BAILARD, BIEHL & KAISER
INTERNATIONAL FUND GROUP, INC.
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
ANNUAL REPORT
September 30, 2000
950 Tower Lane, Suite 1900
Foster City, CA 94404
(800) 882-8383
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities, nor has it passed on the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
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TABLE OF CONTENTS
INTERNATIONAL BOND FUND
Shareholder Letter 1
Schedule of Investments 3
Financial Statements 7
Notes to Financial Statements 11
INTERNATIONAL EQUITY FUND
Shareholder Letter 16
Schedule of Investments 20
Financial Statements 31
Notes to Financial Statements 35
REPORT OF INDEPENDENT ACCOUNTANTS 39
<PAGE>
November 30, 2000
Dear Shareholder:
We are pleased to present your September 30, 2000, 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
Despite stronger economic growth and rising inflation pressure, European bond
yields have remained relatively stable over the last year. For example, the
yield on German Bunds has traded between 5.0% and 5.5%. Tighter monetary policy
was welcomed by bond investors, as central bankers were perceived to be on top
of inflationary pressures. Bond markets around the globe have been reassured by
tighter central bank policy. Global bonds have also been supported by falling
yields in the U.S. and volatility in equity prices. Volatility in equity markets
has pulled some money away from stocks and into bonds. The growing budget
surplus in the U.S. and shrinkage in the supply of debt issuance, helped drive
U.S. yields lower and pulled foreign yields down as well.
For the year ending September 30, 2000, the Salomon Brothers World Government
Bond Index fully hedged returned about 7.0%. Unfortunately, it was another bad
year for the euro. In dollar terms, this index was down 7.86%. The euro slid
from 1.05 a year ago to .90, a 15% decline.(1) Fortunately, we were overhedged
the euro for most of the year and underweight euro denominated bonds. As a
result, the Fund was off only 3.52%.(2)
MARKET OUTLOOK
If the global economy slows as expected, international bond yields should remain
stable and drift a little bit lower. Should the global economy slow more than
expected due to deteriorating equity prices, bond yields could fall much
further. International bonds would be a good hedge against falling stock prices.
Not only would yields fall, but foreign currencies should strengthen, as capital
stays close to home. Given the huge U.S. trade deficit, the U.S. is very
dependent on foreign capital flows. Anything that disrupts those flows would
hurt the dollar and benefit holders of foreign assets.
Relative to U.S. government bonds international bonds are currently looking
relatively more attractive. Both nominal and real yield spreads are moving in
favor of European bonds. However, Japanese bond yields remain below 2.0% and are
relatively unattractive. Despite the low yields, Japanese bonds have
outperformed most bond markets due to a stronger currency. Japan continues to
exhibit deflationary pressures and the economy remains stagnant. Until growth
improves, and the economy begins to reflate, bond yields are likely to remain
near current levels. Recently the yen has weakened and Japanese authorities
appear willing to lean against a too strong yen. Without the benefit of further
yen strength, Japanese bonds will be unattractive.
<PAGE>
As of September 30th, the Fund was overweight in the UK, the Scandinavian
countries, Canada and New Zealand. The Fund is underweight in Eurobonds due to
currency concerns and underweight in Japan due to the low yield environment. The
Fund has gradually moved to a less hedged position and is about 45% hedged.
You should have already received proxy materials outlining proposed changes to
the Fund. Looking forward, the Fund intends to take on a more global perspective
to the fixed income markets. Most significantly, the Fund will refocus its
objective more squarely on U.S. dollar assets. The Fund will retain its ability
to select among the world's markets and will have increased flexibility to
employ some of the newer fixed income assets in an opportunistic fashion to both
enhance return and manage risk. We are excited about these changes and encourage
you return your proxy prior to December 13th.
We appreciate the opportunity too manage your international bond investments and
look forward to continued success. If you have any questions, please call us at
(800) 882-8383.
Sincerely,
Peter M. Hill Burnie E. Sparks, Jr., CFA
Chairman President
----------
(1) The performance data quoted represents past performance and is no
indication of future results.
(2) Total returns for investment periods ended September 30, 2000: 3 months:
0.14%; 6 months: -1.87%; 12 months: -3.52%; 5 years: 3.83% annualized;
since inception (10/1/90): 4.66% 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 International Bond Fund will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
2
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BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
Country of Par Value
Origin (Local Currency) Value
-------------- ------------- ------------
FIXED INCOME SECURITIES (91.7%)
AUSTRALIAN DOLLAR (0.9%)
KFW International Finance, Inc.
9.125% 07/26/05 Australia 1,000,000 $ 590,327
------------
BRITISH POUND (9.1%)
Glaxo Wellcome Plc
8.750% 12/01/05 United Kingdom 800,000 1,300,710
National Westminster Bank
7.875% 09/09/15 United Kingdom 1,000,000 1,637,220
Quebec Province
8.625% 11/04/11 Canada 600,000 1,017,566
Tesco Plc
7.500% 07/30/07 United Kingdom 300,000 465,634
UK Treasury Bill
8.500% 12/07/05 United Kingdom 1,000,000 1,669,407
------------
Total British Pound 6,090,537
------------
CANADIAN DOLLARS (5.7%)
Government of Canada
7.250% 06/01/07 Canada 1,500,000 1,078,383
Government of Canada
6.000% 06/01/08 Canada 2,300,000 1,553,608
Kingdom of Sweden
8.000% 05/12/03 Sweden 600,000 414,936
Province of British Columbia
7.750% 06/16/03 Canada 1,150,000 798,840
------------
Total Canadian Dollar 3,845,767
------------
DANISH KRONER (3.7%)
Kingdom of Denmark
9.000% 11/15/00 Denmark 3,750,000 444,688
Kingdom of Denmark
8.000% 03/15/06 Denmark 10,300,000 1,344,969
Kingdom of Denmark
6.000% 11/15/09 Denmark 5,500,000 669,466
------------
Total Danish Kroner 2,459,123
------------
EURO (44.8%)
Eurohypo AG
4.000% 04/27/09 Germany 1,350,000 1,047,253
European Investment Bank
7.500% 11/04/02 Germany 1,022,584 941,813
3
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BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2000(CONTINUED)
--------------------------------------------------------------------------------
Country of Par Value
Origin (Local Currency) Value
-------------- ------------- ------------
EURO - CONTINUED
Republic of Finland
8.750% 10/17/01 Finland 1,980,000 $ 1,805,165
Government of France (O.A.T)
5.250% 04/25/08 France 5,000,000 4,394,010
Government of France
4.500% 07/12/03 France 1,600,714 1,391,367
Government of France (O.A.T)
5.500% 10/25/07 France 1,372,041 1,224,169
Government of France
6.750% 10/25/03 France 1,295,816 1,199,143
Federal Republic of Germany
6.000% 06/20/16 Germany 4,422,584 4,184,184
Republic of Germany
6.500% 10/14/05 Germany 4,300,000 4,011,765
Republic of Italy
6.250% 03/01/02 Italy 2,000,000 1,789,531
Republic of Italy
7.250% 11/01/26 Italy 2,500,000 2,588,378
Republic of Italy
8.750% 07/01/06 Italy 2,000,000 2,036,792
Government of Netherlands
8.500% 03/15/01 Netherlands 2,400,000 2,148,299
Government of Netherlands
5.500% 07/15/10 Netherlands 750,000 668,580
Kingdom of Spain
4.750% 07/30/14 Spain 750,000 604,984
------------
Total Euro 30,035,433
------------
GERMAN MARK (2.3%)
African Development Bank
6.375% 10/31/02 Multi-National 2,211,000 1,011,704
LKB Baden Wurttemburg
6.625% 08/20/03 Germany 1,100,000 509,304
------------
Total German Mark 1,521,008
------------
GREEK DRACHMAS (1.3%)
Republic of Hellenic
8.600% 03/26/08 Greece 300,000,000 900,643
------------
ITALIAN LIRA (2.5%)
Abbey National Treasury
Services Plc
6.000% 08/08/02 United Kingdom 3,600,000,000 1,653,001
------------
4
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2000(CONTINUED)
--------------------------------------------------------------------------------
Country of Par Value
Origin (Local Currency) Value
-------------- ------------- ------------
JAPANESE YEN (12.0%)
Asian Development Bank
3.125% 06/29/05 Japan 250,000,000 $ 2,513,196
International Bank For
Reconstruction & Development
4.750% 12/20/04 Multi-National 113,000,000 1,206,246
Japan Development Bank
6.500% 09/20/01 Japan 158,000,000 1,544,974
KFW International Finance, Inc.
1.000% 12/20/04 United States 240,000,000 2,219,396
Kingdom of Spain
4.625% 07/22/04 Spain 55,000,000 577,973
------------
Total Japanese Yen 8,061,785
------------
NEW ZEALAND DOLLAR (1.6%)
International Bank For
Reconstruction & Development
7.250% 04/09/01 Multi-National 1,250,000 507,828
International Bank For
Reconstruction & Development
7.250% 05/27/03 Multi-National 1,400,000 571,803
------------
Total New Zealand Dollar 1,079,631
------------
NORWEGIAN KRONE (1.2%)
Kingdom of Norway
5.750% 11/30/04 Norway 7,500,000 799,602
------------
POLISH ZLOTY (1.5%)
International Bank For
Reconstruction & Development
13.000% 10/15/01 Multi-National 5,000,000 1,045,447
------------
SWEDISH KRONA (3.1%)
Spintab AB
7.500% 06/4/04 Sweden 6,000,000 663,540
Eksportfin
6.875% 02/09/04 Norway 2,600,000 280,265
Kingdom of Sweden
6.500% 10/25/06 Sweden 10,000,000 1,108,888
------------
Total Swedish Krona 2,052,693
------------
SWISS FRANC (0.5%)
Inter-American
Development Bank
7.250% 01/21/02 Multi-National 600,000 360,835
------------
5
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
Country of Par Value
Origin (Local Currency) Value
-------------- ------------- ------------
UNITED STATES DOLLAR (1.5%)
United States Treasury Notes
4.250% 01/15/10 United States 1,000,000 $ 1,021,875
------------
TOTAL FIXED INCOME SECURITIES
(Identified Cost $71,009,560) 61,517,707
------------
SHORT-TERM INVESTMENTS (3.0%)
Mexican Cetes Treasury Bill
0.000% 01/25/01
(Identified Cost $2,024,205) Mexico 20,000,000 2,009,742
------------
TOTAL INVESTMENTS (94.7%)
(IDENTIFIED COST $73,033,765) 63,527,449
OTHER ASSETS AND LIABILITIES (5.3%) 3,546,776
------------
NET ASSETS 100.0% $ 67,074,225
============
(See "Notes to Financial Statements")
6
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments, at value
(Identified cost $73,033,765) $ 63,527,449
Cash 1,419,296
Unrealized gain on forward currency contracts open (Note 5) 347,365
Receivables:
Interest and recoverable foreign taxes receivable 1,930,776
Prepaid expenses 8,536
------------
Total assets 67,233,422
------------
LIABILITIES
Advisory fees payable (Note 3) 40,259
Accrued expenses 118,938
------------
Total liabilities 159,197
------------
Net assets (equivalent to $7.34 per share of no par value capital
stock, representing the offering and redemption price for
9,134,663 shares outstanding, 100,000,000 shares authorized) $ 67,074,225
============
Net assets consist of:
Capital paid in $ 89,013,214
Accumulated net investment income 3,437,751
Accumulated net realized loss on investments and foreign
currency transactions (16,111,545)
Unrealized appreciation (depreciation) on:
Investments $ (9,506,316)
Foreign currency 241,121 (9,265,195)
------------ ------------
$ 67,074,225
============
</TABLE>
(See "Notes to Financial Statements")
7
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (inclusive of foreign taxes
recovered of $17,956) $ 3,712,019
EXPENSES
Advisory fees (See Note 3) $ 556,934
Custodian fees 138,081
Audit fees 62,290
Transfer agent fees 45,789
Administrative fees 32,500
Director fees and expenses (See Note 3) 21,425
Legal fees 15,500
Registration expense 14,009
Report to shareholders 3,372
Insurance expense 2,097
Miscellaneous expenses 10,245
------------
Total expenses 902,242
------------
Net investment income 2,809,777
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (478,577)
Net unrealized loss on investments (7,908,054)
------------
Net loss on investments (8,386,631)
------------
Net realized gain on foreign currency 2,200,750
Net unrealized gain on foreign currency and
foreign currency denominated assets and liabilities 839,842
------------
Net gain on foreign currency 3,040,592
------------
Net loss on investments and foreign currency (5,346,039)
------------
Net decrease in net assets resulting from operations $ (2,536,262)
============
(See "Notes to Financial Statements")
8
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended For the Year Ended
INCREASE (DECREASE) IN NET ASSETS September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Operations:
Net investment income $ 2,809,777 $ 2,420,853
Net realized gain (loss) on investments (478,577) 1,154,631
Net unrealized loss on investments (7,908,054) (4,040,080)
Net realized gain (loss) on foreign currency 2,200,750 (217,507)
Net unrealized gain on foreign currency and foreign
currency denominated assets and liabilities 839,842 363,589
------------ ------------
Net decrease resulting from operations (2,536,262) (318,514)
------------ ------------
Distributions to shareholders:
From net investment income (2,538,220) (619,641)
------------ ------------
Fund share transactions:
Proceeds from shares sold 7,982,863 28,939,379
Net asset value of shares issued on
reinvestment of distributions 405,569 479,578
Cost of shares redeemed (15,430,463) (4,318,428)
------------ ------------
Net increase (decrease) resulting from
Fund share transactions (7,042,031) 25,100,529
------------ ------------
Net increase (decrease) (12,116,513) 24,162,374
NET ASSETS
Beginning of year 79,190,738 55,028,364
------------ ------------
End of year (including accumulated net investment
income of $3,437,751 and $589,956, respectively) $ 67,074,225 $ 79,190,738
============ ============
NUMBER OF FUND SHARES
Sold 1,062,130 3,692,507
Issued on reinvestment of distributions 51,996 59,828
Redeemed (2,073,123) (543,571)
------------ ------------
Net increase (decrease) (958,997) 3,208,764
============ ============
</TABLE>
(See "Notes to Financial Statements")
9
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
For the Year Ended September 30,
--------------------------------------------------
2000(1) 1999(1) 1998(1) 1997(1) 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 7.85 $ 7.99 $ 8.20 $ 8.38 $ 8.78
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.29 0.34 0.25 0.42 0.59
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency (0.55) (0.39) 0.40 0.04 0.16
------ ------ ------ ------ ------
Total from Investment Operations (0.26) (0.05) 0.65 0.46 0.75
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Net Investment Income (0.25) (0.09) (0.86) (0.17) (0.45)
For Tax Purposes in Excess of Book
Net Investment Income -- -- -- (0.47) (0.70)
------ ------ ------ ------ ------
Total Distributions (0.25) (0.09) (0.86) (0.64) (1.15)
------ ------ ------ ------ ------
Net Asset Value, End of Year $ 7.34 $ 7.85 $ 7.99 $ 8.20 $ 8.38
====== ====== ====== ====== ======
TOTAL RETURN (3.52%) (0.65%) 8.75% 5.75% 9.32%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (millions) $67.1 $79.2 $55.0 $51.9 $65.4
Ratio of Expenses to Average Net Assets:
Before Expenses Paid Indirectly 1.22% 1.26% 1.33% 1.35% 1.22%
After Expenses Paid Indirectly 1.22% 1.26% 1.26% 1.35% 1.22%
Ratio of Net Investment Income to
Average Net Assets 3.79% 4.03% 4.63% 4.72% 5.41%
Portfolio Turnover Rate 34% 31% 40% 33% 61%
</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")
10
<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.
11
<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, 2000, the Fund had a capital loss carryforward of $15,850,028,
of which $15,257,486 and $592,542 will expire on September 30th of the years
2003 and 2008, respectively. The Fund does not intend to make any capital gains
distributions until the capital loss carryforwards have been extinguished.
In order to meet certain excise tax distribution requirements, the Fund is
required to measure and distribute annually, net capital gain and net foreign
currency gain realized during a twelve-month period ending October 31st. In
connection with this, the Fund is permitted for tax purposes to defer into its
next fiscal year any net capital losses or net foreign currency losses incur
between November 1st and the end of its fiscal year. The Fund has incurred
capital losses of $261,524 and will elect to defer such losses.
At the end of each year, capital paid in, accumulated net investment loss and
accumulated net realized loss on investments will be adjusted for permanent
book-tax differences. Reclassifications between accumulated net investment loss
and accumulated net realized loss on investments arise 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, 2000, purchases and sales of investment
securities other than U.S. Government obligations and short-term investments
aggregated $21,815,435 and $23,064,497, respectively. Purchases of U.S.
Government obligations aggregated $1,046,389 and there were no sales of U.S.
Government obligations.
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.
12
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
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, 2000.
NOTE 4 - TAX BASIS UNREALIZED APPRECIATION (DEPRECIATION)
Gross and net unrealized appreciation (depreciation) on September 30, 2000,
based on a cost of $74,979,189 for federal income tax purposes, is as follows:
Gross unrealized appreciation $ 765,042
Gross unrealized depreciation (12,216,782)
------------
Net unrealized depreciation $(11,451,740)
============
NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS
At September 30, 2000 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 unrealized gain on forward currency contracts in the financial
statements. Open forward foreign currency exchange contracts outstanding at
September 30, 2000 are as follows:
Currency Currency Delivery Unrealized
Receivable Deliverable Date Appreciation/(Depreciation)
---------- ----------- ---- ---------------------------
$1,173,977 SEK 10,439,000 10/19/00 $ 88,394
510,896 GRD 185,910,000 10/26/00 27,356
445,166 NOK 3,908,250 10/26/00 14,742
404,405 NZD 951,475 11/07/00 17,184
4,460,685 EUR 5,127,814 11/13/00 (75,175)
495,422 AUD 850,000 11/17/00 34,790
8,477,474 EUR 9,245,800 11/17/00 297,391
938,509 GBP 622,312 11/17/00 17,391
4,403,888 JPY 473,418,000 11/17/00 (14,901)
356,832 NZD 796,020 11/17/00 32,860
2,462,587 GBP 1,752,270 11/20/00 (131,168)
1,051,921 CAD 1,558,000 11/22/00 14,824
765,022 DKK 6,488,156 11/27/00 (3,653)
636,200 DKK 5,304,000 11/30/00 7,771
911,354 SEK 8,548,500 11/30/00 19,559
---------
Net Unrealized Appreciation $ 347,365
=========
13
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
CURRENCY LEGEND:
AUD - Australian Dollar JPY - Japanese Yen
CAD - Canadian Dollar NOK - Norwegian Kroner
DKK - Danish Kroner NZD - New Zealand Dollar
EUR - Euro SEK - Swedish Krona
GBP - British Sterling
GRD - Greek Drachma
14
<PAGE>
(UNAUDITED)
CUMULATIVE TOTAL RETURN OF A $10,000 INVESTMENT
OCTOBER 1, 1990 - SEPTEMBER 30, 2000
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
<TABLE>
<CAPTION>
BB&K Int'l Salomon Bros. Salomon Bros. Salomon Bros.
Bond Fund Non-US WGBI 10 (Hedged) Non-US WGBI (50% Hedged) WGBI (US$)
--------- ----------------------- ------------------------ ----------
<S> <C> <C> <C> <C>
Sep-90 10,000 10,000 10,000 10,000
Sep-91 11,011 11,409 11,451 11,505
Sep-92 12,381 12,338 13,246 13,610
Sep-93 13,564 13,811 14,555 14,853
Sep-94 11,136 13,568 14,830 15,122
Sep-95 13,066 15,648 17,308 17,569
Sep-96 14,284 17,543 18,698 18,307
Sep-97 15,105 19,690 19,742 18,748
Sep-98 16,427 22,473 22,140 20,918
Sep-99 16,342 23,132 22,580 21,019
Sep-00 15,747 24,777 22,437 20,199
</TABLE>
AVERAGE ANNUAL TOTAL RETURN *
1 Year 5 Year Since Inception
------ ------ ---------------
-3.52% 3.83% 4.66%
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 $15,747 by September 30, 2000.
----------
* 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.
15
<PAGE>
November 30, 2000
Dear Shareholder,
We are pleased to present the Bailard, Biehl & Kaiser International Equity Fund
Annual Shareholders' Report for the year ending September 30, 2000.
FUND PERFORMANCE AND MARKET OVERVIEW
The past year has been one of the most raucous ever in world equity markets. In
the fourth quarter of 1999 shares worldwide rose to precipitous heights, well
past the outer bounds of justifiable valuations. When feared Y2K disruptions did
not occur, markets glided higher still, stretching valuations to the breaking
point in March 2000. Since then, valuations have returned to somewhat less
breathtaking levels, with nearly all equities markets worldwide down for the
year to date. The Bailard, Biehl & Kaiser International Equity Fund returned
6.10% from September 30, 1999 through September 30, 2000.1 This return well
exceeded our international equity benchmark.
Shares in technology, media, and telecommunications (collectively "TMT")
companies paced both the worldwide advance and decline in share prices. Up until
March of this year, investors continued to favor TMT shares to the exclusion of
nearly everything else. Through the 2nd calendar quarter, investors shunned TMT.
More recently, investors have been rapidly shifting their bets between "new
economy" and "old economy" issues. This continuing debate has contributed to the
notable intraday volatility of late.
Crude oil prices soared to a multi-year high in March, before retracing their
gain briefly into April. Rising oil prices caused the most damage to world
markets in the third quarter as prices rose again, peaking in September at
triple the level of two years before. These fluctuations brought gains to
economies of net oil producers and losses to the economies of net oil consumers.
In the Fund, our quantitative stock selection and country selection both added
value, with country selection producing the more consistent gains.
EUROPE
Developed Europe performed very well in local currency terms during the past
12-month period, but returns were considerably less impressive in dollar terms.
Europe as a whole benefited from an improving economic picture, with healthy
reflation, stronger GDP growth, and a pickup in industrial production. Corporate
profits were also on the rise. Considerable consolidation benefited the telecom,
finance, and healthcare sectors.
European TMT's gained as these stocks soared worldwide, but also suffered in the
second and third quarters of this year from correlation with the U.S. technology
decline and the perception of overbidding for spectrum licenses by wireless
telecommunications providers. This happened in Sweden and Finland, home to
telecom giants Ericsson and Nokia.
16
<PAGE>
The dollar rose on capital flows from Europe to the U.S. by both portfolio
investors and European companies making large strategic acquisitions in the U.S.
Although the dollar also gained against other currencies, the spotlight was on
the euro, which has trended steeply downward since its introduction in January
1999. Over the last 12 months, the euro lost 17.1% versus the dollar and 15.8%
against the yen. Thanks to a healthy trade surplus, the yen has held its own
against the dollar. The British pound lost 10.2% against the dollar.2
Currency declines similar to those of their Euroland neighbors pared back dollar
returns for investors in Sweden, Denmark, and Norway. Norway did well in local
terms due its hefty oil sector.
Our country selection in Europe added value, primarily through an overweight in
Finland, one of the best-performing markets for the 12-month period. Stock
selection in the region was mixed. Selections in France and Finland added value
whereas German and Spanish picks detracted from Fund performance.
JAPAN AND ASIA
Japan's market hit 18-month lows in the third quarter of 1999, despite upward
revisions in growth expectations. The Japanese economy shrank during the fourth
quarter of last year, technically putting the country back into recession.
Industrial production numbers have remained strong, however, and Japan's
impressive trade surplus has continued to support the yen. The yen remained in
the range of 101 to 112 yen per dollar throughout the year.
Hong Kong performed better than other developed markets in the region, helped by
its heavy technology orientation, strong economic growth numbers, and China's
agreement with the World Trade Organization.
Emerging Asia was the worst performing region over the year, falling ten percent
in dollar terms. The energy intensiveness of many of the region's economies
weakened their attractiveness as oil prices soared. Political crises heightened
investor risk aversion, and funds flowed out of the least developed markets.
Taiwan's poor performance versus other technology-driven markets was
attributable to political tensions with China, which increased with the election
of a pro-independence president, and to the instability of the new government's
relationship with the leading opposition party. The result was a 9.1%2 loss over
the year.
The thaw in North-South Korean relations, GDP growth, and optimism over
restructuring efforts of the big CHAEBOLS substantially boosted sentiment and
share prices in Korean equities well ahead as of early July 2000. Gains were
erased and reversed in the third quarter, however, when equities fell on Korea's
economic dependence on out-of-favor semiconductor manufacturing.
Indonesia, Thailand, and the Philippines were among the world's worst performing
markets. A weakening economy, political instability, religious violence, and a
falling currency hurt Indonesian shares. Share prices in Thailand suffered from
currency uncertainty, with heavy selling by foreign investors impatient for
quicker action in dealing with the country's bad debts. The equity market of the
Philippines was abandoned outright by foreign investors in the wake of a stock
scandal that raised doubts about the fairness and transparency of the stock
exchange. A further scandal involving President Estrada only made matters worse.
Significant outperformance from stock selection in Hong Kong, thanks to emphasis
on certain electronics, wireless telecom, and software companies, was offset by
inopportune selection in Korea. Overexposure to Japan hurt Fund performance
owing to big share price declines among the country's large-cap and
export-oriented companies.
17
<PAGE>
AMERICAS
The combination of a booming U.S. economy, gains in technology stocks such as
Nortel Networks and BCE, and profits from natural resource exports generously
rewarded investors in Canada. Canada was the single best-performing market for
dollar-based investors this year, producing a 56.3%2 in U.S. dollar terms, a
remarkable return coming from a developed market.
Rising oil prices and an investment-grade debt rating from Moody's boosted the
Mexican market, while better than expected economic results helped Brazil. A
booming U.S. economy also helped both perform well.
Country selection in the Americas was modestly beneficial, while stock selection
in Canada added significant value thanks to overweighting the big telecom
highfliers. This region was responsible for well over 1% of value added to the
annual return of the Fund.
EMERGING EUROPE
Most countries in emerging Europe fared poorly last year, the notable exception
being Russia, a net exporter of oil. Russia's oil & commodities-linked equities
market soared to give the best performance worldwide. Russian stocks rose on the
strength in oil prices and on signs of greater political stability under the
Putin presidency.
For the first half of our fiscal year, Turkey's market cheered the government's
progress on its reform and privatization programs as well as the country's
potential membership in the European Union. Turkey gave back much of its
phenomenal gains in the second and third quarters, and its currency shed 31% of
its value. Nonetheless, dollar-based investors ended the year ahead 28%.2
Israel soared on a technology boom. The Polish market was also up slightly, led
higher by the country's burgeoning software industry.
Turkey was a significant source of added value for the Fund, thanks to an
overweight position and favorable stock selection. A de-emphasis on most of
emerging Europe returned a small positive for a region which is rather small in
economic terms. In Russia, however, we remained underweight too long.
MARKET OUTLOOK AND INVESTMENT STRATEGY
The strong dollar has enhanced the attractiveness of many international stocks
from a valuation perspective. Going forward, we will continue to monitor market
indicators to determine when and where such valuation advantages will be
rewarded. In Asia, market valuations hinge on political issues and dependence on
technology exports. Worldwide, the price of oil and the reinvestment of
petrodollars will continue to create winners and losers on a country-by-country
basis.
At this writing, our models prefer the smaller markets of Scandinavia, Canada
and Italy over Japan and the UK; in Asia, Korea and Hong Kong remain the most
18
<PAGE>
attractive markets; and in Latin America, Brazilian shares are preferred over
Mexican. The Russian market will continue to benefit if oil prices rise.
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,
Peter M. Hill Burnie E. Sparks, Jr., CFA
Chairman President
----------
(1) Total returns for investment periods ended September 30, 2000: 3 months:
-7.72%; 6 months: -14.89%; 12 months: 6.10%; 5 years: 9.43% annualized; 10
years: 6.65% 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 International Equity Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
(2) The performance data quoted represents past performance and is no
indication of future results.
19
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
EQUITY SECURITIES (97.0%)
I. ARGENTINA (0.5%)
Banco De Galicia y Buenos Aires Spns'd ADR 5,300 $ 62,275
* Grupo Financiero Galicia SA 116,625 177,376
Pecom Energia SA 38,000 144,487
Siderar SA A Shares 59,900 176,212
Telecom Argentina 7,800 168,675
----------
Total Argentina 729,025
----------
II. AUSTRALIA (1.6%)
Australia & New Zealand Bank 28,000 201,370
Broken Hill Proprietary Ltd. 15,000 155,560
Commonwealth Bank of Australia 21,750 325,092
ERG (Energy Research Group) Ltd. 27,000 129,403
Jupiters Ltd. 80,000 137,770
Macquarie Bank Ltd. 13,000 197,687
News Corporation Ltd. (The) 45,268 637,387
* Orbital Engine Corp. 125,000 117,787
Qantas Airways Ltd. 60,000 115,578
QBE Insurance Group Ltd. 28,000 132,680
Telstra Corp. 65,000 212,613
Woodside Petroleum 15,000 111,248
----------
Total Australia 2,474,175
----------
IV. BRAZIL (2.3%)
Acucarv GDR 7,800 290,063
* Banco Bradesco SA 30,600,000 253,093
BCO Estado Sao Paulo Pfd. 3,700,000 108,293
* Bradespar SA Pfd. 30,600,000 20,234
Brasil Telecom Part SA ADR 1,000 58,250
Centrais Eletricas Pfd. B ADR 16,000 164,000
CIA Paranense de Energy Copel 16,530,000 147,829
CIA Vale Do Rio Doce ADR 7,100 179,719
Companhia De Bebidas ADR 2,600 57,525
Eletropaulo Metropolitana 1,900,000 113,804
Gerdau SA Pfd. 4,400,000 56,401
* Globo Cabo SA 6,700 89,613
20
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
BRAZIL - CONTINUED
Itaubanco Pfd. 3,100,000 $ 275,556
Lojas Americanas SA 30,600,000 81,268
* Petrobras ADR 17,800 511,194
* Telebras Holders Pfd. ADR 6,200 490,575
# * Telebras ADR 5,500 86
Telecomunicacoes De Sao Paulo SA 6,200 96,875
Telenorte Leste Prtcp ADR 11,578 264,847
+ * Telesp Celular ADR, Rights 10/2/00 248 --
* Telesudeste Celular Spns'd ADR 1,240 26,040
Unibanco Holdings 6,700 221,100
----------
Total Brazil 3,506,365
----------
V. CANADA (4.7%)
Alberta Energy Ltd. 11,600 481,470
* Ballard Power Systems, Inc. 6,500 713,030
Bombardier, Inc. Class B 16,000 276,485
* Crestar Energy, Inc. 15,000 249,236
Imperial Oil Ltd. 6,000 156,420
* Methanex Corp. 155,000 762,329
National Bank of Canada Montreal 29,900 472,963
Nortel Networks Corp. 43,422 2,586,323
Quebecor, Inc. Class B 19,400 453,861
Toronto Dominion Bank 5,000 146,883
Toronto Dominion Bank Ontario 10,000 295,000
* Westport Innovations, Inc. 50,000 639,705
----------
Total Canada 7,233,705
----------
VI. DENMARK (1.2%)
Den Danske Bank AF 2,810 356,975
Falck AS 1,100 160,039
Novo-Nordisk AS 1,848 409,855
Tele Denmark AS Class B 7,452 409,877
Vestas Wind Systems 4,250 217,170
William Demant Holdings 5,000 235,977
----------
Total Denmark 1,789,893
----------
VII. FINLAND (2.4%)
Nokia Class A ADR 93,400 3,718,488
----------
21
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
VIII. FRANCE (11.9%)
Alcatel 41,000 $ 2,623,083
Aventis SA 7,000 525,058
AXA SA 10,400 1,358,267
BNP Paribas 20,990 1,850,410
Banque National De Paris Wts. (Ex. 7/15/02) 3,900 19,961
Eura France 661 373,312
France Telecom SA 20,000 2,142,589
Havas Advertising 60,000 947,751
L'Oreal 8,000 620,892
Peugeot SA 3,510 623,506
Sanofi Synthelabo 24,000 1,289,789
Scor 6,000 262,088
Societe Nationale Elf Aquitaine 10,480 1,586,045
STMicroelectronics NV 20,000 980,402
TV Francaise 25,000 1,433,981
Total Fina Elf 7,500 1,097,326
Vivendi 7,000 520,116
----------
Total France 18,254,576
----------
IX. GERMANY (5.4%)
Alliance AG 3,229 1,058,564
BASF AG 23,500 830,540
Daimlerchrysler AG 17,200 766,951
Deutsche Bank AG 7,500 622,127
Deutsche Telekom AG 40,000 1,373,092
Karstadt Quelle AG 20,000 645,953
Marsscholleck & Lauten Non Voting Pfd. 6,360 951,299
SAP AG Pfd. 3,300 809,560
Siemens AG 9,500 1,221,862
----------
Total Germany 8,279,948
----------
X. GREECE (0.4%)
Hellenic Telecom Organ GRD 15,480 296,341
National Bank of Greece 7,470 307,571
----------
Total Greece 603,912
----------
XI. HONG KONG / CHINA (4.3%)
Cathay Pacific Airways 310,000 568,563
* China Mobile (Hong Kong) Ltd. 170,000 1,133,791
Dah Sing Financial Services 100,200 489,636
Dao Heng Bank 75,000 371,304
22
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
HONG KONG / CHINA - CONTINUED
Giordano International Ltd. 600,000 $ 348,218
HSBC Holdings Plc 23,200 325,824
Hutchison Whampoa 50,500 670,367
Legend Holders Ltd. 1,014,000 962,389
Sun Hung Kai Properties 100,000 942,688
Swire Pacific 120,000 747,994
----------
Total Hong Kong / China 6,560,774
----------
XII. INDIA (0.0%)
Videsh Sanchar Nigam GDR 144A** 5,750 47,150
----------
XIII. INDONESIA (0.0%)
* PT Lippo Bank Tbk Ctf Of Entilmt 5,580,000 --
* PT Lippo Bank Tbk Wts. (Exp. 04/15/02) 5,580,000 --
----------
Total Indonesia --
----------
XIV. IRELAND (0.2%)
Bank of Ireland 20,364 162,810
CRH Plc 7,000 111,436
Eircom Plc 15,000 33,357
Smurfit (Jefferson) Plc 30,000 52,682
----------
Total Ireland 360,285
----------
XV. ISRAEL (0.5%)
Bank Hapoalim 50,700 155,477
* DSP Group, Inc. 4,800 179,400
Elbit Computers Ltd. ADR 16,900 154,213
* Gilat Satellite Networks Ltd. ADR 2,800 215,250
* Nice Systems Ltd. Spns'd ADR 1,500 108,000
----------
Total Israel 812,340
----------
XVI. ITALY (3.0%)
Acea SpA 23,000 321,088
Arnoldo Mondadori Editore 20,000 237,909
Assicurazione Generali 10,528 338,636
ENI SpA 125,000 661,838
Fiat SpA 8,000 186,515
Mediolanum SpA 21,000 356,916
23
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
ITALY - CONTINUED
Sanpaolo Imi 70,000 $1,137,831
Telecom Italia Mobile SpA 75,500 610,285
Telecom Italia SpA 55,000 584,358
Telecom Italia SpA Non Conv 24,139 131,643
----------
Total Italy 4,567,019
----------
XVII. JAPAN (20.2%)
77th Bank 115,000 859,893
Bank of Tokyo-Mitsubishi 60,000 709,050
Belluna Co. Ltd. 23,000 851,379
Canon, Inc. 30,000 1,329,817
Daiichi Pharmaceutical 36,000 914,492
Daiwa Securities Group, Inc. 155,000 1,817,370
Disco Corp. 5,000 666,759
Fast Retailing Co. Ltd. 4,000 810,660
Furukawa Electric Co. Ltd. 30,000 828,706
Honda Motor Co. 28,000 1,031,279
Konami Co. 20,000 1,650,935
Kyocera Corp. 8,000 1,221,544
Mitsui Chemicals 90,000 400,611
Murata Manufacturing 10,000 1,378,864
NEC Corp. 30,000 681,566
Nintendo Co. 5,000 912,919
NTT Docomo, Inc. 140 4,016,287
Rohm Co. 3,000 822,043
Sankyo Co. Ltd. 50,000 1,112,808
Sanyo Electric Co. 180,000 1,582,454
Sony Corp. 21,000 2,129,928
Tokyo Electronics 10,000 906,904
Tokyo Seimitsu Co. Ltd. 10,000 1,045,715
Tostem Corp. 53,000 740,607
Toyota Motor Corp. 41,000 1,620,118
* Trend Micro, Inc. 6,000 805,663
----------
Total Japan 30,848,371
----------
XVIII. MALAYSIA (0.2%)
Public Bank Berhad 80,000 65,684
Tenaga Nasional 81,000 240,868
----------
Total Malaysia 306,552
----------
24
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
XIX. MEXICO (1.0%)
* Banacci 25,000 $ 114,623
* Carso Global Telecom 78,904 191,328
Cemex SA ADR 4,480 89,880
Femsaubd 21,900 85,105
* Grupo Telavisa GDR 144A** 4,550 262,478
Telefonos de Mexico Series L ADR 14,300 760,581
----------
Total Mexico 1,503,995
----------
XX. NETHERLANDS (5.8%)
ABN Amro Holdings 33,000 768,790
* ASM Lithography Holdings NV 13,500 447,932
Axxicon Group NV 24,300 392,417
DSM NV 11,000 318,000
Fortis (NL) NV 20,000 612,420
Getronics NV 12,000 120,507
ING Groep NV 25,050 1,668,513
Koninklijke KPN NV 17,118 372,811
OCE NV 11,000 174,725
Philips Electronics NV 34,920 1,502,855
Royal Dutch Petroleum 37,000 2,236,243
Vendex KBB NV 15,000 203,449
----------
Total Netherlands 8,818,662
----------
XXI. NEW ZEALAND (0.3%)
Fletcher Challenge Energy 25,000 88,414
Telecom Corp. of New Zealand 120,000 298,534
Tranz Rail Holdings Ltd. 50,000 76,219
----------
Total New Zealand 463,167
----------
XXII. NORWAY (0.4%)
Christiana Bank 20,000 106,407
Kvaerner Industrier 4,000 37,892
Norsk Hydro AS 6,000 251,147
* Petroleum Geo Service 3,500 59,372
Tomra Systems AG 2,700 88,777
----------
Total Norway 543,595
----------
25
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
XXIII. POLAND (0.3%)
* Agora 5,600 $ 108,843
* Computerland Poland SA 4,000 98,836
* KGHM Polska Midez SA 35,000 221,609
Telekomunikacja Polska SA 20,000 102,807
----------
Total Poland 532,095
----------
XXIV. PORTUGAL (1.3%)
Banco Commercial Portuguese 40,000 210,023
* Banco Espirito Santo 20,700 328,801
* Brisa Auto Estrada 20,000 166,253
* Cimpor Cimentos Portugal SA 10,000 228,996
* Electricidade De Portugal 150,000 473,876
* Mundial Confianca 3,000 145,631
Portugal Telecom SA 43,000 442,063
----------
Total Portugal 1,995,643
----------
XXV. REPUBLIC OF KOREA (0.3%)
* Hankuk Electric Glass Co. 1,500 84,742
Hyundai Motor 4,000 52,011
Korean Air Lines 6,600 40,246
Pohang Iron & Steel 1,000 74,429
Samsung Electronics 500 90,571
Shinhan Bank 8,500 95,278
----------
Total Republic of Korea 437,277
----------
XXVI. RUSSIA (1.1%)
AO Mosenergo Spns'd ADR 36,000 130,860
* Lukoil Oil Co. Spns'd ADR 9,200 527,850
RAO Unified Energy System ADR 24,100 331,255
Rostelecom Long Distance &
International Telephone ADR 11,600 102,225
Surgutneftegaz Sponsored ADR 35,000 512,750
* Vimpel Communications ADR 3,300 63,731
----------
Total Russia 1,668,671
----------
XXVII. SINGAPORE (0.9%)
DBS Group Holdings Ltd. 10,424 115,004
DBS Land Ord. 98,000 149,790
26
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
SINGAPORE - CONTINUED
Keppel Corp. 65,000 $ 132,219
Omni Industries Ltd. 95,000 150,118
Robinson & Co. 63,000 181,003
Singapore Airlines Ltd. (Fgn. Reg'd.) 40,000 379,245
United Overseas Bank 42,240 303,396
* United Overseas Land Wts. (05/28/01) 10,000 632
----------
Total Singapore 1,411,407
----------
XXVIII. SOUTH AFRICA (0.7%)
Anglogold Ltd. 2,000 74,228
Anglo American Corp. Plc 5,100 269,796
Billiton Plc 30,000 106,356
Impala Platinum Holdings Ltd. 4,000 172,940
Sappi Ltd. 9,000 66,680
Sasol Ltd. 20,000 157,873
Standard Bank Investment Corp. 55,000 211,363
----------
Total South Africa 1,059,236
----------
XXIX. SPAIN (2.7%)
Aumar (Aut Del Mar) 30,000 457,991
Banco Bilbao Vizcaya Argentina 81,666 1,233,773
Banco Popular Espanol 10,000 306,651
NH Hoteles SA 25,000 292,312
Repsol SA 21,000 386,381
Telefonica De Espana 43,749 866,712
Union Electrica Fenosa 30,000 540,324
----------
Total Spain 4,084,144
----------
XXX. SWEDEN (3.5%)
Electrolux AB Series B Free 30,000 376,830
Ericsson (LM) Telecom Co. Series B Free 100,000 1,520,814
Ericsson (LM) Telecom Co. ADR 77,200 1,143,525
Hennes & Mauritz B Free 13,000 260,459
* Netcom Systems AB B 5,000 256,410
SKF AB 12,000 155,715
Sandvik AB Series B 10,000 200,872
Skandia Forsakrings AB 20,000 396,553
Svenska Handelsbanken Series A 65,600 1,055,538
----------
Total Sweden 5,366,716
----------
27
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
XXXI. SWITZERLAND (1.7%)
Abb Ltd. 1,000 97,200
Credit Suisse Group 1,400 261,629
* Givaudan AG 30 7,768
* Kudelski SA 300 459,095
Nestle AG 200 416,570
Novartis AG 220 337,306
Roche Holdings Genusscheine 30 263,828
Swisscom AG Ittigen 750 183,768
Ubs AG 2,200 292,756
Zurich Allied 550 254,253
----------
Total Switzerland 2,574,173
----------
XXXII. TAIWAN (0.5%)
* Macronix International Co. 56,500 89,989
* Via Technologies, Inc. 60,000 633,897
----------
Total Taiwan 723,886
----------
XXXIII. THAILAND (0.0%)
* Banpu Public Co. Ltd. Wts. (Exp. 01/14/03) 60,000 --
----------
XXXIV. TURKEY (0.3%)
* Finansbank 13,837,500 29,108
* T. Sise Cam 37,600,000 350,280
* Turkiye Garanti Bankasi AS 9,584,000 82,084
* Vestel Electronik Sanayai 400,000 73,626
----------
Total Turkey 535,098
----------
XXXV. UNITED KINGDOM (17.4%)
* Allied Domecq Plc 170,000 847,033
Astrazeneca Group Plc 45,500 2,384,111
Barclays Bank 90,000 2,490,977
BP Amoco Plc 340,000 3,026,194
BP Amoco Plc ADR 10,000 530,000
British Telecom 120,000 1,261,456
Cadbury Schweppes Plc 115,000 680,110
CGNU Plc 61,800 877,164
28
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY COUNTRY
SEPTEMBER 30, 2000 (CONTINUED)
--------------------------------------------------------------------------------
SHARES VALUE
------ -----
UNITED KINGDOM - CONTINUED
Electrocomponents Plc 105,000 $ 1,129,389
Kingfisher Plc 35,000 228,724
Logica Plc 25,000 822,416
Marconi Electronics Systems 45,000 615,426
Marks & Spencer 80,000 240,108
National Grid Group Plc 70,000 600,788
Reuters Group Plc 70,000 1,326,806
Rolls-Royce 200,000 504,168
Royal Bank of Scotland Group 70,000 1,477,909
* Royal Bank of Scotland Group Plc 70,000 84,090
Sage Group 100,000 745,164
Smithkline Beecham Plc 95,000 1,301,339
Spirent Plc 150,000 1,485,892
Vodafone Group Plc 867,133 3,237,192
WPP Group 55,000 658,672
------------
Total United Kingdom 26,555,128
------------
TOTAL INVESTMENTS (97.0%)
(IDENTIFIED COST $136,095,119) 148,365,471
------------
OTHER ASSETS LESS LIABILITIES (3.0%) 4,564,823
------------
NET ASSETS (100.0%) $152,930,294
============
----------
ADR - American depositary receipt.
GDR - Global depositary receipt.
* Non-income producing security.
** Exempt from registraion 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, 2000, these
securities were valued at $309,628 or 0.2% of Net Assets.
# Fair value, using procedure approved by Board of Trustees/Directors (Note
1).
+ De-listed / bankrupt security; value by management (Note 1).
(See "Notes to Financial Statements")
29
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
SEPTEMBER 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
Percent of
INDUSTRY Net Assets
-------- ----------
Advertising 1.1%
Aerospace\Defense 0.3
Airline 0.7
Automobile 3.2
Banking 12.7
Beverages and Tobacco 0.6
Broadcasting and Publishing 2.7
Building Materials & Components 0.8
Business Services 2.1
Chemicals 1.9
Computers 1.6
Construction and Housing 0.1
Cosmetics\Personal Care 0.4
Electrical and Electronics 4.8
Electronic Components 1.8
Energy 2.8
Finance\Financial Services 2.7
Food and Housing Products 2.9
Health 5.7
Insurance 4.5
Lodging 0.3
Machinery 0.6
Mining 0.8
Oil & Gas Producers 7.9
Other Industries 2.3
Paper 0.1
Real Estate 0.7
Retail 3.1
Semiconductors 2.2
Software 2.6
Steel 0.3
Telecommunications 22.8
Transportation 0.0 *
-----
Total Investments 97.1
Other Assets less Liabilities 2.9
-----
NET ASSETS 100.0%
=====
----------
* Less than 0.1%.
(See "Notes to Financial Statements")
30
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investments, at value
(Identified cost $136,095,119) $ 148,365,471
Foreign currency, at value
(Identified cost $1,084,872) 1,065,939
Cash 3,310,649
Receivables:
Dividend, interest and recoverable foreign taxes receivable $ 309,053
Unrealized gain on forward currency contracts open (Note 5) 169,989 479,042
------------
Prepaid expenses 8,042
-------------
Total assets 153,229,143
-------------
LIABILITIES
Payables:
Advisory fees (Note 3) 133,897
Fund shares redeemed 10,000 143,897
Accrued expenses 154,952
------------ -------------
Total liabilities 298,849
-------------
Net assets (equivalent to $6.69 per share of $.0001 par value capital stock,
representing the offering and redemption price for 22,875,396 shares
outstanding, 100,000,000 shares authorized) $ 152,930,294
=============
Net assets consist of:
Capital paid in $ 127,447,275
Accumulated net investment loss (410,607)
Accumulated net realized gain on investments
and foreign currency transactions 13,487,505
Unrealized appreciation on:
Investments $ 12,270,352
Foreign currency 135,769 12,406,121
------------ -------------
$ 152,930,294
=============
</TABLE>
(See "Notes to Financial Statements")
31
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $243,511) $ 2,061,723
Interest 175,478
------------
Total income 2,237,201
------------
EXPENSES
Advisory fees (See note 3) $1,564,553
Custodian fees 470,346
Audit fees 64,499
Transfer agent fees 41,660
Administrative fees (See Note 3) 32,501
Director fees and expenses (See Note 3) 21,474
Legal fees 14,410
Registration expense 6,498
Insurance expense 6,344
Report to shareholders 3,430
Miscellaneous expenses 23,270
----------
Total expenses 2,248,985
------------
Net investment loss (11,784)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 16,686,346
Net unrealized depreciation on investments (5,855,998)
------------
Net gain on investments 10,830,348
------------
Net realized loss on foreign currency (3,323,775)
Net unrealized appreciation on foreign currency
and foreign currency denominated assets and liabilities 217,441
------------
Net loss on foreign currency (3,106,334)
------------
Net gain on investments and foreign currency 7,724,014
------------
Net increase in net assets resulting from operations $ 7,712,230
============
</TABLE>
(See "Notes to Financial Statements")
32
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended For the Year Ended
INCREASE (DECREASE) IN NET ASSETS September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Operations:
Net investment income (loss) $ (11,784) $ 441,744
Net realized gain on investments 16,686,346 13,815,115
Net unrealized gain (loss) on investments (5,855,998) 13,252,766
Net realized loss on foreign currency (3,323,775) (303,129)
Net unrealized gain on foreign currency and
foreign currency denominated assets and liabilities 217,441 360,749
------------- -------------
Net increase resulting from operations 7,712,230 27,567,245
------------- -------------
Distributions to shareholders:
From net investment income (369,422) (1,091,609)
From net realized gain (13,278,658) (8,369,002)
------------- -------------
Total distributions (13,648,080) (9,460,611)
------------- -------------
Fund share transactions:
Proceeds from shares sold 31,395,084 29,963,681
Net asset value of shares issued on
reinvestment of distributions 11,379,052 7,833,513
Cost of shares redeemed (23,380,008) (24,728,906)
------------- -------------
Net increase resulting from Fund share transactions 19,394,128 13,068,288
------------- -------------
Net increase 13,458,278 31,174,922
NET ASSETS
Beginning of year 139,472,016 108,297,094
------------- -------------
End of year (including accumulated net investment
income of $0 and $145,802, respectively) $ 152,930,294 $ 139,472,016
============= =============
NUMBER OF FUND SHARES
Sold 4,205,279 4,475,867
Issued on reinvestment of distributions 1,587,037 1,261,435
Redeemed (3,164,349) (3,786,693)
------------- -------------
Net increase 2,627,967 1,950,609
============= =============
</TABLE>
(See "Notes to Financial Statements")
33
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
For the Year Ended September 30,
--------------------------------------------------------------
2000 1999 1998 1997 1996
------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 6.89 $ 5.92 $ 6.91 $ 6.05 $ 6.00
------- ------- --------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.001(2) 0.02(1) 0.09(1) 0.04(1) 0.05
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 0.47 1.47 (0.81) 1.23 0.37
------- ------- --------- ------- -------
Total from Investment Operations 0.47 1.49 (0.72) 1.27 0.42
------- ------- --------- ------- -------
LESS DISTRIBUTIONS:
Net Investment Income (0.02) (0.06) (0.13) (0.05) (0.06)
Net Realized Gain (0.65) (0.46) (0.14) (0.36) (0.31)
------- ------- --------- ------- -------
Total Distributions (0.67) (0.52) (0.27) (0.41) (0.37)
------- ------- --------- ------- -------
Net Asset Value, End of Year $ 6.69 $ 6.89 $ 5.92 $ 6.91 $ 6.05
======= ======= ========= ======= =======
TOTAL RETURN 6.10% 26.13% -10.61% 22.22% 7.33%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (millions) $152.9 $139.5 $ 108.3 $139.2 $100.4
Ratio of Expenses to Average Net Assets:
Before Expenses Paid Indirectly 1.37% 1.49% 1.44% 1.44% 1.54%
After Expenses Paid Indirectly 1.37% 1.49% 1.41% 1.44% 1.54%
Ratio of Net Investment Income to
Average Net Assets (0.01%) 0.37% 0.49% 0.79% 0.78%
Portfolio Turnover Rate 101% 85% 78% 67% 103%
</TABLE>
----------
1. Net investment income per share has been computed before adjustments for
book/tax differences.
2. Amount represents less than $0.01 per share.
(See "Notes to Financial Statements")
34
<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.
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 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.
35
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY 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 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.
In order to meet certain excise tax distribution requirements, the Fund is
required to measure and distribute annually, net capital gain and net foreign
currency gain realized during a twelve-month period ending October 31st. In
connection with this, the Fund is permitted for tax purposes to defer into its
next fiscal year any net capital losses or net foreign currency losses incur
between November 1st and the end of its fiscal year. The Fund has incurred
capital losses of $361,051and will elect to defer such losses.
At the end of each year, capital paid in, accumulated net investment loss and
accumulated net realized gain on investments will be adjusted for permanent
book-tax differences. Reclassifications between accumulated net investment loss
and accumulated net realized gain on investments arise 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, 2000, purchases and sales of securities, other
than short-term investments, aggregated $164,291,884 and $160,605,323,
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.
36
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
NOTE 3 - CONTINUED
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, 2000.
NOTE 4 - TAX BASIS UNREALIZED APPRECIATION (DEPRECIATION)
Gross and net unrealized appreciation (depreciation) at September 30, 2000,
based on a cost of $136,447,626 for federal income tax purposes, is as follows:
Gross unrealized appreciation $ 24,707,973
Gross unrealized depreciation (12,790,128)
-----------
Net unrealized appreciation $ 11,917,845
============
NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS
At September 30, 2000 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 unrealized loss on forward currency contracts in the financial
statements. Open forward foreign currency exchange contracts outstanding at
September 30, 2000 are as follows:
Unrealized
Currency Currency Delivery Appreciation
Receivable Deliverable Date (Depreciation)
---------- ----------- ---- --------------
$2,257,647 SEK 20,075,000 10/19/00 $169,989
--------
Net Unrealized Appreciation $169,989
========
CURRENCY LEGEND:
SEK - Swedish Krona
37
<PAGE>
(UNAUDITED)
CUMULATIVE TOTAL RETURN OF A $10,000 INVESTMENT
OCTOBER 1, 1990 - SEPTEMBER 30, 2000
BB&K Int'l MSCI EAFE MSCI AC World
Equity Fund (Local Currency) MSCI EAFE (US$) Free ex-USA (US$)
----------- ---------------- --------------- -----------------
Sep-90 10,000 10,000 10,000 10,000
Sep-91 11,118 12,344 12,189 12,254
Sep-92 9,445 10,463 11,322 11,509
Sep-93 11,026 13,607 14,305 14,585
Sep-94 11,883 14,063 15,711 16,460
Sep-95 12,136 14,417 16,621 17,038
Sep-96 13,026 16,716 18,052 18,521
Sep-97 15,920 20,367 20,251 21,018
Sep-98 14,231 18,717 18,563 18,255
Sep-99 17,950 24,309 24,308 24,355
Sep-00 19,045 28,069 25,081 25,552
AVERAGE ANNUAL TOTAL RETURN *
1 Year 5 Year 10 Year
------ ------ -------
6.10% 9.43% 6.65%
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, 1990. We compare this investment to
the growth in the MSCI EAFE (Europe, Australia and Far East) and MSCI
All-Country World Free ex-USA stock indexes over the same time period. Both
indexes measure the performance of the international equity markets; the
All-Country World includes markets that are not a part of EAFE. The EAFE index
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 $19,045 over the ten-year period ended September 30, 2000.
* 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.
38
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL FUND GROUP, INC
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and the Board of Directors of Bailard, Biehl & Kaiser
International Fund Group, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the schedules 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, and Bailard, Biehl & Kaiser International Equity Fund
(constituting The Bailard, Biehl & Kaiser International Fund Group, Inc.,
hereafter referred to as the "Fund") at September 30, 2000, the results of each
of their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
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 auditing standards generally accepted in the United States of America,
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, 2000 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
San Francisco, California
November 22, 2000
39
<PAGE>
BAILARD, BIEHL & KAISER
INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
Federal Income Tax Information: (Unaudited)
For the fiscal year ended September 30, 2000, the International Equity Fund
earned foreign source income of $2,305,234 and the Fund incurred foreign taxes
of $243,511, which are expected to be passed through to shareholders as foreign
tax credits on Form 1099-DIV for the year ending December 31, 2000.
In accordance with the Code, during the fiscal year ended September 30, 2000,
the International Equity Fund declared long-term capital gain distribution in
the amount of $9,869,930.
40
<PAGE>
The following information is available by request at no charge.
STOCKHOLDER REPORTS:
Additional information about the Fund's investments and performance is available
in the Funds' Semi-Annual, and Annual Reports to stockholders. The Annual Report
discusses the market conditions and investment strategies that significantly
affected the Funds' performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides further detail about the Funds' investment policies, risks and
operations. It is incorporation by reference into this propectus, and is legally
a part of this prospectus.
To request this information or make any additional inquiries please contact us
at:
BB&K Fund Services, Inc.
950 Tower Lane, Suite 1900
Foster City, CA 94404-2131
Toll free (800) 882-8383
[email protected]
Information about the Funds may be reviewed and copied at the Securities and
Exchange Commission's (SEC) public regerence room in Washington, DC. Information
regarding the operation of the Public Reference Room may be obtained by calling
the SEC at 1-202-942-8090, or sending an email to: [email protected]. Reports
and other information about the Fund are also available at the SEC Internet site
at http://www.sec.gov. Copies of this information may also be obtained by
writing and paying a duplicating fee to: Public Reference Section, Securities
and Exchange Commission, Washington DC, 20549-0102.
SEC File Number: 811-06146
Bailard, Biehl & Kaiser International Equity Fund
Ticker: BBIEX
Bailard, Biehl & Kaiser International Bond Fund
Ticker: BBIFX
