November 30, 1999
Dear Shareholder:
We are pleased to present your September 30, 1999, annual shareholders' report
for the Bailard, Biehl & Kaiser International Bond Fund. It includes a review of
the Fund's performance and our outlook for the months ahead.
PERFORMANCE AND MARKET REVIEW
International bonds were little changed in local terms for the year ending
September 30, 1999. Most foreign bond markets were within the range of plus or
minus 1%. Two small markets, Norway (+3.5%) and New Zealand (+1.5%), performed
the best in local terms(1). The performance disparity between countries was much
larger on a U.S. dollar basis. Despite low nominal yields in Japan, Japanese
bonds significantly outperformed the other markets in dollar-based returns. The
Japanese yen strengthened more than 28% during the year (most of it during the
last quarter of 1998). Meanwhile, the euro declined during most of 1999, leaving
its year-over-year performance at negative 10%(1). Our strategy to overweight
those countries with high real yields had mixed results. Our overweight
positions in the dollar-bloc (Canada, Australia, New Zealand) countries and U.K.
did not fully counter our modest underweight in Japan. For the year ended
September 30, 1999, the Bailard, Biehl & Kaiser International Bond Fund returned
- -0.65%(2).
Market concerns about global market stability were still evident last fall, and
this risk aversion was reflected in asset prices. As 1999 approached, the
arrival of the euro took center stage. While there were few glitches in the euro
conversion, the honeymoon was surprisingly short. Unexpectedly sluggish European
growth prospects weighed heavily on the euro. Moreover, the slow growth led to
an undesirable development: overt political pressure on the European Central
Bank (ECB) to lower rates. The sharp decline in the euro and a period of rapidly
rising U.S. yields pressured European bonds. This occurred despite ample
European evidence supporting low inflation and slow growth. In fact, bond yields
bottomed shortly after the ECB decision to lower interest rates 50 basis points
(bps) to 2.5% in early April.
As 1999 progressed, the markets reassessed global growth prospects. The
pessimistic European growth outlook began to recede amid indications of better
growth. As a result, the market started pricing in prospects for an eventual
rate hike by the European Central Bank (ECB). The ECB did eventually raise rates
in November. Japan continued to surpass economic expectations as well. Despite
much stronger-than-expected growth in Japan, bonds did not fall sharply.
Official concern over the strength of the yen bolstered market confidence that
the Bank of Japan (BOJ) would keep interest rates close to 0%. This softened the
bond bearishness that normally would have accompanied the improving economic
picture. By the end of September, Japanese yields were still only 1.70%.
<PAGE>
MARKET OUTLOOK
The recent rise in global yields has restored some underlying value to bonds by
making them more attractively valued on a real yield basis. However, improving
global growth prospects and the possibility of rising U.S. rates cloud the
horizon. Over the near term, Y2K concerns inject additional uncertainty. We
expect trading activity to slow considerably into the end of the year. While the
strength of the dollar hurt the Fund's performance during the past year, it is
unlikely that the dollar will match these gains going forward. Relative interest
rate differentials should eventually improve the profile of the euro, adding a
source of positive return for the Fund.
CONCLUSION
Looking ahead, we expect solid international bond returns. Nominal yields
already reflect some possibility of good economic growth, and the risk of
prolonged currency weakness has fallen sharply. International bonds remain an
excellent portfolio diversifier should equity markets weaken. Our own research
indicates that during periods of negative stock returns, international bonds
have regularly outperformed domestic bonds and global stocks. Thus, they remain
an important part of your total portfolio.
We appreciate the opportunity to manage your international bond investments and
look forward to continued success. If you have any questions, please call us at
(800) 882-8383.
Sincerely,
/s/ Peter M. Hill /s/ Burnie E. Sparks, Jr.
Peter M. Hill Burnie E. Sparks, Jr., CFA
Chairman President
- ----------
(1) The performance quoted represents past performance and is no indication of
future results.
(2) Average annual total returns for investment periods ended September 30,
1999, 3 months: -1.16%; 6 months: -1.63%; 12 months: -0.65%; 5 years: 7.95%
annualized; Since Inception: 5.60% annualized. These figures reflect the average
compounded return over the period indicated that would equate an initial amount
invested in shares of the Fund to the ending redeemable value of such shares,
assuming that all dividends and distributions by the Fund were reinvested at net
asset value. These figures also reflect the deduction of an assumed 1% annual
investment management fee (0.25% quarterly) payable by clients of Bailard, Biehl
& Kaiser through 9/30/93. Actual fees varied during this period. As of 10/1/93,
the Fund charged a management fee of 0.75%. 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>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
COUNTRY OF
ORIGIN PAR VALUE VALUE
-------------- ------------- -----------
FIXED INCOME SECURITIES (92.0%)
AUSTRALIAN DOLLAR (0.9%)
KFW International Finance Inc.
9.125% 07/26/05 Australia 1,000,000 $ 726,303
-----------
BRITISH POUND (9.8%)
United Kingdom Treasury
9.750% 08/27/02 United Kingdom 500,000 897,615
Republic of Austria
9.000% 07/22/04 Austria 1,350,000 2,403,986
Glaxo Wellcome Plc.
8.750% 12/01/05 United Kingdom 800,000 1,430,773
Tesco Plc.
7.500% 07/30/07 United Kingdom 300,000 511,291
Quebec Province
8.625% 11/04/11 Canada 350,000 648,810
UK Treasury Bill
8.500% 12/07/05 United Kingdom 1,000,000 1,842,046
-----------
Total British Pound 7,734,521
-----------
CANADIAN DOLLAR (5.0%)
Government of Canada
7.250% 06/01/07 Canada 1,500,000 1,115,277
Government of Canada
6.000% 06/01/08 Canada 2,300,000 1,593,331
Kingdom of Sweden
8.000% 05/12/03 Sweden 600,000 432,821
Province of British Columbia
7.750% 06/16/03 Canada 1,150,000 829,823
-----------
Total Canadian Dollar 3,971,252
-----------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
COUNTRY OF
ORIGIN PAR VALUE VALUE
-------------- ------------- -----------
CZECH CROWN (0.6%)
Generale Electric
13.500% 10/01/99 USA 16,000,000 $ 477,751
-----------
DANISH KRONER (3.8%)
Kingdom of Denmark
9.000% 11/15/00 Denmark 3,750,000 567,373
Kingdom of Denmark
7.000% 12/15/04 Denmark 5,000,000 780,422
Kingdom of Denmark
8.000% 03/15/06 Denmark 10,300,000 1,688,163
-----------
Total Danish Kroner 3,035,958
-----------
EURO (43.4%)
Buoni Poliennali Del Tes
4.500% 07/01/01 Italy 2,200,000 2,373,699
Euro
4.000% 04/27/09 Denmark 1,350,000 1,281,220
Government of France
7.750% 04/12/00 France 1,173,857 1,280,854
Government of France (T Bill)
4.500% 07/12/03 France 1,600,714 1,715,478
Government of France
6.750% 10/25/03 France 1,295,816 1,505,143
Government of France (O.A.T.)
5.500% 10/25/07 France 1,372,041 1,506,889
Government of France (O.A.T.)
5.250% 04/25/08 France 5,000,000 5,378,477
Government of Netherlands
8.500% 03/15/01 Netherlands 3,900,000 4,435,730
Republic of Germany
6.875% 05/12/05 Germany 4,141,464 4,869,625
Federal Republic of Germany
6.000% 06/20/16 Germany 4,422,584 5,000,663
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
COUNTRY OF
ORIGIN PAR VALUE VALUE
-------------- ------------- -----------
EURO-CONTINUED
Republic of Finland
8.750% 10/17/01 Finland 1,980,000 $ 2,304,142
Republic of Italy
6.500% 11/01/27 Italy 2,427,343 2,738,160
-----------
Total Euro 34,390,080
-----------
FRENCH FRANC (2.4%)
McDonalds
6.750% 07/24/06 USA 10,000,000 1,757,995
-----------
GERMAN MARK (2.3%)
European Investment Bank
7.500% 11/04/02 Germany 1,022,584 1,187,011
LKB Baden Wurttemburg
6.625% 08/20/03 Germany 1,100,000 640,278
-----------
Total German Mark 1,827,289
-----------
GREEK DRACHMAS (1.4%)
Republic of Hellenic
8.600% 03/26/08 Greece 300,000,000 1,081,291
-----------
ITALIAN LIRA (2.5%)
Abbey National Treasury
Services Plc.
6.000% 08/08/02 United Kingdom 3,600,000,000 2,060,773
-----------
JAPANESE YEN (10.6%)
Asian Development Bank
3.125% 06/29/05 Japan 250,000,000 2,604,849
International Bank For
Reconstruction & Development
4.750% 12/20/04 Multi National 113,000,000 1,268,938
Japan Development Bank
6.500% 09/20/01 Japan 158,000,000 1,664,270
Kingdom of Spain
4.625% 07/22/04 Spain 55,000,000 606,631
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
COUNTRY OF
ORIGIN PAR VALUE VALUE
-------------- ------------- -----------
JAPANESE YEN-CONTINUED
Republic of Austria
6.25% 10/16/03 Austria 200,000,000 $ 2,291,397
-----------
Total Japanese Yen 8,436,085
-----------
NEW ZEALAND DOLLAR (1.8%)
International Bank For
Reconstruction & Development
7.250% 04/09/01 Multi-National 1,250,000 654,742
International Bank For
Reconstruction & Development
7.250% 05/27/03 Multi-National 1,400,000 728,789
-----------
Total New Zealand Dollar 1,383,531
-----------
NORWEGIAN KRONER (1.2%)
Kingdom of Norway
5.750% 11/30/04 Norway 7,500,000 961,625
-----------
SOUTH AFRICA COMMON RAND (0.5%)
International Finance Corporation
14.750% 03/07/00 Multi-National 2,500,000 418,884
-----------
SWEDISH KRONA (3.8%)
Spintab AB
7.500% 06/15/04 Sweden 11,000,000 1,415,616
Kingdom of Sweden
10.250% 05/05/00 Sweden 2,600,000 328,920
Kingdom of Sweden
6.500% 10/25/06 Sweden 10,000,000 1,278,324
-----------
Total Swedish Krona 3,022,860
-----------
SWISS FRANC (0.6%)
Inter-American Development Bank
7.250% 01/21/02 Multi-National 600,000 439,724
-----------
UNITED STATES DOLLARS (1.4%)
Federal National
Mortgage Association
6.000% 05/15/08 United States 1,200,000 1,144,872
-----------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
COUNTRY OF
ORIGIN PAR VALUE VALUE
-------------- ------------- -----------
Total Fixed Income Securities (92.0%)
(Identified Cost $74,456,087) $72,870,794
-----------
Short-Term Investments (1.9%)
Mexican Cetes TBill
0.00% 10/14/99
(Identified Cost $1,511,176) Mexico 14,100,000 1,498,270
-----------
TOTAL INVESTMENTS (93.9%)
(IDENTIFIED COST $75,967,263) 74,369,064
OTHER ASSETS LESS LIABILITIES (6.1%) 4,821,674
-----------
NET ASSETS 100.0% $79,190,738
===========
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments, at value
(Identified cost $75,967,263) $ 74,369,001
Cash 3,443,606
Receivables:
Interest and recoverable foreign taxes receivable $ 2,151,740
Fund shares sold 134 2,151,874
------------
Prepaid expenses 6,267
------------
Total assets 79,970,748
------------
LIABILITIES
Unrealized loss on forward currency contracts
open (Note 5) 620,053
Accrued management fees (Note 3) 47,388
Accrued Directors' fees (Note 3) 4,021
Other accrued expenses 108,548
------------
Total liabilities 780,010
------------
Net assets (equivalent to $7.85 per share of no par
value capital stock, representing the offering and
redemption price for 10,093,660 shares outstanding,
100,000,000 shares authorized) $ 79,190,738
============
Net assets consist of:
Capital paid in $ 96,055,252
Accumulated net investment income 589,956
Accumulated net realized loss on investments
and foreign currency transactions (15,257,487)
Unrealized depreciation:
Investments $ (1,598,262)
Foreign currency (598,721) (2,196,983)
------------ ------------
$ 79,190,738
============
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME Interest (net of foreign taxes
withheld of $13,241) $ 3,180,123
EXPENSES
Advisory fees (See Note 3) $ 450,467
Audit and legal fees 81,275
Custodian fees 116,494
Transfer agent fees 36,077
Administrative fees 33,600
Directors' fees and expenses (See Note 3) 20,408
Registration fees 12,461
Insurance 3,207
Miscellaneous expenses 5,281
-----------
Total expenses 759,270
-----------
Net investment income 2,420,853
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 1,154,631
Net change in unrealized loss on investments (4,040,080)
-----------
Net loss on investments (2,885,449)
-----------
Net realized loss on foreign currency (217,507)
Net change in unrealized gain on foreign currency
and foreign currency denominated assets and
liabilities 363,589
-----------
Net gain on foreign currency 146,082
-----------
Net loss on investments and foreign currency (2,739,367)
-----------
Net decrease in net assets resulting from operations $ (318,514)
===========
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended For the year ended
INCREASE (DECREASE) IN NET ASSETS September 30, 1999 September 30, 1998
---------------------- ----------------------
<S> <C> <C>
Operations:
Net investment income $ 2,420,853 $ 2,422,922
Net realized gain on investments 1,154,631 1,394,398
Net unrealized gain (loss) on investments (4,040,080) 3,954,700
Net realized loss on foreign currency (217,507) (2,455,379)
Net unrealized gain (loss) on foreign currency and
foreign currency denominated assets and liabilities 363,589 (853,415)
------------ ------------
Net increase (decrease) resulting from operations (318,514) 4,463,226
------------ ------------
Distributions to shareholders:
From net investment income (619,641) (5,517,608)
------------ ------------
Total distributions (619,641) (5,517,608)
------------ ------------
Fund share transactions:
Proceeds from shares sold 28,939,379 4,758,355
Net asset value of shares issued on
reinvestment of distributions 479,578 4,342,236
Cost of shares redeemed (4,318,428) (4,920,426)
------------ ------------
Net increase resulting from
Fund share transactions 25,100,529 4,180,165
------------ ------------
Net increase 24,162,374 3,125,783
NET ASSETS
Beginning of Year 55,028,364 51,902,581
------------ ------------
End of Year (including accumulated net
investment income (loss) of $258,684
and ($1,542,528), respectively) $ 79,190,738 $ 55,028,364
============ ============
NUMBER OF FUND SHARES
Sold 3,692,507 620,554
Issued on reinvestment of distributions 59,828 573,511
Redeemed (543,571) (639,517)
------------ ------------
Net increase 3,208,764 554,548
============ ============
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout the period:
<TABLE>
<CAPTION>
For the Years Ended September 30,
--------------------------------------------------------
1999(1) 1998(1) 1997(1) 1996 1995(1)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 7.99 $ 8.20 $ 8.38 $ 8.78 $ 8.02
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.34 0.25 0.42 0.59 0.47
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency (0.39) 0.40 0.04 0.16 0.86
-------- -------- -------- -------- --------
Total from Investment Operations (0.05) 0.65 0.46 0.75 1.33
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Net Investment Income (0.09) (0.86) (0.17) (0.45) (0.45)
For Tax Purposes in Excess of Book
Net Investment Income -- -- (0.47) (0.70) (0.12)
Capital Gains -- -- -- -- --
Return of Capital -- -- -- -- --
-------- -------- -------- -------- --------
Total Distributions (0.09) (0.86) (0.64) (1.15) (0.57)
-------- -------- -------- -------- --------
Net Asset Value, End of Period $ 7.85 $ 7.99 $ 8.20 $ 8.38 $ 8.78
======== ======== ======== ======== ========
TOTAL RETURN (0.65%) 8.75% 5.75% 9.32% 17.33%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000's) $ 79,191 $ 55,028 $ 51,903 $ 65,381 $ 64,640
Ratio of Expenses to Average Net Assets
Before Expenses Paid Indirectly 1.26% 1.33% 1.35% 1.22% 1.16%
After Expenses Paid Indirectly 1.26% 1.26% 1.35% 1.22% 1.16%
Ratio of Net Investment Income to
Average Net Assets 4.03% 4.63% 4.72% 5.41% 5.66%
Portfolio Turnover Rate 31% 40% 33% 61% 179%
</TABLE>
- ----------
(1) Net investment income per share has been computed before adjustments for
book/tax differences. "Distributions for Tax Purposes in Excess of Net
Investment Income" represents amounts paid from foreign currency gains
reclassified to net investment income under the Internal Revenue Code.
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Bailard, Biehl & Kaiser International Bond Fund (the "Fund") is a series of
the Bailard, Biehl & Kaiser International Fund Group, Inc. (the "Group"), which
was organized as a Maryland corporation in June 1990 and is registered under the
Investment Company Act of 1940 as a non-diversified, open-end management
investment company. The following significant accounting policies are followed
by the Fund in the preparation of its financial statements and are in conformity
with generally accepted accounting principles.
SECURITY VALUATION
Investments in securities traded on an exchange or quoted on the
over-the-counter market are valued at the last transaction price reported on the
principal exchange or market on which the issue is traded, or, if no transaction
occurred during the day, at the mean between the current closing bid and asked
prices, except U.S. Government obligations which in all cases are stated at the
mean between the current closing bid and asked price, as last reported by a
pricing service approved by the Board of Directors.
When market quotations are not readily available, or when restricted securities
or other assets are being valued, such assets are valued at fair value as
determined in good faith by or under procedures established by the Board of
Directors. Short-term investments denominated in U.S. dollars that will mature
in 60 days or less are stated at amortized cost; such investments denominated in
foreign currencies are stated at amortized cost as determined in the foreign
currency and translated to U.S. dollars at the current day's exchange rate.
The Fund's investment in foreign securities may entail risks due to the
potential of political and economic instability in the countries in which the
securities are offered or the issuers conduct their operations. It is the Fund's
policy to continuously monitor exposure to these risks.
FOREIGN CURRENCY
Foreign currency amounts, other than the cost of investments, are translated
into U.S. dollar values at the mean of the bid and offer price of such currency
against U.S. dollars last quoted on the valuation date. The cost of investments
is translated at the rates of exchange prevailing on the dates the portfolio
securities were acquired.
The Fund includes foreign exchange gains and losses from interest receivable and
other foreign-currency denominated payables and receivables in realized and
unrealized gain (loss) on foreign currency. The Fund does not isolate that
portion of realized and unrealized gain (loss) on investments resulting from
changes in foreign exchange rates on investments from fluctuations arising from
changes in the market price of securities for financial reporting purposes.
Fluctuations in foreign exchange rates on investments are thus included with net
realized and unrealized gain (loss) on investments.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
In connection with purchases and sales of securities denominated in a foreign
currency the Fund may enter into forward foreign currency exchange contracts
("contracts"). Additionally, from time to time the Fund may enter into contracts
to sell foreign currencies to hedge certain foreign currency denominated assets.
All commitments are "marked-to-market" daily at the applicable translation rates
supplied by a quotation service and any resulting unrealized gains or losses are
included as unrealized appreciation (depreciation) on foreign currency
denominated assets and liabilities. The Fund records realized gains or losses at
the time the forward contract is settled. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 1 - CONTINUED
FEDERAL INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code ("Code") applicable to regulated investment companies and to distribute all
of its income to its shareholders. It is also the Fund's intention to make
distributions in amounts sufficient to avoid imposition of excise tax under the
Code. Therefore, no provision is made for Federal income or excise taxes.
At September 30, 1999, the Fund had a capital loss carryforward of approximately
$15,257,486, which may be carried forward through the fiscal year ending
September 30, 2003. During the year ended September 30, 1999, the Fund utilized
previously deferred capital losses of approximately $605,852. The Fund does not
intend to make any capital gains distributions until the capital loss
carryforwards have been extinguished.
Paid in capital, undistributed net investment income and accumulated net
realized loss have been adjusted for permanent book-tax differences.
Reclassifications between undistributed net investment income and accumulated
net realized loss arose principally from differing book and tax treatments for
foreign currency transactions.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
OTHER
Investment security transactions are accounted for on the trade date (the date
the order to buy or sell is executed). Interest income is recorded on the
accrual basis. Distributions to shareholders are recorded on the ex-dividend
date. The Fund uses the identified cost method for determining realized gain or
loss on investments. Certain expenses of the Group are allocated between the
series of the Group in such manner as the Directors deem appropriate.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
For the year ended September 30, 1999, purchases and sales of investment
securities other than short-term investments aggregated $42,937,691 and
$17,564,622, respectively. There were no purchases and sales of U.S. Government
obligations during the year ended September 30, 1999.
NOTE 3 - MANAGEMENT AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Investment Management Agreement with Bailard, Biehl
& Kaiser, Inc. (the "Advisor") for investment advisory services. Under the
agreement, the Advisor receives a fee, payable monthly, at the annual rate of
0.75% of the average net assets of the Fund. Advisory fees paid on shares of the
Fund owned are taken into account in the computation of fees payable under
individual advisory agreements for advisory clients of the Advisor.
Each outside director is compensated by the Group at the total rate of $8,000
per year plus $1,333 for each meeting of the Board of Directors attended and
travel expenses incurred for such meetings.
As approved by the Board of Directors, the Fund has entered into an agreement
with its custodian, Brown Brothers Harriman & Co. ("BBH & Co."), whereby
brokerage commissions charged on U.S. equity trades executed through BBH & Co.
are available to offset custody transaction charges. There were no such credits
during the year ended September 30, 1999.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 4 - TAX BASIS UNREALIZED APPRECIATION (DEPRECIATION)
Gross and net unrealized appreciation (depreciation) on September 30, 1999,
based on a cost of $77,331,892 for federal income tax purposes, is as follows:
Gross unrealized appreciation $ 1,825,194
Gross unrealized depreciation (4,788,085)
-----------
Net unrealized appreciation $(2,962,891)
===========
NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS
At September 30, 1999 the Fund had entered into forward foreign currency
contracts which obligated the Fund to exchange currencies at specified future
dates. At the maturity of a forward contract, the Fund may either make delivery
of the foreign currency from currency held, if any, or from the proceeds of
portfolio securities sold, or it may terminate its obligation to deliver the
foreign currency at any time by purchasing an offsetting contract. The forward
value of amounts due to the Fund under the contracts, including contracts which
have been offset but remained unsettled, has been netted against the forward
value of the currency to be delivered by the Fund and the remaining amount is
shown as receivable for forward currency contracts in the financial statements.
Open forward foreign currency exchange contracts outstanding at September 30,
1999 are as follows:
Currency Currency Delivery Unrealized
Receivable Deliverable Date Appreciation/(Depreciation)
- ---------- ----------- -------- ---------------------------
$ 943,960 CHF 1,468,660 10/12/99 $ (20,031)
494,919 JPY 59,900,000 10/12/99 (26,777)
584,899 GRD 185,910,000 10/21/99 (16,799)
492,161 NOK 3,908,250 10/21/99 (12,080)
433,809 JPY 50,560,000 10/26/99 (7,459)
1,861,486 JPY 212,228,000 11/15/99 (145,816)
938,514 JPY 107,000,000 11/15/99 (64,438)
555,008 AUD 850,000 11/17/99 (463)
1,000,000 CHF 1,500,000 11/17/99 (5,266)
9,000,000 EUR 8,405,323 11/17/99 14,603
1,000,000 GBP 622,312 11/17/99 (25,144)
1,000,000 JPY 114,190,000 11/17/99 (80,380)
423,116 NZD 796,020 11/17/99 11,344
1,281,976 EUR 1,203,767 11/18/99 (4,972)
233,357 CZK 8,202,500 11/30/99 (11,379)
751,261 DKK 5,304,000 11/30/99 (12,104)
1,032,428 SEK 8,548,500 11/30/99 (14,851)
5,466,506 EUR 5,127,814 12/10/99 (25,743)
493,568 NZD 951,475 12/12/99 941
5,053,922 EUR 4,818,716 12/20/99 (111,861)
2,849,366 GBP 1,752,270 12/20/99 (38,171)
1,670,688 CAD 2,458,000 12/22/99 (6,471)
919,132 DKK 6,488,156 12/23/99 (16,736)
---------
$(620,053)
=========
<PAGE>
CURRENCY LEGEND:
AUD - Australian Dollar GRD - Greek Drachma
CAD - Canadian Dollar NOK - Norwegian Kroner
CZK - Czech Crown NZD - New Zealand Dollar
DKK - Danish Kroner SEK - Swedish Krona
EUR - Euro GBP - British Sterling
CHF - Swiss Franc JPY - Japanese Yen
<PAGE>
(Unaudited)
Cumulative Total Return of a $10,000 Investment
October 1, 1990 - September 30, 1999
BB&K Int'l Salomon Bros. WGBI
Bond Fund Non-US 10 Index
--------- ---------------
Sep-90 $10,000 $10,000
Dec-90 $10,253 $10,559
Mar-91 $10,339 $10,923
Jun-91 $10,233 $10,982
Sep-91 $11,012 $11,409
Dec-91 $11,570 $11,732
Mar-92 $11,397 $11,803
Jun-92 $11,951 $12,016
Sep-92 $12,381 $12,338
Dec-92 $12,251 $12,674
Mar-93 $12,898 $13,006
Jun-93 $13,271 $13,305
Sep-93 $13,563 $13,811
Dec-93 $13,959 $14,374
Mar-94 $12,597 $13,897
Jun-94 $11,370 $13,564
Sep-94 $11,135 $13,568
Dec-94 $11,278 $13,797
Mar-95 $12,375 $14,432
Jun-95 $12,858 $15,108
Sep-95 $13,066 $15,648
Dec-95 $13,603 $16,269
Mar-96 $13,571 $16,425
Jun-96 $13,789 $16,849
Sep-96 $14,284 $17,543
Dec-96 $14,753 $18,192
Mar-97 $14,499 $18,461
Jun-97 $14,847 $19,037
Sep-97 $15,105 $19,690
Dec-97 $15,137 $20,204
Mar-98 $15,400 $20,821
Jun-98 $15,564 $21,304
Sep-98 $16,427 $22,473
Dec-98 $16,882 $22,543
Mar-99 $16,592 $23,030
Jun-99 $16,134 $22,917
Sep-99 $16,342 $23,132
AVERAGE ANNUAL TOTAL RETURN *
1 Year 5 Year Since Inception
------ ------ ---------------
-0.65% 7.95% 5.60%
The above graph shows the historic growth of a $10,000 investment in the
Bailard, Biehl & Kaiser International Bond Fund since October 1, 1990. The graph
shows the cumulative return of the Bailard, Biehl & Kaiser International Bond
Fund and the Salomon Brothers World Government 10 country, non-U.S. bond index,
fully hedged. The index, which measures the performance of the government bonds
of ten countries, is given on a fully hedged basis. As the graph indicates, a
$10,000 investment in the Bailard, Biehl & Kaiser International Bond Fund would
have grown to $16,342 by September 30, 1999.
* 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) through September 30, 1993. Actual fees varied during this period. As
of 10/1/93, the Fund charged a management fee of 0.75%. 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>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS OF
BAILARD, BIEHL & KAISER INTERNATIONAL BOND FUND
(FORMERLY BAILARD, BIEHL & KAISER INTERNATIONAL FIXED-INCOME FUND)
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio 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 Bond Fund (the "Fund") (a series of Bailard, Biehl & Kaiser
International Fund Group, Inc.) at September 30, 1999, and the results of its
operations, the changes in its net assets and the 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 at
September 30, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
San Francisco, California
November 18, 1999
<PAGE>
November 30, 1999
Dear Shareholder:
We are pleased to present the Bailard, Biehl & Kaiser International Equity Fund
annual shareholders' report for the year ending September 30, 1999.
FUND PERFORMANCE AND MARKET OVERVIEW
The past twelve months have been a period of recovery and relative calm for
worldwide equity markets, a welcome contrast to the steep losses and exceptional
volatility seen in the spring and summer of 1998. Investors in the Bailard,
Biehl & Kaiser International Equity Fund earned a healthy 26.13%(1) return from
September 30, 1998 to September 30, 1999.
This eventful twelve months around the world included: the conversion to the
euro; the devaluation of the Brazilian currency; the Kosovo crisis; central bank
rate cuts (spring) and hikes (summer); the first signs in years of economic
recovery in Japan; a strong yen; earthquakes in Turkey, Taiwan, and Mexico; a
struggle for independence in East Timor; and democratic elections in Indonesia.
Emerging markets generally performed better than developed markets, with
emerging Asia staging the strongest comeback. The Korean and Indonesian stock
market indices both more than tripled in U.S. dollar terms. Latin America was
weighed down by Brazil's devaluation woes, while emerging European countries
landed either near the top (Greece doubled, Russia nearly tripled) or bottom
(Poland managed only a single digit return)(2).
Developed markets split quite neatly into leaders and laggards according to
region. European markets filled the bottom half, while Asia/Pacific,
Scandinavia, and North America filled the top half. Even in Europe, only two
markets (Austria and Portugal) actually fell.
EUROPE
At the end of 1998, European markets saw strong gains and some record highs,
thanks to interest rate cuts and cross-border acquisitions made in anticipation
of the debut of the euro. But in 1999 the performance of most Euroland countries
has been disappointing. The euro's weakness has been a major drag on U.S. dollar
returns: since its debut, the currency has fallen steadily to near dollar
parity, where it remains. Denmark and Switzerland also have seen their
currencies slide against the dollar, moving in close concert with the euro
despite their opting out of monetary union.
Stagnant economies at home and economic slowdown throughout most of the rest of
the world hit European corporate earnings hard, making investors pay more
attention to profits and less to mergers. Rising bond yields and the Kosovo
crisis added to nervousness, especially in the smaller European markets of
Portugal, Belgium, Ireland, and Austria. Even as growth started to pick up again
in the third quarter of 1999, fears of central bank rate rises in the U.S., the
U.K. and on the continent have kept financial stocks and the overall markets
depressed. France is the one exception, quietly holding onto its fourth-quarter
1998 gains and ending the twelve months ahead of the U.S.
<PAGE>
The Fund's country selection in Europe was helped most by long-standing
underweights in Germany and the U.K., partly offset by an overweight position in
Ireland and a slight underexposure to Scandinavia. Europe proved to be a
difficult environment for stock-picking last year, as a few very
large-capitalization stocks determined most markets' performance -- much as a
few large cap stocks did in the U.S. In Finland this worked to our advantage, as
market leader Nokia was the Fund's only holding for most of the year. But in
Germany, France and the Netherlands, our desire to participate in a broader,
more diverse cross section of the market was penalized with below-index returns.
JAPAN
Economic data from Japan finally turned positive during 1999. After a surprising
first-quarter surge in GDP, second-quarter numbers also came in positive,
confirming the recovery in the minds of many investors. The good news helped
drive the yen 28% higher over the past twelve months, accounting for close to
half of the country's outstanding U.S. dollar return(2). Within Japan, large
multinational firms have begun much-needed restructuring efforts. Further
positive developments include Japan's increased openness to foreign mergers and
progress on financial system reform. The rapidly rising yen does, however, raise
concerns about the profitability and competitiveness of the country's exporters.
Over the last twelve months, the Fund's large overweight position and very
favorable stock selection made Japan the single biggest source of added value.
ASIA
Improving economic conditions, strengthening currencies, signs of financial
system reform, and foreign institutional buying all contributed to Asia's
outstanding stock market performance through the first half of 1999. In the
third quarter, however, yen strength and fears of higher U.S. interest rates
dampened sentiment. Investors began to worry that an excessively strong yen
could choke off recovery in Japan and thus endanger the entire region.
Falling interest rates and rising real estate prices helped banks and property
developers in Singapore and Hong Kong. Government involvement played an
important role in both countries' recovery from crisis, by way of fiscal
stimulus (Singapore) and share purchases (Hong Kong).
Korea's breathtaking 250%(2) gain can be attributed to perceptions that Korea is
taking the swiftest and most determined steps toward corporate restructuring. On
average, the largest chaebols -- troubled Daiwa Group aside -- have cut their
admittedly very high debt/equity ratios considerably. In Indonesia, improving
economic conditions and a peaceful, democratic change of government amounted to
a major reduction in the country's fundamental risk. Unfortunately, Indonesia's
rehabilitated image was tarnished by violence in newly-independent East Timor.
The Fund's most profitable country selections in Asia were overweight positions
in Korea and Singapore, the best-performing emerging and developed markets,
respectively. Thailand and the Philippines, after good fourth-quarter 1998
performances, have done very little in 1999; our overweight positions this year
in these two countries have proved premature. Stock selection was best in
Thailand and least helpful in Indonesia.
<PAGE>
LATIN AMERICA
Latin American countries enjoyed neither the positive economic reports nor the
currency strength that helped Asia's stock markets bounce back during the past
year. In January, the 50% fall in the Brazilian real cast doubt on the viability
of the whole emerging market recovery story. Although a worldwide financial
crisis did not ensue, thanks in part to timely intervention by the IMF, other
regional markets suffered by association. The real has recovered little of its
losses, and Brazil is the worst-performing emerging market over this
twelve-month period. Argentina and Chile remain in recession, while Brazil
wrestles with huge budget deficits. Mexico, however, is a bright spot with its
growing economy, strengthening peso and hints of political reform. The Fund's
performance in this region was neutral over the last twelve months.
EMERGING EUROPE, AFRICA
The impressive U.S. dollar returns of Russia and Turkey came despite currency
devaluations on par with Brazil's. Russia's near 200% gain is a bit less
impressive if you remember that after last August's debt default the market was
90% off its highs--it therefore needed to rise more than 200% again to return to
its previous levels. The rebound was driven by bargain hunting and rising oil
and commodity prices. The Turkish market reacted favorably to inflation and
short-term interest rates falling to double-digit levels, as well as to the
promise of IMF loans for earthquake reconstruction. In Greece, inflation fell
more rapidly than expected and retail investment flows surged. Poland and the
Czech Republic, on the other hand, reported disappointing economic growth, as
eastern European exporters generally have suffered from weakness in western
European demand. An overweight position in Greece helped the Fund, but avoiding
Russia's extreme political, economic and financial risks came at a large
opportunity cost. Added value from stock selection in Poland and Israel more
than made up for underperformance in Greece.
MARKET OUTLOOK AND INVESTMENT STRATEGY
On the whole, the global equity markets have continued on their upward course
since the end of the third quarter. The dollar has continued to weaken against
the yen and strengthen against the euro. The long-term picture for international
stocks is very attractive, as corporate restructuring and the wider adoption of
information technology should allow other countries to reap the type of
productivity gains seen in the U.S.
Long term, we expect Europe, aided by its single currency, to benefit from
further industry consolidation and improved efficiency. Economic growth appears
to be on the upswing. But stocks in these markets remain some of the most
expensive outside the U.S., despite their recent lackluster performance. Asia
looks more attractive in the near term; countries there stand to gain not only
from corporate restructuring but also from banking reform, and valuations remain
compelling even after their recent gains.
For global investors, "Y2K" uncertainty is a cause for some concern,
particularly in less developed countries. However, it is extremely difficult to
assess the impact that problems associated with Y2K may have on global financial
markets. The Fund is limited in its exposure to developing markets (15%). The
fund is also well diversified across both countries and stocks.
Global stock market volatility has come down since the start of the year,
falling below its long-term average during the summer. Through the first half of
1999, therefore, we emphasized value (as the over-reaction to news that is
characteristic of turbulent markets should reward contrarian investing),
switching over to momentum just recently (which tends to work best in calm
markets when investors under-react to news). In regional terms this has meant
emphasizing Asia, where markets have enjoyed low price/book value and
price/earnings ratios, at the expense of Europe, where valuations had already
become quite rich by mid-1998. Momentum also favors Asia over Europe. Coming off
<PAGE>
such low bases from 1998, expected earnings are rising much faster in Asia than
in Europe. We therefore remain overweight developed and emerging Asia,
particularly Japan, and significantly underweight developed Europe, especially
Switzerland and the U.K..
The past year has been a testing time for the disciplined investment process
underlying the Bailard Biehl & Kaiser International Equity Fund, and the Fund
has come through strongly. Looking ahead, we remain confident that the Fund will
continue to successfully control risk and exploit future opportunities in stock
markets outside the U.S.
We appreciate your continued support of the Bailard Biehl & Kaiser International
Equity Fund. As always, if you have any questions concerning the Fund, please do
not hesitate to call us at 1-800-882-8383.
Sincerely,
/s/ Peter M. Hill /s/ Burnie E. Sparks, Jr.
Peter M. Hill Burnie E. Sparks, Jr., CFA
Chairman President
(See "Notes to Financial Statements")
- ----------
(1) Total returns for investment periods ended September 30, 1999: 3 months:
- -0.29%; 6 months: 5.67%; 12 months: 26.13%; 5 years: 8.60% annualized; 10 years:
3.70% annualized. These figures reflect the average compounded return over the
period indicated that would equate an initial amount invested in shares of the
Fund to the ending redeemable value of such shares, assuming that all dividends
and distributions by the Fund were reinvested at net asset value. These figures
also reflect the deduction of an assumed 1% annual investment management fee
(0.25% quarterly) payable by clients of Bailard, Biehl & Kaiser through 9/30/93.
Actual fees varied during this period. As of 10/1/93, the Fund charged a
management fee of 0.95%. The performance data quoted represents past
performance, and the investment return and principal value of an investment in
the Bailard, Biehl & Kaiser Equity Fund will fluctuate so that an investor's
shares when redeemed, may be worth more or less than their original cost. The
performance data quoted represents past performance and is no indication of
future results.
(2) The performance quoted represents past performance and is no indication of
future results.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
EQUITY SECURITIES (98.0%)
I. AUSTRALIA (2.1%)
Australia & New Zealand Bank 60,000 $ 401,349
Brambles Industries Ltd. 8,500 246,125
Broken Hill Proprietary Ltd. 20,000 230,368
Coles Myer Ltd. 12,500 65,325
Colonial Ltd. 69,000 250,363
Fairfax Holdings 60,000 154,392
Jupiters Ltd. 80,000 178,029
Pasminco Ltd. 200,000 221,884
Qantas Airways Ltd. 75,000 234,936
Southcorp Ltd. 20,000 72,961
Telstra Corporation 55,000 285,062
The News Corporation Ltd. 30,700 215,414
Woodside Petroleum 25,000 173,543
Westpac Banking Corp. 30,000 185,071
------------
Total Australia 2,914,822
------------
II. BELGIUM (1.2%)
Delhaize Feres "Le Lion" SA NPV 1,400 111,820
Electrabel NPV 1,450 502,475
Fortis NV 14,227 463,622
Fortis Strip VVPR 1,197 13
KBC Bancassurance Holding SA 3,000 152,554
Solvay Et Cie A NPV 2,300 163,864
Tractebel Cap NPV 1,720 304,797
Tractebel NPV Wts. (Ex. 11/30/99) 400 4
------------
Total Belgium 1,699,149
------------
III. BRAZIL (0.7%)
Companhia Cervejaria Brahma Spns'd ADR 2,600 31,200
Companhia Energetica Spns'd ADR 6,471 101,514
Centrais Electricas Pf'd. B ADR 16,000 141,000
CIA Paran Energy Copel 16,530,000 108,909
Itaubanco Pfd. Reg'd. 2,000,000 104,167
Gerdau S.A. Pfd. 2,200,000 34,375
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
BRAZIL- CONTINUED
Petrobras Spns'd ADR 4,500 $ 71,156
* Telebras Holders Pfd ADR 5,500 412,156
* Telebras Spns'd. ADR 5,500 172
------------
Total Brazil 1,004,649
------------
IV. CANADA (3.6%)
Abitibi Consolidated Inc. 7,500 90,469
Alberta Energy Ltd. 8,000 230,827
Alcan Aluminum Ltd. 10,500 328,125
Aliant Inc. 18,337 274,525
BCE Inc. 6,000 298,875
BCT Telus Communication Inc. 2,623 54,709
BCT Telus Communication Non Voting 874 17,991
* Bank of Nova Scotia 14,000 300,102
Bombardier Inc. Class B 16,000 265,124
Imasco Ltd. 12,600 329,255
Imperial Oil Ltd. 6,000 124,875
National Bank of Canada Montreal 18,000 214,359
Nortel Networks Corp. 20,000 1,020,000
Quebecor Inc. Class B 18,000 434,842
Seagram Ltd. 10,000 455,000
Shell Canada Ltd. Class A 15,000 331,745
Toronto Dominion Bank 10,000 195,000
------------
Total Canada 4,965,823
------------
V. FINLAND (2.9%)
Enso Oy 45,000 596,159
Merita Limited Oyj 45,000 253,032
Nokia Class A ADR 30,300 2,721,319
UPM-Kymmene Oy 15,000 511,176
------------
Total Finland 4,081,686
------------
VI. FRANCE (9.1%)
AXA SA 5,400 683,187
Banque Nationale De Paris 18,490 1,475,835
Banque Nationale De Paris Wts. (Ex. 7/15/02) 3,900 32,396
Cap Gemini SA 2,000 315,225
Casino Guichard Perrachon et Cie 6,700 770,598
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
FRANCE- CONTINUED
Eiffage SA 4,000 $ 296,056
Eridania Beghin Say SA 2,280 276,316
Essilor Int'l. 1,000 319,485
Eura France 630 389,133
France Telecom SA 18,000 1,579,534
Havas Advertising 3,000 718,841
L'Oreal 800 510,750
Peugeot SA 1,510 302,640
Renault SA 8,000 442,167
Sanofi Synthelabo 12,000 511,176
Schneider SA 6,000 438,972
Scor 6,000 290,731
Societe Nationale Elf Aquitaine 10,480 1,830,351
St. Gobain 2,735 509,712
Usinor 35,000 493,871
Vivendi 8,155 572,754
------------
Total France 12,759,730
------------
VII. GERMANY (6.5%)
Alliance AG 4,729 1,362,782
BASF AG 16,500 702,867
Bewag AG 22,000 320,976
BHF Bank 10,000 479,228
Daimlerchrysler AG 14,700 1,012,863
Depfa Deutsche Pfandbriefban 3,500 288,868
Deutsche Bank AG 12,400 829,958
Deutsche Telekom AG 35,000 1,435,020
Douglas Holdings AG 11,000 474,435
Mannesmann AG 3,500 559,099
Marscholeck & Lauten Non Voting Pfd. 1,590 275,664
Siemens AG 9,000 743,282
Veba AG 4,500 246,563
Volkswagen AG 5,000 279,017
------------
Total Germany 9,010,622
------------
VIII. GREECE (1.3%)
Alpha Credit Bank 3,624 290,723
Attica Enterprises SA 7,200 176,429
Ergo Bank 3,077 292,221
Hellenic Bottling Co. 1,800 43,174
Hellenic Telecom Organ. 10,000 233,372
National Bank of Greece 6,800 544,406
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
GREECE- CONTINUED
Panafon Hellenic Telecom 3,230 $ 87,942
Titan Cement 1,100 128,319
------------
Total Greece 1,796,586
------------
IX. HONG KONG / CHINA (3.4%)
CLP Holdings Ltd. 30,000 140,967
Cheung Kong Holdings 59,000 491,806
* China Telecom Ltd. Class H 171,000 526,134
Cosco Pacific Ltd. 72,000 57,468
Dao Heng Bank 100,000 457,015
Giordano International Ltd. 600,000 475,038
Gold Peak Ind. 299,000 55,814
Gold Peak Ind. Wts (Ex. 08/06/00) 29,800 345
Great Eagle Holdings 105,000 135,173
Hong Kong Electric 55,000 170,640
HSBC Holdings Plc 14,400 164,525
Huaeng Power Intl. ADR 5,000 62,188
Hutchison Whampoa 25,000 231,726
Hysan Development 125,000 156,093
JCG Holdings Ltd. 450,000 263,588
Road King Infrastructure 250,000 160,921
Sun Hung Kai Properties 61,000 465,286
Swire Pacific 120,000 568,501
Zhenhai Refining & Chem Co. 700,000 164,010
------------
Total Hong Kong / China 4,747,238
------------
X. HUNGARY (1.1%)
Demasz Rt 1,350 98,204
Magyar Olay Es. Gazipari 15,710 332,777
Matav Rt. Regd Shs 29,860 164,021
Matav Rt. ADR 1,400 38,150
OTP Bank Ltd. 6,525 289,916
** OTP Bank Ltd. Spons GDR 144A 1,500 66,750
Pick Szeged Ord. 5,780 203,063
Richter Gedeon Vegyeszeti 2,380 95,418
Tiszai Vegyi Kombinat Rt 20,000 306,268
------------
Total Hungary 1,594,567
------------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
XI. INDIA (0.8%)
** India Tobacco Ltd. GDR 144A 4,700 $ 118,969
Industrial Credit & Inv. GDR 9,800 116,865
** Gujarat Amjua Cements GDR 144A 17,000 210,375
** Mahanagar Tel Spons GDR 144A 13,600 134,300
** Ranbaxy Labs Ltd. GDR 144A 19,200 463,200
------------
Total India 1,043,709
------------
XII. INDONESIA (0.2%)
Indosat ADR 3,000 40,500
* Indofood Sukes Makmur 80,000 75,883
* Pabrik Kert Tjiwi Kimia 150,000 36,355
PT Lippo Bank Tbk Ctf Entilmt 5,580,000 --
PT Lippo Bank Tbk Wts. (Ex. 4/15/02) 5,580,000 --
* PT HM Sampoerna 55,000 97,262
Semen Gresik 30,000 47,756
------------
Total Indonsia 297,756
------------
XIII. IRELAND (0.5%)
Allied Irish Banks 14,000 168,028
CRH Plc. 18,000 344,660
Irish Life & Permanent Plc 9,672 108,667
Smurfit (Jefferson) Plc 40,000 118,422
------------
Total Ireland 739,777
------------
XIV. ISRAEL (0.8%)
* Bank Hapoalim 50,700 124,754
* Bezek-The Israel Telecommunication 8,000 28,583
* DSP Group Inc. ADR 4,700 187,413
* ECI Telecom ADR 3,800 93,813
* Elbit Computers Ltd.ADR 16,900 217,588
* Formula Systems 1985 Ltd. ADR 2,200 54,450
* Gilat Communications Ltd. 2,500 35,938
* Gilat Satellite Networks Ltd. ADR 2,800 150,150
Koor Industries Ltd. ADR 1,000 17,438
* Nice Systems Ltd. Sponsored ADR 1,500 38,625
* PEC Israel Economic Corp. ADR 3,500 121,844
Teva Pharmaceutical Industry Spns'd. ADR 1,500 75,469
------------
Total Israel 1,146,065
------------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
XV. ITALY (2.5%)
Arnoldo Mondadori Editore 20,000 $ 349,304
Banca Popolare Mi Milano 95,000 695,040
ENI SpA 155,000 972,246
Instituto Nazionale delle Assicurazioni SpA 150,400 490,116
Telecom Italia SpA Non Conv 199,139 1,000,985
------------
Total Italy 3,507,691
------------
XVI. JAPAN (18.1%)
Bank of Tokyo-Mitsubishi 195,000 2,994,505
Bridgestone Corp. 18,000 503,804
DDI Corp. 100 751,385
Daiwa House Ind Co. 85,000 840,659
Daiwa Securities Group Inc. 130,000 1,184,371
Fuji Heavy Industries 80,000 635,672
Hitachi Ltd. 100,000 1,108,293
Honda Motor Co. 24,000 1,005,354
House Food Corporation 32,000 467,362
Jusco Co. 40,000 753,264
Komatsu Ltd. 120,000 795,717
Konami Co. 9,000 870,668
Matsushita Electric Industrial 24,000 510,566
Meiwa Estate Company Ltd. 35,000 1,344,510
Mitsui Petrochemical Inc. 105,000 939,842
Nintendo Co. 5,000 797,408
Nippon Tel. and Tel. 60 738,236
NTT Mobile Communications Network Inc. 70 1,380,671
Rohm Co. 8,000 1,671,832
Sankyo Co. Ltd. 40,000 1,202,217
Sony Corp. 4,000 597,727
Takeda Chemical Industries 10,000 540,058
Takefuji Corp. 9,000 1,498,732
Tomy Co. Ltd. 9,000 638,208
Toyota Motor Corp. 30,000 955,199
Uniden Corp. 48,000 484,644
------------
Total Japan 25,210,904
------------
XVII. MALAYSIA (0.2%)
Genting Berhad 15,000 50,132
Malayan Banking Berhad 16,000 49,684
Telekom Malaysia 35,000 90,724
Tenaga Nasional 21,000 43,105
------------
Total Malaysia 233,645
------------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
XVIII. MEXICO (1.2%)
* Carso Global Telecom 19,726 $ 109,325
Cemex Spns'd. ADR 3,680 88,780
Desc. SA de CV Spns'd ADR 1,515 25,376
Formento Economico Mexica-UBD 18,900 58,743
* Geo Series B 37,000 93,623
Grupo Industrial Maseca 119,000 68,755
** Grupo Televisa GDR 144A 3,050 121,809
* Savia SA Spon ADR 5,500 121,000
Soriana SA Series B 48,000 192,585
Telefonos de Mexico Series L ADR 11,900 847,875
------------
Total Mexico 1,727,871
------------
XIX. NETHERLANDS (4.2%)
Axxicon Group NV 24,300 273,016
Fortis Amev NV 20,000 646,425
Getronics NV 10,300 555,579
Heineken NV 7,000 348,132
ING Groep NV 22,050 1,197,590
Koninklijke Ahold NV 14,000 460,697
Koninklijke Numico NV 13,000 538,545
OCE - Van Der Grinten NV 11,000 202,660
Royal Dutch Petroleum 25,000 1,450,994
Verenigd Bezit VNU Haarlem 4,000 138,869
------------
Total Netherlands 5,812,507
------------
XX. PHILIPPINES (1.0%)
Ayala Corp. 432,000 103,511
Ayala Land Inc. 300,000 73,350
* Bankard Inc. 60,000 4,841
Bank of the Phillipine Island 86,000 233,399
* Belle Corporation 1,300,000 98,533
* C & P Homes Inc. 2,167,000 37,088
* DMCI Holdings Inc. 50,800 1,490
Davao Union Cement Corp. 103,938 2,363
* Digital Telecommunications 3,400,000 128,020
* Empire East Land Inc. 2,925,600 47,925
Far East Bank & Trust 17,820 26,142
* Filinvest Land 2,221,000 162,910
* Fortune Cement Corp. 57,937 1,417
* Ionics Circuits Inc. 230,000 81,540
Manila Electric Class B 5,343 15,415
Metro Bank & Trust 15,000 110,024
* Mondragon Int'l. Philippines Inc. 120,960 6,920
Philippine Long Distance Telephone 7,000 151,467
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
PHILIPPINES- CONTINUED
* Philippine National Bank 1,500 $ 5,208
San Miguel Corp. Class B 66,000 100,049
Universal Robina 365,000 47,298
------------
Total Philippines 1,438,910
------------
XXI. POLAND (0.8%)
Big Bank Gdanski SA 250,000 567,419
Debica SA Class A 1,000 8,932
Elektrim SA 9,700 89,484
KGHM Polska Midez SA 30,000 169,860
* Mostostal Export SA 25,000 19,707
* Okocimskie Zaklady Piwowarskie 3,500 12,300
* Stalex Port A Shares 20,000 125,930
Telekomunikacja Polska SA 20,000 99,573
------------
Total Poland 1,093,205
------------
XXII. SINGAPORE (2.2%)
DBS Land Ord. 98,000 182,111
Development Bank of Singapore (Fgn. Reg'd.) 31,924 356,693
Elec. & Eltek International ADR 7,700 29,876
GP (Gold Peak) Batteries Int'l 30,000 47,457
Hong Leong Finance (Fgn. Reg'd) 65,000 108,939
Keppel Land Ltd. 65,000 189,591
Natsteel Electronics 35,000 130,697
Omni Industries Ltd. 155,000 164,069
Overseas Chinese Bank (Fgn. Reg'd.) 35,200 273,237
Singapore Airlines Ltd. (Fgn. Reg'd.) 46,100 450,021
Singapore Press Holdings (Fgn. Reg'd) 15,000 236,401
Singapore Technologies Engineering Ltd. 150,539 192,102
Singapore Telecom 127,000 231,520
United Overseas Bank 40,000 303,440
United Overseas Land Wts. (Ex. 5/28/01) 10,000 2,235
Wing Tai Holdings 200,000 158,777
------------
Total Singapore 3,057,166
------------
XXIII. SOUTH AFRICA (0.8%)
Anglo-American Corp. 5,100 285,770
Bidvest Group Ltd. 13,295 88,633
BOE Corp. Ltd. 183,000 103,700
Impala Platinum Holdings Ltd. 4,300 148,350
Imperial Holdings Ltd. 15,378 135,839
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
SOUTH AFRICA- CONTINUED
Rembrandt Group Ltd. 15,000 $ 113,750
Sappi Ltd. 8,000 78,000
Standard Bank Invest Corp. 48,000 153,600
------------
Total South Africa 1,107,642
------------
XXIV. SOUTH KOREA (1.9%)
Dongwon Securities 20,000 470,201
Hanjin Heavy Industries 25,000 160,296
Pohang Iron & Steel 7,760 879,435
Samsung Electronics 5,500 890,670
SK Corp. 10,000 198,931
Ssangyong Oil Refining 4,000 79,901
------------
Total South Korea 2,679,434
------------
XXV. SPAIN (3.1%)
Aceralia SA 18,000 230,029
Argentaria Corporation 49,000 1,078,091
Corporation Mapfre Reg'd. 5,000 93,449
Endesa SA 26,541 504,245
Grupo Dragados SA 15,000 172,522
Repsol SA 31,000 607,117
* Telefonica de Espana SA 81,127 1,298,535
Union Electrica Fenosa 25,000 375,129
------------
Total Spain 4,359,117
------------
XXVI. SWEDEN (2.9%)
Electrolux AB Series B Free 14,000 261,283
Ericsson (L M) Telecom Co. ADR 19,300 603,125
Ericsson (L M) Telecom Series B Free 25,800 799,366
Hennes & Mauritz B Free 13,000 327,458
* Netcom Systems AB B 7,100 263,284
Nordbanken Holdings AB 123,600 693,535
Rottneros Bruk AB 130,000 120,517
Sandvik AB Series B 10,000 273,237
Stora Enso 10,000 132,349
Svenska Handelsbanken Series A 15,600 217,882
Volvo AB Class B Free 11,150 314,860
------------
Total Sweden 4,006,896
------------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
XXVII. SWITZERLAND (2.6%)
Nestle SA (Reg'd.) 260 $ 488,605
Roche Holdings Genusscheine 168 1,944,102
Swiss Reinsurance (Reg'd.) 299 596,765
UBS AG 2,100 591,963
------------
Total Switzerland 3,621,435
------------
XXVIII. TAIWAN (1.3%)
* Acer Inc. 182,000 329,243
Asustek Computer Inc. 30,000 298,254
Cathay Life Insurance 72,000 185,748
China Steel 190,000 154,224
* China Trust Commercial Banks 275,000 237,062
* Taiwan Semiconductor 140,000 588,013
------------
Total Taiwan 1,792,544
------------
XXIX. THAILAND (1.2%)
* Advanced Information Services (Fgn. Reg'd) 18,500 211,558
* Ban Pu Coal (Fgn. Reg'd) 103,400 183,176
* Bangkok Bank (Fgn. Reg'd) 183,900 361,734
Delta Electric Public Co. 18,000 160,098
* Hana Microelectron 47,000 155,040
* National Petro Chemical 75,000 58,644
* PTT Exploration (Fgn. Reg'd) 11,500 80,367
* Shin Corp Pcl (Fgn. Reg'd) 13,800 56,987
* Siam Cement Pcl (Fgn. Reg'd) 11,000 229,004
* Thai Airways International (Fgn. Reg'd.) 54,000 74,551
* Thai Farmers Bank Pcl 65,000 76,634
Thai Farmers Bank Rts. (12/31/49) 65,000 44,868
------------
Total Thailand 1,692,661
------------
XXX. TURKEY (1.4%)
Adana Cimento Sanayi 22,161,600 54,034
Aksigorta SA 6,000,000 169,047
* Carsi Buyuk Magazacilik 1,298,000 48,526
Dogan Holdings 10,500,000 150,192
* Eregli Demir Ve Celik 3,640,000 82,833
Finansbank 81,375,000 273,360
Hurriyet Gazette 13,500,000 105,329
* Turkiye Garanti Bankasi 94,584,000 686,713
Turkiye Is Bankasi 4,440,000 81,793
* Vestel Electronik Sanayai 2,815,000 341,649
Yapi Kredi Bank 463,188 6,324
------------
Total Turkey 1,999,800
------------
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
---------- ------------
XXXI. UNITED KINGDOM (18.4%)
Abbey National 90,000 $ 1,597,774
Aegis Group Plc 300,000 617,569
Amec Ord 200,000 816,838
Avis Europe Plc 170,000 811,897
Berisford International 165,000 830,136
BG Plc 210,000 1,206,976
BP Amoco Plc 65,000 1,187,132
BP Amoco Plc ADR 5,000 554,063
British American Tobacco 87,500 750,758
British Borneo Oil & Gas Plc 225,000 629,920
British Sky Broadcasting Group Plc 100,000 967,524
British Telecom. 100,000 1,514,279
Daily Mail & General Trust 12,000 639,900
Dixons Group 60,000 1,069,135
Glaxo Wellcome Plc 53,000 1,382,564
Hanson Plc 140,000 1,079,015
Logica Plc 60,000 793,452
Norwich Union Plc 180,000 1,302,082
* Orange Plc 45,000 884,853
Rolls-Royce 200,000 694,147
Scottish & Newcastle Plc 85,000 844,793
Scottish Radio Holdings Plc 25,000 389,480
Smithkline Beecham Plc 90,928 1,045,967
Somerfield Plc 85,000 181,977
Unilever 714 6,720
Viridian Group Plc 125,000 1,293,807
Vodafone Group Plc 33,000 781,496
Woolwich Plc 320,000 1,727,215
------------
Total United Kingdom 25,601,469
------------
TOTAL INVESTMENTS (98.0%)
(IDENTIFIED COST $118,618,726) 136,745,076
OTHER ASSETS LESS LIABILITIES (2.0%) 2,726,940
------------
NET ASSETS (100.0%) $139,472,016
============
- ----------
* Non-income producing security.
** Exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. On September 30, 1999, these
securities were valued at $1,115,403 or 0.80% of Net Assets.
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
SEPTEMBER 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
Percent of
INDUSTRY Net Assets
- -------- ----------
Aerospace 0.7%
Airline 0.5
Appliances and Household Products 1.9
Automobile 3.6
Banking 15.2
Beverages and Tobacco 1.6
Building Materials & Components 1.9
Broadcasting and Publishing 2.8
Business Services 4.4
Chemicals 1.6
Construction and Housing 1.6
Data Products 0.4
Electrical and Electronics 5.9
Electronic Components 2.2
Energy 6.9
Finance/Financial Services 4.1
Food and Housing Products 1.6
Health 5.8
Industrial Components 0.4
Insurance 4.6
Leisure 0.8
Machinery 1.1
Merchandising 3.5
Muli-Industry 2.2
Other Industries 0.6
Paper 1.2
Real Estate 2.4
Recreation 1.1
Shipping 0.2
Steel 1.3
Telecommunications 11.7
Utilities 4.1
Wholesale and International 0.1
Other Assets Less Liabilities 2.0
------
NET ASSETS 100.0%
======
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments, at value
(Identified cost $118,618,726) $136,745,076
Foreign currency, at value
(Identified cost $87,622) 86,893
Cash 3,111,903
Receivables:
Investment securities sold $ 1,341,283
Dividend, interest and recoverable foreign
taxes receivable 413,545
Fund shares sold 4,410 1,759,238
-------------
Prepaid expenses 6,906
------------
Total assets 141,710,016
------------
LIABILITIES
Payables:
Portfolio securities purchased 1,832,139
Unrealized loss on forward currency
contracts (Note 5) 87,235 1,919,374
------------
Accrued management fees (Note 3) 121,050
Accrued Directors' fees (Note 3) 4,402
Other accrued expenses 193,174
------------
Total liabilities 2,238,000
------------
Net assets (equivalent to $6.89 per share of $.0001
par value capital stock, representing the offering
and redemption price for 20,247,429 shares
outstanding, 100,000,000 shares authorized) $139,472,016
============
Net assets consist of:
Capital paid in $108,052,247
Accumulated net investment income 145,802
Accumulated net realized gain on investments
and foreign currency transactions 13,229,289
Unrealized appreciation (depreciation) on:
Investments $ 18,126,350
Foreign currency (81,672) 18,044,678
------------- ------------
$139,472,016
============
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C>
Dividends (net of foreign taxes withheld of $232,814) $ 2,108,527
Interest 138,915
------------
2,247,442
------------
EXPENSES
Advisory fees (See note 3) $ 1,149,030
Custodian fees 457,968
Audit and legal fees 81,826
Transfer agent fees 36,366
Administrative fees (See Note 3) 33,900
Directors' fees and expenses (See Note 3) 20,108
Insurance 6,785
Printing fees 3,546
Registration fees 8,554
Miscellaneous expenses 7,615
------------
Total expenses 1,805,698
------------
Net investment income 441,744
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 13,815,115
Net change in unrealized gain on investments 13,252,766
------------
Net gain on investments 27,067,881
------------
Net realized loss on foreign currency (303,129)
Net change in unrealized gain on foreign currency
and foreign currency denominated assets and
liabilities 360,749
------------
Net gain on foreign currency 57,620
------------
Net gain on investments and foreign currency 27,125,501
------------
Net increase in net assets resulting from operations $ 27,567,245
============
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended For the year ended
INCREASE (DECREASE) IN NET ASSETS September 30, 1999 September 30, 1998
-------------------- --------------------
<S> <C> <C>
Operations:
Net investment income $ 441,744 $ 668,016
Net realized gain on investments 13,815,115 9,273,505
Net unrealized gain (loss) on investments 13,252,766 (21,932,140)
Net realized gain (loss) on foreign currency (303,129) 116,379
Net unrealized gain (loss) on foreign currency and
foreign currency denominated assets and liabilities 360,749 (480,491)
------------- -------------
Net increase (decrease) resulting from operations 27,567,245 (12,354,731)
------------- -------------
Distributions to shareholders:
From net investment income (1,091,609) (2,726,489)
From net realized gains 13,252,766 (2,787,529)
------------- -------------
Total distributions 12,161,157 (5,514,018)
------------- -------------
Fund share transactions:
Proceeds from shares sold 29,963,681 11,431,649
Net asset value of shares issued on
reinvestment of distributions 7,833,513 4,451,069
Cost of shares redeemed (24,728,906) (28,936,849)
------------- -------------
Net increase (decrease) resulting from
Fund share transactions 13,068,288 (13,054,131)
------------- -------------
Net increase (decrease) 52,796,690 (30,922,880)
NET ASSETS
Beginning of period 108,297,094 139,219,974
------------- -------------
End of period (including accumulated net
investment income of $189,119 and
$838,984, respectively) 161,093,784 $ 108,297,094
============= =============
NUMBER OF FUND SHARES
Sold 4,475,867 1,676,106
Issued on reinvestment of distributions 1,261,435 712,171
Redeemed (3,786,693) (4,240,657)
------------- -------------
Net increase (decrease) 1,950,609 (1,852,380)
============= =============
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout the period:
<TABLE>
<CAPTION>
For the years ended September 30,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 5.92 $ 6.91 $ 6.05 $ 6.00 $ 6.10
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.02(3) 0.09(3) 0.04(3) 0.05 0.06(1)
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 1.47 (0.81) 1.23 0.37 0.06(2)
--------- --------- --------- --------- ---------
Total from Investment Operations 1.49 (0.72) 1.27 0.42 0.12
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Net Investment Income (0.06) (0.13) (0.05) (0.06) --
Capital Gains (0.46) (0.14) (0.36) (0.31) (0.22)
--------- --------- --------- --------- ---------
Total Distributions (0.52) (0.27) (0.41) (0.37) (0.22)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period $ 6.89 $ 5.92 $ 6.91 $ 6.05 $ 6.00
========= ========= ========= ========= =========
TOTAL RETURN 26.13% -10.61% 22.22% 7.33% 2.13%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000's) $ 139,472 $ 108,297 $ 139,220 $ 100,382 $ 108,210
Ratio of Expenses to Average Net Assets:
Before Expenses Paid Indirectly 1.49% 1.44% 1.44% 1.54% 1.53%
After Expenses Paid Indirectly 1.49% 1.41% 1.44% 1.54% 1.53%
Ratio of Net Investment Income to
Average Net Assets 0.37% 0.49% 0.79% 0.78% 0.97%
Portfolio Turnover Rate 85% 78% 67% 103% 174%
</TABLE>
- ----------
(1) Calculated based on the average shares outstanding during the period.
(2) The amount shown for each share outstanding may not accord with the change
in the aggregate gains and losses in the portfolio securities during the
period because of the timing of purchases and redemptions of shares in
relation to the fluctuating market value of the portfolio.
(3) Net investment income per share has been computed before adjustments for
book/tax differences.
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Bailard, Biehl & Kaiser International Equity Fund (the "Fund") is a
non-diversified series of the Bailard, Biehl & Kaiser International Fund Group,
Inc. (the "Group"), which was organized as a Maryland corporation in June 1990
and is an open-end management investment company registered under the Investment
Company Act of 1940. The following significant accounting policies are followed
by the Fund in the preparation of its financial statements and are in conformity
with generally accepted accounting principles for investment companies.
SECURITY VALUATION
Each listed investment security is valued at the closing price thereof reported
by the principal securities exchange on which the issue is traded, or if no sale
is reported, the mean of the closing bid and asked prices. Securities which are
traded over-the-counter are normally valued at the mean of the closing bid and
asked prices quoted by major dealers of such securities, or in the absence of
such prices, as determined in good faith by, or under procedures determined by,
the Board of Directors of the Fund. Short-term obligations with a maturity of 60
days or less are valued at amortized cost which approximates market.
The Fund's investment in foreign securities may entail risks due to the
potential of political and economic instability in the countries in which
securities are offered or the issuers conduct their operations. It is the Fund's
policy to continuously monitor exposure to these risks.
FOREIGN CURRENCY
Foreign currency amounts, other than the cost of investments, are translated
into U.S. dollar values at the mean of the bid and offer price of such currency
against U.S. dollars last quoted on the valuation date. The cost of investments
is translated at the rates of exchange prevailing on the dates the portfolio
securities were acquired.
The Fund includes foreign exchange gains and losses from dividends and interest
receivable and other foreign currency denominated payables and receivables in
realized and unrealized gain (loss) on foreign currency. The Fund does not
isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from fluctuations arising from changes in
the market price of securities for financial reporting purposes. The impact of
fluctuations in foreign exchange rates on investments are included with net
realized and unrealized gain (loss) on investments.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
In connection with 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.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code ("Code") applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. It is also the Fund's intention to
make distributions in amounts sufficient to avoid imposition of excise tax under
the Code. Therefore, no provision is made for Federal income or excise taxes.
Paid in capital, undistributed net investment income and undistributed realized
net gain have been adjusted for permanent book-tax differences.
Reclassifications between undistributed net investment income and undistributed
realized net gain arose principally from differing book and tax treatments for
foreign currency transactions.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
OTHER
Investment security transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date or when the Fund first becomes aware
of such dividend. Interest income is recorded on the accrual basis.
Distributions to shareholders are recorded on the ex-dividend date. The Fund
uses the identified cost method for determining realized gain or loss on
investments. Certain expenses of the Group are allocated between the series of
the Group in such manner as the Directors deem appropriate.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
For the year ended September 30, 1999, purchases and sales of securities, other
than short-term investments, aggregated $106,664,547 and $100,127,035,
respectively. There were no purchases or sales of U.S. Government obligations.
NOTE 3 - MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Investment Management Agreement with Bailard, Biehl
& Kaiser, Inc. (the "Advisor") for investment advisory services, under which the
Advisor receives a fee, payable monthly, at the annual rate of 0.95% of the
average net assets of the Fund. Advisory fees paid on shares of the Fund are
taken into account in the computation of fees payable under individual advisory
agreements for advisory clients of the Advisor.
Each outside director is compensated by the Group at the rate of $8,000 per year
plus $1,333 for each meeting of the Board of Directors attended and travel
expenses incurred in attending such meetings.
As approved by the Board of Directors, the Fund has entered into an agreement
with its custodian, Brown Brothers Harriman & Co. ("BBH & Co."), whereby
brokerage commissions charged on U.S. equity trades executed through BBH & Co.
are available to offset custody transaction charges. There were no such credits
during the year ended September 30, 1999.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 4 - TAX BASIS UNREALIZED APPRECIATION (DEPRECIATION)
Gross and net unrealized appreciation (depreciation) at September 30, 1999,
based on a cost of $118,979,850 for federal income tax purposes, is as follows:
Gross unrealized appreciation $24,254,177
Gross unrealized depreciation (6,488,951)
-----------
Net unrealized appreciation $17,765,226
===========
NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS
At September 30, 1999 the Fund had entered into forward foreign currency
contracts which obligated the Fund to exchange currencies at specified future
dates. At the maturity of a forward contract, the Fund may either make delivery
of the foreign currency from currency held, if any, or from the proceeds of
portfolio securities sold, or it may terminate its obligation to deliver the
foreign currency at any time by purchasing an offsetting contract. The forward
value of amounts due to the Fund under the contracts, including contracts which
have been offset but remained unsettled, has been netted against the forward
value of the currency to be delivered by the Fund and the remaining amount is
shown as receivable for forward currency contracts in the financial statements.
Open forward foreign currency exchange contracts outstanding at September 30,
1999 are as follows:
Unrealized
Currency Currency Delivery Appreciation
Receivable Deliverable Date (Depreciation)
---------- ----------- -------- --------------
$1,484,756 JPY 179,700,000 10/12/99 $(80,330)
1,892,146 CHF 2,833,300 11/18/99 (6,905)
--------
$(87,235)
========
CURRENCY LEGEND:
CHF - Swiss Franc JPY - Japanese Yen
<PAGE>
(Unaudited)
Cumulative Total Return of a $10,000 Investment
October 1, 1988 - September 30, 1999
BB&K Int'l MSCI EAFE MSCI EAFE
Equity Fund (Local Currency) (US$)
----------- ---------------- -------
Sep-88 $10,000 $10,000 $10,000
Dec-88 $11,009 $10,798 $11,566
Mar-89 $10,837 $11,477 $11,598
Jun-89 $10,503 $11,528 $10,883
Sep-89 $11,864 $12,546 $12,231
Dec-89 $12,427 $13,113 $12,785
Mar-90 $10,838 $11,042 $10,257
Jun-90 $11,859 $11,624 $11,237
Sep-90 $ 9,470 $ 8,487 $ 8,855
Dec-90 $ 9,945 $ 9,202 $ 9,787
Mar-91 $10,778 $10,553 $10,515
Jun-91 $10,221 $10,185 $ 9,941
Sep-91 $10,529 $10,476 $10,793
Dec-91 $10,022 $10,003 $10,974
Mar-92 $ 9,482 $ 9,401 $ 9,672
Jun-92 $ 9,471 $ 8,995 $ 9,876
Sep-92 $ 8,944 $ 8,880 $10,025
Dec-92 $ 8,792 $ 9,384 $ 9,638
Mar-93 $ 9,029 $10,180 $10,794
Jun-93 $ 9,691 $10,855 $11,879
Sep-93 $10,442 $11,548 $12,667
Dec-93 $12,028 $12,123 $12,777
Mar-94 $11,199 $11,930 $13,223
Jun-94 $11,033 $12,053 $13,899
Sep-94 $11,255 $11,935 $13,912
Dec-94 $10,516 $11,878 $13,771
Mar-95 $10,572 $10,954 $14,027
Jun-95 $11,130 $11,006 $14,129
Sep-95 $11,494 $12,236 $14,718
Dec-95 $11,827 $13,006 $15,314
Mar-96 $12,092 $13,705 $15,757
Jun-96 $12,337 $14,142 $16,006
Sep-96 $12,337 $14,187 $15,985
Dec-96 $12,961 $14,475 $16,239
Mar-97 $13,179 $15,105 $15,984
Jun-97 $14,640 $16,869 $18,059
Sep-97 $15,076 $17,285 $17,933
Dec-97 $14,250 $16,429 $16,528
Mar-98 $16,413 $19,111 $18,960
Jun-98 $16,550 $19,363 $19,161
Sep-98 $13,476 $15,885 $16,437
Dec-98 $15,961 $18,448 $19,833
Mar-99 $16,084 $19,790 $20,109
Jun-99 $17,046 $20,926 $20,620
Sep-99 $16,997 $20,631 $21,525
AVERAGE ANNUAL TOTAL RETURN*
1 Year 5 Year 10 Year
------ ------ -------
26.13% 8.60% 3.70%
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, 1988. We compare this investment to
the growth in the MSCI 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 $16,997 over the ten-year period ended September 30, 1999.
* 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) through 9/30/93. Actual fees varied during
this period. As of 10/1/93, the Fund charged a management fee of 0.95%. The
performance data quoted represents past performance, and the investment
return and principal value of an investment in the Bailard, Biehl & Kaiser
International Equity Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
REPORT OF INDEPENDENT ACCOUNTANTS
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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 (the "Fund") (a series of Bailard, Biehl & Kaiser
International Fund Group, Inc.) at September 30, 1999, and the results of its
operations, the changes in its net assets and the 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 at
September 30, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
San Francisco, California
November 18, 1999
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
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Federal Income Tax Information: (Unaudited)
For the fiscal year ended September 30, 1999, the Fund earned foreign source
income of $2,341,341 and the Fund incurred foreign taxes of $232,814, which are
expected to be passed through to shareholders as foreign tax credits on Form
1099-DIV for the year ending December 31, 1999.
In accordance with the code, during the fiscal year ended September 30, 1999,
the Fund declared long-term capital gain distribution in the amount of
$8,369,002.
