BAIRD
BLUE CHIP FUND
SEMIANNUAL
REPORT
MARCH 31, 1996
(BAIRD LOGO)
BAIRD BLUE CHIP FUND
SEMIANNUAL REPORT May 28, 1996
DEAR FELLOW SHAREHOLDER:
The Baird Blue Chip Fund posted a March quarter total return of +5.9%,
compared with +5.4% for the Standard &Poor's 500 Index. Signs of stronger
economic growth pressured the bond market, but the improvement in near-term
earnings was beneficial to the equity market. The stocks of companies providing
services and products for business showed especially strong price gains, as
might be expected when recession fears dim and the promise of expansion is
renewed. The portfolio's beneficiaries included duPont, General Electric, Viking
Office Products, Reuters, Manpower, Olsten, Microsoft, AMP and Boeing.
Companies that are less sensitive to the business cycle temporarily fell from
favor, despite continued prospects for solid growth. Food, household product and
health care firms showed only a nominal advance in value, lagging the market.
Many of these firms have developed substantial international businesses in
recent decades, and this long-term positive was viewed as a temporary negative:
A strengthening U.S. dollar might temporarily diminish the rate of overseas
earnings contribution. Still, we firmly believe that emerging economies outside
North America, Western Europe and Japan have the potential to provide greater
long-term growth than the developed economies, and conclude that the broad
geographic diversification of large multi-national firms remains an undervalued
asset. Over the 1982-1995 interval, imported products and services have nearly
doubled their share of our domestic market, rising from under 7% to over 13%. We
expect this trend to continue and believe that long-term investors should add to
their holdings in leading international firms when they are out of favor.
The financial services industry also produced a strong gain, led by Fifth
Third Bancorp, State Street Boston and Norwest. Initial positions in Fifth
Third, which we view as the best managed regional bank, and Norwest, which is
one of the most successful, marketing-oriented banks, were added to the Fund
during the quarter. Schlumberger, the global leader in oil field services, has
continued to benefit from the increasing international investments being made by
the oil industry in its ever broadening search for new energy supplies.
Although the domestic economy is likely to rebound this quarter from the
weather induced problems earlier this year, we believe that growth is likely to
remain subdued. Consumer spending seems unlikely to serve as an engine of strong
growth, business investment in new plant and equipment is likely to inch ahead,
and export growth is slowing. The recent backup in interest rates is sure to
have a dampening effect, as well, on such sectors as housing and durable goods.
Still, in the absence of a shift in Federal Reserve Board policy toward
tightening and with inflation still relatively subdued, the economy seems
unlikely to move into recession.
A period of slow growth with adequate financial liquidity and the likelihood
of flat to lower interest rates should continue to provide a moderately
favorable environment for financial assets in 1996. Longer-term prospects
continue to be bolstered by the powerful demographic shift that has already
contributed to the rise in demand for financial assets.
Sincerely,
/s/ Marcus C. Low, Jr. /s/ Robinson Bosworth III /s/ John T. Evans
Marcus C. Low, Jr. Robinson Bosworth III John T. Evans
President Portfolio Manager Portfolio Manager
BAIRD BLUE CHIP FUND, INC.
STATEMENT OF NET ASSETS
March 31, 1996 (Unaudited)
QUOTED
SHARES COST MARKET VALUE
------ ---- -------------
COMMON STOCKS 96.2% (A)<F2>
AEROSPACE -- 2.7%
23,900 Boeing Co. $1,212,845 $2,070,337
BANKS -- 0.8%
10,600 Fifth Third Bancorp. 508,800 614,800
BEVERAGES/SOFT DRINKS-- 2.6%
24,000 The Coca-Cola Company 243,788 1,983,000
BUSINESS SERVICES & SUPPLIES -- 7.1%
35,200 Alco Standard Corp. 744,496 1,834,800
26,900 Manpower Inc. 721,458 833,900
87,450 Olsten Corp. 1,511,143 2,820,263
----------- ----------
2,977,097 5,488,963
CHEMICALS -- 6.0%
36,500 Air Products and Chemicals, Inc. 2,048,131 1,993,812
16,600 E.I du Pont de Nemours & Co. 794,310 1,377,800
26,300 PPG Industries, Inc. 823,428 1,285,413
---------- ----------
3,665,869 4,657,025
CONGLOMERATES -- 0.9%
11,100 Minnesota Mining & Manufacturing Co. 332,393 720,112
COSMETICS -- 5.1%
44,000 Gillette Company 1,888,540 2,277,000
34,200 International Flavors & Fragrances Inc. 680,878 1,637,325
---------- ----------
2,569,418 3,914,325
DRUGS & HOSPITAL SUPPLIES -- 12.1%
59,700 Abbott Laboratories 1,453,398 2,432,775
25,600 Johnson & Johnson 581,730 2,361,600
43,900 Medtronic, Inc. 1,782,716 2,617,538
30,600 Merck & Co., Inc. 541,788 1,904,850
----------- ----------
4,359,632 9,316,763
ELECTRICAL CONNECTORS -- 6.1%
49,100 AMP Inc. 1,156,053 2,031,513
83,200 Molex Inc. Class A 2,118,947 2,662,400
----------- ----------
3,275,000 4,693,913
ELECTRICAL EQUIPMENT -- 6.9%
29,900 Emerson Electric Co. 1,455,375 2,414,425
37,600 General Electric Co. (U.S.) 914,131 2,928,100
----------- ----------
2,369,506 5,342,525
ELECTRONICS -- 3.3%
47,500 Motorola, Inc. 991,194 2,517,500
ENTERTAINMENT & RESTAURANTS -- 3.8%
60,400 McDonald's Corp. 904,405 2,899,200
FINANCIAL SERVICES -- 5.8%
51,100 FIserv, Inc.*<F1> 1,417,719 1,430,800
43,000 Norwest Corp. 1,437,666 1,580,250
29,200 State Street Boston Corp. 1,062,650 1,460,000
----------- -----------
3,918,035 4,471,050
FOOD MERCHANDISING -- 1.4%
28,300 Albertson's, Inc. 696,534 1,050,637
FOODS -- 2.2%
52,200 Sara Lee Corp. 541,644 1,703,025
HOUSEHOLD PRODUCTS -- 3.2%
29,500 Procter & Gamble, Inc. 1,323,424 2,500,125
INFORMATION PROCESSING -- 4.3%
22,800 Microsoft Corp.*<F1> 907,725 2,351,250
21,300 Oracle Corp.*<F1> 1,050,576 1,003,763
----------- ----------
1,958,301 3,355,013
INSURANCE -- 5.6%
25,200 American International Group, Inc. 1,044,299 2,359,350
21,200 The Chubb Corp. 1,793,805 1,990,150
----------- ----------
2,838,104 4,349,500
MERCHANDISING -- 5.1%
29,800 Nordstrom, Inc. 1,080,250 1,443,452
25,000 Viking Office Products, Inc.*<F1> 672,625 1,390,625
49,200 Wal-Mart Stores, Inc. 583,210 1,137,750
----------- ----------
2,336,085 3,971,827
OIL/INTERNATIONAL -- 3.4%
18,800 Royal Dutch Petroleum Co. (ADR) 1,377,105 2,655,500
OIL/SERVICE -- 3.3%
31,800 Schlumberger Ltd. 1,928,680 2,516,175
POLLUTION CONTROL -- 1.7%
41,700 WMX Technologies, Inc. 1,033,173 1,323,975
PUBLISHING & PRINTING -- 2.8%
33,600 Reuters Holdings PLC ADR 1,242,285 2,188,200
------------ ----------
Total common stocks 42,603,317 74,303,490
SHORT-TERM INVESTMENTS 3.6% (A)<F2>
VARIABLE RATE DEMAND NOTES
$235,000 American Family Financial Services 235,000 235,000
554,089 General Mills, Inc. 554,089 554,089
450,000 Pitney Bowes Credit Corp. 450,000 450,000
1,545,000 Wisconsin Electric Power Company 1,545,000 1,545,000
----------- ----------
Total short-term investments 2,784,089 2,784,089
------------ -----------
Total investments $45,387,406 77,087,579
-----------
-----------
Cash and receivables, less
liabilities -- 0.2% (A)<F2> 123,654
-----------
NET ASSETS $77,211,233
-----------
-----------
Net Asset Value Per Share
($0.01 par value 20,000,000
shares authorized),
redemption price
($77,211,233 / 3,094,335
shares outstanding) $24.95
-----------
-----------
Maximum Offering Price Per Share
(net asset value plus 6.10%
of the net asset value or 5.75%
of the offering price calculated
as $24.95 x 100 / 94.25) $26.47
-----------
-----------
* <F1>Non-income producing security.
(a)<F2>Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENT OF OPERATIONS
For the Period Ended March 31, 1996 (Unaudited)
INCOME:
Dividends $516,097
Interest 71,730
---------
Total income 587,827
---------
EXPENSES:
Management fees 272,371
Distributor fees 93,727
Administrative services 25,903
Transfer agent fees 23,784
Printing and postage expense 20,324
Professional fees 11,376
Custodian fees 7,819
Registration fees 4,440
Other expenses 2,808
---------
Total expenses 462,552
---------
NET INVESTMENT INCOME 125,275
---------
NET REALIZED GAIN ON INVESTMENTS 3,795,971
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 3,549,731
---------
NET GAIN ON INVESTMENTS 7,345,702
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $7,470,977
----------
----------
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended March 31, 1996 (Unaudited) and For the Year Ended September
30, 1995
1996 1995
---------- ----------
OPERATIONS:
Net investment income $125,275 $435,096
Net realized gain on investments 3,795,971 3,508,717
Net increase in unrealized appreciation
on investments 3,549,731 11,889,076
---------- ----------
Net increase in net assets resulting
from operations 7,470,977 15,832,889
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.1352 and $0.1165 per share, respectively) (404,037) (358,084)
Distributions from net realized gains
($1.1414 and $0.4637 per share, respectively) (3,411,001) (1,424,952)
----------- -----------
Total distributions (3,815,038)(1,783,036)*<F3>
----------- -----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued
(224,941 and 235,753 shares, respectively) 5,297,574 4,808,974
Net asset value of shares issued in distributions
(74,633 and 43,313 shares, respectively) 1,678,484 809,149
Cost of shares redeemed (198,660 and
414,147 shares, respectively) (4,744,844) (8,458,795)
----------- -----------
Net increase (decrease) in net assets
derived from Fund share activities 2,231,214 (2,840,672)
---------- -----------
TOTAL INCREASE 5,887,153 11,209,181
NET ASSETS AT THE BEGINNING OF THE PERIOD 71,324,080 60,114,899
---------- ----------
NET ASSETS AT THE END OF THE PERIOD
(including undistributed net investment income
of $125,234 and $403,996, respectively) $77,211,233 $71,324,080
----------- ----------
----------- ----------
*<F3>Total distributions include $404,637 of ordinary income, of which 100% is
eligible for the corporate dividends received deduction.
The accompanying notes to financial statements are an integral part of this
statement.
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE
PERIOD
ENDED
MARCH 31, YEARS ENDED SEPTEMBER 30,
-------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987+<F4>
-------- ------ ------ ------- ------ ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $23.83 $19.22 $18.89 $18.24 $16.77 $13.60 $13.82 $11.48 $13.10 $10.00
Income from investment
operations:
Net investment
income 0.04 0.14 0.15 0.19 0.20 0.23 0.25 0.24 0.12 0.01
Net realized and
unrealized gains (losses)
on investments 2.36 5.05 1.24 0.63 1.48 3.19 (0.20) 2.25 (1.68) 3.09
------ ------ ------ ------------- ------- ------ ------ ------ ------
Total from investment
operations 2.40 5.19 1.39 0.82 1.68 3.42 0.05 2.49 (1.56) 3.10
Less distributions:
Dividends from
net investment
income (0.14) (0.12) (0.21) (0.17) (0.21) (0.25) (0.27) (0.15) (0.02) --
Distributions from net
realized gains (1.14) (0.46) (0.85) -- -- -- -- -- (0.04) --
------ ------ ------ ------------- ------- ------ ------ ------ ------
Total from distributions (1.28) (0.58) (1.06) (0.17) (0.21) (0.25) (0.27) (0.15) (0.06) --
------ ------ ------ ------------- ------- ------ ------ ------ ------
Net asset value,
end of period $24.95 $23.83 $19.22 $18.89 $18.24 $16.77 $13.60 $13.82 $11.48 $13.10
------ ------ ------ ------------- ------- ------ ------ ------ ------
------ ------ ------ ------------- ------- ------ ------ ------ ------
TOTAL INVESTMENT
RETURN***<F7> 22.4%*<F5> 27.8% 7.7% 4.5% 10.1% 25.5% 0.3% 22.0%(11.8%) 13.5%*<F5>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in 000's $) 77,211 71,324 60,115 65,112 61,601 46,958 31,706 21,170 18,681 16,917
Ratio of expenses
to average
net assets**<F6> 1.3%*<F5> 1.3% 1.4% 1.3% 1.4% 1.5% 1.6% 1.7% 2.2% 2.6%*<F5>
Ratio of net investment
income to average
net assets 0.3%*<F5> 0.7% 0.8% 1.0% 1.2% 1.6% 2.0% 1.9% 3.3% 0.2%*<F5>
Portfolio
turnover rate 11.0% 16.7% 12.7% 24.9% 5.4% 8.8% 12.2% 14.8% 14.8% 9.0%
+<F4>For the period from December 31, 1986 (commencement of operations) to
September 30, 1987.
*<F5>Annualized.
**<F6>Includes a .75% distribution fee from December 31, 1986 through
September 30, 1988 and a .45% distribution fee beginning October 1, 1988.
***<F7>Total return does not include the sales load.
The accompanying notes to financial statements are an integral part of this
statement.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1996 (Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- The following is a summary of
significant accounting policies of the Baird Blue Chip Fund, Inc. (the "Fund"),
which is registered under the Investment Company Act of 1940. The Fund was
incorporated under the laws of Wisconsin on October 16, 1986.
(a) Each security, excluding short-term investments, is valued at the last sale
price reported by the principal security exchange on which the issue is
traded, or if no sale is reported, the latest bid price. Securities which are
traded over-the-counter are valued at the latest bid price. Securities for
which quotations are not readily available are valued at fair value as
determined by the investment adviser under the supervision of the Board of
Directors. Short-term investments are valued at amortized cost which
approximates quoted market value. Investment transactions are recorded no
later than the first business day after the trade date.
(b) Net realized gains and losses on common stock are computed on the basis of
the cost of specific certificates.
(c) Provision has not been made for Federal income taxes since the Fund has
elected to be taxed as a "regulated investment company" and intends to
distribute substantially all income to its shareholders and otherwise comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies.
(d) Dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis.
(e) The Fund has investments in short-term variable rate demand notes, which
are unsecured instruments. The Fund may be susceptible to credit risk with
respect to these notes to the extent the issuer defaults on its payment
obligation. The Fund's policy is to monitor the creditworthiness of the
issuer and does not anticipate nonperformance by these counterparties.
(f) Generally accepted accounting principles require that permanent financial
reporting and tax differences be reclassified to capital stock.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND TRANSACTIONS WITH RELATED
PARTIES -- The Fund has a management agreement with Robert W. Baird &Co.
Incorporated ("RWB"), with whom certain officers and directors of the Fund are
affiliated, to serve as investment adviser and manager. Under the terms of the
agreement, the Fund will pay RWB a monthly management fee at the annual rate of
0.74% of the daily net assets of the Fund.
The Fund has adopted a Distribution Plan (the "Plan"), pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan provides that the Fund may
incur certain costs which may not exceed the lesser of a monthly amount equal to
0.45% per year of the Fund's daily net assets or the actual distribution costs
incurred by RWB during the year. Amounts paid under the Plan are paid monthly to
RWB for any activities or expenses primarily intended to result in the sale of
shares of the Fund.
During the period ended March 31, 1996, the Fund was advised that RWB received
$38,333 from investors representing commissions on sales of Fund shares and no
brokerage fees on the execution of purchases and sales of portfolio securities
were paid by the Fund.
(3) DISTRIBUTION TO SHAREHOLDERS -- Net investment income and net realized gains
are distributed to shareholders.
(4) INVESTMENT TRANSACTIONS -- For the period ended March 31, 1996, purchases
and proceeds of sales of investment securities (excluding short-term securities)
were $7,753,074 and $8,804,750, respectively.
(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES -- As of March 31, 1996,
liabilities of the Fund included the following:
Payable to RWB for management fees........... $48,080
Payable to shareholders for redemptions ..... 3,172
Other liabilities ........................... 36,903
(6) SOURCES OF NET ASSETS -- As of March 31, 1996, the sources of net assets
were as follows:
Fund shares issued and outstanding........... $41,590,266
Net unrealized appreciation on investments... 31,700,173
Accumulated net realized gains on investments 3,795,560
Undistributed net investment income.......... 125,234
-----------
$77,211,233
-----------
-----------
Aggregate net unrealized appreciation as of March 31, 1996, consisted of the
following:
Aggregate gross unrealized appreciation...... $31,971,354
Aggregate gross unrealized depreciation...... (271,181)
-----------
Net unrealized appreciation............... $31,700,173
-----------
-----------
(7) SUBSEQUENT EVENTS -- On or about June 3, 1996, the assets (net of its
liabilities) of the Fund will be sold to AIM Blue Chip Fund, a newly-created
portfolio of AIM Equity Funds, Inc., pursuant to the Agreement and Plan of
Reorganization dated December 20, 1995, as amended, between the Fund and AIM
Equity Funds, Inc. (the "Agreement and Plan of Reorganization"). In the
reorganization transaction, the shareholders of the Fund will receive shares of
AIMBlue Chip Fund having a net asset value equal to the net asset value of the
Fund immediately prior to the transaction. Following the reorganization, the
Fund will liquidate and dissolve its corporate existence and terminate its
status as a registered investment company. The reorganization transaction was
approved by shareholders of the Fund at a special meeting called for that
purpose on March 15, 1996. See Note 8 below.
(8) MATTERS SUBMITTED TO A VOTE OF SHAREHOLDERS -- At a special meeting held on
March 15, 1996, the shareholders of the Fund approved the Agreement and Plan of
Reorganization and the reorganization transaction contemplated thereby. The
requisite vote for approval was a majority of the shares of the Fund outstanding
on the record date (January 25, 1996). Of the 3,085,577 shares outstanding on
the record date, 1,925,583 shares (or 62.4% of the total outstanding shares)
were present at the meeting in person or by proxy, 1,773,720 shares (or 57.5% of
the total outstanding shares) voted for approval of the Agreement and Plan of
Reorganization and the reorganization transaction, and 151,863 shares either
voted against or abstained from voting on the matter.
(BAIRD LOGO)
A NORTHWESTERN
MUTUAL COMPANY
Robert W. Baird & Co. Incorporated
777 E. Wisconsin Avenue, Milwaukee, WI 53202
Phone 414 765-3500. Toll Free 1-800-RW-BAIRD
(c)1996 Robert W. Baird & Co. Incorporated
