May 30, 1996
Dear Shareholders:
We are pleased to present your March 31, 1996 semi-annual shareholders' report
for the Bailard Biehl & Kaiser International Equity Fund. In this report, we
will review the markets' performance over the past six months and present our
outlook for the future.
Performance Review
The Bailard Biehl & Kaiser International Equity Fund returned 5.20%* for the
past six months and 14.38%* for the past year. For comparison, Morgan Stanley's
Europe, Australia and Far East Index (EAFE) returned 7.05% and 12.33% over the
same respective time periods.
Many of the world's major stock markets have performed exceptionally well over
the past six months. Hong Kong, with its currency effectively linked to the U.S.
dollar, was a leading performer among the larger markets, returning 16%. In
Japan, where we increased our holdings to more than 25% of the Fund in the
fourth quarter, the local market has risen just over 14% since September.
Germany and France, where we have approximately 16% of the portfolio invested,
increased 11% and 17%, respectively. The dollar, however, has strengthened over
the past six months, up 7.6 % versus the yen and 3.6% against the mark, so that
in dollar terms, the returns from these markets were substantially reduced.
Market Review and Outlook -- Europe
Overall, the European markets are currently enjoying a favorable environment,
despite the fact that economic growth is extremely slow. Inflation is low and
stable, corporations are recognizing the need to restructure to become globally
competitive, and governments are continuing to privatize. Most European nations
are reducing spending in an effort to meet the fiscal targets necessary for
monetary union. They are also reducing interest rates in an effort to stimulate
expansion. This mix of a tight fiscal policy and a loose monetary policy has
been favorably received by investors.
Currently, Germany is in recession. However, low short-term interest rates, a
weaker mark and continued containment of wage costs should set the stage for
better economic growth later this year. The German stock market has been rising
in anticipation of better times ahead. We expect German stocks to continue to
move higher, but political struggles over cutbacks in the welfare system may add
some volatility to the market in the coming months.
The French stock market has been performing strongly so far this year. Prime
Minister Juppe's structural reforms, although causing considerable pain, have
been an important factor behind the confidence in both the French bond and stock
markets. The French markets have also been helped by lower interest rates in
Germany and a belief that the Maastricht targets for monetary union may still be
realized.
The U.K.'s stock market was relatively subdued in the first quarter of the year
before climbing 3.4% in April. The economic news has been mixed: retailing seems
to be recovering but manufacturing is still struggling. Importantly, inflation
remains low. Lower short-term interest rates in Europe plus the prospects of
bids and mergers in the financial sector have been helping the stock market move
higher. The local elections results, though largely expected, were bad news for
the Tories. The
<PAGE>
financial markets are probably discounting a labor government being in power by
this time next year, but political uncertainties will increase over the
remainder of 1996.
Amongst the smaller markets, performance has been more erratic. Italy, a market
that has behaved poorly earlier this year, has risen 13% following the April
general elections which have thrust Romano Prodi, center-left politician, into
the role of Prime Minister. This rally reflects the financial markets' belief
that Prodi's new government has some hope of tackling Italy's formidable
deficits. Spain, too, enjoyed a confidence boost, as it became clear that the
new Prime Minister, Jose Maria Aznar, would be able to secure enough support to
form a government. Aznar pleased the financial markets by declaring that Spain
would seek to join the European monetary union.
Looking ahead, we are optimistic about the outlook for Europe. We expect lower
interest rates, corporate restructuring and higher economic growth (later in
1996) to encourage the financial markets to move higher. Although Germany and
France will participate, we believe the better relative returns will come from
Spain, Switzerland and Holland. In Spain, there is considerable potential for
further interest rate cuts to drive the market higher. The high relative
earnings-to-cash yields make the markets of Holland and Switzerland very
attractive.
Market Review and Outlook -- Japan
The Japanese economy is at an interesting juncture. The economic recovery is
slow but seems likely to continue. Since swelling deficits have reduced the
scope for further fiscal stimulus, an accommodative monetary policy has taken a
leading but delicate role in the economic recovery. The Japanese authorities are
trying to walk carefully on a path between too much monetary stimulus, which may
lead to another bout of asset inflation and too little money growth. This in
turn could exacerbate bank lending problems and destroy the economic recovery.
The Japanese government's policies seem to be working. Recent industrial
production data showed output accelerating. Employment and average hours worked
are rising, partly as a result of last year's fiscal stimulus. Private domestic
demand is growing, led by non-residential investment. Capital expenditure growth
has spread to non-manufacturing industries. This, along with a rebound in
consumer spending and a recovery in exports, should allow the growth cycle to
continue despite a tighter fiscal policy. With ample capacity and only nominal
increases in wages, Japan's inflation should stay extremely low.
The continued downward revisions of Japanese profit growth estimates has been
primarily driven by huge downward revisions in the banking sector --- a positive
sign that Japanese banks are becoming more proactive in recognizing bad loans.
Excluding financial companies, corporate profit estimates are up and are
expected to increase substantially in the coming year.
The Japanese market does face some risks: tightening monetary and fiscal policy
causing a slip back to recession, weak demand abroad, and a potential excess
supply of stock ---should too many issues flood the market at once (e.g. from
banks raising capital). Nevertheless, economic recovery, an improved earnings
outlook, undervaluation and sentiment all point to a good relative performance
from the Japanese market in the months ahead. We are therefore currently
slightly overweighting Japan in our portfolio.
Market Review and Outlook -- Asia ex-Japan
Overheating is the main concern in southeast Asia. Record-high current account
deficits, a flood of
<PAGE>
fresh capital inflows and strong domestic demand have stoked the fires of
overheating economies. Tightly controlled Singapore is the exception in the
region, having slowed its exuberant economy much earlier than its neighbors.
In Malaysia, monetary tightening will help to rein in economic growth. The
dissipation of overheating pressures, together with a firmer currency, should
hold down the trade deficit. An extremely tight labor market will heat up
inflation and put pressure on competitiveness and profit margins. Nevertheless,
interest rates are near a peak, and we are maintaining a neutral exposure to
this market.
In Hong Kong, sluggish consumer spending, lower inventory accumulation and
slower investment spending subdued GDP growth for the fourth quarter of 1995; no
improvement is in sight for the first quarter of 1996. An expansionary budget
and falling unemployment should help to prevent further declines in private
consumption and to keep growth steady. Although Hong Kong's growth lags the rest
of Asia, it is still double that of Europe. As a result, we are remaining
overweight in Hong Kong.
Market Outlook -- Emerging Markets
Emerging markets have grown to over 10% of equity market capitalization outside
of the U.S. It is our view that these emerging markets will outperform developed
markets in the long term. We have recently added a very small exposure to Korea
and Thailand. Over the next few months, we expect to add further to our emerging
market portfolio. Although individual emerging markets can be risky, they are
generally not correlated with the market movements of the developed markets.
Even adding a small exposure to a number of these markets should reduce the
total volatility of the Fund over the long term.
Summary and Conclusions
Our economic outlook for Europe and Japan is one of low growth and contained
inflation. These conditions should facilitate further progress for these markets
in the second half of 1996. For the smaller countries of the Far East, economic
growth will continue to fuel solid stock market returns in the months ahead.
Our investment approach is to overweight those markets and stocks which are most
attractive on the basis of book-to-price ratios and other relative value
measures. At the same time, our models indicate that global market volatility is
an important predictor of when we should expect this "value" approach to
investing to pay its biggest rewards. So far in 1996, global volatility has
remained near its historical lows. This implies that the markets that have been
performing well are likely to continue to do so. Because it has risen so much in
the past eighteen months, the U.S. market does not rank highly in terms of
relative value. When global market volatility increases, we expect that "better
value" will be recognized in the overseas markets and international equities
will begin to outperform the U.S. market.
<PAGE>
We appreciate your continued investment in the Bailard, Biehl & Kaiser
International Equity Fund. If you have any questions concerning the Fund, please
do not hesitate to call us.
Sincerely,
/s/ Peter M. Hill /s/ Burnie E. Sparks
Peter M. Hill Burnie E. Sparks, Jr., CFA
Chairman President
*Total return summary for investment periods ended March 31, 1996: 6 months:
5.20%; 12 months: 14.38%; 5 years: 2.27% annualized; and 10 years: 4.39%
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, may be worth more or less than their original cost.
<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
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
M A R C H 3 1 , 1 9 9 6
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
Equity Securities (93.57%)
I. Belgium (1.25%)
Electrabel 600 $ 133,705
Fortis 1,700 208,190
Generale Banque 630 224,293
Gevaert Photo-Producten 1,000 63,293
Kredietbank 600 165,747
Powerfin 150 19,334
Societe Generale de Belgigue 2,800 221,524
Sofina 30 15,131
Tractebel 535 206,344
-------------------
Total Belgium 1,257,561
-------------------
II. France (6.70%)
Air Liquide (L') S.A. 2,850 518,799
Axa SA 5,300 325,628
Carrefour 350 256,238
Credit Commercial de France 4,000 186,601
Credit Local de France 4,900 383,635
Ecco 1,500 345,707
Eramet 1,800 130,779
Eridania Beghin Say 1,580 268,169
Generale des Eaux 3,200 327,146
LVMH Moet Hennessy 2,040 517,542
Michelin CL "B" Regd. 7,900 376,377
Peugeot S.A. 2,510 382,666
Rhone Poulenc SA 6,000 154,720
Saint Louis 1,100 308,764
Sanofi 5,460 396,697
Seita 6,700 277,975
Soc. Nationale Elf Aquitaine 11,380 771,468
Societe Generale Paris 3,550 394,640
Technip SA Compagnie Francaise 1,500 131,017
UAP Companie 13,500 276,566
-------------------
Total France 6,731,134
-------------------
III. Germany (4.96%)
Altana AG 200 128,718
BASF AG 700 188,978
Bankgesellschaft Berlin AG 1,500 346,521
Bayer AG 1,100 374,765
</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
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
M A R C H 3 1 , 1 9 9 6 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
Germany - Continued
Berliner Kraft & Light CL A 650 $ 180,543
CKAG Colonia Konzern AG 600 451,189
Degussa 530 193,889
Deutsche Bank AG 7,200 362,561
Gehe AG 350 201,545
Hoechst AG 900 318,881
Ind-Werke Karl-Aug (IWKA) AG 170 29,368
Mannesmann AG 700 255,132
Munich Reinsurance Part Pd Regd 190 395,807
Siemens AG 1,250 688,046
Veba AG 10,700 520,104
Volkswagen AG 1,000 350,586
-------------------
Total Germany 4,986,633
-------------------
VI. Hong Kong (7.29%)
Amoy Properties 124,000 144,298
Bank of East Asia 40,800 140,326
Cheung Kong Holdings Ltd. 92,000 654,254
China Light & Power Co. 60,000 270,753
Chinese Estates Holdings Ltd. 112,000 101,371
Citic Pacific Ltd. 60,000 231,963
Consolidated Electric Power Asia 84,000 138,479
Dickson Concept Intl Ltd. 208,000 227,256
Electric & Eltek Intl Holdings 680,000 144,194
Goldlion Holdings Ltd. 123,000 97,808
Hang Seng Bank 65,000 668,154
Hong Kong & China Gas 108,000 212,258
Hong Kong & Shanghai Hotels Ord. 81,000 132,486
Hong Kong Aircraft & Engineering 44,800 118,169
Hong Kong Telecommunications 349,200 697,587
Hutchison Whampoa Ltd. 108,000 678,666
Kowloon Motor Bus Co. 125,000 211,727
New World Development Co. Ltd. 130,000 608,482
Regal Hotels International 490,000 121,011
Sime Darby Hong Kong 104,000 96,819
Sun Hung Kai Properties Ltd. 67,000 610,745
Swire Pacific Ltd. (Class A) 58,000 511,831
Varitronix Intl 37,000 67,455
Wharf Holdings 116,000 433,463
-------------------
Total Hong Kong 7,319,555
-------------------
</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
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
M A R C H 3 1 , 1 9 9 6 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
V. Indonesia (0.19%)
Indosat ADR 2,600 $ 88,725
Telekomunikasi Indonesia ADR 3,300 101,888
-------------------
Total Indonesia 190,613
-------------------
VI. Italy (2.34%)
Autostrade CEC Pfd. 100,000 109,670
Banca Comm. Italiana 55,600 116,239
Banca Popolare di Bergamo Credit 14,800 227,218
Benetton Group SpA 9,000 103,127
Credito Italiano 87,900 94,268
*ENI SpA 35,000 127,241
Fiat SpA 66,500 209,071
Fiat SpA di Risp (Non CV) 55,300 96,902
*Istituto Mobiliare Italiano 35,000 239,960
Istituto Nazionale delle Assicurazioni SpA (A) 211,800 289,339
*Pirelli SpA 79,900 111,956
R.A.S. 13,970 136,444
Telecom Italia Mobile SpA 80,000 145,546
*Telecom Italia SpA 158,800 251,909
Telecom Italia SpA di Risp 67,000 94,736
-------------------
Total Italy 2,353,626
-------------------
VII. Japan (25.69%)
77th Bank 45,000 416,129
Aoyama Trading 4,000 122,300
Atsugi Nylon Industrial 86,000 394,016
Autobacs Seven 1,000 86,957
Canon Inc. 22,000 419,635
Canon Sales 5,500 146,050
Chubu Electric Power 4,030 92,696
Chugoku Bank 49,000 856,755
Chugoku Electric Power 33,000 740,533
Daiichi Corp. 10,000 231,884
Daiichi Pharmaceutical 5,000 78,541
Daikyo Inc. 94,000 672,370
Daiwa Bank 76,000 558,541
Daiwa House Ind. Co. 18,000 282,749
Dowa Fire & Marine 80,000 441,328
Fuji Bank Ltd. 28,000 610,005
Fujita Corp. 46,000 218,925
Fukuda Corp. 16,000 145,863
*Furukawa Electric Co. Ltd. 22,000 124,039
</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
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
M A R C H 3 1 , 1 9 9 6 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
Japan - Continued
Gunze Ltd. 20,000 $ 115,194
*Haseko Corp. 100,000 409,537
Hitachi Ltd. 115,000 1,118,280
Honda Motor Co. 20,000 435,718
Honshu Paper Co. 32,000 218,121
Ishikawajima Harima Heavy Industry 32,000 149,603
JGC Corp. 25,000 301,543
Jaccs Co. 14,000 130,902
Japan Tobacco Inc. 70 647,966
Kawasaki Steel 43,000 153,988
Kitz Corp. 12,000 55,652
Kobe Steel 88,000 272,352
Komai Tekko 3,000 22,973
Long Term Credit Bank of Japan 54,000 451,389
Makita Corp. 23,000 346,237
Marubeni Corp. 123,000 688,892
Matsushita Electric Industrial 54,000 878,541
Mitsubishi Corp. 9,000 117,812
Mitsubishi Heavy Industries 18,000 155,512
Mitsubishi Motors 33,000 282,020
Mitsubishi Oil Co. 10,000 84,245
Mitsui Marine & Fire Insurance Co. 5,000 37,681
Nagase & Co. 15,000 143,058
New Oji Paper Co. Ltd. 35,000 319,074
Nichiei Co. (Yokohama) 64,000 279,458
Nippon Fire & Marine Insurance 58,000 359,009
Nippon Steel Corp. 144,000 495,484
Nissin Food Products 10,000 248,714
Nomura Securities Co. Ltd. 14,000 307,620
Olympus Optical Co. Ltd. 22,000 213,932
Orient Corp. 80,000 482,468
Orix Corp. 2,000 75,736
Santen Pharmaceutical Co. 7,700 159,112
Sanwa Bank Ltd. 20,000 402,057
Sekisui House 60,000 751,753
Shizuoka Bank 52,000 656,381
*Sogo Company Ltd. 80,000 352,314
Sumitomo Bank 37,000 747,265
Sumitomo Electric 15,000 201,964
Sumitomo Forestry 9,000 138,008
Sumitomo Trust & Banking 12,000 164,937
Toda Corp. 48,000 437,588
Tohoku Electric Power 13,000 301,449
Tokyo Electric Power 10,070 257,988
Tokyo Ohka Kokyo 13,000 361,010
Toray Industries 18,000 116,466
Toyo Seikan Kaisha 2,000 70,500
Toyo Trust & Banking 44,000 410,996
</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
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
M A R C H 3 1 , 1 9 9 6 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
Japan - Continued
Toyota Motor Corp. 49,000 $ 1,081,253
Toyota Tsusho Kaisha 32,000 215,129
Yakult Honsha Co. 30,000 406,732
Yamaichi Securities Co. 99,000 763,675
Yamamura Glass Co. 47,000 280,813
Yamanouchi Pharmaceutical Co. Ltd. 2,000 44,507
Yamatake Honeywell 24,000 417,391
Yasuda Trust & Banking 70,000 430,014
-------------------
Total Japan 25,807,329
-------------------
VIII. Malaysia (1.02%)
DCB Holdings Berhad 13,000 44,704
Golden Hope Plantations Berhad 38,000 63,984
Hong Leong Inds Bhd 12,000 60,711
IOI Corp. Bhd 38,000 45,360
MBF Capital Bhd 37,000 48,846
Magnum Corp. Bhd 22,000 35,304
Malayan Banking Bhd 10,000 93,281
Malaysia Intl Shipping (Fgn Regd) 22,000 62,174
New Strait Times 5,000 25,692
Petronas Gas Bhd 29,000 130,672
Resorts World Bhd 14,000 79,684
Rothmans Pall Mall 4,000 38,577
Sime Darby Bhd 43,000 118,972
Sungei Way Holdings 19,000 82,609
Telekom Malaysia 5,000 46,047
UMW Holdings Bhd 14,000 47,589
-------------------
Total Malaysia 1,024,206
-------------------
IX. Netherlands (4.80%)
ABN-AMRO Holdings NV 14,600 726,459
Aegon NV 9,100 429,657
Fortis Amev NV 2,400 169,248
Heineken NV 1,800 388,435
Hoogovens NV CVA 1,800 66,028
ING Groep NV 13,300 966,093
KLM 4,300 149,666
Koninklijke Ahold NV 1,500 72,366
Philips Electronics NV 10,000 363,798
*Pirelli Tyre Holdings NV 3,600 32,252
</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
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
M A R C H 3 1 , 1 9 9 6 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
Netherlands - Continued
Royal Dutch Petroleum Co. 7,500 $ 1,062,340
Unilever NV 2,900 395,499
-------------------
Total Netherlands 4,821,841
-------------------
X. Singapore (3.65%)
ACMA Ltd. 15,000 46,672
Amcol Holdings 15,000 38,574
City Developments 32,000 284,151
DBS Land (Foreign) 64,000 245,507
Development Bank of Singapore (Foreign) 32,000 393,266
Fraser & Neave 14,400 162,648
Jardine Matheson 62,000 483,600
Jardine Strategic 62,000 195,920
Keppel Bank Ltd. 39,000 121,901
Keppel Corp. 37,000 336,435
Neptune Orient Lines 123,000 139,803
Overseas Chinese Bank (Foreign) 28,000 375,932
Prima 24,000 98,032
Sembawang Corp. Ltd. 19,000 95,155
Singapore Airlines Ltd. (Foreign) 18,000 186,688
Singapore Telecomm 31,000 76,195
United Overseas Land 185,000 390,318
-------------------
Total Singapore 3,670,797
-------------------
XI. Spain (5.14%)
Acerinox SA 600 67,710
*Amper SA 900 11,752
Argentaria 30,700 1,299,182
Autopistas Cesa 8,500 86,330
Banco Popular Esp. 300 51,846
Banco de Santander 5,600 266,777
Endesa 8,300 475,686
Fomento Construcciones Y Contratas 500 44,737
Fuerzas Electricas de Cataluna (FECSA) 17,800 116,219
Gas Natural SDG SA 1,300 224,877
Iberdrola SA 88,000 812,195
Portland Valderrivas 800 49,460
Repsol SA 12,000 452,688
Sevillana de Electricidad 20,200 145,729
Tabacalera SA Ser A 2,400 112,205
Telefonica de Espana 39,000 619,303
</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
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
M A R C H 3 1 , 1 9 9 6 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
Spain - Continued
Union Electrica Fenosa 45,700 $ 249,757
Vallehermoso SA 4,000 71,901
-------------------
Total Spain 5,158,354
-------------------
XII. Switzerland (8.94%)
BBC Brown Boveri (BR) 300 364,989
Baloise Holdings (Regd) 100 216,925
CS Holdings (Regd) 3,800 349,056
Ciba Geigy AG (Regd) 950 1,189,347
Danzas Holdings AG (Ptg Cert) 800 187,666
Holderbank Fin Glarus (BR) 265 200,084
Intershop Holdings AG (BR) 100 62,807
Nestle S.A. (Regd) 1,300 1,466,852
Roche Holdings AG (Ptg Cert) 200 1,661,412
Sandoz AG (Regd) 1,000 1,172,910
*Swissair (Regd) 250 262,749
Union Bank of Switzerland (BR) 950 1,054,357
Winterthur (Regd) 650 429,016
Zurich Insurance (Regd) 1,250 359,440
-------------------
Total Switzerland 8,977,610
-------------------
XIII. United Kingdom (21.60%)
ASDA Group 304,900 494,454
Amstrad Plc 81,500 233,860
B.A.T. Industries Plc 124,500 919,718
BAA Plc 24,400 199,243
BTR Plc 60,000 289,386
Barclays Plc 105,800 1,177,208
Bardon Group Plc 390,000 217,269
Bass Plc 46,200 524,632
Bellway Plc 36,000 150,554
Bowthorpe Holdings 17,400 113,799
Brammer Plc 21,300 168,728
Britannic Assurance 20,000 239,934
British Aerospace 36,200 474,339
*British Biotechnology Plc 15,000 572,363
British Gas Plc 86,600 302,026
British Petroleum Plc 160,000 1,399,312
British Steel Plc 90,000 260,997
British Telecom Plc 259,200 1,462,794
Burton Group Plc 154,000 339,060
Cobham Group Plc 58,000 474,054
Dixons Group Plc 135,000 921,046
</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
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
M A R C H 3 1 , 1 9 9 6 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
United Kingdom - Continued
Electrocomponents Plc 28,800 $ 156,049
Fine Art Developments Plc 30,000 208,798
GKN Plc 21,300 309,172
General Accident Plc 34,700 324,926
General Electric Company Plc 44,500 248,588
Glaxo Wellcome Plc 90,200 1,131,666
Harris Phillip Plc 3,900 14,852
Hays Plc 53,000 328,429
Hyder Plc 40,833 469,607
Hyder Plc Pfd 44,100 67,983
Imperial Chemical Industries Plc 25,900 365,268
Invesco Plc 82,000 321,027
LLoyds TSB Group Plc 141,689 684,463
Land Securities Plc 28,800 275,174
London Clubs International 50,000 414,390
Lonrho Plc 51,100 167,297
Mirror Group Plc 190,000 630,743
National Power Plc 31,000 220,962
National Westminster Bank 37,600 364,706
Prudential Corp. 30,000 195,061
Reed International 5,000 84,519
Sears Plc 88,200 133,947
Shell Transport & Trading 13,500 178,234
Smithkline Beecham Class A 29,700 297,825
Smithkline Beecham Units 9,200 92,537
Standard Chartered Plc 36,000 334,351
Sun Alliance Group 50,000 275,116
Thorn EMI Plc 26,400 678,355
Unichem Plc 97,000 356,803
Unilever Plc 34,500 643,999
Yorkshire Electricity Group 37,000 458,844
Yorkshire Water Plc 8,000 83,397
Zeneca Group Plc 11,500 238,359
-------------------
Total United Kingdom 21,690,223
-------------------
Total Equity Securities
(Identified Cost $85,467,993) 93,989,482
-------------------
</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
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
M A R C H 3 1 , 1 9 9 6 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
--------- -----
<S> <C> <C>
Short-Term Investments (5.81%)
Brown Brothers Harriman & Co.
(Grand Cayman Branch)
5.50% Call Account $ 5,842,000 $ 5,842,000
-------------------
Total Short-Term Investments
(Identified Cost $5,842,000) 5,842,000
-------------------
Total Investments (99.38%)
(Identified Cost $91,309,993) 99,831,482
Other Assets Less Liabilities (0.62%) 618,549
-------------------
Net Assets (100.00%) $ 100,450,031
===================
- --------------------------------
* This security is non-income producing.
</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
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
M A R C H 3 1 , 1 9 9 6
U N A U D I T E D
- --------------------------------------------------------------------------------
Industry Percent of
- -------- Net Assets
----------
Aerospace 1.06%
Appliances and Household Products 1.28
Automobile 2.83
Banking 16.52
Beverages and Tobacco 2.14
Broadcasting and Publishing 0.74
Building Materials & Components 0.75
Business and Public Services 1.95
Chemicals 3.71
Construction and Housing 2.52
Data Products 0.65
Electrical and Electronics 2.77
Electronic Components and Instruments 0.89
Energy Sources 4.06
Finance/Financial Services 3.08
Food and Housing Products 3.60
Health and Personal Care 6.50
Industrial Components 0.91
Insurance 5.54
Leisure 1.30
Machinery 2.19
Merchandising 3.21
Metals (Non-Ferrous) 0.13
Materials 0.65
Multi-Industry 4.45
Paper & Allied Products 0.53
Real Estate 4.47
Recreation 0.89
Steel 1.31
Telecommunications 3.62
Textiles 0.61
Transportation 0.95
Utilities 6.60
Wholesale and International 1.16
Short-Term Investments 5.81
Assets Less Other Liabilities 0.62
------
Net Assets 100.00%
======
<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
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
M A R C H 3 1 , 1 9 9 6
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Investments, at value
(Identified cost $91,309,993) $ 99,831,482
Foreign currency, at value
(Identified cost $598,135) 598,331
Cash 898
Receivables:
Dividends, interest and recoverable foreign taxes receivable $ 539,383
Portfolio securities sold 302,175
Fund shares sold 6,018 847,576
Prepaid expenses ----------------- 9,625
---------------------
Total assets 101,287,912
---------------------
Liabilities
Payables:
Portfolio securities purchased 597,942
Shares of the Fund redeemed 5,000 602,942
Accrued management fees (Note 3) ----------------- 83,827
Other accrued expenses 151,112
---------------------
Total liabilities 837,881
---------------------
Net assets (equivalent to $5.93 per share of $.0001 par value capital stock,
representing the offering and redemption price for 16,947,566 shares
outstanding,
100,000,000 shares authorized) $ 100,450,031
=====================
Net assets consist of:
Capital paid in $ 88,111,229
Accumulated overdistributed net investment income (74,414)
Accumulated net realized gain on investments
and foreign currency transactions 3,896,785
Unrealized appreciation (depreciation) on:
Investments $ 8,521,489
Foreign currency (5,058) 8,516,431
----------------- ---------------------
$ 100,450,031
=====================
</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
S T A T E M E N T O F O P E R A T I O N S
M A R C H 3 1 , 1 9 9 6
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income
Dividends (net of foreign taxes withheld of $112,869) $ 819,818
Interest 95,752
-----------------
915,570
Expenses
Advisory fees $ 511,326
Custodian fees 165,189
Audit and legal fees 54,413
Transfer agent fees 18,642
Administrative fees 16,499
Directors' fees and expenses 8,001
Insurance 2,809
Printing fees 2,518
Registration fees 4,316
Miscellaneous expenses 10,002
Total expenses ---------------- 793,715
-----------------
Net investment income 121,855
-----------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain from investments 3,923,647
Net unrealized gain on investments 1,024,662
-----------------
Net gain on investments 4,948,309
-----------------
Net realized loss on foreign currency (9,557)
Net unrealized loss on foreign currency
and foreign currency denominated assets and
liabilities (28,971)
-----------------
Net loss on foreign currency (38,528)
-----------------
Net gain on investments and foreign currency 4,909,781
-----------------
Net increase in net assets resulting from operations $ 5,031,636
=================
</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
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended March 31, 1996 For the year ended
(Unaudited) September 30, 1995
-------------------- ------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 121,855 $ 1,119,886
Net realized gain on investments 3,923,647 5,460,318
Net unrealized gain (loss) on investments 1,024,662 (11,515,113)
Net realized loss on foreign currency (9,557) (213,691)
Net unrealized gain (loss) on foreign currency and
foreign currency denominated assets and liabilities (28,971) 12,374
------------------ -----------------------
Net increase (decrease) resulting from operations 5,031,636 (5,136,226)
------------------ -----------------------
Distributions to shareholders:
From net investment income (1,102,464) -
From net realized gains (5,442,823) (3,077,445)
------------------ -----------------------
Total distributions (6,545,287) (3,077,445)
------------------ -----------------------
Fund share transactions:
Proceeds from shares sold 8,955,649 35,594,714
Net asset value of shares issued on
reinvestment of distributions 5,720,256 2,576,600
Cost of shares redeemed (20,921,956) (126,536,057)
------------------ -----------------------
Net decrease resulting from Fund share
transactions (6,246,051) (88,364,743)
------------------ -----------------------
Net decrease (7,759,702) (96,578,414)
Net Assets
Beginning of period 108,209,733 204,788,147
------------------ -----------------------
End of period (including (overdistributed) undistributed
net investment income of ($74,414) and
$906,195, respectively) $ 100,450,031 $ 108,209,733
================== =======================
Number of Fund Shares
Sold 1,525,102 6,030,952
Issued on reinvestment of distributions 999,560 448,885
Redeemed (3,618,468) (21,996,752)
------------------ -----------------------
Net decrease (1,093,806) (15,516,915)
================== =======================
</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
U N A U D I T E D
- --------------------------------------------------------------------------------
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.
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 March 31, 1996.
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>
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 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Other
Investment security transactions are accounted for on the trade date. Dividend
income is recorded on the ex- dividend date or when the Fund first becomes aware
of such dividend. Interest income is recorded on the accrual basis.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
uses the identified cost method for determining realized gain or loss on
investments. Certain expenses of the Group are allocated between the series of
the Group in such manner as the Directors deem appropriate.
Note 2 - Purchases and Sales of Securities
For the six months ended March 31, 1996, purchases and sales of securities,
other than short-term investments, aggregated $52,166,204 and $66,983,372,
respectively. There were no purchases or sales of U.S. Government obligations.
Note 3 - Management Fee and Other Transactions with Affiliates
The Fund has entered into an Investment Management Agreement with Bailard, Biehl
& Kaiser, Inc. (the "Advisor") for investment advisory services, under which the
Advisor receives a fee, payable monthly, at the annual rate of 0.95% of the
average net assets of the Fund. Advisory fees paid on shares of the Fund 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 March 31, 1996, based on the cost of
securities for federal income tax purposes of $91,309,993 consists of:
Gross unrealized appreciation $ 9,955,675
Gross unrealized depreciation (1,434,186)
--------------
Net unrealized appreciation $ 8,521,489
==============
<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
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 period:
<TABLE>
<CAPTION>
1
For the Six-months Year Ended September 30,
Ended March 31, 1996--------------------------------------------------------------------
Unaudited 1995 1994 1993 1992 1991
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 6.00 $ 6.10 $ 5.66 $ 4.80 $ 5.69 $ 5.26
------------ ----------- --------- ----------- ----------- ----------
Income from Investment Operations:
2
Net Investment Income 0.01 0.06 0.01 0.07 0.06 0.11
Net Realized/Unrealized Gain (Loss) on 3
Securities and Foreign Currency 0.29 0.06 0.43 0.79 (0.87) 0.54
------------ ----------- --------- ----------- ----------- ----------
Total from Investment Operations 0.30 0.12 0.44 0.86 (0.81) 0.65
------------ ----------- --------- ----------- ----------- ----------
Less Distributions:
Net Investment Income (0.06) -- -- -- (0.08) (0.11)
Capital Gains (0.31) (0.22) -- -- -- (0.11)
------------ ----------- --------- ----------- ----------- ----------
Total Distributions (0.37) (0.22) -- -- (0.08) (0.22)
------------ ----------- --------- ----------- ----------- ----------
Net Asset Value, End of Period $ 5.93 $ 6.00 $ 6.10 $ 5.66 $ 4.80 $ 5.69
============ =========== ========= =========== =========== ==========
Total Return 5.20% 2.13% 7.77% 17.92% (14.20%) 12.30%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $ 100,450 $ 108,209 $ 204,788 $ 182,894 $ 127,092 $ 126,132
4
Ratio of Expenses to Average Net Assets 1.50% 1.53% 1.39% 0.68% 1.05% 1.22%
Ratio of Net Investment Income to 4
Average Net Assets 0.23% 0.97% 0.29% 1.88% 1.55% 1.93%
Portfolio Turnover Rate 50% 174% 176% 131% 77% 81%
5
Average Commission Rate Paid $ 0.0268 -- -- -- -- --
</TABLE>
- ------------------------------
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 paid 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.
4. Annualized.
5. Represents average commission rate paid per share on purchases and sales
of equity securities by the Fund, as computed under SEC rule effective
with the Fund's 1996 fiscal year. Prior period rates have not been
presented as permitted by the rule.
See "Notes to Financial Statements"
<PAGE>
May 30, 1996
Dear Shareholder:
We are pleased to present your March 31, 1996, semi-annual shareholders' report
for the Bailard Biehl & Kaiser International Bond Fund. It includes a review of
the world's fixed income markets, Fund performance and our outlook for the
months ahead.
Performance and Market Review
International bonds posted a strong fourth quarter return. European bonds in
particular were up over 5.0% in local currency for the most part. Australia and
Canada also performed well. Only Japanese bonds were down. The first quarter of
1996 was more stressful for bond holders. After a strong January, international
bonds sold off in sympathy with the U.S. market, following a stronger than
expected February employment report. International bonds were not hit as hard as
the treasury market, however, and they recovered somewhat in March. The net
result was positive local currency returns in Europe and Japan and modestly
negative returns for the dollar block countries (Canada, Australia) for the
quarter. The dollar strengthened over the quarter, however, and U.S. dollar
returns were negative on average by 1.5%. Over the full six months,
international bond returns both locally and in dollar terms were up between 2.0%
and 3.0% on average. The Bailard, Biehl and Kaiser International Bond Fund
performed well in the period, with a total return for the last six months of
3.86% .*
Market Outlook
The fundamental environment remains constructive for bonds on a global basis. In
Europe, growth has remained slower than expected as a result of tight fiscal
policies and structural problems in the economies. Inflation continues to
decline in the absence of any reflationary fiscal or monetary policy changes.
First quarter German GDP is likely to show the second quarterly decline in a
row. Unemployment recently topped a record high of 4 million in Germany. While
France enjoyed a first quarter rebound from the strikes and poor weather of last
December, growth prospects for the second quarter are bleak. Consumer confidence
is declining, and unemployment has begun to rise again. We expect to see
continued weak activity in the second quarter for Europe. As a result, bond
yields should decline toward their January levels, creating good returns for the
second quarter of 1996.
The Japanese market is more uncertain. The economy has begun to slowly recover,
and politicians are fretting over the budget deficit. In addition, they are
being pressured to allow interest rates to rise by the voting public, who sees
the lower interest rates propping up wealthy bankers at the expense of small
savers. This has created anxiety in the bond market. While from a fundamental
standpoint, there is little reason for the Bank of Japan to raise interest rates
with continued deflation and only slow growth, the political factors cannot be
fully ignored. Given the low level of yields, it would take only a small rise in
bond yields to wipe out the coupon return on Japanese bonds. Therefore, we do
<PAGE>
not expect the Japanese market to perform as well as the European markets over
the next quarter.
We believe Canadian and Australian bonds will perform well during the quarter,
as the U.S. bond market recovers. Both Canada and Australia have economic
fundamentals that are positive for bonds, but these markets find it more
difficult to decouple from the U.S. market than either Europe or Japan. We
expect the U.S. bond market to recover in the second quarter, once investors
realize that the recent growth and inflation scare has been overblown. This will
allow the Canadian and Australian markets to realize their inherent value.
We appreciate the opportunity to manage your international bond investments and
look forward to continued success. If you have any questions, please feel free
to call.
Sincerely,
/s/ Peter M. Hill /s/ Burnie E. Sparks
Peter M. Hill Burnie E. Sparks, Jr., CFA
Chairman President
* Average annual returns for investment periods ended March 31, 1996: 3 months:
- -0.24%; 6 months: 3.86%; 12 months: 9.65%; 5 years: 5.54% annualized; since
inception (10/1/90): 5.71% annualized. As required by the Securities and
Exchange Commission, these figures reflect the average compounded return over
the period indicated that would equate an initial amount invested in shares of
the Fund to the ending redeemable value of such shares, assuming that all
dividends and distributions by the Fund were reinvested at net asset value. The
performance data quoted represents past performance, and the investment return
and principal value of an investment in the Bailard, Biehl & Kaiser
International Bond Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
<PAGE>
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 B O N D F U N D
P O R T F O L I O O F I N V E S T M E N T S
M A R C H 3 1 , 1 9 9 6
U n a u d i t e d
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
--------- -----
<S> <C> <C> <C>
Senior Securities (94.31%)
Australian Dollar (1.64%)
Government of Australia
10.000% 10/15/02 A$ 675,000 $ 558,392
Queensland Treasury Corp.
8.000% 05/14/03 A$ 650,000 482,490
-------------------
Total Australian Dollar 1,040,882
-------------------
Austrian Schilling (1.51%)
Republic of Austria
6.250% 09/14/03 ATS 10,000,000 957,094
-------------------
Belgium Franc (5.35%)
Government of Belgium
10.000% 08/02/00 BEF 25,000,000 968,508
Government of Belgium
9.000% 03/28/03 BEF 36,000,000 1,368,662
Government of Belgium
8.750% 06/25/02 BEF 28,000,000 1,049,562
-------------------
Total Belgium Franc 3,386,732
-------------------
British Pound (9.40%)
British Telecom Plc
7.125% 09/15/03 (pound) 1,950,000 2,837,054
European Investment Bank
8.500% 11/06/01 (pound) 600,000 944,600
United Kingdom Treasury
9.750% 08/27/02 (pound) 1,300,000 2,168,038
-------------------
Total British Pound 5,949,692
-------------------
Canadian Dollar (5.94%)
Government of Canada
6.500% 06/01/04 C$ 2,000,000 1,369,928
Government of Canada
10.250% 03/15/14 C$ 1,000,000 881,919
KFW International Finance
10.000% 03/05/01 C$ 1,825,000 1,510,035
-------------------
Total Canadian Dollar 3,761,882
-------------------
</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 B O N D F U N D
P O R T F O L I O O F I N V E S T M E N T S
M A R C H 3 1 , 1 9 9 6 (Continued)
U n a u d i t e d
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
--------- -----
<S> <C> <C> <C>
Danish Kroner (5.23%)
Kingdom of Denmark
9.000% 11/15/00 DKr 7,500,000 $ 1,457,831
Kingdom of Denmark
8.000% 05/15/03 DKr 10,000,000 1,852,526
-------------------
Total Danish Kroner 3,310,357
-------------------
French Franc (12.34%)
Government of France (O.A.T.)
7.750% 04/12/00 FF 17,000,000 3,645,559
Government of France (O.A.T.)
6.750% 10/25/03 FF 20,500,000 4,166,739
-------------------
Total French Franc 7,812,298
-------------------
German Mark (20.07%)
Baden Wurtttemberg
6.000% 01/25/06 DM 2,000,000 1,293,861
Deutsche Bundespost
6.250% 10/01/03 DM 2,500,000 1,691,112
European Investment Bank
7.500% 11/04/02 DM 1,300,000 943,669
German Federal Republic
8.375% 05/21/01 DM 7,700,000 5,888,849
German Federal Republic
8.250% 09/20/01 DM 800,000 608,956
German Federal Republic
7.375% 01/03/05 DM 1,300,000 937,812
Int'l Bank for Reconstruction & Development
5.875% 11/10/03 DM 2,000,000 1,334,259
-------------------
Total German Mark 12,698,518
-------------------
Italian Lira (8.12%)
American International Group Inc.
11.700% 12/04/01 ITL 5,500,000,000 3,751,489
</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 B O N D F U N D
P O R T F O L I O O F I N V E S T M E N T S
M A R C H 3 1 , 1 9 9 6 (Continued)
U n a u d i t e d
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
--------- -----
<S> <C> <C> <C>
Italian Lira - Continued
Government of Italy
10.500% 04/01/00 ITL 2,150,000,000 $ 1,385,378
-------------------
Total Italian Lira 5,136,867
-------------------
Japanese Yen (13.97%)
Asian Development Bank
5.625% 02/18/02 (Y) 235,000,000 2,556,545
Autobahnen & Schnellstrassen Fin AG
6.000% 03/11/00 (Y) 215,000,000 2,304,289
International Bank For Reconstruction & Development
4.750% 12/20/04 (Y) 113,000,000 1,194,979
Japan Development Bank
6.500% 09/20/01 (Y) 247,000,000 2,782,936
-------------------
Total Japanese Yen 8,838,749
-------------------
Netherlands Guilder (4.15%)
Government of Netherlands
8.500% 03/15/01 NLG 2,000,000 1,368,027
Government of Netherlands
7.750% 03/01/05 NLG 1,900,000 1,258,107
-------------------
Total Netherlands Guilder 2,626,134
-------------------
Spanish Peseta (4.24%)
Government of Spain
7.400% 07/30/99 ESP 240,000,000 1,855,829
Government of Spain
10.300% 06/15/02 ESP 98,000,000 821,230
-------------------
Total Spanish Peseta 2,677,059
-------------------
Swedish Kroner (2.35%)
Kingdom of Sweden
10.250% 05/05/03 SKr 9,000,000 1,484,866
-------------------
Total Senior Securities
(Identified Cost $59,422,647) 59,681,130
-------------------
</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 B O N D F U N D
P O R T F O L I O O F I N V E S T M E N T S
M A R C H 3 1 , 1 9 9 6 (Continued)
U n a u d i t e d
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value Value
--------- -----
<S> <C> <C>
Short-Term Investments (2.30%)
Brown Brothers Harriman & Co. (Grand Cayman Branch)
5.50% Call Account $ 1,455,000 $ 1,455,000
-------------------
Total Investments (96.61%)
(Identified Cost $60,877,647) 61,136,130
Other Assets Less Liabilities (3.39%) 2,147,708
-------------------
Net Assets (100%) $ 63,283,838
===================
</TABLE>
Currency Legend:
A$ - Australian Dollar NLG - Netherlands Guilder
ATS - Austrian Schilling (pound) - British Sterling
BEF - Belgium Franc FF - French Franc
C$ - Canadian Dollar ITL - Italian Lira
DKr - Danish Kroner (Y) - Japanese Yen
DM - German Mark ESP - Spanish Peseta
SKr - Swedish Kroner
(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 B O N D 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
M A R C H 3 1 , 1 9 9 6
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Investments, at value
(Identified cost $60,877,647) $ 61,136,130
---------------------
Foreign currency, at value
(Identified cost $1,086,052) 1,074,587
Cash 746
Receivables:
Interest and recoverable foreign taxes receivable $ 2,211,906
-----------------
Portfolio securities sold 106,755
Shares of the Fund sold 77,360 2,396,021
Prepaid expenses 11,625
---------------------
Total assets 64,619,109
---------------------
Liabilities
Payables:
Portfolio securities purchased 1,111,839
Forward currency contracts open (Note 5) 47,248
Distributions to shareholders 2,360 1,161,447
-----------------
Accrued management fees (Note 3) 31,042
Other accrued expenses 142,782
---------------------
Total liabilities 1,335,271
---------------------
Net assets (equivalent to $8.17 per share, representing the offering and
redemption price for 7,749,594 shares outstanding,
100,000,000 shares authorized) $ 63,283,838
=====================
Net assets consist of:
Capital paid in $ 78,918,953
Accumulated net investment income 149,940
Accumulated net realized loss on investments
and foreign currency transactions (15,967,397)
Unrealized appreciation (depreciation) on:
Investments $ 258,483
Foreign currency (76,141) 182,342
----------------- ---------------------
$ 63,283,838
=====================
</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 B O N D 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
F O R T H E S I X M O N T H S E N D E D M A R C H 3 1 , 1 9 9 6
U N A U D I T E D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income
Interest (net of foreign taxes withheld of $17,548) $ 2,142,507
-----------------
Expenses
Advisory fees $ 232,030
Custodian fees 78,046
Audit and Legal fees 52,501
Transfer agent fees 18,499
Administrative fees 16,499
Directors' fees and expenses 8,001
Insurance 1,278
Printing fees 2,500
Registration fees 1,695
Miscellaneous expenses 7,739
--------------
Total expenses 418,788
-----------------
Net investment income 1,723,719
-----------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain from investments 1,532,256
Net unrealized loss on investments (1,741,608)
-----------------
Net loss on investments (209,352)
-----------------
Net realized gain on foreign currency 192,079
Net unrealized gain on foreign currency
and foreign currency denominated assets and
liabilities 663,077
-----------------
Net gain on foreign currency 855,156
-----------------
Net gain on investments and foreign currency 645,804
-----------------
FOREIGN CURRENCY
Net increase in net assets resulting from operations $ 2,369,523
=================
</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 B O N D 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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended March 31, 1996 For the year ended
(Unaudited) September 30, 1995
----------- ------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 1,723,719 $ 5,805,168
Net realized gain on investments 1,532,256 13,483,733
Net unrealized gain (loss) on investments (1,741,608) 1,750,599
Net realized gain (loss) on foreign currency 192,079 (4,104,103)
Net unrealized gain on foreign currency and
foreign currency denominated assets and liabilities 663,077 627,058
------------------- ----------------------
Net increase resulting from operations 2,369,523 17,562,455
------------------- ----------------------
Distributions to shareholders:
From net investment income (1,573,779) (5,805,168)
For tax purposes in excess of book
net investment income (5,239,089) (1,595,884)
------------------- ----------------------
Total distributions (6,812,868) (7,401,052)
------------------- ----------------------
Fund share transactions:
Proceeds from shares sold 4,618,068 38,075,626
Net asset value of shares issued on
reinvestment of distributions 5,527,737 5,311,388
Cost of shares redeemed (7,058,649) (125,274,300)
------------------- ----------------------
Net increase (decrease) resulting from Fund share
transactions 3,087,156 (81,887,286)
------------------- ----------------------
Net decrease (1,356,189) (71,725,883)
Net Assets
Beginning of period 64,640,027 136,365,910
------------------- ----------------------
End of period (including undistributed net investment
income of $149,940 and $5,239,089,
respectively) $ 63,283,838 $ 64,640,027
=================== ======================
Number of Fund Shares
Sold 545,559 4,780,250
Issued on reinvestment of distributions 673,484 651,288
Redeemed (830,279) (15,069,674)
------------------- ----------------------
Net increase (decrease) 388,764 (9,638,136)
=================== ======================
</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 B O N D 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
U N A U D I T E D
- --------------------------------------------------------------------------------
Note 1 - Summary of Significant Accounting Policies
The Bailard, Biehl & Kaiser International Fixed-Income Fund (the "Fund") is a
series of the Bailard, Biehl & Kaiser International Fund Group, Inc. (the
"Group"), which was organized as a Maryland corporation in June 1990 and is
registered under the Investment Company Act of 1940 as a non-diversified,
open-end management investment company. The following significant accounting
policies are followed by the Fund in the preparation of its financial statements
and are in conformity with generally accepted accounting principles.
Security Valuation
Investments in securities traded on an exchange or quoted on the
over-the-counter market are valued at the last transaction price reported on the
principal exchange or market on which the issue is traded, or, if no transaction
occurred during the day, at the mean between the current closing bid and asked
prices, except U.S. Government obligations which in all cases are stated at the
mean between the current closing bid and asked price, as last reported by a
pricing service approved by the Board of Directors.
When market quotations are not readily available, or when restricted securities
or other assets are being valued, such assets are valued at fair value as
determined in good faith by or under procedures established by the Board of
Directors. Short-term investments denominated in U.S. dollars that will mature
in 60 days or less are stated at amortized cost; such investments denominated in
foreign currencies are stated at amortized cost as determined in the foreign
currency and translated to U.S. dollars at the current day's exchange rate.
The Fund's investment in foreign securities may entail risks due to the
potential of political and economic instability in the countries in which the
securities are offered or the issuers conduct their operations. It is the Fund's
policy to continuously monitor 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.
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 realized and unrealized gain (loss) on investments
resulting from changes in foreign exchange rates on investments from
fluctuations arising from changes in the market price of securities for
financial reporting purposes. Fluctuations in foreign exchange rates on
investments are thus included with net realized and unrealized gain (loss) on
investments.
Forward Foreign Currency Exchange Contracts
In connection with purchases and sales of securities denominated in a foreign
currency the Fund may enter into forward foreign currency exchange contracts
("contracts"). Additionally, from time to time the Fund may enter into contracts
to sell foreign currencies to hedge certain foreign currency denominated assets.
All commitments are "marked-to-market" daily at the applicable translation rates
supplied by a quotation service and any resulting unrealized gains or losses are
included as unrealized appreciation (depreciation) on foreign currency
denominated assets and liabilities. The Fund records realized gains or losses at
the time the forward contract is settled. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
Federal Income Taxes
The Fund's policy is to comply with the requirements of the Internal Revenue
Code ("Code") applicable to regulated investment companies and to distribute all
of its income to its shareholders. It is also the Fund's intention to make
distributions in amounts sufficient to avoid imposition of excise tax under the
Code. Therefore, no provision is made for Federal income or excise taxes.
<PAGE>
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 B O N D 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 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
Note 1 - Continued
The final tax status of distributions paid to shareholders for the Fund's fiscal
year ending September 30, 1996 will be determined based on full-year results of
operations. The amount of distributions for tax purposes in excess of book net
investment income for the years ended September 30, 1996 and 1995 represents
amounts paid to shareholders from foreign currency gains reclassified to net
investment income under the Code.
At September 30, 1995, the Fund had a capital loss carryforward of approximately
$17,193,000, which principally resulted from the deferral under the Code of net
capital losses realized during the period from November 1, 1993 to September 30,
1994. These losses may be carried forward through the fiscal year ending
September 30, 2003. Additionally, the Fund incurred net capital losses of
$325,000 during the period from November 1, 1994 to September 30, 1995 which may
be deferred to the Fund's 1996 fiscal year under the Code. These losses will
first be used to offset any net capital gain realized during that year, and any
remaining net capital loss may be carried forward through the fiscal year ending
September 30, 2004.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Other
Investment security transactions are accounted for on the trade date (the date
the order to buy or sell is executed). Interest income is recorded on the
accrual basis. Distributions to shareholders are recorded on the ex-dividend
date. The Fund uses the identified cost method for determining realized gain or
loss on investments. Certain expenses of the Group are allocated between the
series of the Group in such manner as the Directors deem appropriate.
Note 2 - Purchases and Sales of Securities
For the six months ended March 31, 1996, purchases and sales of investment
securities other than short-term investments aggregated $22,594,737 and
$24,352,019, respectively. There were no purchases and sales of U.S. Government
obligations during the six months ended March 31, 1996.
Note 3 - Management Agreement and Other Transactions with Affiliates
The Fund has entered into an Investment Management Agreement with Bailard, Biehl
& Kaiser, Inc. (the "Advisor") for investment advisory services. Under the
agreement, the Advisor receives a fee, payable monthly, at the annual rate of
0.75% of the average net assets of the Fund. Advisory fees paid on shares of the
Fund owned are taken into account in the computation of fees payable under
individual advisory agreements for advisory clients of the Advisor.
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 average
net assets, 2.0% of the next $70 million and 1.5% of average net assets in
excess of $100 million.
Certain officers and directors of the Group are currently officers and directors
of the Advisor and receive total compensation from the Group of $500 per year.
Each other director is compensated by the Group at the total rate of $6,000 per
year plus $1,000 for each meeting of the Board of Directors attended and travel
expenses incurred in such meetings.
Note 4 - Unrealized Appreciation (Depreciation) on a Tax Basis
Unrealized appreciation (depreciation) on March 31, 1996, based on the cost of
securities of $60,877,647 for federal income tax purposes, consists of the
following:
Gross unrealized appreciation $ 1,452,504
Gross unrealized depreciation (1,194,021)
--------------
Net unrealized appreciation $ 258,483
==============
<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 B O N D 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 (Continued)
U N A U D I T E D
- --------------------------------------------------------------------------------
Note 5 - Commitments
At March 31, 1996 the Fund had entered into forward foreign currency contracts
which obligated the Fund to exchange currencies at specified future dates. At
the maturity of a forward contract, the Fund may either make delivery of the
foreign currency from currency held, if any, or from the proceeds of portfolio
securities sold, or it may terminate its obligation to deliver the foreign
currency at any time by purchasing an offsetting contract. The value of amounts
due to the Fund under the contracts, including contracts which have been offset
but remained unsettled, has been netted against the value of the currency to be
delivered by the Fund and the remaining amount is shown as payable for forward
currency contracts in the financial statements. Open forward foreign currency
exchange contracts outstanding at March 31, 1996 were as follows:
<TABLE>
<CAPTION>
Currency Currency Delivery Unrealized
Receivable Deliverable Date Appreciation/(Depreciation)
---------- ----------- -------- ---------------------------
<S> <C> <C> <C> <C>
$1,884,878 DKr 10,832,773 04/29/96 $ (18,567)
500,000 A$ 679,163 05/31/96 (29,041)
2,195,995 (Y) 226,187,500 05/31/96 62,381
1,100,000 SKr 7,755,550 05/31/96 (59,804)
5,548,963 DM 8,159,495 06/07/96 (2,620)
4,614,733 FF 23,267,484 06/10/96 (17,225)
941,614 (pound) 616,643 06/10/96 1,104
1,019,708 ITL 1,604,000,000 06/10/96 4,079
1,931,177 BEF 58,225,000 06/14/96 2,489
2,082,118 (pound) 1,369,815 06/14/96 (7,024)
1,390,052 NLG 2,283,160 06/14/96 760
2,122,226 DM 3,111,184 06/18/96 4,134
2,208,389 C$ 3,001,200 06/21/96 4,315
1,552,491 ESP 194,760,000 06/24/96 (7,748)
2,283,384 ITL 3,598,385,000 06/24/96 8,536
2,126,260 (Y) 223,958,975 06/24/96 6,983
-----------
$ (47,248)
===========
</TABLE>
Currency Legend:
A$ - Australian Dollar ITL - Italian Lira
BEF - Belgian Franc NLG - Netherlands Guilder
C$ - Canadian Dollar (pound) - British Sterling
DKr - Danish Kroner FF - French Franc
DM - German Mark SKr - Swedish Kroner
ESP - Spanish Peseta (Y) - Japanese Yen
<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 B O N D 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 period:
<TABLE>
<CAPTION>
1
Year Ended September 30,
For the Six months----------------------------------------------------------------
Ended March 31, 1996 2 2
(Unaudited) 1995 1994 1993 1992 1991
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $8.78 $8.02 $10.85 $11.29 $10.94 $10.00
----- ----- ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income 0.26 0.47 0.61 0.67 0.85 0.73
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 0.08 0.86 (2.39) 0.39 0.53 0.38
----- ----- ------ ------ ------ ------
Total from Investment Operations 0.34 1.33 (1.78) 1.06 1.38 1.11
----- ----- ------ ------ ------ ------
Less Distributions:
Net Investment Income (0.22) (0.45) (0.26) (1.08) (0.94) (0.17)
For Tax Purposes in Excess of Book
Net Investment Income (0.73) (0.12) - - - -
Capital Gains - - (0.27) (0.42) (0.09) -
Return of Capital - - (0.52) - - -
Total Distributions (0.95) (0.57) (1.05) (1.50) (1.03) (0.17)
----- ----- ------ ------ ------ ------
Net Asset Value, End of Period $8.17 $8.78 $8.02 $10.85 $11.29 $10.94
===== ===== ===== ====== ====== ======
Total Return 3.98% 17.33% (17.90%) 10.65% 13.57% 11.22%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $63,284 $64,640 $136,366 $165,484 $115,628 $91,256
3
Ratio of Expenses to Average Net Assets 1.33% 1.16% 1.12% 0.42% 0.64% 0.53%
Ratio of Net Investment Income to 3
Average Net Assets 5.47% 5.66% 5.87% 6.25% 7.37% 7.33%
Portfolio Turnover Rate 37% 179% 319% 157% 140% 89%
</TABLE>
- ------------------------------
1. On October 1, 1993, the Fund and the Advisor entered into a new
Investment Management Agreement pursuant to which the Fund is required
to pay certain management fees to the Advisor. Prior to that date,
advisory fees were directly charged to clients of Bailard, Biehl &
Kaiser, Inc. and the Fund did not pay any management fees. If such
directly charged fees were included as Fund expense at an assumed 1%
annual rate payable quarterly, pro-forma total return information would
be as follows (unaudited):
Year Ended September 30,
---------------------------------
1993 1992 1991
---- ---- ----
9.55% 12.44% 10.12%
2. Net investment income per share has been computed on the basis of
average shares outstanding before adjustments for book/tax differences.
"Distributions for Tax Purposes in Excess of Net Investment Income"
represent amounts paid from foreign currency gains reclassified to net
investment income under the Internal Revenue Code.
3. Annualized.
See "Notes to Financial Statements"
