turnover Rate 64%(4) 85% 78% 67% 103% 174%
</TABLE>
----------
1. Calculated based on the average shares outstanding during the period.
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.
(See "Notes to Financial Statements")
31
<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"), which was organized as a Maryland corporation in June 1990
and is 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. The impact of
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 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.
32
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
NOTE 1 - 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.
At the end of each year, capital paid in, accumulated net investment loss and
accumulated net realized gain on investments will be adjusted for permanent
book-tax differences. Reclassifications between accumulated net investment loss
and accumulated net realized gain on investments arise 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 period ended March 31, 2000, purchases and sales of securities, other
than short-term investments, aggregated $107,107,728 and $102,387,372,
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.
As approved by the Board of Directors, the Fund has entered into an agreement
with its custodian, Brown Brothers Harriman & Co. ("BBH & Co."), whereby
brokerage commissions charged on U.S. equity trades executed through BBH & Co.
are available to offset custody transaction charges. There were no such credits
during the period ended March 31, 2000.
33
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
NOTE 4 - TAX BASIS UNREALIZED APPRECIATION (DEPRECIATION)
Gross and net unrealized appreciation (depreciation) at March 31, 2000, based on
a cost of $136,301,779 for federal income tax purposes, is as follows:
Gross unrealized appreciation $ 48,220,356
Gross unrealized depreciation (7,597,739)
------------
Net unrealized appreciation $ 40,622,617
============
NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS
At March 31, 2000 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
unrealized loss on forward currency contracts in the financial statements. Open
forward foreign currency exchange contracts outstanding at March 31, 2000 are as
follows:
Unrealized
Currency Currency Delivery Appreciation
Receivable Deliverable Date (Depreciation)
---------- ----------- -------- --------------
$2,382,507 SEK 20,075,000 04/19/00 $ 55,442
1,800,000 JPY 197,172,000 05/23/00 (99,958)
---------
(44,516)
=========
Currency
Payable
---------
3,500,000 GBP 2,183,406 05/23/00 (57,817)
---------
Net Unrealized Depreciation $(102,333)
=========
CURRENCY LEGEND:
GBP - British Sterling
JPY - Japanese Yen
SEK - Swedish Krona
34
