bailard, Biehl & Kaiser International Equity Fund
A No Load Fund with No 12b-1 Plan
Annual Report
As of September 30,1995
<PAGE>
November 20, 1995
Dear Shareholders:
We are pleased to present your September 30, 1995 annual shareholder's report
for the Bailard Biehl & Kaiser International Equity Fund. In this report we
review the world's markets, the performance of the Fund and our outlook for the
future.
Performance and Market Review
The return to the Fund for the year ending September 30, 1995 was a
disappointing 2.13%*. However, over the last six months of the period the return
was a solid 8.73%*. As you may recall, last winter was marked by increases in
the Fed funds rate, the collapse of the dollar against the yen and core European
currencies, the Mexican peso crisis and, in Japan, the Great Hanshin Earthquake
and the Barings futures trading fiasco. These factors in large part accounted
for the poor first half returns. The past six months have seen a sharp reversal
of both interest rates and the dollar and the major international stock markets
have recovered strongly. The Japanese market was down over 20% in local terms
over the first six months of calendar 1995 but recovered nearly all of this
between August and September as investors became more encouraged by government
plans to stimulate the economy. For the year as a whole, the U.K. and Germany
were the best performers from the major markets, returning (in U.S. dollars)
19.1% and 18.3% respectively.
Market Outlook - Europe
In Europe, there are several factors that lead us to conclude that the markets
are attractive. First, valuations have returned to the best levels since the
1993 run up in share prices. Second, bond yields have been declining and the
prospect of low inflation, coupled with softening economic growth, suggests that
interest rates will continue to decline. This provides a major valuation support
for the markets. Third, the key central banks such as Germany's Bundesbank
remain accommodative in their monetary policy. Finally, earnings growth has been
very positive and we expect it to remain so going into 1996.
There are, however, a few concerns that will subject the markets to periods of
skittishness. First is the debate over European Monetary Union, which, as a
result of the Maastricht conference in 1993, is scheduled to take place in 1997.
The debate centers over the strictness of implementation of the criteria set at
Maastricht, and what it means in determining which countries will be allowed to
participate and on what time scale. This has important implications for the
fiscal and monetary policy for every nation, and in turn this will influence
currency values. A manifestation of this problem is that many of the peripheral
countries of Europe need to curb their budget and current account deficits. The
former is not popular with voters because it means cutting government programs.
Reducing the current account deficit is most easily accomplished by slowing the
economy through higher interest rates but once again this is not poppular with
the voters. Another concern is the course of the dollar against the
Eurocurrencies. Many European companies export heavily into dollar linked
economies and a strong dollar is good for their profits. The dollar has
rebounded slightly over the past six months but its course over the next year
could have a meaningful impact on market performance. On balance, we have been
overweight the European stock markets in our portfolios, which has worked very
well for us, and we plan to maintain this posture for the time being.
<PAGE>
Market Outlook - Japan
While the rest of the world has enjoyed strong growth over the past year, the
Japanese economy has struggled with problems of deflation and recession. For
much of the past five-year economic downturn, the Japanese authorities have
dealt with the problems by hoping they would go away by themselves. Clearly they
have not. Recently, we have seen some greater signs of willingness by the
authorities to deal with Japan's problems, and this caused the market to rally
from 14,500 in June to 18,000 in September. Some of the most significant shifts
in government policy have been seen in the currency management area, where the
Bank of Japan, with the help of the Fed, was able to weaken the yen from 80 yen
to 100 Yen to the dollar. At this levelcorporate Japan could breathe again.
Additionally, the government announced a huge supplementary budget in September
that is expected to add over 1% to GDP in the coming year. We have also seen
more aggressive intervention in the banking crisis by the authorities, as they
have stepped in to rescue failed banks, and have begun to put together plans to
aid the beleaguered banking system.
It is too early to if the steps taken by the Japanese government will be
successful in turning around the economy and the stock market in Japan. We have
been underweight Japan in the portfolio over the entire past year and do not see
compelling reasons yet to reverse this position. However, the market is cheap on
some measures and if local investors decided to buy their own market, the gains
could be explosive.
Market Outlook - Asia ex-Japan
Outside of Japan, the other markets of the Far East have had a difficult year,
as investors drove down share prices on waves of selling following the Mexican
peso crisis. Investors became afraid of currencies and the share markets of the
smaller "emerging" Asian markets were tarred with the Mexican brush. Since then,
they have managed some recovery, but it has been surprisingly tepid, given the
very supportive U.S. interest rate environment, which is usually quite an
important factor for these markets. However, markets have focused instead on
local concerns about overheating economies, and fears that local interest rates
would have to rise. We have been underweight this region but believe that it may
begin to perform better in 1996 and are therefore watching for signals to
increase our exposure.
Fund Management
Our international equity investment is moving to a greater reliance on
quantitative methods and information technology. This approach enables us to
design and construct our international equity portfolio to control risk and to
emphasize a "value" approach to investing. In November, we increased our
commitment to our quantitative approach by appointing Rosemary Macedo, already a
senior vice president at Bailard Biehl & Kaiser, the manager of our
international equity team. Rosemary has published articles on international and
quantitative investment and has been advancing Bailard Biehl & Kaiser's
quantitative methodology for the past three and a half years.
<PAGE>
Our "value" approach to investing currently ranks most international markets as
more attractive than the U.S. So far in 1995 world markets have been relatively
stable, however, our work suggests that when world market volatility picks up,
international equity markets are likely to perform much more strongly than the
U.S. We appreciate your continued investment in the Bailard, Biehl & Kaiser
International Equity Fund. Please do not hesitate to contact us with any
questions you may have.
Sincerely,
Peter M. Hill Burnice E. Sparks, Jr., CFA
Chairman President
* Total return summary for investment periods ended September 30, 1995; 12
months: 2.13%; 5 years: 3.95% annualized; and 10 years: 8.58%: annualized. As
required by the Securities and Exchange Commission, these figures reflect the
average annual compounded return over the period indicated that would equate an
initial amount invested in shares of the Fund to the ending redeemable value of
such shares, assuming that all dividends and distributions by the Fund were
reinvested at net asset value. These figures also reflect the deduction of an
assumed 1% annual investment management fee (-0.25% quarterly) payable by
clients of Bailard, Biehl & Kaiser through 9/30/93. As of 10/01/94, the Fund
charged a management fee of 0.95%. Actual fees varied during this period. The
performance data quoted represents past performance, and the investment return
and principal value of an investment in the Bailard, Biehl & Kaiser
International Equity Fund will fluctuate so that an investor's shares, when
redeemed, nay be worth more or less than their original cost. Further historical
performance of the Fund can be found in the graph at the end of this report.
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R
I N T E R N A T I O N A L E Q U I T Y F U N D
S C H E D U L E O F I N V E S T M E N T S B Y C O U N T R Y
S E P T E M B E R 3 0 , 1 9 9 5
Shares Value
Equity Securities (96.45%)
<S> <C> <C>
I. Argentina (0.17%)
The Argentina Fund Inc. 17,000 $ 180,625
---------------
II. Australia (1.59%)
Broken Hill Proprietary Co. Ltd. 19,800 272,641
CRA Ltd. 14,400 225,274
National Australia Bank Ltd. 51,400 455,270
Pioneer International Ltd. 84,400 223,249
The News Corporation Ltd. 27,500 153,172
TNT Ltd. 28,100 43,110
Western Mining Holding Corp. 19,000 124,351
Westpac Banking Corp. 55,300 224,010
-------
Total Australia 1,721,077
---------
III. Brazil (0.19%)
Brazil Fund Inc. 7,500 200,625
-------
IV. Denmark (1.01%)
DFDS A/S 100 57,788
Danisco A/S 2,400 104,884
Den Danske Bank Group A/S 2,600 165,272
East Asiatic Co. 1,300 36,153
FIH Class B 2,200 47,277
FLS Industries 'B' 700 62,194
GN Store Nord 700 52,460
Korn-Og Fodestofkomp 1,100 49,661
Novo Nordisk A/S 1,500 182,031
Teledanmark A/S Class B 3,800 196,604
Unidanmark A/S "A" 2,300 100,514
Wessel & Vett C Shares 800 36,840
------
Total Denmark 1,091,678
---------
V. Finland (3.87%)
Enso-Gutzeit Oy Class A 66,000 556,295
Huhtamaki Oy Ser 'I' 12,000 413,007
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
Finland - Continued
<S> <C> <C>
Kansallis Thtymae 347,250 $ 364,233
Kymmene Oy 2,000 61,811
Metra (AB) Class B 13,000 602,653
Nokia Oy (AB) Pfd 22,750 1,597,944
Outokumpu A 11,000 195,733
Repola Oy 13,000 292,195
Sampo Insurance A 1,500 87,799
Stockmann (AB) Oy B 250 12,877
------
Total Finland 4,184,547
---------
VI. France (5.62%) 5.62%
Air Liquide (L') S.A. 4,150 661,301
Alcatel Alsthom CGE 7,700 648,083
Bouygues 2,200 253,089
Carrefour 800 469,919
Cie Financiere de Paribas 8,000 404,878
Credit Local de France 6,000 483,049
Groupe Danone 3,000 485,366
LVMH Moet Hennessy 3,300 623,110
Peugeot S.A. 3,110 425,413
Sanofi 9,500 608,232
Soc. Nationale Elf Aquitaine 7,500 506,555
Societe Generale Paris 5,000 512,195
-------
Total France 6,081,190
---------
VII. Germany (3.82%)
Allianz Holdings AG 400 721,695
BASF AG 2,090 457,451
Bayer AG 1,600 407,915
Deutsche Bank AG 6,500 309,715
Dresdner Bank AG 15,500 419,594
Fresenius AG Non Vtg Pfd 300 234,075
Mannesmann AG 1,150 377,762
Siemens AG 1,050 530,461
Veba AG 11,700 464,722
Volkswagenwerk AG 650 211,014
-------
Total Germany 4,134,404
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
VIII. Hong Kong (3.83%)
<S> <C> <C>
Cathay Pacific Airways 93,000 $ 141,334
Cheung Kong Holdings Ltd. 69,000 376,605
China Light & Power Co. 44,000 227,634
Hang Lung Development Co. 110,000 177,839
Hang Seng Bank 54,000 445,245
Hong Kong & China Gas 128,000 206,113
Hong Kong Electric 28,000 93,615
Hong Kong Telecommunications Ltd. 181,200 330,447
Hopewell Holdings Ltd. 200,000 135,805
Hutchison Whampoa Ltd. 140,000 758,695
National Mutual Asia Ltd. 134,000 103,987
Sun Hung Kai Properties Ltd. 63,000 513,341
Swire Pacific Ltd. (Class A) 59,000 467,394
Tai Cheung Holdings Ltd. 190,000 167,104
-------
Total Hong Kong 4,145,158
---------
IX. Indonesia (0.69%)
Gadjah Tunggal (Foreign) 340,000 225,116
Indofood Sukses Makmur (Foreign) 47,000 226,650
Indocement Tunggal (Foreign) 55,000 200,287
Indosat ADR 2,600 91,325
------
Total Indonesia 743,378
-------
X. Italy (2.13%)
Assicurazioni Generali SpA 21,000 485,509
Banca Comm. Italiana 55,600 122,341
Credito Italiano 87,900 104,225
Fiat SpA di Risp (Non CV) 55,300 121,338
Fiat SpA 66,500 248,959
Istituto Mobiliare Italiano 13,000 77,918
Istituto Nazionale delle Assicurazioni SpA (A) 55,800 75,398
Mediobanca SpA 18,000 133,324
* Pirelli SpA 79,900 109,943
R.A.S. 12,700 136,182
Telecom Italia SpA 158,800 262,311
Telecom Italia SpA di Risp 67,000 87,625
* Telecom Italia Mobile SpA 158,800 264,772
* Telecom Italia Mobile di Risp 67,000 73,920
------
Total Italy 2,303,765
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
XI. Japan (21.45%)
<S> <C> <C>
Aoyama Trading 10,000 $ 274,747
Canon Inc. 20,000 357,576
Canon Sales 10,000 258,586
Chubu Electric Power 4,030 97,697
Chugoku Bank 45,000 777,273
Dai Ichi Kangyo Bank 33,000 600,000
Daikyo Inc. 20,000 140,404
Daiwa House Ind. Co. 18,000 283,636
Fuji Bank Ltd. 28,000 596,768
Furukawa Electric Co. Ltd. 89,000 467,475
Honshu Paper Co. 32,000 194,263
Ishikawajima Harima Heavy Industry 173,000 716,465
Jaccs Co. 35,000 342,576
Japan Radio Co. 35,000 392,424
Japan Tobacco Inc. 100 861,616
Kajima Corp. 25,000 246,465
Kamigumi Co. 20,000 187,677
Kawasaki Steel 43,000 154,626
* Kobe Steel 125,000 352,273
Mabuchi Motor Co. 7,000 413,636
Marubeni Corp. 130,000 650,000
Matsushita Electric Industrial 28,000 429,899
Mitsubishi Heavy Industries 185,000 1,420,202
Mitsubishi Oil Co. 10,000 85,657
Mitsubishi Paper Mills 40,000 233,131
Mitsui Petrochemical 20,000 159,596
* NKK Corp. 100,000 267,677
Nichiei Co. 30,000 115,152
Nippon Fire & Marine Insurance 44,000 252,000
Nippon Sharyo Seizo Kaisha 20,000 163,838
Nippon Steel Corp. 144,000 503,273
Nissei Sangyo 14,000 178,182
Nissin Food Products 16,000 358,788
Okamoto Industries 29,000 181,616
Okamura Corp. 33,000 243,333
Olympus Optical Co. Ltd. 34,000 315,616
Orix Corp. 10,000 368,687
Promise Co. 23,000 975,758
Sanyo Electric Co. 85,000 485,960
Sega Enterprises 6,000 343,636
Sekisui House 35,000 434,848
Seven-Eleven Japan 7,600 511,273
Shizuoka Bank 73,000 1,002,828
Sumitomo Bank 21,000 407,273
Sumitomo Forestry 18,000 283,636
TDK Corp. 6,000 309,091
Takeda Chemical Industries Ltd. 20,000 278,788
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
Japan - Continued
<S> <C> <C>
Teijin Ltd. 107,000 $ 513,384
Toda Construction 12,000 103,879
Toho Gas Co. 49,000 157,889
Tokio Marine & Fire Insurance Co. Ltd. 102,000 1,102,416
Tokyo Electric Power 10,070 275,654
Tokyo Gas Co. 65,000 238,333
Tokyo Ohka Kokyo 12,000 363,636
Toyota Motor Corp. 49,000 935,455
Yamaha Motor Co. 35,000 281,061
Yamamura Glass Co. 38,000 234,909
Yamanouchi Pharmaceutical Co. Ltd. 15,000 324,242
-------
Total Japan 23,206,779
----------
XII. Latin America (0.65%)
Latin America Discovery Fund Inc. 25,700 260,213
Latin American Equity Fund 15,000 202,500
Latin American Investment Fund 15,800 237,000
-------
Total Latin America 699,713
-------
XIII. Malaysia (2.36%)
AMMB Holdings Bhd 22,000 271,443
Arab Malaysian Finance 25,000 92,040
Genting Bhd 48,000 414,567
Kedah Cement Bhd 159,000 267,057
Kian Joo Can Factory 52,000 221,453
Malayan Banking Bhd 63,000 509,015
Malaysian Pacific Inds 62,000 164,100
Oriental Holdings Bhd 16,000 80,239
Sime Darby Bhd 200,000 533,333
-------
Total Malaysia 2,553,247
---------
XIV. Netherlands (9.10%)
ABN-AMRO Holdings NV 16,900 699,859
Aegon NV 9,200 333,221
AKZO-Nobel NV 4,200 504,710
DSM NV 4,000 321,285
Fortis Amev NV 3,400 198,439
Heineken NV 3,300 532,598
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
Netherlands - Continued
<S> <C> <C>
Hoogovens NV CVA 2,200 $ 87,803
Internatio Muller 1,400 98,613
Internationale Nederlanden Groep NV 19,600 1,139,036
KLM 1,400 49,131
Koninklijke Ahold NV 4,400 165,422
Koninklijke KNP BT NV 4,300 127,770
Koninklijke PTT Nederland NV 18,200 643,258
Koninklijke Pakhoed NV 3,800 111,486
Nedlloyd NV 1,200 42,638
Philips Electronics NV 20,400 995,383
* Pirelli Tyre Holdings NV 3,600 31,528
Royal Dutch Petroleum Co. 24,600 3,025,410
Unilever NV 5,700 741,302
-------
Total Netherlands 9,848,892
---------
XV. Norway (0.53%) 0.53%
Aker AS 1,700 25,734
Bergesen DY AS 'A' 700 15,504
Dyno Industrier 1,600 35,948
Elkem AS 1,400 17,066
Hafslund Nycomed Ser 'B' 2,200 57,141
Kvaerner Industrier 1,300 55,102
Norsk Hydro AS 6,000 258,140
Norske Skogindustrier 'A' 1,000 33,303
Orkla AS 1,500 72,422
------
Total Norway 570,360
-------
XVI. Singapore (1.77%)
DBS Land (Foreign) 57,000 168,978
Development Bank of Singapore (Foreign) 28,000 318,651
Jardine Matheson 62,000 418,500
Keppel Corp. 33,000 264,278
Overseas Chinese Bank (Foreign) 25,000 282,754
United Overseas Bank (Foreign) 19,000 164,173
United Overseas Land 164,000 293,783
-------
Total Singapore 1,911,117
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
XVII. Spain (5.94%)
<S> <C> <C>
Acerinox SA 1,300 $ 148,403
* Amper SA 5,700 77,991
Autopistas Cesa 18,000 176,335
Banco Bilbao Vizcaya SA 21,400 658,383
Banco Popular Esp. Regd. 3,100 482,388
Banco de Santander Regd. 12,500 524,229
Endesa 18,300 939,338
Fomento Construcciones Y Contratas 1,000 84,120
Gas Natural Sgd SA 3,000 378,174
Iberdrola SA 33,200 251,054
Portland Valderrivas 1,500 103,834
Repsol SA 26,500 833,525
Tabacalera SA Ser A 12,100 430,552
Telefonica de Espana 64,600 889,125
Union Electrica Fenosa 94,000 454,343
-------
Total Spain 6,431,794
---------
XVIII. Sweden (3.37%) 3.37%
AGA AB Ser 'B' Free 22,000 287,230
Asea AB Ser 'B' Free 2,000 198,508
Astra AB Ser 'A' Free 17,600 630,954
Atlas Copco AB Free 9,200 153,295
Autoliv AB Free 1,700 103,618
Ericsson (LM) Tele Ser 'B' Free 35,800 883,157
Ericsson B Rights Exp 10/27/95 35,800 41,834
Incentive AB Ser 'A' Free 6,700 319,935
SKF AB 'B' Free 6,300 139,056
Skandia Forsakrings AB Free 4,700 110,860
Skanska AB Ser B Free 5,300 162,095
Svenska Cellulosa Ser 'B' Free 14,000 253,472
Volvo AB Ser 'B' Free 14,900 365,421
-------
Total Sweden 3,649,435
---------
XIX. Switzerland (6.96%)
Baloise Holdings (Regd) 100 219,894
BBC Brown Boveri (BR) 300 347,762
CS Holdings (Regd) 3,800 356,939
Ciba Geigy AG (Regd) 950 761,579
Danzas Holdings AG (Ptg Cert) 800 148,905
Holderbank Fn Glarus (BR) 265 208,311
Holderbank Warrants Exp 12/20/95 1,325 1,606
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
Switzerland - Continued
<S> <C> <C>
Intershop Holdings AG (BR) 100 $ 54,368
Nestle S.A. (Regd) 1,300 1,331,400
Roche Holdings AG (Ptg Cert) 200 1,412,865
Sandoz AG (Regd) 1,000 761,839
* Swissair (Regd) 250 173,145
Union Bank of Switzerland (BR) 950 973,769
Winterthur (Regd) 650 424,292
Zurich Insurance (Regd) 1,250 350,619
-------
Total Switzerland 7,527,293
---------
XX. United Kingdom (21.41%)
3I Group Plc 90,500 576,305
ASDA Group 125,900 206,899
Abbey National 40,000 342,261
Amstrad Plc 25,500 98,720
B.A.T. Industries Plc 124,500 1,040,695
BAA 24,400 193,742
BBA Group 52,000 237,876
BPB Industries 70,000 351,603
BTR Plc 94,000 482,736
Barclays Plc 105,800 1,242,147
Bass Plc 40,200 404,318
Bowthorpe Holdings 17,400 115,581
British Aerospace 15,200 175,934
British Gas Plc 86,600 362,629
British Petroleum Plc 160,000 1,195,542
British Steel Plc 129,500 370,379
British Telecom Plc 190,200 1,190,157
Commercial Union Plc 39,000 361,667
Dixons Group Plc 135,000 733,822
Electrocomponents Plc 28,800 148,357
Forte Plc 71,000 280,477
GKN Plc 21,300 278,345
General Accident Plc 34,700 337,623
General Electric Company Plc 44,500 223,256
Glaxo Wellcome Plc 90,200 1,094,627
Hanson Plc 177,100 565,286
Hays Plc 53,000 289,768
Imperial Chemical Industries Plc 25,900 328,635
Land Securities Plc 28,800 278,739
Lloyds Bank Plc 52,400 572,147
Lonrho Plc 51,100 134,038
MEPC Plc 39,100 243,429
National Power Plc 31,000 253,986
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
United Kingdom - Continued
<S> <C> <C>
National Westminster Bank 37,600 $ 376,683
Northumbrian Water Plc 30,400 475,562
Norweb Plc 17,000 290,116
Prudential Corp. 30,000 178,952
RTZ Corp. Plc 31,400 457,714
Reed International 5,000 75,818
Scottish & Newcastle Plc 19,000 181,939
Sears Plc 301,200 521,156
Shell Transport & Trading 13,500 158,710
Smith & Nephew Plc 42,700 126,848
Smithkline Beecham Class A 128,700 1,299,505
Smithkline Beecham Units 9,200 91,295
Smiths Industries 40,000 366,595
South Western Electricity Plc 32,200 455,384
Standard Chartered 22,000 156,783
Tesco Plc 101,300 499,416
Thorn EMI 26,400 613,642
Unilever Plc 32,500 646,558
Welsh Water Plc 40,833 502,629
Welsh Water Plc 7.875% Preferred 44,100 71,949
Whitbread Plc 55,000 532,748
Zeneca 21,500 387,762
Total United Kingdom 23,179,490
----------
Total Equity Securities
(Identified Cost $96,867,740) 104,364,567
===========
Par Value
Short-Term Investments (7.35%)
Brown Brothers Harriman & Co. (Grand Cayman)
5.50% Call Account $ 7,952,000 7,952,000
---------
Total Investments (103.80%)
(Identified Cost $104,819,740) 112,316,567
Liabilities Less Other Assets (-3.80%) (4,106,834)
----------
Net Assets (100.00%) 100.00% $ 108,209,733
===================
<FN>
* This security is non-income producing.
</FN>
</TABLE>
See Notes to Financials
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R
I N T E R N A T I O N A L E Q U I T Y F U N D
S C H E D U L E O F I N V E S T M E N T S B Y I N D U S T R Y
S E P T E M B E R 3 0 , 1 9 9 5
U N A U D I T E D
Percent of
Industry Net Assets
<S> <C>
Aerospace 0.16%
Appliances and Household Products 1.77
Automobile 2.30
Banking 13.53
Beverages and Tobacco 3.30
Broadcasting and Publishing 0.21
Building Materials & Components 2.27
Business and Public Services 1.86
Chemicals 4.44
Construction and Housing 1.50
Data Products 0.42
Electrical and Electronics 4.95
Electronic Components and Instruments 0.68
Energy Sources 5.96
Finance/Financial Services 3.47
Food and Housing Products 3.98
Health and Personal Care 6.92
Industrial Components 1.12
Insurance 5.07
Investment Trust Units 0.84
Leisure 0.64
Machinery 3.51
Merchandising 3.52
Metals (Non-Ferrous) 0.74
Multi-Industry 5.17
Other Industries 0.90
Paper & Allied Products 1.61
Real Estate 2.31
Recreation 1.44
Steel 1.95
Telecommunications 3.77
Transportation 0.48
Utilities 4.76
Wholesale and International 0.90
Short-Term Investments 7.35
Liabilities Less Other Assets -3.80
----
Net Assets 100.0
=====
</TABLE>
See Notes to Financials
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R
I N T E R N A T I O N A L E Q U I T Y F U N D
S T A T E M E N T O F A S S E T S A N D L I A B I L I T I E S
S E P T E M B E R 3 0 , 1 9 9 5
Assets
<S> <C> <C>
Investments, at value
(Identified cost $104,819,740) $ 112,316,567
Foreign currency, at value
(Identified cost $32,804) 33,092
Cash 5,941
Receivables:
Dividend, interest and recoverable
foreign taxes receivable $ 591,358
Portfolio securities sold 4,957,138
Forward contracts offset 20,526
Fund shares sold 101,110 5,670,132
-------
Prepaid expenses 5,164
-----------
Total assets 118,030,896
-----------
Liabilities
Payables for portfolio securities purchased 9,603,565
Accrued management fees (Note 3) 79,055
Other accrued expenses 138,543
-------
Total liabilities 9,821,163
---------
Net assets (equivalent to $6.00 per share of $.0001
par value capital stock,
representing the offering and redemption
price for 18,041,372 shares outstanding,
100,000,000 shares authorized) $ 108,209,733
===================
Net assets consist of:
Capital paid in $ 94,357,280
Accumulated net investment income 906,195
Accumulated net realized gain on investments
and foreign currency transactions 5,425,518
Unrealized appreciation on:
Investments $ 7,496,827
Foreign currency 23,913 7,520,740
------ ---------
$ 108,209,733
===================
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R
I N T E R N A T I O N A L E Q U I T Y F U N D
S T A T E M E N T O F O P E R A T I O N S S E P T E M B E R 3 0 , 1 9 9 5
<S> <C> <C>
Investment Income
Dividends (net of foreign taxes
withheld of $353,956) $ 2,403,503
Interest 479,456
-------
2,882,959
Expenses
Advisory fees $ 1,092,804
Custodian fees 436,737
Audit and legal fees 81,503
Transfer agent fees 36,008
Administrative fees 38,110
Directors' fees and expenses 16,498
Insurance 4,004
Printing fees 2,501
Registration fees 17,664
Taxes 16,854
Miscellaneous expenses 20,390
------
Total expenses 1,763,073
---------
Net investment income 1,119,886
---------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain from investments 5,460,318
Net unrealized loss on investments (11,515,113)
-----------
Net loss on investments (6,054,795)
----------
Net realized loss on foreign currency (213,691)
Net unrealized gain on foreign currency
and foreign currency denominated assets and
liabilities 12,374
------
Net loss on foreign currency (201,317)
--------
Net loss on investments and foreign currency (6,256,112)
----------
FOREIGN CURRENCY
Net decrease in net assets resulting from operations $ (5,136,226)
==================
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R I N T E R N A T I O N A L E Q U I T Y F
U N D
S T A T E M E N T O F C H A N G E S I N N E T A S S E T S
For the year ended
September 30,
1995 1994
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 1,119,886 $ 616,809
Net realized gain on investments 5,460,318 29,101,364
Net unrealized loss on investments (11,515,113) (8,138,112)
Net realized loss on foreign currency (213,691) (11,513,385)
Net unrealized gain on foreign currency and
foreign currency denominated assets and liabilities 12,374 4,312,096
------ ---------
Net increase (decrease) resulting from operations (5,136,226) 14,378,772
---------- ----------
Distributions from net realized gains (3,077,445) -
Fund share transactions:
Proceeds from shares sold 35,594,714 36,051,477
---------- ----------
Net asset value of shares issued on
reinvestment of distributions 2,576,600 -
Cost of shares redeemed (126,536,057) (28,536,478)
------------ -----------
Net increase (decrease) resulting from Fund share
transactions (88,364,743) 7,514,999
----------- ---------
Net increase (decrease) (96,578,414) 21,893,771
Net Assets
Beginning of year 204,788,147 182,894,376
----------- -----------
End of year (including accumulated net investment
income (loss) of $906,195 and
($8,700,869), respectively) $ 108,209,733 $ 204,788,147
=========== =================== ===================
Number of Fund Shares
Sold 6,030,952 5,856,009
Issued on reinvestment of distributions 448,885 -
Redeemed (21,996,752) (4,614,390)
----------- ----------
Net increase (decrease) (15,516,915) 1,241,619
=========== =========
</TABLE>
See Notes to Financial Statements
<PAGE>
B A I L A R D , B I E H L & K A I S E R
I N T E R N A T I O N A L E Q U I T Y F U N D
N O T E S T O F I N A N C I A L S T A T E M E N T S
Note 1 - Summary of Significant Accounting Policies
Bailard, Biehl & Kaiser International Equity Fund (the "Fund") is a
non-diversified series of the Bailard, Biehl & Kaiser International Fund Group,
Inc. (the "Group"), a Maryland corporation and an open-end management investment
company registered under the Investment Company Act of 1940. The following
significant accounting policies are followed by the Fund in the preparation of
its financial statements and are in conformity with generally accepted
accounting principles for investment companies.
Security Valuation
Each listed investment security is valued at the closing price thereof reported
by the principal securities exchange on which the issue is traded, or if no sale
is reported, the mean of the closing bid and asked prices. Securities which are
traded over-the-counter are normally valued at the mean of the closing bid and
asked prices quoted by major dealers of such securities, or in the absence of
such prices, as determined in good faith by, or under procedures determined by,
the Board of Directors of the Fund. Short-term obligations with a maturity of 60
days or less are valued at amortized cost which approximates market.
The Fund's investment in foreign securities may entail risks due to the
potential of political and economic instability in the countries in which
securities are offered or the issuers conduct their operations. It is the Fund's
policy to continuously monitor its exposure to these risks.
Foreign Currency
Foreign currency amounts, other than the cost of investments, are translated
into U.S. dollar values at the mean of the bid and offer price of such currency
against U.S. dollars last quoted on the valuation date. The cost of investments
is translated at the rates of exchange prevailing on the dates the portfolio
securities were acquired.
Effective October 1, 1994, the Fund adopted AICPA Statement of Position 93-4,
under which the Fund includes foreign exchange gains and losses from dividends
and interest receivable and other foreign-currency denominated payables and
receivables in realized and unrealized gain (loss) on foreign currency. The Fund
does not isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from fluctuations arising from
changes in the market price of securities for financial reporting purposes.
Fluctuations in foreign exchange rates on investments are included with net
realized and unrealized gain (loss) on investments.
Forward Foreign Currency Exchange Contracts
In connection with portfolio purchases and sales of securities denominated in a
foreign currency, the Fund may enter into forward foreign exchange contracts
("contracts"). Additionally, from time to time the Fund may enter into contracts
to sell foreign currencies to hedge certain foreign currency denominated assets.
All commitments are "marked-to-market" daily at the applicable translation rates
supplied by a quotation service and any resulting unrealized gains or losses are
included in unrealized appreciation (depreciation) on foreign currency
denominated assets and liabilities. The Fund records realized gains or losses at
the time the forward contract is settled. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The Fund had no such contracts outstanding
on September 30, 1995.
Federal Income Taxes
The Fund's policy is to comply with the requirements of the Internal Revenue
Code ("Code") applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Therefore, no provision is made for
Federal income taxes.
<PAGE>
Note 1 - Continued
In accordance with AICPA Statement of Position 93-2, the Fund reduced
paid-in-capital by $10,605,000 and increased undistributed net investment income
and accumulated net realized capital gains by $8,487,000 and $2,118,000,
respectively, primarily to reflect the recognition of deferred prior-year
foreign currency losses in taxable net investment income and adjustments to the
amounts of realized gains on investments in companies designated as "passive
foreign investment companies" for tax purposes.
Other
Investment security transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date or when the Fund first becomes aware
of such dividend. Interest income is recorded on the accrual basis.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
uses the identified cost method for determining realized gain or loss on
investments. Certain expenses of the Group are allocated between the series of
the Group in such manner as the Directors deem appropriate.
Note 2 - Purchases and Sales of Securities
For the year ended September 30, 1995, purchases and sales of securities, other
than short-term investments, aggregated $193,179,004 and $259,369,511,
respectively. There were no purchases or sales of U.S. Government obligations.
Note 3 - Management Fee and Other Transactions with Affiliates
The Fund has entered into an Investment Management Agreement with Bailard, Biehl
& Kaiser, Inc. (the "Advisor") for investment advisory services, under which the
Advisor receives a fee, payable monthly, at the annual rate of 0.95% of the
average net assets of the Fund. Advisory fees paid on shares of the Fund owned
are taken into account in the computation of fees payable under individual
advisory agreements for advisory clients of the Advisor.
The Advisor has agreed to reimburse the Fund to the extent that the Fund's
operating expenses (as defined) exceed 2.5% of the first $30 million of the
average net assets of the Fund, 2.0% of the next $70 million, and 1.5% of the
remaining average net assets of the Fund.
Certain officers and directors of the Group are currently officers and directors
of the Advisor and receive compensation of $500 per year. Each other director is
compensated by the Group at the rate of $6,000 per year plus $1,000 for each
meeting of the Board of Directors attended and travel expenses incurred in
attending such meetings.
Note 4 - Tax Basis Appreciation
Unrealized appreciation (depreciation) at September 30, 1995, based on the cost
of securities for federal income tax purposes of $104,838,168 consists of:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 9,061,034
Gross unrealized depreciation (1,582,635)
Net unrealized appreciation $ 7,478,399
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R
I N T E R N A T I O N A L E Q U I T Y F U N D
F I N A N C I A L H I G H L I G H T S
For a share outstanding throughout the year:
Year Ended September 30,(1)
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $6.10 $5.66 $4.80 $5.69 $5.26
Income from Investment Operations:
Net Investment Income(2) 0.06 (3) 0.01 0.07 0.06 0.11
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 0.06 0.43 0.79 (0.87) 0.54
Total from Investment Operations 0.12 0.44 0.86 (0.81) 0.65
Less Distributions:
Net Investment Income - - - (0.08) (0.11)
Capital Gains (0.22) - - - (0.11)
Total Distributions (0.22) - - (0.08) (0.22)
Net Asset Value, End of Year $6.00 $6.10 $5.66 $4.80 $5.69
Total Return 2.13% 7.77% 17.92% (14.20%) 12.30%
Ratios/Supplemental Data:
Net Assets, End of Year (000's) $108,210 $204,788 $182,894 $127,092 $126,132
Ratio of Expenses to Average Net Assets 1.53% 1.39% 0.68% 1.05% 1.22%
Ratio of Net Investment Income to
Average Net Assets 0.97% 0.29% 1.88% 1.55% 1.93%
Portfolio Turnover Rate 174% 176% 131% 77% 81%
<FN>
1. Prior to February, 1993, the investment managers of the Fund were Normura
Capital Management, Inc. and certain affiliates; (collectively, "Normura"),
Acadian Asset Management, Inc. ("Acadian"), and, with respect to foreign
currency hedging transactions and allocation of Fund assets to the other
managers, Bailard, Biehl & Kaiser, Inc. The Fund paid Normura and Acadian fees
at varying rates for their services. Effective February, 1993, Bailard, Biehl &
Kaiser, Inc. (the "Adivisor") assumed full responsibility for investment
management services to the Fund.
On October 1, 1993, the Fund and the Advisor entered into a new Investment
Management Agreement pursuant to which the Fund pays management fees to the
Advisor. At all times prior to that date, the Advisor directly charged
management fees to clients and the Fund pay no fees to the Advisor. If fees
directly charged to clients were included as a Fund expense at an assumed 1%
annual rate payable quarterly, pro-forma total returns would be as follows
(unaudited):
Year Ended September 30,
1993 1992 1991
16.74% (15.05%) 11.18%
2. 1995 amounts are computed on the basis of average shares outstanding,
before book-to-tax adjustments of undistributed net investment income.
3. The amount shown for each share outstanding may not accord with the change
in the aggregate gains and losses in the portfolio securities for the period
because of the timing of purchases and redemptions of shares in relation to the
fluctuating market value of the portfolio.
</FN>
</TABLE>
<PAGE>
B A I L A R D , B I E H L & K A I S E R
I N T E R N A T I O N A L E Q U I T Y F U N D
R E P O R T O F I N D E P E N D E N T A C C O U N T A N T S -
- --------------------------------------------------------------------------------
To the Shareholders and the Board of Directors of
Bailard, Biehl & Kaiser International Equity Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Bailard, Biehl & Kaiser
International Equity Fund (a series of Bailard, Biehl & Kaiser International
Fund Group, Inc.) at September 30, 1995, and the results of its operations, the
changes in its net assets and its financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities owned at
September 30, 1995 by correspondence with the custodian and brokers (and the
application of alternative auditing procedures where confirmations from brokers
were not received), provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
November 17, 1995
<PAGE>
B A I L A R D , B I E H L & K A I S E R
I N T E R N A T I O N A L E Q U I T Y F U N D
Federal Income Tax Information: (Unaudited)
For the fiscal year ended September 30, 1995, the Fund accrued foreign taxes
amounting to $353,956, which are expected to be passed through to shareholders
as foreign tax credits on Form 1099-DIV for the year ending December 31, 1995.
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Average Annual Total Return
------------------------------------------------------------------------------
------------------------- -------------------------- -------------------------
1 Year 5 Year 10 Year
------------------------- -------------------------- -------------------------
------------------------- -------------------------- -------------------------
<S> <C> <C> <C>
7.77% -1.05% 11.28%
------------------------- -------------------------- -------------------------
</TABLE>
This graph (as mandated by the Securities and Exchange Commission), shows the
historic growth of a $10,000 investment in the Bailard, Biehl & Kaiser
International Equity Fund since October 1, 1985. We compare this investment to
the growth in the Morgan Stanley EAFE stock index over the same time period. The
index, which measures the performance of the international equity markets, is
given in both U.S. dollar and local currency terms. As the graph indicates, a
$10,000 investment in the Bailard, Biehl & Kaiser International Equity Fund
would have grown to $22,898 over the ten-year period ended September 30, 1995.
* Total return summary for investment periods ended September 30, 1994; 12
months: 2.13%; 5 years: 3.95% annualized; and 10 years: 8.58% annualized. As
required by the Securities and Exchange Commission, tese figures reflect the
average annual compounded return over the period indicated that would equate an
initial amount invested in shares of the Fund to the ending redeemable value of
such shares, assuming that all dividends and distributions by the Fund were
reinvested at net asset value. These figures also reflect the deduction of an
assumed 1% annual investment management fee (-0.25% quarterly) payable by
clients of Bailard, Biehl & Kaiser through 9/30/93. As of 10/1/95, the Fund
charged a management fee of 0.95%. Actual fees varied during this period. The
performance data quoted represents past performance, and the investment return
and principal value of an investment in the Bailard, Biehl & Kaiser
International Equity Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
<PAGE>
Investment Adviser
Bailard, Biehl & Kaiser, Inc.
2755 Campus Drive
San Mateo, California 94403
Transfer Agent
Chase Global Funds Services Company
Boston, Massachusetts
Custodian And Accountant
Brown Brothers Harriman & Co.
Boston, Massachusetts
Counsel
Howard, Rice, Nemerovski, Canady, Falk & Rabkin
San Francisco, California
Distributor
BB&K Fund Services, Inc.
2755 Campus Drive
San Mateo, California 94403
Independent Accountants
Price Waterhouse LLP
Boston, Massachusetts
IRA Custodian
Chase Manhattan Bank, N.A.
New York, New York
International Fixed-Income Fund Officers And Trustees
Peter M. Hill, Chairman, Director
Burnice E. Sparks, Jr., President, Director
Tina Thomas, Treasurer
Janis M. Horne, Secretary
Shirley L. Clayton, Director
David B. Shippey, Director
James C. Van Horne, Director
Investor Services Department
(800) 882-8383
This report is submitted for the general information of the shareholders of
Bailard, Biehl & Kaiser International Fixed-Income Fund. The report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus.
