<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER GLOBAL INCOME FUND
AND JULIUS BAER INTERNATIONAL EQUITY FUND
ANNUAL REPORT
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
I am pleased to offer reports from the Funds' investment advisers on the
performance for the fiscal year ended October 31, 1998 and outlook for the
Julius Baer Global Income Fund ("Income Fund") and the Julius Baer International
Equity Fund ("Equity Fund"). The Income Fund had a return of 9.43%, which was
slightly lower than its benchmark index. The Equity Fund, however, strongly
outperformed its benchmark index and the competition with a 16.10% return for
the fiscal year ended October 31, 1998.
JULIUS BAER GLOBAL INCOME FUND
During the six months ended October 31, 1998, the Income Fund had a 6.74%
return compared with 7.48% for the blended customized benchmark index--80%
Merrill Lynch U.S. Corporate & Government 1-10Yr Bond Index and 20% JP Morgan
Global Government Non-US in US$ Bond Index-- (the "benchmark"). For the twelve
month period ended October 31, 1998 the Income Fund returned 9.43% which
compares to 10.06% for the benchmark. The Income Fund's return was attributable
to two main factors: 1) The Portfolio's longer duration from July through
September, which resulted in more capital gain for the portfolio as bond markets
rallied strongly and 2) The Portfolio's holdings of very high quality securities
during the investor flight to quality bonds as a result of the global market
turbulence of the past quarter. The Income Fund's return relative to the
benchmark was hindered by the lack of investment in the Japanese bond market
during a period when the Japanese Yen rallied sharply. The Japanese Government
passed a series of fiscal measures designed to encourage domestic growth.
However, as the economy continued to deteriorate through the third calendar
quarter, it is unclear whether this plan will enable positive growth in 1999.
The reporting period was dominated by large-scale global events. The default
of Russian Government bonds sparked investor flight to "safe haven" assets, such
as U.S. and German Government debt. This in turn put financial strain on some
well-known hedge funds and the desire for high quality, conservative assets was
advanced. In an effort to alleviate the pressure this created for financial
institutions, the U.S. Federal Reserve lowered official interest rates by 0.50%
to 5.0% during September. This Fed action, combined with International Monetary
Fund support packages for emerging nations and G-7 policy maker initiatives,
quickly calmed investor sentiments and assets slowly began their return toward
expected fair value.
U.S. economic growth slowed to 1.8% GDP in the second calendar quarter as
exports were affected by the Asian slowdown. While consumer confidence and
employment in the U.S. fell as a result, the Federal Reserve's easing of
monetary policy and the rebound of the U.S. stock markets have kept domestic
spending and the housing market buoyant. Preliminary third quarter figures
showed GDP at 3.3% in the U.S.
The European focus remained on European Monetary Union ("EMU") and the
launch of the Euro currency at the beginning of 1999. The German central bank
reduced interest rates to 3.0% ahead of the launch of the Euro, as European
inflation remained very low. The other participating nations in the EMU moved
their rates to 3.0% as well with the exception of Italy, which eased interest
rates to 3.5%. These moves supported strong performance in European bond
markets.
Overall, core bond markets posted strong positive returns as a result of the
investor flight to quality, continued low inflation and easing monetary policies
by certain central banks . While the U.S. dollar continued to appreciate early
in the reporting period, the Federal Reserve's easing of interest rates, slower
US growth prospects and hedge fund de-leveraging caused the U.S. dollar to
decline rapidly against both the Japanese yen and European currencies in
October.
The duration of the portfolio was extended during the summer through the
addition of long maturity German bonds. These bonds had the potential for
capital gain from declining bond yields as well as a strengthening European
currency. This position was reduced later in the reporting period as our
expectations were realized. Exposure to peripheral countries remained low as
core markets appeared to offer the better value. We maintained our underweight
position in Japanese bonds as we believed the very low yields offered little
value. In terms of currency
<PAGE>
exposure, the U.S dollar hedge was removed during the reporting period,
reflecting our view that the long-term upward trend of the U.S. dollar was near
its end.
We were able to avoid the losses suffered by some competitors by remaining
in the highest quality government securities heading into the October "flight to
quality". Subsequently, we shifted 25% of the Income Fund's assets into high
quality corporate and mortgage-backed securities to take advantage of attractive
yields which resulted from the global financial turmoil.
JULIUS BAER INTERNATIONAL EQUITY FUND
The Equity Fund for the period ended October 31, 1998 returned -11.16% for
the past 6 months, +16.10% for the past 12 months, and +54.02% for the past
3 years versus MSCI EAFE's (the "benchmark") returns of -5.02%, +9.65%, and
+26.73% for comparable periods. Returns for the Lipper International Equity Fund
Index, a reasonable proxy for our competitors, were -10.24%, +4.66%, and +37.98%
respectively:
<TABLE>
<CAPTION>
TOTAL RETURN
----------------------------------------------------------
6-MONTH 1-YEAR 3-YEAR
4/30/98-10/31/98 10/31/97-10/31/98 10/31/95-10/31/98
---------------- ----------------- -----------------
<S> <C> <C> <C>
Equity Fund......................................................... -11.16% 16.10% 54.02%
MSCI EAFE w net dividend reinvested................................. -5.02% 9.65% 26.73%
LIPPER Intl. Equity Fund Index...................................... -10.24% 4.66% 37.98%
Equity Fund vs. MSCI EAFE........................................... -6.14% +6.45% +27.29%
Equity Fund vs. LIPPER.............................................. -0.92% +11.44% +16.04%
</TABLE>
The Equity Fund strongly outperformed both the benchmark and the competition
over the full fiscal year, despite a weaker performance in the second half of
the fiscal year. The Equity Fund's sound results can be attributed to an
emphasis on Continental European companies undertaking corporate restructuring,
the selection of industries consolidating in response to the planned EMU, and a
preference for companies with significant domestic operations and little
emerging market exposure. Additional factors that have contributed to the Equity
Fund's performance are our predilection to countries in the European periphery
benefiting from interest rate convergence, our avoidance of Asian and Latin
American equity markets, and our sizable investment in Greece in anticipation of
its acceptance into the EMU. Finally, our skepticism about Japan's efforts to
resolve its cyclical and structural problems has been one of the key reasons
contributing to the Equity Fund's solid three-year performance record.
In August, the Russian government's default on its debt obligations caused
sudden and violent moves in the equity, debt, and foreign exchange markets.
Concerns about the ability to refinance emerging market debt and the subsequent
collapse of some major hedge funds triggered profit-taking behavior and reduced
liquidity in the markets. Hence, the stocks and countries that had appreciated
the most also corrected the most. As a result, the Equity Fund performed poorly
during the third quarter. However, we managed to mitigate significant losses by
selling many of our security positions during the downward correction.
The problems in Russia and some major hedge funds managed to derail the bull
market, momentarily. The aggressive cutting of interest rates by the U.S.
Federal Reserve, the vocal assertions by the G-7 policy makers on the need to
supervise hedge funds and support emerging markets, and the International
Monetary Fund's economic stimulus package to Brazil, have managed to put the
bull market back in upward motion.
We believe what has performed well before the correction, will continue to
render good results. However, we are entering a period of low earnings
visibility, weakened conviction among investors caused by the recent carnage in
global financial markets, and limited liquidity due to
2
<PAGE>
the prevalence of "disengagement". As a result, movements in the international
equity and foreign exchange markets are going to be sudden and frequent.
Our strategy for the next fiscal year remains mostly unchanged. In Europe,
we still prefer the Mediterranean countries, domestic companies with low
exposure to emerging markets, and industries with potential for consolidation
and restructuring. Some risks to the European stock market include unfriendly
moves toward the market by the newly elected left-leaning governments and the
possibility of funds flowing out of Europe in favor of Japan and emerging
markets.
In Japan, we increased our weighting to 7%. However, we remain significantly
underweight in Japan versus the benchmark. One of our major concerns in Japan
remains the almost nonexistence of shareholder value creation. If the country
were to aggressively adopt a more shareholder friendly policy of corporate
governance and shareholder value creation, we may substantially increase our
exposure.
In emerging markets, we still favor Greece and plan to moderately increase
our exposure to Asia and Latin America. These markets are benefiting from the
recent developments such as lower U.S. interest rates, a weakened U.S. dollar
and political support from the governments of G-7 countries. However,
shareholder-value culture is almost absent, hence our guarded optimism.
The latter part of the fiscal year was a very tumultuous period for the
global financial markets and although both the Income Fund and Equity Fund did
not go completely unscathed, our investment adviser did a commendable job of
navigating the Funds through the uncertainty and turbulence which developed. We
believe our positions in both Fund portfolios offer good potential returns for
shareholders given an uncertain but weaker economic outlook in 1999.
We wish to remind shareholders that as of July 1, 1998, Bank Julius Baer &
Co. Ltd., New York Branch ("BJB") became the Investment Adviser to the Income
Fund. The administrative and support services previously provided by BJB as
Servicing Agent will continue as part of their role as Investment Adviser to the
Income Fund. As investors are aware, BJB has managed the Equity Fund since its
inception in October 1993.
Also, effective effective December 9, 1998, Unified Management Corporation
became the Distributor of the Julius Baer Investment Funds. We are also pleased
to inform shareholders that the Equity Fund is now a participant in the Charles
Schwab Mutual Fund OneSource Program at no additional cost to the Fund.
Finally, on behalf of the management of the Julius Baer Investment Funds I
would like to express our appreciation to shareholders for their continued
support.
Yours sincerely,
/s/ Michael Quain
-----------------
Michael Quain
President
December 11, 1998
The views expressed in this shareholder letter reflect those of the President of
the Fund only through the end of the period covered by the report as stated on
the cover. This shareholder letter contains certain forward looking statements
regarding the intent, belief or current expectations of the President.
Shareholders are cautioned that such forward looking statements are not
guarantees of future performance and involve risks and uncertainties and that
actual results may differ materially from those in the forward looking
statements, as a result of various factors. The President's views are subject to
change based on market and other conditions.
3
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN* (UNAUDITED)
- -----------------------------------------------------------
Year Ended 10/31/98........................................ 9.43%
Five Years Ended 10/31/98.................................. 6.08%
Inception (7/1/92) through 10/31/98........................ 6.87%
- ------------------
* All average annual total return figures shown reflect the reinvestment of
dividends and capital gains distributions. The Income Fund commenced
operations on July 1, 1992. Total returns for the Fund reflect expenses,
waived and reimbursed, if applicable, by the Adviser and/or Administrator.
Without such waivers and reimbursements, total returns would have been lower.
Growth of $10,000 invested in
shares of Julius Baer Global Income Fund
vs. a Blended Lehman Brothers and Salomon Brothers Index
and a Blended Merrill Lynch and JP Morgan Index
July 1, 1992-October 31, 1998+
JULIUS BAER GLOBAL INCOME FUND
Income Fund Lehman & Salomon Merrill Lynch & JP
Combined Morgan Combined
July 1992 10,000 10,000 10,000
Oct 1992 10,486 10,314 10,276
Apr 1993 10,781 10,987 10,852
Oct 1993 11,341 11,546 11,289
Apr 1994 11,018 11,331 11,106
Oct 1994 10,939 11,538 11,310
Apr 1995 11,690 12,622 12,124
Oct 1995 12,460 13,327 12,826
Apr 1996 12,755 13,354 12,949
Oct 1996 13,488 14,075 13,588
Apr 1997 13,385 13,878 13,595
Oct 1997 13,925 14,889 14,420
Apr 1998 14,276 15,194 14,770
Oct 1998 15,238 16,522 15,873
- ------------------
+ Hypothetical illustration of $10,000 invested on July 1, 1992 assuming
reinvestment of dividends and capital gains distributions through October 31,
1998.
This period was one in which stock and bond prices fluctuated and the results
should not be considered a representation of the income or capital gain or
loss which may be realized from an investment in the Income Fund today. No
adjustment has been made for shareholder tax liability on dividends or capital
gains distributions.
In 1998, the benchmark for the Julius Baer Global Income Fund was changed
retroactively from a blended Lehman Brothers and Salomon Brothers Index to a
blended Merrill Lynch and JP Morgan Index. The Lehman/Salomon benchmark index
for performance comparison consists of 50% of the Salomon Brothers 3-7 Year
World Government Bond Index and 50% of the Lehman Brothers Intermediate
Government/Corporate Index. The new benchmark index for performance comparison
consists of 80% of the Merrill Lynch 1-10 year U.S. Government/Corporate Index
and 20% of the JP Morgan Global Government Bond (non-U.S.) Index. The new
index better reflects the investment style, capitalization and valuation
characteristics of the Fund. A comparison to the prior benchmark, the blended
Lehman Brothers and Salomon Brothers Index, has also been provided.
NOTE: All figures cited here and on the following pages represent past
performance of the Income Fund and do not guarantee future results. Investment
return and principal value of an investment will fluctuate so that an
investor's shares upon redemption may be worth more or less than their
original cost.
4
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN* (UNAUDITED)
- ----------------------------------------------------------
Year Ended 10/31/98....................................... 16.10%
Five Years Ended 10/31/98................................. 3.61%
Inception (10/4/93) through 10/31/98...................... 5.36%
- ------------------
* All average annual total return figures shown reflect the reinvestment of
dividends and capital gains distributions. The Equity Fund commenced
operations on October 4, 1993. Total returns for the Fund reflect expenses,
waived and reimbursed, if applicable, by the Adviser and/or Administrator.
Without such waivers and reimbursements, total returns would have been lower.
Growth of $10,000 invested in
shares of Julius Baer International Equity Fund
vs. Morgan Stanley EAFE Index
October 4, 1993-October 31, 1998+
JULIUS BAER INTERNATIONAL EQUITY FUND
Morgan Stanley EAFE
Equity Fund Index
Oct 1993 10,000 10,000
Apr 1994 9,608 10,798
Oct 1994 9,440 11,261
Apr 1995 7,970 11,401
Oct 1995 8,462 11,219
Apr 1996 9,281 12,701
Oct 1996 9,540 12,394
Apr 1997 10,592 12,588
Oct 1997 11,227 12,968
Apr 1998 14,672 14,970
Oct 1998 13,035 14,219
- ------------------
+ Hypothetical illustration of $10,000 invested on October 4, 1993 assuming
reinvestment of dividends and capital gains distributions through October 31,
1998.
This period was one in which stock and bond prices fluctuated and the results
should not be considered as a representation of dividend income or capital
gain or loss which may be realized from an investment in the Equity Fund
today. No adjustment has been made for shareholder tax liability on dividends
or capital gains distributions. The Morgan Stanley EAFE Index is a composite
portfolio consisting of equity total returns for the countries of Europe,
Australia, New Zealand and countries in the Far East, weighted based on each
country's gross domestic product.
NOTE: All figures cited here and on the following pages represent past
performance of the Equity Fund and do not guarantee future results. Investment
return and principal value of an investment will fluctuate so that an
investor's shares upon redemption may be worth more or less than their
original cost.
5
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
U.S. GOVERNMENT OBLIGATIONS -- 73.2%
<S> <C> <C> <C>
Federal Home Loan Bank,
GBP 250,000 6.875% due 06/07/2002............................................................. $ 434,220
Federal Home Loan Mortgage Corporation,
USD 1,400,000 5.750% due 07/15/2003............................................................. 1,452,063
Federal National Mortgage Association:
USD 220,000 5.625% due 03/15/2001............................................................. 224,572
USD 1,200,000 5.750% due 04/15/2003............................................................. 1,244,813
U.S. Treasury Inflation Indexed Bond,
USD 900,000 3.625% due 04/15/2028............................................................. 900,984
U.S. Treasury Inflation Indexed Note,
USD 440,000 3.625% due 01/15/2008............................................................. 439,931
U.S. Treasury Notes:
USD 1,675,000 6.625% due 06/30/2001............................................................. 1,768,957
USD 2,050,000 6.000% due 07/31/2002............................................................. 2,160,828
USD 1,200,000 5.750% due 04/30/2003............................................................. 1,266,938
USD 370,000 7.500% due 02/15/2005............................................................. 429,431
USD 750,000 6.500% due 05/15/2005............................................................. 834,258
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $10,913,153).............................. 11,156,995
-----------
<CAPTION>
FOREIGN GOVERNMENT BONDS -- 20.4%
<S> <C> <C> <C>
GERMANY -- 12.8%
BundesObligation,
DEM 1,970,000 5.000% due 11/12/2002............................................................. 1,247,106
Deutschland BundesRepublic:
DEM 400,000 6.000% due 07/04/2007............................................................. 271,798
DEM 680,000 5.625% due 01/04/2028............................................................. 437,036
-----------
1,955,940
-----------
UNITED KINGDOM -- 5.0%
United Kingdom Gilts:
GBP 375,000 0.000% due 12/07/2003 (effective yield 5.560%).................................... 486,899
GBP 152,000 6.500% due 12/07/2003............................................................. 272,146
-----------
759,045
-----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
FOREIGN GOVERNMENT BONDS -- CONTINUED
<S> <C> <C> <C>
FINLAND -- 2.6%
Republic of Finland,
USD 350,000 7.875% due 07/28/2004............................................................. $ 397,592
-----------
TOTAL FOREIGN GOVERNMENT BONDS (COST $2,980,176).................................. 3,112,577
-----------
<CAPTION>
CORPORATE BONDS -- 1.4%
<S> <C> <C> <C>
SPAIN -- 1.4%
Instituto de Credito Official,
USD 200,000 6.000% due 05/19/2008 (Cost $199,006)............................................. 209,455
-----------
<CAPTION>
REPURCHASE AGREEMENTS -- 2.5%
<S> <C> <C> <C>
UNITED STATES -- 2.5%
USD 388,791 Investors Bank & Trust Repurchase Agreement dated 10/30/1998, due 11/02/1998, with
a maturity value of $388,945 and an effective yield of 4.770%, collateralized by a
Federal Home Loan Mortgage Corporation obligation, with a rate of 8.067%, a
maturity date of 10/01/2025, and a market value of $408,358 (at amortized cost)... 388,791
-----------
TOTAL INVESTMENTS -- 97.5% (COST $14,481,126)*.................................... 14,867,818
OTHER ASSETS AND LIABILITIES (NET) -- 2.5%........................................ 386,536
-----------
NET ASSETS -- 100.0%.............................................................. $15,254,354..
-----------
-----------
</TABLE>
- ------------------
* Aggregate cost for federal income tax purposes.
See Notes to Financial Statements.
7
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER GLOBAL INCOME FUND
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
OCTOBER 31, 1998
FORWARD FOREIGN CROSS CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACTS TO DELIVER CONTRACTS TO RECEIVE
----------------------------- -------------------------------
EXPIRATION LOCAL VALUE IN LOCAL VALUE IN NET UNREALIZED
DATE CURRENCY USD CURRENCY USD DEPRECIATION
- ---------- --------------- --------- ----------------- --------- --------------
<S> <C> <C> <C> <C> <C>
11/30/98 GBP 710,000 1,186,015 DEM 1,959,600 1,183,805 $ (2,210)
--------
</TABLE>
<TABLE>
<S> <C>
Net unrealized depreciation on forward foreign exchange
contracts.......................................................... $ (2,210)
--------
--------
</TABLE>
GLOSSARY OF CURRENCIES
DEM -- Deutsche Mark
GBP -- British Pound Sterling
USD -- United States Dollar
See Notes to Financial Statements.
8
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- 80.7%
UNITED KINGDOM -- 13.7%
ARM Holdings Plc ADR *................................................................. 21,840 $ 1,026,480
British Aerospace Plc.................................................................. 89,686 667,068
British Airport Authority Plc.......................................................... 176 1,981
British Petroleum Co Plc............................................................... 30,725 450,884
British Telecommunications Plc......................................................... 38,611 498,772
Colt Telecom Group Plc *............................................................... 10,000 513,750
General Electric Plc................................................................... 81,156 648,437
Glaxo Wellcome Plc..................................................................... 14,384 446,716
HSBC Holdings Plc...................................................................... 14,748 345,490
Lloyds TSB Group Plc................................................................... 26,344 325,100
National Westminster Bank Plc.......................................................... 25,900 437,285
Royal & Sun Alliance Insurance Group................................................... 616 5,638
Smithkline Beecham Plc................................................................. 42,046 525,556
Tesco Plc.............................................................................. 144,017 406,057
Unilever Plc........................................................................... 54,788 550,061
Virgin Express Holdings Plc ADR *...................................................... 17,100 138,938
Vodafone Group Plc..................................................................... 54,505 729,626
-----------
7,717,839
-----------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
FRANCE -- 12.9%
Accor SA............................................................................... 2,031 $ 426,398
Axa-UAP................................................................................ 5,300 598,784
Banque National De Paris............................................................... 99 6,267
Canal Plus............................................................................. 2,210 535,941
Cap Gemini SA (a) ..................................................................... 3,294 494,817
Carrefour Supermarche.................................................................. 805 534,099
Compagnie Generale des Eaux............................................................ 3,091 705,660
Dassault Aviation SA................................................................... 1,600 466,304
Elf-Aquitaine SA....................................................................... 3,600 416,436
France Telecom SA...................................................................... 7,200 501,925
Groupe Danone.......................................................................... 1,820 480,981
L'Oreal................................................................................ 1 571
Rhone Polenc........................................................................... 8,076 369,032
Sanofi SA.............................................................................. 2,400 375,634
Societe Fermiere du Casino Municipal de Cannes......................................... 6,500 646,656
Synthelabo............................................................................. 1,800 343,252
Total SA Class B....................................................................... 3,752 432,669
-----------
7,335,426
-----------
NETHERLANDS -- 8.8%
Akzo Nobel NV.......................................................................... 10,320 400,637
Benckiser NV........................................................................... 12,000 679,536
Equant NV *............................................................................ 10,350 448,365
Heineken NV............................................................................ 12,175 647,780
ING Groep NV........................................................................... 10,921 527,917
Ahold NV............................................................................... 16,304 541,403
Laurus NV.............................................................................. 29,210 734,116
Philips Electronics NV................................................................. 7,580 402,894
Scala Business Solutions NV *.......................................................... 6,104 41,297
Unique International NV................................................................ 13,500 377,547
Vendex NV *............................................................................ 8,000 203,198
Wolters Kluwer NV...................................................................... 9 1,742
-----------
5,006,432
-----------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
GERMANY -- 8.0%
Bayer AG............................................................................... 9,100 $ 369,412
Bayerische Motoren Werke AG............................................................ 400 281,570
Bayerische Motoren Werke AG New Shares *............................................... 120 81,793
Bayerische Vereinsbank AG.............................................................. 5,500 436,258
Daimler Benz AG........................................................................ 3,200 248,032
Mannesmann AG.......................................................................... 6,500 639,081
Marschollek, Lautenschlaeger und Partner AG Preferred.................................. 800 407,757
Metro AG............................................................................... 8,800 541,424
MobilCom AG............................................................................ 1,900 551,256
Veba AG................................................................................ 8,800 490,997
Volkswagen AG *........................................................................ 6,350 476,868
-----------
4,524,448
-----------
JAPAN -- 6.7%
Canon Sales Co Inc..................................................................... 400 5,324
Circle K Japan Co Ltd.................................................................. 66 2,600
Fuji Photo Film........................................................................ 5,000 183,215
Fuji Soft ABC Inc...................................................................... 7,000 264,310
Fujitsu Ltd............................................................................ 500 5,321
Kao Corp............................................................................... 27,000 546,812
Kirin Brewery Co Ltd................................................................... 46,000 501,330
Nippon Telegraph & Telephone Corporation............................................... 1,600 125,221
Nippon Telegraph & Telephone Corporation ADR *......................................... 5,375 212,984
NTT Data Corp *........................................................................ 40 169,227
NTT Mobile Communcation Network Inc * (a).............................................. 500 180,640
Sakura Bank Ltd........................................................................ 70,000 174,204
Sankyo Co Ltd.......................................................................... 10,000 225,693
Sony Corp.............................................................................. 5,400 342,916
Takeda Chemical Industries............................................................. 16,000 520,381
The Bank of Tokyo-Mitsubishi Ltd....................................................... 20,000 185,532
Sanwa Bank Ltd......................................................................... 22,000 171,612
-----------
3,817,322
-----------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
SWITZERLAND -- 5.1%
Adecco SA.............................................................................. 1,139 $ 453,618
Nestle SA (Registered)................................................................. 376 798,643
Novartis AG (Bearer)................................................................... 75 134,855
Novartis AG (Registered)............................................................... 330 593,849
Roche Holdings AG...................................................................... 210 380,227
Zurich Allied AG....................................................................... 880 534,140
-----------
2,895,332
-----------
ITALY -- 4.5%
Assicurazioni Generali................................................................. 15,200 541,507
Banca Popolare di Brescia (a) ......................................................... 15,600 365,803
Istituto Nazionale delle Assicurazioni................................................. 200,000 552,456
Telecom Italia Mobile.................................................................. 91,000 528,205
Telecom Italia SPA..................................................................... 75,000 541,754
-----------
2,529,725
-----------
GREECE -- 3.1%
Alpha Credit Bank...................................................................... 6,222 496,757
Commercial Bank of Greece SA........................................................... 6,330 535,822
Hellenic Telecommunication Organization SA............................................. 2 45
Lambrakis Media Group *................................................................ 5,710 70,930
National Bank of Greece................................................................ 4,453 632,180
-----------
1,735,734
-----------
FINLAND -- 2.8%
Nokia Oyj Class A...................................................................... 8,300 755,593
Pohjola Insurance Group Class B........................................................ 9,600 390,321
Raision Tehtaat Oy *................................................................... 33,100 444,441
Rauma Oy............................................................................... 167 1,971
-----------
1,592,326
-----------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
SWEDEN -- 2.6%
Ericsson AB Class B.................................................................... 20,420 $ 459,933
Mandamus AB *.......................................................................... 625 3,439
Nordbanken Holding AB.................................................................. 89,650 536,936
Sparbanken Sverige..................................................................... 18,400 498,029
-----------
1,498,337
-----------
PORTUGAL -- 2.2%
Banco Espirito Santo (Registered)...................................................... 13,025 384,813
Jeronimo Martins....................................................................... 8,247 357,225
Telecel Comunicacoes Pessoai........................................................... 2,850 524,998
-----------
1,267,036
-----------
UNITED STATES -- 1.7%
Global Crossing Ltd *.................................................................. 15,000 431,250
Global TeleSystems Group Inc *......................................................... 13,000 520,813
-----------
952,063
-----------
IRELAND -- 1.5%
Bank of Ireland........................................................................ 21,214 390,822
Elan Corp Plc *........................................................................ 4,150 290,759
Ryanair Holdings Plc *................................................................. 5,000 146,875
-----------
828,456
-----------
SPAIN -- 1.4%
Centros Comerciales Pryca.............................................................. 22,300 494,729
Tabacalera SA Class A.................................................................. 13,500 325,855
-----------
820,584
-----------
AUSTRALIA -- 1.1%
Australia & New Zealand Bank Group..................................................... 50,549 289,308
Star City Holdings Ltd *............................................................... 60,000 40,908
The News Corporation Ltd............................................................... 43,344 296,331
-----------
626,547
-----------
DENMARK -- 1.1%
Tele Danmark SA Class B................................................................ 5,700 620,371
-----------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
BELGIUM -- 0.8%
Algemene Maatschappij voor Nijverheidskredit NV........................................ 5,880 $ 475,386
Algemene Maatschappij voor Nijverheidskredit NV Strip.................................. 90 3
-----------
475,389
-----------
CANADA -- 0.7%
Barrick Gold Corp...................................................................... 3,000 64,125
Canadian Imperial Bank of Commerce *................................................... 64 1,273
Royal Bank of Canada................................................................... 6,740 310,875
-----------
376,273
-----------
HUNGARY -- 0.5%
Magyar Tavkozlesi Rt ADR *............................................................. 8,980 241,338
Mol Magyar Olaj-Es Gazipari............................................................ 1,950 43,555
-----------
284,893
-----------
TURKEY -- 0.3%
Kazkommertsbank Co GDR *............................................................... 6,659 143,169
-----------
RUSSIA -- 0.2%
Lukoil Oil Co ADR *.................................................................... 5,530 89,863
Vimpel Communications ADR *............................................................ 3,000 35,250
-----------
125,113
-----------
POLAND -- 0.2%
Bank Rozwoju Eksportu SA............................................................... 1,560 32,789
Elektrim SA............................................................................ 5,000 59,845
Gorazdze *............................................................................. 800 6,539
Mostostal-Export SA.................................................................... 10,558 9,863
-----------
109,036
-----------
SOUTH AFRICA -- 0.2%
Barlow Ltd............................................................................. 3,333 15,800
Nedcor Ltd............................................................................. 2,946 59,025
South African Breweries Ltd............................................................ 1,371 26,684
-----------
101,509
-----------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
MAURITIUS -- 0.2%
New Mauritius Hotels Ltd............................................................... 23,500 $ 49,574
State Bank of Mauritius Ltd............................................................ 72,000 50,239
-----------
99,813
-----------
NEW ZEALAND -- 0.1%
Lion Nathan *.......................................................................... 27,000 70,774
Sky Network Television Ltd *........................................................... 1,000 13,000
-----------
83,774
-----------
CHILE -- 0.1%
Vina Concha Y Toro..................................................................... 2,500 64,219
-----------
MEXICO -- 0.1%
Grupo Posadas SA Class L *............................................................. 180,000 59,489
-----------
SOUTH KOREA -- 0.1%
Korea Electric Power Corp.............................................................. 2,500 31,875
-----------
INDONESIA -- 0.0%
Pt Kalbe Farma *....................................................................... 525,000 25,905
-----------
MALAYSIA -- 0.0%
Arab-Malaysian Merchant Bank........................................................... 358 223
-----------
PERU -- 0.0%
Cementos Lima SA -- Trabajo............................................................ 1 1
-----------
TOTAL COMMON STOCKS (COST $38,711,266)................................................. 45,748,659
-----------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
INVESTMENT FUNDS -- 0.1%
MULTI-NATIONAL -- 0.1%
Morgan Stanley Africa Investment Fund Inc.............................................. 3,100 $ 31,000
-----------
POLAND -- 0.0%
Polish National Investment Fund PC *................................................... 1,500 24,960
-----------
TOTAL INVESTMENT FUNDS (COST $114,977)................................................. 55,960
-----------
RIGHTS & WARRANTS -- 0.1%
HUNGARY -- 0.1%
Egis Rights *.......................................................................... 780 14,261
Pick Szeged Rights *................................................................... 534 22,133
-----------
36,394
-----------
FRANCE -- 0.0%
Compagnie Generale des Eaux Warrants, expire 5/02/2001 *............................... 2,110 4,308
-----------
HONG KONG -- 0.0%
China Everbright Ltd Warrants, expire 1/05/2000 *...................................... 21,000 2,169
-----------
BRAZIL -- 0.0%
Brahma Warrants, expire 4/30/2003 *.................................................... 9,993 377
-----------
THAILAND -- 0.0%
Siam Commercial Bank Public Company Ltd Warrants, expire 12/31/2002 *.................. 2,100 0
-----------
TOTAL RIGHTS & WARRANTS (COST $49,800)................................................. 43,248
-----------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- -------- --------- -----------
<S> <C> <C> <C>
CORPORATE BONDS -- 0.0%
PORTUGAL -- 0.0%
PTE 2,879,000 Jeronimo Martins 0.000%, effective yield 7.537%, due 12/30/2004 (cost $15,535)...... $ 19,655
-----------
REPURCHASE AGREEMENTS -- 14.5%
UNITED STATES -- 14.5%
USD 8,225,653 Investors Bank & Trust Company Repurchase Agreement dated 10/30/1998, due
11/02/1998, with a maturity value of $8,228,923 and an effective yield of 4.770%,
collateralized by a Federal Home Loan Mortgage Corporation obligation, with a rate
of 6.500%, a maturity date of 06/15/2028, and a market value of $8,636,936 (at
amortized cost)..................................................................... 8,225,653
-----------
TOTAL INVESTMENTS -- 95.4% (COST $47,117,231)**..................................... 54,093,175
OTHER ASSETS AND LIABILITIES (NET) -- 4.6%.......................................... 2,624,561
-----------
TOTAL NET ASSETS -- 100.0%.......................................................... $56,717,736
-----------
-----------
PORTFOLIO FOOTNOTES:
ADR American Depositary Receipt
GDR Global Depository Receipt
* Non-income producing security.
** Aggregate cost for federal income tax purposes was $47,281,899. (See Note 4)
(a) Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to Section 4 (2) of the Securities Act of
1933, as amended. These securities have been determined to be liquid under
guidelines established by the Board of Trustees.
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
OCTOBER 31, 1998
FORWARD FOREIGN EXCHANGE CONTRACTS TO BUY
CONTRACTS TO RECEIVE
----------------------------
EXPIRATION LOCAL VALUE IN IN EXCHANGE NET UNREALIZED
DATE CURRENCY USD FOR USD APPRECIATION
- ---------- ---------------- ---------- ----------- --------------
11/09/98 JPY 359,940,000 3,093,220 3,000,000 $ 93,220
--------
Net unrealized appreciation on forward
foreign exchange contracts.................... $ 93,220
--------
--------
GLOSSARY OF CURRENCIES
JPY -- Japanese Yen
PTE -- Portuguese Escudo
USD -- United States Dollar
See Notes to Financial Statements.
18
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- INDUSTRY SECTOR (UNAUDITED)
OCTOBER 31, 1998
(PERCENTAGE OF NET ASSETS)
At October 31, 1998, sector diversification of the Fund's investments was as
follows:
<TABLE>
<CAPTION>
MARKET
% OF NET VALUE
ASSETS (NOTE 1)
-------- -----------
<S> <C> <C>
INDUSTRY SECTOR:
Banking.................................................................................... 10.6% $ 6,007,861
Beverages, Food and Tobacco................................................................ 10.3 5,860,734
Telephone Systems.......................................................................... 8.2 4,649,491
Communications............................................................................. 5.9 3,324,233
Insurance.................................................................................. 5.6 3,150,763
Pharmaceuticals............................................................................ 4.5 2,545,212
Chemicals.................................................................................. 3.9 2,219,997
Financial Services......................................................................... 3.0 1,710,056
Oil and Gas................................................................................ 2.5 1,433,407
Electronics................................................................................ 2.5 1,429,241
Retailers.................................................................................. 2.1 1,196,107
Food Retailers............................................................................. 2.0 1,159,828
Transportation............................................................................. 2.0 1,135,353
Commercial Services........................................................................ 2.0 1,121,924
Automotive................................................................................. 1.9 1,088,263
Heavy Machinery............................................................................ 1.9 1,041,975
Computer Software and Processing........................................................... 1.7 969,651
Media -- Broadcasting and Publishing....................................................... 1.6 916,202
Entertainment and Leisure.................................................................. 1.3 694,103
Cosmetics and Personal Care................................................................ 1.2 680,107
Industrial -- Diversified.................................................................. 1.2 652,745
Health..................................................................................... 1.1 607,662
Other...................................................................................... 3.9 2,272,607
------ -----------
TOTAL INVESTMENTS (EXCLUDES REPURCHASE AGREEMENT)............................................ 80.9 45,867,522
OTHER ASSETS AND LIABILITIES (NET)........................................................... 19.1 10,850,214
------ -----------
NET ASSETS................................................................................... 100.0% $56,717,736
------ -----------
------ -----------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
JULIUS BAER INVESTMENT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
<TABLE>
<CAPTION>
JULIUS BAER JULIUS BAER
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
-------------- --------------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost $14,092,335 and $38,891,578,
respectively)................................................................... $ 14,479,027 $ 45,867,522
Repurchase agreements, at amortized cost........................................... 388,791 8,225,653
Cash and foreign currency, at value (Cost $50,878 and $2,712,405, respectively).... 52,956 2,690,728
Receivables:
Fund shares sold................................................................ 103,847 25,788
Interest and dividends.......................................................... 280,350 31,013
Tax reclaim..................................................................... -- 60,775
Unrealized appreciation on forward foreign exchange contracts...................... -- 93,220
Prepaid expense.................................................................... 3,170 12,192
------------ ------------
Total Assets.................................................................... 15,308,141 57,006,891
------------ ------------
LIABILITIES:
Payables:
Investment advisory fee (Note 2)................................................ 14,753 147,293
Custody and administration fees................................................. 7,389 44,970
Distribution and shareholder servicing fees (Note 3)............................ 8,701 36,727
Unrealized depreciation on forward foreign exchange contracts...................... 2,210 --
Accrued expenses and other payables................................................ 20,734 60,165
------------ ------------
Total Liabilities............................................................... 53,787 289,155
------------ ------------
NET ASSETS........................................................................... $ 15,254,354 $ 56,717,736
------------ ------------
------------ ------------
NET ASSETS CONSIST OF:
Par value.......................................................................... $ 1,248 $ 3,685
Paid in capital in excess of par value............................................. 15,484,374 49,012,038
Distributions in excess of income.................................................. (102,745) (640,399)
Accumulated net realized gain (loss) on investments sold, forward foreign exchange
contracts and foreign currency transactions..................................... (518,876) 1,289,815
Net unrealized appreciation on investments, forward foreign exchange contracts and
foreign currency related transactions........................................... 390,353 7,052,597
------------ ------------
NET ASSETS........................................................................... $ 15,254,354 $ 56,717,736
------------ ------------
------------ ------------
SHARES OUTSTANDING................................................................... 1,248,207 3,685,359
------------ ------------
------------ ------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE....................................... $ 12.22 $ 15.39
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
JULIUS BAER INVESTMENT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
<TABLE>
<CAPTION>
JULIUS BAER JULIUS BAER
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
------------- --------------------
<S> <C> <C>
INVESTMENT INCOME (LOSS):
Interest.............................................................................. $ 688,867 $ 158,629
Dividends+............................................................................ -- 823,927
----------- ----------
688,867 982,556
EXPENSES:
Investment advisory fee (Note 2).................................................... 78,432 576,830
Custody and administration fees..................................................... 35,537 234,668
Distribution and shareholder servicing fees (Note 3)................................ 30,145 144,207
Professional fees................................................................... 27,929 153,668
Transfer agent fees................................................................. 18,492 21,430
Trustees' fees and expenses (Note 2)................................................ 12,627 12,651
Registration and filing fees........................................................ 7,044 19,438
Shareholder reports................................................................. 6,241 36,532
Insurance premium expense........................................................... 4,529 21,129
Amortization of organization costs (Note 6)......................................... -- 4,186
Miscellaneous fees.................................................................. 1,427 2,366
----------- ----------
Total gross expenses............................................................. 222,403 1,227,105
Less: Fees paid indirectly (Note 2).............................................. (830) (15,526)
Less: Fees waived by investment adviser (Note 2)................................. (7,780) (140,412)
----------- ----------
Net expenses..................................................................... 213,793 1,071,167
----------- ----------
NET INVESTMENT INCOME (LOSS).......................................................... 475,074 (88,611)
----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 4):
Realized gain (loss) on:
Security transactions............................................................ 432,420 5,536,162
Forward foreign exchange contracts............................................... 33,138 (622,487)
Foreign currency transactions.................................................... 34,187 39,845
----------- ----------
Net realized gain on investments............................................... 499,745 4,953,520
----------- ----------
Net change in unrealized appreciation on:
Securities..................................................................... 196,421 2,183,378
Forward foreign exchange contracts............................................. (28,485) 134,747
Currencies and net other assets................................................ (18,332) 44,710
----------- ----------
Net change in unrealized appreciation of investments........................ 149,604 2,362,835
----------- ----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS....................................... 649,349 7,316,355
----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................. $ 1,124,423 $7,227,744
----------- ----------
----------- ----------
</TABLE>
- ------------------
+ Net of foreign withholding taxes of $107,456 for the International Equity
Fund.
See Notes to Financial Statements.
21
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER GLOBAL INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
---------------- ----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income................................................................. $ 475,074 $ 608,753
Net realized gain (loss) on investments............................................... 499,745 (75,438)
Net change in unrealized appreciation of investments.................................. 149,604 (148,834)
------------ ------------
Net increase in net assets resulting from operations.................................. 1,124,423 384,481
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Dividends from net investment income.................................................. (564,298) (700,402)
Distributions from capital............................................................ -- (114,208)
FUND SHARE TRANSACTIONS:
Net increase (decrease) from Fund share transactions (Note 5)......................... 2,804,874 (2,264,748)
------------ ------------
Net increase (decrease) in net assets................................................. 3,364,999 (2,694,877)
NET ASSETS:
Beginning of period................................................................... 11,889,355 14,584,232
------------ ------------
End of period (including distributions in excess of net investment income of $102,745
and $26,275 respectively)........................................................... $ 15,254,354 $ 11,889,355
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
---------------- ----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment loss................................................................... $ (88,611) $ (848)
Net realized gain on investments...................................................... 4,953,520 917,721
Net change in unrealized appreciation of investments.................................. 2,362,835 3,392,380
------------ ------------
Net increase in net assets resulting from operations.................................. 7,227,744 4,309,253
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Dividends from net investment income.................................................. (501,882) (67,184)
FUND SHARE TRANSACTIONS:
Net increase from Fund share transactions (Note 5).................................... 5,690,137 20,898,481
------------ ------------
Net increase in net assets............................................................ 12,415,999 25,140,550
NET ASSETS:
Beginning of period................................................................... 44,301,737 19,161,187
------------ ------------
End of period (including undistributed (distributions in excess of) net investment
income of $(640,399) and $533,978 respectively)..................................... $ 56,717,736 $ 44,301,737
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------------
10/31/98 10/31/97 10/31/96 10/31/95(1) 10/31/94(1)
-------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period........................ $ 11.70 $ 12.01 $ 12.11 $ 11.16 $ 12.28
-------- -------- -------- ------- -------
Income (Loss) from investment operations:
Net investment income..................................... 0.48 0.50 0.59 0.59 0.39
Net realized and unrealized gain (loss) on investments.... 0.59 (0.13) 0.36 0.92 (0.81)
-------- -------- -------- ------- -------
Total income (loss) from investment operations......... 1.07 0.37 0.95 1.51 (0.42)
-------- -------- -------- ------- -------
Less Distributions:
Dividends from net investment income........................ (0.55) (0.58) (1.05) (0.56) (0.27)
Distributions from capital (Note 1)......................... -- (0.10) -- -- (0.43)
-------- -------- -------- ------- -------
Total distributions.................................... (0.55) (0.68) (1.05) (0.56) (0.70)
-------- -------- -------- ------- -------
Net Asset Value, end of period.............................. $ 12.22 $ 11.70 $ 12.01 $ 12.11 $ 11.16
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Total Return(2)............................................. 9.43% 3.24% 8.25% 13.90% (3.54)%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)........................ $ 15,254 $ 11,889 $ 14,584 $17,327 $28,619
Ratio of net investment income to average net assets........ 3.93% 4.32% 4.71% 5.19% 3.29%
Ratio of total expenses to average net assets............... 1.77%(3)(4) 1.99% 2.53%(3) 2.15%(3) 1.66%
Portfolio turnover rate..................................... 269% 162% 219% 319% 320%
</TABLE>
- ------------------------------
(1) Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for the period
since the use of the undistributed income method does not accord with
results of operations.
(2) Total return represents aggregate total return for the periods indicated and
does not reflect any applicable sales charge.
(3) Includes indirectly paid expenses. Excluding indirectly paid expenses the
ratio of total expenses to average net assets would have been 1.77%, 2.43%
and 2.05% for the years ended October 31, 1998, 1996 and 1995, respectively.
(4) Figure is net of the voluntary expense waiver by the Adviser. Excluding this
waiver, the ratio of total expenses to average net assets would have been
1.83% for the year ended October 31, 1998.
See Notes to Financial Statements.
24
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------------------------------------
10/31/98 10/31/97(1) 10/31/96 10/31/95(1) 10/31/94
-------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period........... $ 13.41 $ 11.43 $ 10.13 $ 11.30 $ 13.10
-------- ------- -------- ------- --------
Income from investment operations:
Net investment income (loss)................. (0.03)(2) -- (2) (0.02)(2) (0.06)(2) (0.21)
Net realized and unrealized gain (loss) on
investments............................... 2.16 2.02 1.32 (1.11) (1.56)
-------- ------- -------- ------- --------
Total income (loss) from investment
operations.............................. 2.13 2.02 1.30 (1.17) (1.77)
-------- ------- -------- ------- --------
Less distributions:
In excess of net investment income............. (0.15) (0.04) -- -- (0.03)
-------- ------- -------- ------- --------
Net Asset Value, end of period................. $ 15.39 $ 13.41 $ 11.43 $ 10.13 $ 11.30
-------- ------- -------- ------- --------
-------- ------- -------- ------- --------
Total Return(3)................................ 16.10% 17.68% 12.73% (10.35)% (13.53)%
-------- ------- -------- ------- --------
-------- ------- -------- ------- --------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)........... $ 56,718 $44,302 $ 19,161 $ 9,643 $ 14,831
Ratio of net investment gain (loss) to average
net assets................................... (0.15)% 0.00% (0.58)% (0.63)% (1.26)%
Ratio of total expenses to average net
assets....................................... 1.85%(4)(5) 1.79%(4) 2.46%(4)(5) 2.84%(6)(5) 2.16%
Portfolio turnover rate........................ 134% 94% 67% 116% 169%
</TABLE>
- ------------------------------
(1) Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for the period
since the use of the undistributed income method does not accord with
results of operations.
(2) Net investment loss before waiver of fees by the investment adviser was
($0.07), ($0.07) ($0.05) and ($0.11) for the years ended October 31, 1998,
1997, 1996 and 1995, respectively.
(3) Total return represents aggregate total return for the periods indicated and
does not reflect any applicable sales charge.
(4) Figure is net of the voluntary expense waiver by the Adviser. Excluding this
waiver, the ratio of total expenses to average net assets would have been
2.09%, 2.29% and 2.96% for the years ended October 31, 1998, 1997 and 1996,
respectively.
(5) Includes indirectly paid expenses. Excluding indirectly paid expenses the
ratio of total expenses to average net assets would have been 1.87%, 2.37%
and 2.67% for the years ended October 31, 1998, 1996 and 1995, respectively.
(6) Figures are net of the expense reimbursement by the Adviser in connection
with the voluntary and involuntary expense limitation. Before the expense
reimbursement the ratio of total expenses to average net assets would have
been 3.36%.
See Notes to Financial Statements.
25
<PAGE>
JULIUS BAER INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Julius Baer Investment Funds (the "Trust") is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company. The
Trust currently offers two investment funds: Julius Baer Global Income Fund (the
"Income Fund") and Julius Baer International Equity Fund (the "Equity Fund")
(individually, a "Fund" and collectively, the "Funds"). The Trust was organized
as a Massachusetts business trust under the laws of the Commonwealth of
Massachusetts on April 30, 1992. The Income Fund commenced operations on
July 1, 1992 and the Equity Fund commenced operations on October 4, 1993.
Effective July 1, 1998, the name of the BJB Investment Funds was changed to
the Julius Baer Investment Funds. At the same time, the name of each of the BJB
Global Income Fund and the BJB International Equity Fund was changed to the
Julius Baer Global Income Fund and the Julius Baer International Equity Fund,
respectively.
The Income Fund's investment objective is to maximize current income
consistent with the protection of principal by investing in a non-diversified
portfolio of fixed income securities of governmental, supranational and
corporate issuers denominated in various currencies, including United States
(U.S.) dollars. The Equity Fund's investment objective is long-term growth of
capital from investing in a diversified portfolio of common stocks of foreign
issuers of all sizes.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
presentation 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 revenue and expenses during the reporting period. Actual
results could differ from these estimates.
Portfolio valuation: Generally, each Fund's investments are valued at
market value. A security which is traded primarily on a United States or foreign
stock exchange is valued at the last sale price on that exchange or, if there
were no sales during the day, at the mean of the current quoted bid and asked
prices. Portfolio securities which are traded primarily on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges, except that when an occurrence
subsequent to the time that a value was so established is likely to have changed
such value, then the fair value of those securities will be determined by
consideration of other factors by or under the direction of the Trust's Board of
Trustees or its delegates. Debt securities (other than government securities and
short-term obligations) are valued by independent pricing services approved by
the Trust's Board of Trustees. Investments in government securities (other than
short-term securities) are valued at the mean of the quoted bid and asked prices
in the over-the-counter market. In the absence of a readily available market
value, fair value is determined by or under the direction of the Trust's Board
of Trustees. Short-term investments that mature in 60 days or less are valued at
amortized cost.
Repurchase agreements: The Funds may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, a Fund takes
possession of an underlying debt obligation, in return for the use of the Funds
available cash, subject to an obligation of the seller to repurchase, and the
Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. This arrangement results
in a fixed rate of return that is not subject to market fluctuations during a
Fund's holding period. The value of the collateral at all times is equal to at
least 100% of the total amount of the repurchase obligations, including accrued
interest. In the event of counterparty default, the Fund has the right to use
the collateral to offset losses incurred. There is potential loss to a Fund in
the event the Fund is delayed or prevented from exercising its rights to dispose
of the collateral securities, including the risk of a possible decline in the
value of the underlying securities during the period while the Fund seeks to
assert its rights. The Funds' investment adviser, acting under the supervision
of the Board of Trustees, reviews the value of the
26
<PAGE>
JULIUS BAER INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
collateral and the creditworthiness of those banks and dealers with which the
Funds enter into repurchase agreements to evaluate potential risks.
Foreign currency: The books and records of the Funds are maintained in
U.S. dollars. Foreign currencies, investments and other assets and liabilities
are translated into U.S. dollars at the exchange rates prevailing at the end of
the period, purchases and sales of investment securities and income and expenses
are translated on the respective dates of such transactions. Unrealized gains or
losses on investments which result from changes in foreign currencies have been
included in the net unrealized appreciation (depreciation) of investments. Net
realized currency gains and losses include foreign currency gains and losses
between trade date and settlement date on investment securities transactions,
gains and losses from foreign currency transactions and gains and losses from
the differences between the amounts of interest and dividends recorded on the
books of the Funds and the amounts actually received. The portion of foreign
currency gains and losses related to fluctuations in exchange rates between the
purchase trade date and sale trade date is included in realized gains and losses
on security transactions.
Forward foreign currency contracts: Forward foreign currency contracts are
valued at the forward rate and are marked-to-market daily. The change in market
value is recorded by a Fund as an unrealized gain or loss. When the contract is
closed, a Fund records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value at the time it
was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of a Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline in
the value of the currency holdings, they also limit any potential gain that
might result should the value of the currency increase. In addition, a Fund
could be exposed to risks if the counterparties to the contracts are unable to
meet the terms of their contracts.
Option contracts: Purchase of put and call options are recorded as an
investment, the value of which is marked-to-market daily. When a purchased
option expires, a Fund will realize a loss equal to the premium paid. When a
Fund enters into a closing sale transaction, the Fund will realize a gain or
loss depending on whether the sales proceeds from the closing sale transaction
are greater or less than the premium paid. When a Fund exercises a put option,
it will realize a gain or loss from the sale of the underlying security and the
proceeds from such sale will be decreased by the premium originally paid. When a
Fund exercises a call option, the cost of the security which the Fund purchases
upon exercise will be increased by the premium originally paid.
When a Fund writes a call option or a put option, an amount equal to the
premium received by a Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, a Fund realizes a gain
equal to the amount of the premium received. When a Fund enters into a closing
purchase transaction the Fund realizes a gain (or loss if the cost of the
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is eliminated. When a call option is
exercised, a Fund realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale are increased by the premium originally
received. When a put option is exercised, the amount of the premium originally
received will reduce the cost of the security which a Fund purchased upon
exercise.
Unlike options on specific securities, all settlements of options on stock
indices are in cash and gains or losses depend on general movements in the
stocks included in the index rather than price movements on a particular stock.
There is no physical delivery of securities.
The risk associated with purchasing options is limited to the premium
originally paid. The risk in writing a call option is that a Fund may forego the
opportunity of profit if the market price of the underlying security increases
and the option is exercised. The risk in writing a put option is that a Fund may
incur a loss if the market price of the underlying security decreases and the
option is exercised.
27
<PAGE>
JULIUS BAER INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
There is also the risk that a Fund may not be able to enter into a closing
transaction because of an illiquid secondary market. In addition, the Fund could
be exposed to risks if the counterparties to the transactions are unable to meet
the terms of the contracts.
Securities transactions and investment income: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date.
Dividends and distributions to shareholders: Distributions to shareholders
are recorded on the ex-dividend date. Each Fund intends to distribute annually
to its shareholders substantially all of its taxable income. The Income Fund
declares and pays monthly dividends. The Equity Fund declares and pays dividends
from its net investment income, if any, annually. Both Funds will distribute net
realized capital gains, if any, annually. Additional distributions of net
investment income and capital gains may be made at the discretion of the Board
of Trustees to avoid the application of the excise tax imposed under
Section 4982 of the Internal Revenue Code of 1986, as amended, for certain
undistributed amounts. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Funds, timing differences and differing characterization of distributions
made by the Funds as a whole.
Permanent differences incurred during the year ended October 31, 1998
resulting from differences in book and tax accounting have been reclassified at
year-end to undistributed net investment income, accumulated net realized loss,
and paid-in capital as follows:
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
IN UNDISTRIBUTED INCREASE/(DECREASE)
NET INVESTMENT IN ACCUMULATED
INCOME REALIZED LOSS
------------------- -------------------
<S> <C> <C>
Income Fund.................................................. $ 12,754 $ (12,754)
Equity Fund.................................................. (583,884) 583,884
</TABLE>
Federal income taxes: The Trust intends that each Fund separately qualify
as a regulated investment company for U.S. federal income tax purposes.
Accordingly, the Funds do not anticipate that any income taxes will be paid. It
is expected that certain capital gains earned by the Funds and certain dividends
and interest received by the Funds will be subject to foreign withholding taxes.
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS
Effective July 1, 1998, Bank Julius Baer & Co., Ltd., New York Branch
("Bank Julius Baer") serves as the Income Fund's investment adviser. The Income
Fund pays Bank Julius Baer a quarterly fee for its investment advisory services
calculated at an annual rate of 0.65% of the Income Fund's average daily net
assets. The new investment advisory agreement was approved by the Board of
Trustees at a meeting on May 21, 1998 and by shareholders at a special meeting
of shareholders on June 8, 1998. Effective September 1, 1998, the adviser
voluntarily agreed to begin waiving half of its advisory fee on the first $25
million of average daily net assets. If the average daily net assets of the
Income Fund exceed $25 million, the advisory fee would be calculated at 0.325%
of net assets up to $25 million and at 0.65% of net assets exceeding $25
million. The waiver can be terminated at any time.
Prior to July 1, 1998, Julius Baer Investment Management served as the
Income Fund's investment adviser and Bank Julius Baer served as the Income
Fund's servicing agent pursuant to a servicing agent agreement with Julius Baer
Investment Management. Out of its 0.65% advisory fee, Julius Baer Investment
Management paid Bank Julius Baer a quarterly fee calculated at an annual rate of
0.15% of the Income Fund's average daily net assets.
28
<PAGE>
JULIUS BAER INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Bank Julius Baer serves as the Equity Fund's investment adviser. The Equity
Fund pays Bank Julius Baer a quarterly fee calculated at an annual rate of 1.00%
of average daily net assets. Prior to May 15, 1998, the adviser had voluntarily
been waiving half of its fee.
No director, officer or employee of Julius Baer Investment Management, Bank
Julius Baer or any affiliates of those entities receives any compensation from
the Trust for serving as an officer or Trustee of the Funds.
For the year ended October 31, 1998, the International Equity Fund incurred
total brokerage commissions of $313,361 of which $31,750 was paid to affiliates
of the advisers.
3. DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Services Plan and a Distribution Plan
(the "Plans") pursuant to Rule 12b-1 of the 1940 Act. Under the Plans, the Funds
may compensate certain financial institutions, including the Funds' distributor,
for certain distribution, shareholder servicing, administrative and accounting
services for their clients and customers who are beneficial owners of each of
the Funds' shares. A Fund may expend an aggregate amount, on an annual basis,
not to exceed 0.25% of the value of the average daily net assets of the Fund.
For the year ended October 31, 1998, the Income Fund and Equity Fund incurred
$30,145 and $144,207 respectively, in distribution and shareholder servicing
fees.
Under their terms, the Plans shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a majority of the
Trustees and a majority of those Trustees who are not "interested persons" of
the Trust and who have no direct or indirect financial interest in the operation
of the Plans or in any agreement related to the Plans.
Effective December 9, 1998, the Board of Trustees voted to approve a new
Distribution Agreement between the Trust and Unified Management Corporation
("UMC"), designating UMC as the Funds' distributor.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding U.S.
government securities and short-term investments, during the year ended October
31, 1998, were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
----------- -----------
<S> <C> <C>
Income Fund............................................................. $ 8,916,164 $11,718,015
Equity Fund............................................................. 71,989,187 75,673,608
</TABLE>
Cost of purchases and proceeds from sales of long-term U.S. government
securities during the year ended October 31, 1998, were $24,316,944 and
$19,265,535, respectively for the Income Fund.
At October 31, 1998, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost, and aggregate
gross unrealized depreciation for all securities in which there was an excess of
tax cost over value was:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
------------ ------------
<S> <C> <C>
Income Fund............................................................... $ 408,934 $ 22,242
Equity Fund............................................................... 9,112,562 2,301,286
</TABLE>
29
<PAGE>
JULIUS BAER INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest of
each Fund, with a par value of $.001 per share. Changes in outstanding shares of
beneficial interest on the Income Fund and the Equity Fund were as follows:
<TABLE>
<CAPTION>
YEAR ENDED 10/31/98 YEAR ENDED 10/31/97
------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- -------- -----------
<S> <C> <C> <C> <C>
INCOME FUND:
Sold.............................................. 503,318 $ 5,984,704 287,326 $ 3,378,426
Issued as reinvestment of dividends............... 38,218 450,479 48,186 562,733
Redeemed.......................................... (309,148) (3,630,309) (534,288) (6,205,907)
---------- ----------- -------- -----------
Net increase (decrease)........................... 232,388 $ 2,804,874 (198,776) $(2,264,748)
---------- ----------- -------- -----------
---------- ----------- -------- -----------
<CAPTION>
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
EQUITY FUND:
Sold............................................ 1,863,767 $29,548,855 2,093,850 $27,215,448
Issued as reinvestment of dividends............. 36,110 497,235 104 1,243
Redeemed........................................ (1,517,046) (24,355,953) (468,551) (6,318,210)
---------- ----------- --------- -----------
Net increase.................................... 382,831 $ 5,690,137 1,625,403 $20,898,481
---------- ----------- --------- -----------
---------- ----------- --------- -----------
</TABLE>
6. ORGANIZATIONAL COSTS
Costs incurred in connection with the organization of the Funds were
amortized on the straight-line method over a period of sixty months from the
respective date the Funds commenced operations.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments
involves special risks and considerations not typically associated with
investing in U.S. companies and the United States government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of many foreign companies and foreign
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable U.S. companies and the United States
government.
8. CAPITAL LOSS CARRYFORWARD
At October 31, 1998, the Income Fund had $518,876 available as capital loss
carryforwards which expire in 2002.
9. YEAR 2000 (UNAUDITED)
Like other funds and business organizations around the world, the Funds
could be adversely affected if the computer systems used by the Adviser and the
Funds' other service providers do not properly process and calculate
date-related information for the year 2000 and beyond. The Funds have been
informed that the Adviser, and the Funds' other service providers (i.e.,
Administrator, Transfer Agent, Fund Accounting Agent, Distributor and Custodian)
have developed and are implementing clearly defined and documented plans to
minimize the risk associated with the Year 2000 problem. These plans include the
following activities: inventorying of software systems,
30
<PAGE>
JULIUS BAER INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
determining inventory items that may not function properly after December 31,
1999, reprogramming or replacing such systems and retesting for Year 2000
readiness. In addition, the service providers are obtaining assurances from
their vendors and suppliers in the same manner. Non-compliant Year 2000 systems
upon which the Funds are dependent may result in errors and account maintenance
failures. The Funds have no reason to believe that (1) the Year 2000 plans of
the Adviser and the Funds' other service providers will not be completed by
December, 1999, and (2) the costs currently associated with the implementation
of their plans will have a material adverse impact on the business, operations
or financial condition of the Funds or their service providers.
In addition, the Year 2000 problem may adversely affect the companies in
which the Funds invest. For example, these companies may incur substantial costs
to correct the problem and may suffer losses caused by data processing errors.
Since the ultimate costs or consequences of incomplete or untimely resolution of
the Year 2000 problem by the Funds' service providers are unknown to the Funds
at this time, no assurance can be made that such costs or consequences will not
have a material adverse impact on the Funds or their service providers.
The Funds and the Adviser will continue to monitor developments relating to
the Year 2000 problem, including the development of contingency plans for
providing back-up computer services in the event of a systems failure.
31
<PAGE>
JULIUS BAER INVESTMENT FUNDS
JULIUS BAER GLOBAL INCOME FUND INDEPENDENT AUDITORS' REPORT
AND JULIUS BAER INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
[KPMG PEAT MARWICK LLP LOGO]
The Board of Trustees
Julius Baer Investment Funds:
We have audited the accompanying statements of assets and liabilities of
Julius Baer Global Income Fund and Julius Baer International Equity Fund,
portfolios of Julius Baer Investment Funds, including the portfolios of
investments and schedules of forward foreign exchange contracts, as of
October 31, 1998, and the related statements of operations for the year then
ended, statements of changes in net assets for each of the years in the two-year
period then ended and the financial highlights for each of the years in the
five-year period then ended. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Julius Baer Global Income Fund and Julius Baer International Equity Fund as of
October 31, 1998, and the results of their operations for the year then ended,
changes in their net assets for each of the years in the two-year period then
ended and financial highlights for each of the years in the five-year period
then ended, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
December 11, 1998
32
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<PAGE>
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<PAGE>
ANNUAL REPORT
JULIUS BAER
INVESTMENT FUNDS
Julius Baer
Global
Income
Fund
Julius Baer
International
Equity
Fund
October 31, 1998
This report is sent to the shareholders
of the Julius Baer Investment Funds for
their information. It is not a Prospectus,
circular or representation intended for
use in the purchase or sale of shares of
the Funds or of any securities
mentioned in the report.
