BAILARD BIEHL & KAISER INTERNATIONAL FUND GROUP INC
485APOS, 2000-10-20
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    As filed with the Securities and Exchange Commission on October 20, 2000

                                                        Registration No. 2-63270
                                                               File No. 811-6146
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM N-1A

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                         POST-EFFECTIVE AMENDMENT NO. 33                     [X]

                                       and

         REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
                                AMENDMENT NO. 35                             [X]

             BAILARD, BIEHL & KAISER INTERNATIONAL FUND GROUP, INC.
               (Exact name of registrant as specified in charter)

                           950 Tower Lane, Suite 1900
                          Foster City, California 94404
                    (Address of principal executive offices)
             Telephone number (including area code): (800) 882-8383

                             PETER M. HILL, CHAIRMAN
             BAILARD, BIEHL & KAISER INTERNATIONAL FUND GROUP, INC.
                           950 Tower Lane, Suite 1900
                          Foster City, California 94404
               (Name and address of agent for service of process)

                                   Copies to:

                             ANDRE W. BREWSTER, ESQ.
   HOWARD, RICE, NEMEROVSKI, CANADY, FALK & RABKIN, A PROFESSIONAL CORPORATION
                       Three Embarcadero Center, 7th Floor
                      San Francisco, California 94111-4065

Approximate date of proposed public offering: As soon as practicable after this
post-effective amendment becomes effective.

It is proposed that this filing will become effective (check appropriate box):

     [ ]  Immediately upon filing pursuant to paragraph (b)
     [ ]  On __(date)____, pursuant to paragraph (b) of Rule 485
     [X]  60 days after filing pursuant to paragraph (a)(1)
     [ ]  On __(date)____, pursuant to paragraph (a)(1)
     [ ]  75 days after filing pursuant to paragraph (a)(2) " On __(date)____,
          pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

     [ ]  This post-effective amendment designates a new effective date for a
          previously filed post-effective amendment.

================================================================================
<PAGE>
             Bailard, Biehl & Kaiser International Fund Group, Inc.


                  BAILARD, BIEHL & KAISER BOND OPPORTUNITY FUND
                BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND

                                   PROSPECTUS

                                DECEMBER 18, 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 disproved these securities, nor has it passed on the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
<PAGE>
TABLE OF CONTENTS
--------------------------------------------------------------------------------

Information on the Bond Fund................................................   3

Information on the Equity Fund..............................................   7

Additional Information on Strategies and Risks..............................  10

Management of the Funds.....................................................  13

Pricing of Fund Shares......................................................  14

Purchasing Shares...........................................................  15

Selling/Exchanging Shares...................................................  16

Distributions/Taxes.........................................................  18

Financial Highlights........................................................  20

                                        2
<PAGE>
BAILARD, BIEHL & KAISER BOND OPPORTUNITY FUND ("BOND FUND")

OBJECTIVE: The Bond Fund seeks total return, from income and long-term growth of
capital, by investing primarily in U.S. dollar-denominated debt securities, with
a secondary emphasis on non-U.S. dollar-denominated debt securities.

THE BOND FUND'S INVESTMENT OBJECTIVE WAS CHANGED ON DECEMBER , 2000 FROM
INVESTING SUBSTANTIALLY IN INTERNATIONAL BONDS. DEPENDING ON MARKET AND OTHER
FACTORS, THE FUND EXPECTS TO TRANSITION TO ITS NEW OBJECTIVE WITHIN SIX MONTHS
OF THE CHANGE.

PRINCIPAL STRATEGIES:

The Bond Fund may invest up to 100% of its assets in U.S. dollar-denominated
debt securities. The Bond Fund may also invest up to 50% of its assets in debt
securities denominated in currencies of developed countries around the world,
including Europe, the United Kingdom, the Far East, Canada, Australia, and to a
lesser extent emerging markets.

The Adviser, Bailard, Biehl & Kaiser, Inc., employs a disciplined top-down
approach that focuses first on sector selection (for example, agencies,
corporates and sovereign debt), and then on bond selection within those sectors.
The Adviser overweights sectors based on their relative value to other sectors
on a historical and fundamental basis. It uses a value oriented approach
combined with rigorous market environment analysis and relative momentum
strategies. Ideally, it is looking for significantly undervalued situations in
the credit markets, where the market environment is expected to be conducive to
value recognition and where the price action in the market is positive. The
Adviser generally overweights countries whose bond markets have high relative
nominal or real yield spreads to U.S. Treasuries. Foreign bond investment will
focus primarily on yield and secondarily on currency appreciation. The Adviser
seeks to control risk by investing primarily in investment grade bonds and by
closely monitoring the interest rate sensitivity of the Fund's investments. The
Adviser also intends to hedge the Fund's foreign currency exposure to help
manage the risk of currency fluctuations.

The Bond Fund invests in:

*    FIXED-INCOME SECURITIES, such as bonds, notes, bills and other debt
     securities or obligations, of U.S. and foreign governments, agencies and
     corporations. The Bond Fund's foreign investments include securities issued
     by entities in both developed and emerging market countries. The Bond Fund
     may also invest in debt securities issued by supra-national entities. The
     average maturity of the debt securities in the Fund's portfolio will vary
     depending on the Adviser's interest rate forecasts.

*    CASH EQUIVALENTS, such as short-term U.S. and foreign government
     securities, bank debt, and commercial paper, which mature in one year or
     less. The Fund typically holds cash equivalents for the payment of expenses
     and redemptions, pending investment or for protection against market
     declines.

*    HEDGING INSTRUMENTS, such as foreign currency forward contracts, options,
     futures and certain other derivative instruments, to manage investment risk
     or to serve as a substitute for underlying securities or currency
     positions.

                                        3
<PAGE>
For more information about the Bond Fund's investment practices, please see the
section titled, "Additional Information about the Bond Fund's and Equity Fund's
Investment Strategies and Risks."

DETERMINING IF THE BOND FUND IS RIGHT FOR YOU: An investment in the Bond Fund
provides a vehicle for longer-term investors seeking to add bond exposure to
their investment portfolios. The Bond Fund may be appropriate for investors
seeking a core U.S. bond portfolio that also invests opportunistically in
international bonds. It is not a balanced investment program. We strongly
discourage short-term traders and market timers from investing in the Bond Fund.

PRINCIPAL RISKS:

All Bond Fund investments are subject to some degree of risk that will affect
the value of the Fund's assets and may result in a loss of your money. The Bond
Fund's principal risks are:

*    MARKET RISK, the risk that the market value of the Fund's investments will
     fluctuate as the global bond and equity markets fluctuate.

*    INTEREST RATE RISK, the risk that changes in interest rates will affect
     bond prices. Generally, an increase in interest rates will cause the value
     of fixed-rate securities to fall, while a decline in interest rates will
     cause an increase in the value of these securities.

*    CREDIT RISK, the risk that the issuer of a security will default on its
     financial obligations. This risk is enhanced to the extent the Fund invests
     in lower rated securities.

*    FOREIGN COUNTRY AND CURRENCY RISKS, the risks that accompany investing in
     foreign securities, including the risk that a decline in the value of
     foreign currencies relative to the U.S. dollar will reduce the value of
     securities denominated in those currencies.

*    NON-DIVERSIFICATION RISK, the risk that the Fund may hold more concentrated
     positions in certain investments than more diversified mutual funds.

*    VOLATILITY OF ASSET SIZE RISK, the risk that, since substantially all of
     the Fund's shareholders are clients of the Adviser, the total assets of the
     Fund may fluctuate significantly whenever the Adviser increases or
     decreases its clients' allocation to bonds.

PAST PERFORMANCE:

On December __, 2000, the Bond Fund changed its investment strategy from
investing substantially all its assets in international bonds to investing
primarily in U.S. dollar-denominated debt securities, with a secondary emphasis
on non-U.S. dollar-denominated debt securities. At the same time, the Bond Fund
permitted investment in certain types of securities with more speculative
characteristics (such as lower rated debt, convertible bonds, preferred stock
and Rule 144A securities) and reduced its advisory fee from 0.75% to 0.60% of
assets. As a result, the information provided below reflects the performance of
an investment portfolio that is materially different from the current investment
portfolio of the Bond Fund.

The following Annual Total Returns bar chart shows some of the risk of investing
in the Bond Fund before the changes in its investment objective, strategies and
fees on December __, 2000 by illustrating how returns have varied from year to
year since the Bond Fund's inception on October 1, 1990.

                                        4
<PAGE>
              ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31ST

1990    1991    1992     1993     1994     1995    1996    1997     1998    1999
----    ----    ----     ----     ----     ----    ----    ----     ----    ----
2.53%  12.83%   5.91%   13.94%   -19.20%  20.61%   8.45%   2.60%   11.53%     0

Note: The year to date return for 2000 through September 30, 2000 was -2.00%.
The 2.53% return for 1990 represents the three-month return from inception
(10/1/90) to December 31, 1990. Performance numbers from October 1, 1990 through
September 30, 1993 reflect the deduction of an assumed 1% investment management
fee (0.25% quarterly). Actual fees varied during that period.

                                               Quarter Ended        Total Return
                                               -------------        ------------
Best Quarter, Inception-1999                      3/31/95               9.73%
Worst Quarter, Inception-1999                     6/30/94              -9.84%

The following Average Annual Total Returns table compares the Bond Fund's
performance to five international bond indices.

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 12/31/99

<TABLE>
<CAPTION>
                                                                                     Since
                                                               1-Year    5-Year    Inception
                                                               ------    ------    ---------
<S>                                                            <C>       <C>         <C>
Bailard, Biehl & Kaiser Bond Opportunity Fund                  -4.70%    7.36%       5.28%
Salomon Brothers World Government 10-country
(ex-U.S.) Bond Index (fully hedged)                             3.97%    11.18%      9.65%
Salomon Brothers World Government (ex-U.S.)
Bond Index (50% hedged):                                       -1.12%    8.48%       9.18%

Salomon Brothers World Government Bond Index ($) "SBWGB"       -4.27%    6.42%       8.20%
Merrill Lynch Corporate Government Master Index                -2.05%    7.61%       7.08%
80% Merrill Lynch Corporate Government Master Index and 20%
Salomon Brothers World Government Bond Index
(ex-U.S., fully hedged)                                        -1.05%    8.29%       7.47%
</TABLE>

The first three indices are listed for comparative purposes before the change in
the Bond Fund's investment objective on December __ 2000. The Salomon Brothers
World Government 10-country (ex-U.S.) bond index is a commonly used index that
measures the performance of government bonds in ten countries, given on a fully
hedged basis. To more fully reflect the Bond Fund's hedging strategy prior to

                                        5
<PAGE>
December __, 2000, we have also calculated a 50%-hedged return for the Salomon
Brothers World Government (ex-U.S.) bond index, a commonly used index that
measures the performance of government bonds in seventeen developed countries.
The third index listed, the Salomon Brothers World Government Bond Index,
measures the U.S. dollar performance of government bonds in the U.S. and
seventeen other developed countries. The fourth and fifth indices listed are for
comparative purposes after the change in the Bond Fund's investment objective on
December __, 2000. The Merrill Lynch Corporate Government Master Index is a
commonly used index which measures the performance of the broad U.S. dollar
investment grade debt universe, excluding mortgage and asset-backed securities.
To more fully reflect the Bond Fund's current investment strategy, we have also
calculated an index with an 80% weighting in the Merrill Lynch Corporate
Government Master index and a 20% weighting in the fully hedged Salomon Brothers
World Government Bond Index (ex-U.S.). None of the indices listed above measure
the performance of the bond markets in developing countries.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.


FEES AND EXPENSES

The tables below describe the fees and expenses that you may pay if you buy and
hold shares of the Bond Fund:

STOCKHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)

Maximum Sales Load Imposed on Purchases..............................    None
Maximum Sales Load Imposed on Reinvested Dividends
  (and other Distributions)..........................................    None
Maximum Deferred Sales Load..........................................    None
Redemption Fees......................................................    None
Exchange Fees........................................................    None

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM THE FUND'S ASSETS)

Management Fees......................................................   0.60%(1)
12b-1 Fees...........................................................    None
Other Expenses.......................................................   0.51%
Total Fund Operating Expenses........................................   1.11%

----------
(1)  Management Fees have been restated to reflect the reduction in the advisory
     fee payable to the Adviser from 0.75% to 0.60% of assets effective December
     __, 2000.

                                        6
<PAGE>
EXAMPLE

The example below is intended to help you compare the cost of investing in the
Bond Fund, as described in the preceeding tables, with the cost of investing in
other mutual funds.

The example assumes that you invest $10,000 in the Bond Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Bond Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on the above assumptions, your costs
would be:

           1 year           3 years        5 years        10 years
           ------           -------        -------        --------



                                        7
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND ("EQUITY FUND")

OBJECTIVE: The Equity Fund seeks long-term growth of capital through investments
in international stocks. Although income is a factor in portfolio selection, the
Equity Fund will seek income only when consistent with its primary objective of
capital appreciation.

PRINCIPAL STRATEGIES:

The Equity Fund invests primarily in the equity securities of issuers located in
developed and, to a lesser extent, emerging market countries around the world.
It will normally invest in established companies in Europe, the United Kingdom,
Japan, Asia, Australia and Canada, among other areas. The Fund's holdings are
diversified across multiple industries and geographic regions.

The Adviser employs a disciplined, quantitative approach that focuses first on
country selection and then on sector and stock selection within individual
countries. The Adviser considers such factors as relative valuations,
fundamental economic conditions, risk and the global investing environment.
These factors are dynamically weighted to ascertain the relative attractiveness
of different countries, sectors and companies. The Adviser will generally
overweight those countries, sectors and companies that appear to be the most
attractive and underweight those countries, sectors and companies that appear to
be the least attractive.

The Equity Fund invests in:

*    EQUITY SECURITIES, such as common and preferred stocks of foreign issuers.
     The Fund may also invest in the equity securities of U.S. companies whose
     assets or operations are primarily located outside of the U.S. Ordinarily,
     the Fund will invest at least 65% of its assets in the equity securities of
     at least three countries other than the U.S.

*    CASH EQUIVALENTS, such as short-term U.S. and foreign government
     securities, bank debt, and commercial paper, which mature in one year or
     less. The Fund typically holds cash equivalents for payment of expenses and
     redemptions, pending investment or for protection against market declines.

*    HEDGING INSTRUMENTS, such as foreign currency forward contracts, options,
     futures and certain other derivative instruments to manage investment risks
     or to serve as a substitute for underlying securities or currency
     positions.

For more information about the Equity Fund's investment practices, please see
the section titled, "Additional Information about the Bond Fund's and the Equity
Fund's Investment Strategies and Risks."

DETERMINING IF THE EQUITY FUND IS RIGHT FOR YOU: An investment in the Equity
Fund provides a specialized vehicle for longer-term investors seeking to add
international stocks to their investment portfolio. It is not a balanced
investment program. International stocks typically offer more opportunities and
more risks than U.S. stocks. They allow investors to participate in any future
growth and development of the world's foreign equity markets. They can also
provide important diversification benefits for U.S. investors. We strongly
discourage short-term traders and market timers from investing in the Equity
Fund.

                                        8
<PAGE>
PRINCIPAL RISKS:

All Equity Fund investments are subject to some degree of risk that will affect
the value of the Fund's assets and may result in a loss of your money. The
Fund's principal risks are:

*    MARKET RISK, the risk that the market value of the Fund's investments will
     fluctuate as the global stock markets fluctuate.

*    FOREIGN COUNTRY AND CURRENCY RISKS, the risks that accompany investing in
     foreign securities, including the risk that a decline in the value of
     foreign currencies relative to the U.S. dollar will reduce the value of
     securities denominated in those currencies.

*    EMERGING MARKET RISK, the risks that accompany investing in securities of
     issuers located in emerging market countries.

*    NON-DIVERSIFICATION RISK, the risk that the Fund may hold more concentrated
     positions in certain investments than diversified mutual funds.

*    VOLATILITY OF ASSET SIZE RISK, the risk that, since substantially all of
     the Fund's shareholders are clients of Bailard, Biehl & Kaiser, the total
     assets of the Fund may fluctuate significantly whenever Bailard, Biehl &
     Kaiser increases or decreases its clients' allocation to international
     stocks.

PAST PERFORMANCE: The following Annual Total Returns bar chart shows some of the
risk of investing in the Equity Fund by illustrating how Fund returns have
varied from year to year over the past ten years.

              ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31ST

  1990    1991     1992    1993    1994     1995    1996    1997    1998    1999
  ----    ----     ----    ----    ----     ----    ----    ----    ----    ----
-19.98%   0.79%  -12.28%  36.81%  -12.58%  12.46%   9.59%   9.96%  12.01%    0

Note: Performance numbers from January 1, 1990 through September 30, 1993
reflect the deduction of an assumed 1% investment management fee (0.25%
quarterly). Actual fees varied during this period.

                                               Quarter Ended        Total Return
                                               -------------        ------------
Best Quarter, 1990-1999                          12/31/98              18.44%
Worst Quarter, 1990-1999                          9/30/90             -20.14%

                                        9
<PAGE>
The following Average Annual Total Returns table compares the Equity Fund's
performance to three international stock indices.

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 12/31/99

                                                       1-Year   5-Year   10-Year
                                                       ------   ------   -------
Bailard, Biehl & Kaiser International Equity Fund      32.41%   12.31%    5.31%
MSCI EAFE (Local Currency)                             33.46%   15.70%    6.50%
 MSCI EAFE (U.S. $)                                    26.96%   12.83%    7.01%
MSCI All Country World Free(ex U.S.)($)                30.91%   12.39%    7.29%

The MSCI EAFE index is a commonly used index that measures the performance of
the international equity markets in eighteen countries in Europe, Australia, New
Zealand and the Far East. The index results are given in both local currency and
U.S. dollar terms, net of withholding taxes on foreign income. The MSCI All
Country World Free (ex-U.S.) is a commonly used index that measures the
performance of equities available to foreign investors in 47 developed and
emerging market countries outside of the United States. The returns for this
index are given in U.S. dollar terms, gross of withholding taxes on foreign
income.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

FEES AND EXPENSES

STOCKHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)

The tables below describe the fees and expenses that you may pay if you buy and
hold shares of the Equity Fund:

Maximum Sales Load Imposed on Purchases.................................    None
Maximum Sales Load Imposed on Reinvested Dividends
  (and other Distributions).............................................    None
Maximum Deferred Sales Load.............................................    None
Redemption Fees.........................................................    None
Exchange Fees...........................................................    None

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM THE FUND'S ASSETS)

Management Fees.........................................................   0.95%
12b-1 Fees..............................................................   None
Other Expenses..........................................................   0.54%
Total Fund Operating Expenses...........................................   1.49%

                                       10
<PAGE>
EXAMPLE

The example below is intended to help you compare the cost of investing in the
Equity Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Equity Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Equity Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on the above assumptions, your costs
would be:

           1 year           3 years        5 years        10 years
           ------           -------        -------        --------
            $152              $471           $813          $1,779

                                       11
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENT STRATEGIES AND RISKS

OTHER INVESTMENTS: In addition to the types of investments listed under
Principal Strategies, the Bond Fund may invest in preferred stock, convertible
bonds, taxable municipal debt, 144A securities, indexed securities and
investment companies. The Equity Fund may invest in convertible securities,
American Depository Receipts (ADRs), Global Depository Receipts (GDRs),
International Depository Receipts (IDRs), and investment companies.

CREDIT QUALITY OF DEBT SECURITIES (BOND FUND ONLY): The Bond Fund may invest in
investment grade U.S. and international debt securities and obligations rated at
least Baa3 and BBB- by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P"). Up to 20% of the Fund's assets may also be
invested in debt of lesser quality, emerging market debt, preferred stock, and
convertible bonds. Since Moody's and S&P do not provide credit ratings for many
international bonds, the Bond Fund may invest in unrated bonds of comparable
quality to the rated bonds described above. For a description of specific bond,
preferred stock and municipal debt ratings, see Appendix A of the Statement of
Additional Information.

Bonds rated lower than Baa3 and BBB-, commonly referred to as "junk bonds," are
riskier than higher grade bonds. Lower-rated bonds are generally unsecured and
are often subordinated to other obligations of the issuer, and the issuers of
such bonds usually have high levels of indebtedness. Lower-rated bonds may also
be redeemable by the issuer, causing the holder to replace the bond with a lower
yielding security in a declining interest rate environment. Investment in
lower-rated securities may make achievement of the Bond Fund's investment
objective more dependent on the Adviser's credit analysis than is the case for
higher-rated securities. Ratings attempt to evaluate the safety of the principal
and interest payments on a bond, but not the risk of a decline in its market
value. Ratings are also subject to change and may fail to reflect recent events
in a timely manner.

The growth in the market for lower-rated debt securities has paralleled a long
economic expansion. An economic downturn or rise in interest rates is likely to
have a greater negative effect on this market and on the ability of issuers to
repay principal and interest, meet projected business goals and obtain
additional financing than on higher-rated securities. It may also result in a
higher incidence of default than with higher-rated securities. The market for
lower-rated securities is typically thinner and less active than for
higher-rated securities, resulting in price volatility and limited liquidity.
Adverse publicity and investor perceptions may further decrease the value and
liquidity of lower-rated securities. In addition, because of their price
volatility and limited liquidity, lower-rated securities may be more difficult
to value accurately.

U.S. AND INTERNATIONAL CASH EQUIVALENTS: Typically, the Funds will maintain a
low weighting in cash equivalents, unless a higher weighting is needed for
defensive purposes. The Bond Fund and the Equity Fund will invest in higher
quality cash equivalents, with a credit quality comparable to that indicated by
a commercial paper rating of at least Prime-3 by Moody's or at least A-3 by S&P.
If the Funds acquire securities that are not rated by Moody's or S&P, the
Adviser will determine if the securities are of comparable quality. For a
description of specific commercial paper ratings, see Appendix A of the
Statement of Additional Information.

The Bond Fund and the Equity Fund may invest in U.S. and international
repurchase agreements.

                                       12
<PAGE>
DEFENSIVE STRATEGY (BOND FUND ONLY):When the Adviser is concerned about the
outlook for the global bond markets, the Bond Fund may invest up to 100% of its
assets in U.S. and international cash equivalents. The Bond Fund's investment
objective may not be achieved when the Fund is invested for temporary defensive
purposes.

HEDGING TRANSACTIONS: The Funds may use hedging transactions:

*    to help protect the Bond Fund from adverse changes in currency exchange and
     interest rates, and the Equity Fund from adverse changes in currency
     exchange rates and market conditions, and

*    as a substitute for an underlying securities or currency position.

The Funds may engage in the following types of hedging transactions:

                                                        Bond Fund    Equity Fund
                                                        ---------    -----------
Forward foreign currency exchange contracts                 X             X

Put and call options, futures contracts, and
options on futures contracts on foreign
currencies and debt securities                              X

Put and call options, futures contracts, and
options on futures contracts on foreign
currencies and stock indices                                              X

Interest rate and foreign currency swaps and
related caps, floors and collars                            X

The Bond Fund and the Equity Fund may also conduct foreign currency exchange
transactions at the rate prevailing on the foreign currency exchange markets
(i.e., on a spot basis).

In a typical hedging transaction, the Bond Fund or the Equity Fund might hedge
the foreign currency risk associated with a particular investment with a forward
contract. The Bond Fund might use options, futures contracts or options on
futures contracts on debt securities to hedge the risk of interest rate
increases or to serve as a substitute for a debt position. The Equity Fund might
use stock index options, stock index futures contracts or options on a stock
index futures contract to hedge the risk of a stock market correction or to
serve as a substitute for an equity position.

The Bond Fund and the Equity Fund are not required to use hedging transactions
to seek their objectives. The Equity Fund may engage in currency hedging to help
protect its international stock investments from the risk of a strong dollar
despite its current 0% hedged benchmark. The Bond Fund intends to hedge up to
100% of its foreign currency exposure to help manage the risk of currency
fluctuations and currently follows a 100% hedged benchmark.

The Funds have placed certain limits on these hedging transactions, which must
not be used for speculative purposes.

All of the Bond Fund's and the Equity Fund's hedging transactions involve
special risks. If the Adviser uses a hedging instrument at the wrong time or
incorrectly judges market conditions, the hedging strategy may prevent the Funds
from realizing some potential gains. The Funds could also experience losses if,
among other things:

*    the prices of their forwards, futures and options positions are not
     correlated with their other investments,

*    the Adviser is unable to close out a position because of an illiquid
     market, or

*    the counterparty (the party on the other side of the transaction) fails to
     complete a transaction.

                                       13
<PAGE>
FOREIGN SECURITIES: The Funds' international stock and bond investments are
subject to special risks. These include:

*    Lack of accurate public information

*    Different accounting standards

*    Less governmental regulation and supervision of issuers, markets and
     brokers

*    Higher transaction costs, less liquidity, and higher price volatility

*    The possibility of expropriation, confiscatory taxation, exchange
     restrictions, limitations on the removal of assets, and political or
     economic instability.

EMERGING MARKETS: Securities issued in countries with developing or emerging
markets have greater risk. These countries tend to have less mature economies
and less stable political systems. They may have restrictions on foreign
ownership or the repatriation of assets. In addition, the securities markets of
emerging market countries tend to have more volatility, less liquidity, higher
transaction costs, less sophisticated settlement practices and less regulatory
protection for investors than their developed country counterparts.

DIVIDENDS: Dividends payable on the Funds' foreign investments may be subject to
foreign withholding taxes that reduce the net amount of income available for
distribution to the Funds' shareholders. The U.S. has signed tax treaties with
certain countries that lower the tax on U.S. taxpayers.

CURRENCY EXCHANGE RATES: Changes in currency exchange rates may increase or
decrease the value of the Funds' assets. An increase in the U.S. dollar relative
to a foreign currency could result in a substantial decline in the U.S. dollar
value of the Funds' investments denominated in that currency. The Adviser can
use certain hedging techniques to help minimize this risk. However, there is no
guarantee that the Adviser will use these techniques or that they will fully
protect the Funds against adverse changes in exchange rates. Moreover, to the
extent hedging transactions are used to reduce currency risks, the Funds will
not benefit from increases in the value of the currencies of the countries in
which the Funds invest.

The Funds may incur costs in connection with conversions between various
currencies, since foreign exchange dealers will typically offer to buy and sell
a foreign currency at different rates. Fluctuations in exchange rates may also
affect the Funds' income distributions. For example, if foreign exchange losses
exceed other investment company taxable income during a taxable year, the Funds
might not be able to or might determine not to make any further ordinary income
distributions. The Funds might also recharacterize ordinary income distributions
made before the losses were realized as a return of capital to shareholders.
This would reduce each shareholder's cost basis in his Funds' shares for U.S.
tax purposes.

NON-DIVERSIFICATION: The Bond Fund and the Equity Fund are non-diversified funds
under the Investment Company Act of 1940. This means the Funds can invest more
than 25% of their assets in issuers in which the Funds hold individual positions
that are greater than 5% of the Funds' assets. Concentrated positions in the
securities of a single issuer expose the Funds to a greater risk of loss from
declines in the prices of these securities

VOLATILITY OF ASSET SIZE: The Adviser's clients currently hold substantially all
of the Funds' shares. As a result, the Funds' assets may increase or decrease by
a significant amount whenever the Adviser decides to buy or sell Fund shares on
behalf of its clients. However, the fact that substantially all of the Funds'
shareholders are clients of the Funds' Adviser may make it easier for the

                                       14
<PAGE>
Adviser to manage the Funds' cash flow. Any significant decline in the Funds'
assets will likely increase the Funds' expenses as a percentage of their net
assets. Moreover, to meet the redemption requests of the Adviser's clients, the
Funds may need to liquidate portfolio positions and realize gains and losses at
inopportune times for non-redeeming shareholders. Higher portfolio turnover also
results in greater brokerage and other transaction costs. The Funds will not
notify shareholders of any changes in the Funds' net assets, regardless of what
caused the changes.

PORTFOLIO TURNOVER: The Bond Fund's portfolio turnover rate has been less than
70% for each of the past four fiscal years. However, it may increase under the
new investment objective adopted by the Bond Fund on December __ 2000 to a range
of 80% to 120%. The Equity Fund's portfolio turnover rate has been 85% or less
for each of the past three fiscal years. However, both Funds may engage in
short-term trading if the Adviser believes the sale of securities held for a
short period is advisable. Higher portfolio turnover results in increased
brokerage costs and may generate short-term capital gains that could be subject
to ordinary income tax.

INVESTMENT OBJECTIVES AND POLICIES: The Funds' investment objectives and
non-fundamental policies may be changed by the Board of Directors without
shareholder approval. Please see the Statement of Additional Information for a
list of fundamental policy restrictions that may be changed only with the
approval of a majority of shareholders.

A FINAL NOTE ON RISK: Since the Funds' assets will fluctuate in value, you can
lose money by investing in the Funds. When you redeem shares of the Funds, they
may be worth more or less than your original investment. Moreover, there is no
guarantee that the Funds will achieve their investment objectives. You should
consult with your financial and other advisers regarding the suitability of
these investments for your own particular circumstances.

FUND MANAGEMENT

THE ADVISER. Bailard, Biehl & Kaiser, Inc., located at 950 Tower Lane, Suite
1900, Foster City, California 94404 is the investment adviser (the "Adviser")
for the Funds. The Adviser actively manages the Funds' investments and handles
the day-to-day operations of the Funds, subject to policies established by the
Board of Directors.

The Adviser has been managing money for institutions and wealthy families since
1971. The Adviser currently has over $1.4 billion in assets under management and
offers separate account and commingled fund strategies to qualified investors.
In addition to the Funds, Bailard, Biehl & Kaiser also offers cash management,
domestic bond and domestic stock strategies on a separate account basis, often
in tailored combinations. The Adviser also manages the Bailard, Biehl & Kaiser
Diversa Fund, the Bailard, Biehl & Kaiser Real Estate Investment Trust, Inc.,
and several private exchange funds.

Bailard, Biehl & Kaiser is committed to providing innovative and enduring
investment solutions to discerning investors. The Funds are just one example of
such innovation. Bailard, Biehl & Kaiser's clients were rewarded by the firm's
early entry into international investing in 1979. They continue to benefit from
Bailard, Biehl & Kaiser's diligence in maintaining cutting edge global
investment practices. Balancing the forces of dynamic financial markets with
changing investor needs requires knowledgeable investment professionals,
sophisticated portfolio engineering, disciplined processes and judgment only
attained over time. Bailard, Biehl & Kaiser has always been willing to ask "Is
this the right thing to do?" -- a philosophy that has served its clients well
for 30 years.

                                       15
<PAGE>
PORTFOLIO MANAGERS. Rosemary Macedo has been primarily responsible for the
day-to-day management of the Equity Fund since November 1995. Ms. Macedo joined
the Adviser in 1992 with responsibility for quantitative research. She became a
Senior Vice President of the Adviser in 1995.

Arthur A. Micheletti has been the senior investment strategist and lead
portfolio manager for the Bond Fund since June 1992. Mr. Micheletti has been
with the Adviser and has managed international and domestic debt portfolios
since 1981. Mr. Micheletti has been a Senior Vice President and the Chief
Economist of the Adviser since 1992. Eric Leve has been with the Adviser since
June 1987 and joined the bond portfolio management team in October 1997. In
April 2000, Mr. Leve was appointed a Senior Vice President of the Adviser with
portfolio managment responsibilities for both domestic bond and international
bond management. Josie Zhao joined the Adviser in 2000 and serves as an analyst
on the bond management team. Prior to joining the Adviser, Ms. Zhao worked in
portfolio management for Mellon Bank in San Francisco.

ADVISORY FEES. For the fiscal year ended September 30, 2000, the Equity Fund
paid the Adviser an advisory fee of 0.95% of its net assets. For that same time
period, the Bond Fund paid the Adviser an advisory fee of 0.75% of its net
assets. The advisory fee rates are set forth in the Investment Management
Agreements between the Funds and the Adviser. As of December X, 2000, the
advisory fee for the Bond Fund was reduced to 0.60%.

PRICING OF FUND SHARES

The Funds' net asset value per share, also referred to as the NAV per share, is
the price of a single share of the Fund. Purchases, redemptions and exchanges of
shares are made at the next NAV calculated after the Funds' transfer agent, or
an authorized broker or its designee, has received your stockholder purchase or
redemption request in good order.

The Funds value securities for which market quotations are readily available at
their current market value. The NAV per share is determined by dividing the
total market value of the Funds' assets, less its liabilities, by the number of
shares outstanding. The NAV is calculated as of the regular closing of the New
York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern Time) on each day the
NYSE is open for trading. The NAV is not calculated on days when the NYSE is
closed.

The Funds hold securities that trade on foreign markets that may be open when
the NYSE is closed. As a result, the Funds' asset value may fluctuate
significantly on days when you will not be able to purchase or redeem shares.

HOW TO PURCHASE SHARES

You may purchase shares of the Funds on any day that the NYSE is open. There is
no fee charged when you purchase shares directly from the Funds. However, if you
use a broker/dealer to purchase your shares, the broker/dealer may impose a fee.
Certain Funds services may not be available to shares held in the name of a
broker/dealer or other nominee.

                                       16
<PAGE>
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, any securities to any person in any jurisdiction where it is
unlawful to make such an offer.

NEW ACCOUNTS: The minimum initial investment in the Funds is $5,000. The minimum
initial investment for employees and officers of the Adviser and their
relatives, and Directors of the Funds, is $2,000. The Funds reserves the right
to waive, reduce or increase the minimum investment for initial and subsequent
investments.

You may open your account by sending your initial purchase by mail or by wire as
referenced below.

By Mail:  Please complete the Stockholder Application found in the back of this
          prospectus and send it by regular mail to the Funds' transfer agent
          at:

                         Chase Global Funds Services Co.
                         P.O. Box 2798
                         Boston, MA  02208

          OR

          by express, registered or certified  mail to:

                         Chase Global Funds Services Co.
                         73 Tremont Street
                         Boston, MA  02108

          Please also include a check for your initial purchase made payable to
          the Fund in which you will be investing:

              BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND, OR
              BAILARD, BIEHL & KAISER BOND OPPORTUNITY FUND


BY WIRE:  Please contact the Funds' transfer agent directly at 800-541-4366 for
          instructions on how to wire your initial purchase. Please note that,
          before wiring your investment, a completed Stockholder Application
          must be received by the Funds' transfer agent at one of the addresses
          above.

          The wiring instructions for purchases in the Funds is:

               The Chase Manhattan Bank, N.A.
               One Chase Manhattan Plaza New York, NY 10081-1000 ABA
               #021000021 DDA #910-2-733160
               Attn: [NAME OF THE BAILARD, BIEHL & KAISER FUND IN WHICH YOU WILL
               BE INVESTING]
               Stockholder's Name: __________________
               Account Number: ____________________

                                       17
<PAGE>
RETIREMENT ACCOUNTS. If you wish to establish a retirement account, please
contact BB&K Fund Services at 800-882-8383 to discuss your options and to
request the appropriate paperwork. Please note that the minimum initial
investment amount for retirement accounts is also $5,000.

If a purchase is cancelled because your check or wire transfer does not clear,
you will be responsible for any loss the Funds or the Adviser incurs. In
addition, you may be prohibited or restricted from making future purchases in
the Funds.

Because of the additional cost to the Funds caused by investors who are trying
to time the market with short-term purchases and redemptions, the Funds
discourage "market timers" from investing in the Funds. The Funds reserve the
right to refuse any purchases.

ADDITIONAL PURCHASES:

The minimum amount for subsequent purchases is $100. You may make additional
purchases by mail or by wire by using the addresses and wiring instructions
listed in the previous section entitled NEW ACCOUNTS. Please be sure to include
your account number on your check or wire whenever making additional purchases.

HOW TO SELL SHARES

You may sell all or a portion of your shares, at no charge, on any day the NYSE
is open. If you use a broker/dealer to sell your shares, the broker/dealer may
impose a fee for this service. The Funds' transfer agent will normally send the
sale proceeds to you within seven days.

Below are your options for redeeming shares. Please note that the Funds'
transfer agent must receive any redemption request before 4:00 p.m. Eastern Time
in order for the request to be processed that day. Any request received after
that time will be processed on the next business day.

BY MAIL:            You may redeem shares from your account by mailing your
                    written request directly to the Funds' transfer agent at one
                    of the addresses listed under HOW TO PURCHASE Shares. Please
                    reference your account number and be sure to have all
                    required signers on the account sign the request. Please
                    note that any written redemption request for an amount
                    exceeding $50,000 requires a signature guarantee. A
                    signature guarantee is also required if you request that the
                    proceeds of your redemption be sent anywhere other than your
                    address or bank of record. For more information on how to
                    obtain a signature guarantee, please refer to the Funds'
                    Statement of Additional Information or contact the Funds'
                    transfer agent at 800-541-4366.

BY TELEPHONE:       If you have elected Telephone Redemption Privileges for your
                    account either by checking the appropriate box on your
                    Stockholder Application or by subsequently adding the
                    service to your account, you may call the Funds' transfer
                    agent directly at 800-541-4366 to request a redemption and
                    have the proceeds sent to your address or bank of record.
                    Redemption requests by telephone must be for at least $1,000
                    and not exceed $150,000.

                                       18
<PAGE>
                    Neither the Funds nor their transfer agent will be liable
                    for following telephone instructions that the Funds'
                    transfer agent reasonably believes to be genuine.

                    If you wish to add Telephone Redemption Privileges to your
                    existing account, please contact the Funds' transfer agent
                    for the appropriate form. Please note that shares held in
                    individual retirement plans or issued in certificate form
                    are not eligible for telephone exchange or redemption
                    privileges.

SYSTEMATIC
WITHDRAWAL PLAN:    The Systematic Withdrawal Plan lets you withdraw a minimum
                    of $100 on a periodic basis. To request this feature, please
                    check the appropriate box on your Stockholder Application or
                    contact the Funds' transfer agent at the telephone number
                    listed above for the appropriate form. Please note that
                    there is a $2 fee for each withdrawal under this plan. You
                    must have a minimum account size of $10,000 to participate.

Your options for receiving your redemption proceeds are:

BY CHECK:           A check will be sent to your address of record unless you
                    indicate otherwise on your request.

BY WIRE:            You may request to have your redemption proceeds wired
                    directly to your bank account.

If you are requesting a redemption shortly after a purchase by check was made in
your account, the transfer agent may wait until the check clears before
processing your request.

If the market value of your account should fall under $1,000, the Funds reserve
the right to liquidate your account after providing you with a 30-day written
notice.

If the amount you are redeeming exceeds 1% of the Funds' net assets or $250,000
during any 90-day period, the Funds reserves the right to honor your redemption
request by distributing to you readily marketable securities to you instead of
cash. You may incur brokerage and other costs in converting to cash any
securities distributed.

EXCHANGING SHARES WITH ANOTHER BAILARD, BIEHL & KAISER FUND

You can exchange your Fund shares for shares in any mutual fund offered by
Bailard, Biehl & Kaiser at no charge. You may make your exchange request in
writing directly to the Funds' transfer agent at either of the addresses listed
under HOW TO PURCHASE SHARES. You may also make your request over the telephone
by following the procedures described above regarding telephone redemptions.
Exchanges may only be made between accounts with identical account
registrations.

                                       19
<PAGE>
Exchanges can only be made in states where shares of the funds being purchased
are qualified for sale, and the dollar amount of an exchange must meet the
initial or subsequent minimum investment requirements of the funds being
purchased. The Funds reserve the right to reject any exchange request and to
modify or terminate the exchange privilege at any time.

Before making your exchange, please read carefully the prospectus carefully for
the fund in which you will invest. You may request the prospectus by contacting
BB&K Fund Services at 800-882-8383.

STATEMENTS

You will receive a confirmation statement after your initial purchase and after
each subsequent purchase or sale in your account. You will also receive a
statement after each dividend and capital gain distribution.

DISTRIBUTIONS

The Funds intend to distribute any net investment income and net realized
capital gains to its stockholders. Any net investment income earned by the Funds
is distributed as dividends on a quarterly basis for the Bond Fund and on an
annual basis (generally in December) for the Equity Fund. Short-term and
long-term capital gains realized from the sale of securities from the Funds'
portfolios are distributed annually, generally in December. Gains from
investments held by the Funds for one year or less are short-term gains, and if
held for over one year are long-term gains.

The amount of net investment income distributed and the characterization of
Funds distributions for tax purposes may be affected, among other factors, by
foreign currency exchange losses.

You have the choice of receiving your distributions from the Funds in cash or
having your distributions reinvested in additional shares in your account. If
you decide to have your distributions paid to you in cash, you may choose to
have the proceeds sent to you by check or wired directly to your bank account.
Unless you note otherwise on your Stockholder Application, your distributions
will automatically be reinvested in additional shares of the Funds.

You may change your distribution option at any time by sending your written
request directly to the Funds' transfer agent. Please allow sufficient time for
your request to be processed. The transfer agent must receive your request at
least five days before the next distribution record date for it to be effective.

TAXES

For income tax purposes, net investment income dividends are generally taxed at
the ordinary income rate. In addition, any net realized short-term capital gains
are also taxable at the ordinary income rate. Net realized long-term capital
gains distributed to you by the Funds are taxed at the long-term capital gain

                                       20
<PAGE>
rate regardless of how long you held your shares. All dividends and
distributions are taxable to stockholders whether the proceeds are received in
cash or reinvested in additional shares. The Funds will inform you of the source
and nature of the distributions at the time they are paid.

If you purchase shares shortly before the Funds make a distribution, the
distribution may return some of your initial capital to you in a taxable event.
As a result, the Funds do not recommend you make purchases shortly before a
distribution.

When you sell your shares or exchange your Fund shares for shares in another
fund, you may trigger a taxable event depending on the amount of your sale
proceeds relative to your initial investment, and how long you held your shares.

Any loss recognized upon the sale of shares held for six months or less will be
treated as a long-term capital loss to the extent of any distributions of
long-term capital gains during the period the shares were held. Dividends and
distributions payable to stockholders of record as of a date in October,
November or December of any year will be deemed to have been paid by the Fund
and received by stockholders on December 31 if the dividends are paid by the
Funds at any time during the following January.

Investors are urged to consult their own tax advisers to determine the effect of
an investment in the Funds upon their individual tax situations.

                                       21
<PAGE>
FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the Funds'
financial performance for the past 5 fiscal years. Certain information reflects
financial results for a single Fund share. The total returns in these tables
represent the rate that an investor would have earned (or lost) on an investment
in each Fund (assuming reinvestment of all dividends and distributions).

This information has been audited by __________________________, whose report,
along with the Funds' financial statements, are included in the Annual Reports
for each Fund, which are available upon request.

BAILARD, BIEHL & KAISER BOND OPPORTUNITY FUND

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%(2)        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
     "Distributions for Tax for book/tax differences. Purposes in Excess of Net
     Investment Income" represents amounts paid from foreign currency gains
     reclassified to net investment income under the Internal Revenue Code.
2.   The Fund had entered into an agreement with the Custodian where the daily
     interest earned from the Fund's cash balance would be applied as a credit
     to the custody For the year ended 9/30/98, the Fund earned fees for the
     Fund. $39,730 in such credits.

                                       22
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND:

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%(4)        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.

4.   The Fund had entered into an agreement with the Custodian where the daily
     interest earned from the Fund's cash balance would be applied as a credit
     to the custody fees For the year ended 9/30/98, the Fund earned $39,091 in
     for the Fund. such credits.

                                       23
<PAGE>
BAILARD, BIEHL & KAISER INTERNATIONAL FUND GROUP, INC.
STOCKHOLDER APPLICATION FORM

IMPORTANT - Please mail completed forms to:  Chase Global Funds Services Company
                                             P.O. Box 2798
                                             Boston, MA  02208

NOTE: Please do not use this application to establish a Bailard, Biehl & Kaiser
IRA. You may obtain a Bailard, Biehl & Kaiser IRA application by calling the
Bailard, Biehl & Kaiser International Fund Group at (800) 882-8383.

I. FUND SELECTION AND INVESTMENT INFORMATION -
   Minimum initial investment of $5,000.00.                        Investment
                                                                   ----------

   [ ] Bailard, Biehl & Kaiser International Equity Fund           $_________
   [ ] Bailard, Biehl & Kaiser  Bond Opportunity Fund              $_________
   [ ] Check or draft made payable to each Fund
   [ ] Wire through Federal Reserve System

II. ACCOUNT REGISTRATION - Register shares as one of the following:
    (Please print)

*   NAME OF INDIVIDUAL                     NAME(S) OF CO-STOCKHOLDER(S)
    ____________________________________   _____________________________________
                                           _____________________________________
                                           _____________________________________

    [ ] Community Property   [ ] Tenants in Common
    [ ] Joint Tenants with Rights of Survivorship
    [ ] Other (specify) ________________________________________________________

*   NAME OF ORGANIZATION OR TRUST ______________________________________________
                                  Name(s) of Trustee(s)
    Date of Trust ______________________________________________________________

*   GIFT OR TRANSFER TO MINOR
    _________________________ as Custodian for _______________________ under the
       (Custodian's Name)                          (Minor's Name)
    ___________________________  Uniform Gift or Transfer to Minor's Act (as
   (Minor's State of Residence)  applicable in the minor's state of residence).

III. TAXPAYER IDENTIFICATION NUMBER (Important Tax Information)

You (as payee) are required by law to provide us (as payer) with your correct
taxpayer identification number. Accounts that have a missing or incorrect
taxpayer identification number will be subject to backup withholding at a 31%
rate on interest, dividends and other payments. Backup withholding is not an
additional tax. The tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld.

PART 1. Enter your taxpayer identification number. For most individual
taxpayers, this is your Social Security number. For accounts established under
the Uniform Gift or Transfer to Minor's Act, this would be the minor's social
security number.

Social Security # _ _ _ - _ _ - _ _ _ _  OR  Tax ID # _ _ - _ _ _ _ _ _

PART 2. BACKUP WITHHOLDING

[ ] CHECK HERE IF YOU ARE NOT SUBJECT TO BACKUP WITHHOLDING, EITHER BECAUSE YOU
HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (IRS) THAT YOU ARE
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF FAILURE TO REPORT ALL INTEREST OR
DIVIDENDS OR BECAUSE THE IRS HAS NOTIFIED YOU THAT YOU ARE NO LONGER SUBJECT TO
BACKUP WITHHOLDING.

IV.OTHER ACCOUNT INFORMATION

Address: _______________________________________________________________________
            Street or P.O. Box Number          City         State       Zip Code
Home Phone ___________________________   Business Phone ________________________
Date of Birth ________________________   Marital Status ________________________
Occupation ___________________________   State of Residence ____________________
Citizen of: [ ] United States [ ] Other (specify)  ___________ Do you have
other Bailard, Biehl & Kaiser accounts? [ ] Yes [ ] No.

V. DISTRIBUTION OPTION - If none is selected, distributions will be reinvested
in additional shares. (IF YOU CHOOSE TO HAVE YOUR DIVIDENDS OR CAPITAL GAINS
SENT BY WIRE, PLEASE ALSO COMPLETE SECTION VII.)

[ ] Dividends reinvested at net asset value    [ ] Dividends paid in cash
[ ] Dividends wired                            [ ] Capital gains reinvested at
                                                   net asset value
[ ] Capital gains paid in cash                 [ ] Capital gains wired
<PAGE>
VI.TELEPHONE EXCHANGE AND REDEMPTION OPTION                     [ ] Yes   [ ] No

I/We authorize the Bailard, Biehl & Kaiser International Fund Group and its
agent, Chase Global Funds Services Company, to honor exchange and redemption
requests of between $1,000 and $150,000, by telephone. I/We agree that the
Bailard, Biehl & Kaiser International Fund Group and Chase Global Funds Services
Company will not be liable for losses sustained as a result of acting on
telephone instructions that Chase Global Funds Services Company reasonably
believes to be genuine and that such authorization will apply until I/we revoke
it. I/We select one of the following telephone redemption options:

[ ]  Please MAIL telephone redemption proceeds to the name and address in which
     my/our fund account is registered;

[ ]  Please MAIL or WIRE telephone redemption proceeds to the commercial bank
     indicated below. (Please obtain wiring instructions from your bank before
     completing the section below.)

VII. WIRING INSTRUCTIONS - Please add the following wiring instructions to my
account for redemption proceeds:

Bank Name _______________________________  Bank ABA Number _____________________
Bank Address ___________________________________________________________________
                    Street Address             City         State      Zip Code
Nominee Account Name & Number (if applicable) __________________________________
Client Account Name & Number ___________________________________________________
PLEASE ATTACH A VOIDED CHECK OR DEPOSIT SLIP FROM THE ACCOUNT TO WHICH THE
PROCEEDS ARE TO BE MAILED OR WIRED.

VIII. SYSTEMATIC WITHDRAWAL PLAN OPTION

If you select this option, please review the terms and conditions of this plan
in the Prospectus. This Application must be received in good order at least 10
days prior to the first designated payment from the Systematic Withdrawal Plan
(SWP) account, and 10 days prior notice is required before any changes to the
instructions in this Application can be implemented.

[ ] I/We hereby authorize the Bailard, Biehl & Kaiser International Fund Group
and its agent, Chase Global Funds Services Company, to liquidate shares in and
withdraw cash from this account beginning ________________, 19 _____, in the
amount of $ ____________ [ ] SEMIMONTHLY, on or about the [ ] THIRD or the [ ]
EIGHTEENTH, or [ ] MONTHLY, on or about the [ ] THIRD or the [ ] EIGHTEENTH, or
[ ] QUARTERLY, on or about the [ ] THIRD or the [ ] EIGHTEENTH, to provide SWP
payments, and to mail a check for such amount from Boston as soon as practicable
after the third and/or eighteenth day of the payment period, as applicable, to
me or to the following payee (complete only if different from information
previously stated):

Name(s) of Payee _______________________________________________________________
Address ________________________________________________________________________
            Street or P.O. Box Number         City         State       Zip Code

IX. DUPLICATE STATEMENT AUTHORIZATION

I/We hereby authorize the Bailard, Biehl & Kaiser International Fund Group and
its agent, Chase Global Funds Services Company, to release information regarding
my account to the person listed below:

Name & Title (if applicable) _________________________  Telephone # ____________
Firm Name (if applicable) ______________________________________________________
Address ________________________________________________________________________
           Street or P.O. Box Number         City         State       Zip Code

X. INVESTMENT REPRESENTATIONS AND SIGNATURE(S)

The undersigned represent that the shares subscribed to hereby, and any other
shares of the Fund purchased by the undersigned in the future, will be purchased
for the undersigned's own account (or for a trust account described in "Account
Registration" above) and not with a view to or for sale in connection with any
distribution of the shares. This representation shall in no way restrict the
undersigned's ability to redeem some or all of the undersigned's shares at any
time.

The undersigned certify that I/we have received and read the current Fund
Prospectus and agree to be bound by its terms. Under penalties of perjury, I/we
certify that the taxpayer identification number and the statement as to backup
withholding provided in "Taxpayer Identification Number" above are true, correct
and complete. The establishment of this account is subject to acceptance by the
Fund.

THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.

___________________________   ________   ____________________________   ________
Signature                     Date       Signature                      Date
<PAGE>
The following information is available by request at no charge:

STOCKHOLDER REPORTS

Additional information about the Funds' 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 incorporated by reference into this Prospectus 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 (including the SAI) may be reviewed and copied at
the Securities and Exchange Commission's (SEC) Public Reference 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.. Reports and other
information about the Funds are also available at the SEC's Internet site at
http://www.sec.gov. Copies of this information may also be obtained, after
paying a duplicating fee, by sending an email to [email protected] or by
writing to: Public Reference Room, Securities and Exchange Commission,
Washington, DC 20549-0102.

Bailard, Biehl & Kaiser International Equity Fund
Ticker: BBIEX
SEC File Number: 811-4828

Bailard, Biehl & Kaiser  Bond Opportunity Fund
Ticker: BBIFX
SEC File Number: 811-2888
<PAGE>
                  BAILARD, BIEHL & KAISER BOND OPPORTUNITY FUND
                BAILARD, BIEHL & KAISER INTERNATIONAL EQUITY FUND
                       STATEMENT OF ADDITIONAL INFORMATION

                                DECEMBER 18, 2000

This Statement of Additional Information is not a Prospectus, but contains
information in addition to that contained in the Prospectus, which may be of
interest to some investors. This Statement of Additional Information should be
read in conjunction with the Prospectus dated. You can request the Prospectus by
writing directly to us at the address above or by calling us at (800) 882-8383.

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
Investment Objectives, Policies and Restrictions..........................   B-2
Net Asset Value...........................................................  B-10
Purchases, Exchanges Redemptions..........................................  B-11
Distributions and Taxes...................................................  B-12
Directors and Officers....................................................  B-15
Investment Advisory and Other Services....................................  B-18
Portfolio Transactions and Brokerage Commissions..........................  B-20
Stockholder Information...................................................  B-21
Performance Data..........................................................  B-18
Financial Statements......................................................  B-22

Appendix A (Bond, Commercial Paper, Preferred Stock
  and Municipal Debt Ratings).............................................  B-24

Appendix B (Hedging and Other Transactions)...............................  B-26

                This Statement of Additional Information Does Not
                     Constitute an Offer to Sell Securities.
<PAGE>
THE FUNDS

The Bailard, Biehl & Kaiser Bond Opportunity Fund (the "Bond Fund") and the
Bailard, Biehl & Kaiser International Equity Fund (the "Equity Fund") are
non-diversified series of the Bailard, Biehl & Kaiser International Fund Group
(the "Company"), a Maryland corporation and an open-end management investment
company.

The Company was organized as a Maryland corporation on June 12, 1990. Prior to
January 1996, the name of the Bond Fund was the Bailard, Biehl & Kaiser
International Fixed-Income Fund and, from January 1996 to December 2000, it was
the Bailard, Biehl & Kaiser International Bond Fund. The Equity Fund is the
successor to the Bailard, Biehl & Kaiser International Fund, Inc., a Delaware
corporation that was organized on March 12, 1979.

The Company's fiscal year ends on September 30 of each year.

INVESTMENT POLICIES AND RESTRICTIONS

BOND FUND:

DEBT SECURITIES OF THE U.S. GOVERNMENT AND ITS AGENCIES. The Bond Fund may
invest in U.S. Government securities which consist of: (i) U.S. Treasury
obligations, which differ only in their interest rates, maturities and times of
issuance. U.S. Treasury Obligations consist of U.S. Treasury bills (maturities
of one year or less), U.S. Treasury notes (maturities of one to ten years), and
U.S. Treasury bonds (generally maturities of greater than ten years), all of
which are backed by the full faith and credit of the United States; and (ii)
obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, some of which are supported by the right of the issuer to
borrow from the U.S. Government (e.g., obligations of Federal Home Loan Banks)
and some of which are backed only by the credit of the issuer itself, such as
the Federal Farm Credit Bank ("FFCB"). U.S. Government securities generally do
not involve the credit risks associated with U.S. corporate debt securities and,
as a result, the yields available from U.S. Government securities are generally
lower than the yields available from U.S. corporate debt securities. Like other
debt securities, however, the values of U.S. Government securities change as
interest rates fluctuate.

DEBT SECURITIES OF FOREIGN GOVERNMENTS AND SUPRA-NATIONAL ENTITIES: The Bond
Fund may invest in debt securities issued or guaranteed as to payment of
principal and interest by governments, semi-governmental entities and
governmental agencies of countries throughout the world denominated in the
currencies of such countries or other currencies. The Fund may also invest in
debt securities of supra-national entities, which may be denominated in dollars
or other currencies. A supra-national entity is an entity designated or
supported by a national government or governments to promote economic
reconstruction or development. Examples of supra-national entities in which the
Fund may invest include the World Bank (International Bank for Reconstruction
and Development), the European Investment Bank, the Asian Development Bank and
the European Coal and Steel Community. These supra-national entities do not have
taxing authority and therefore depend upon their members' continued support to
meet interest and principal payments.

CORPORATE DEBT SECURITIES: The Bond Fund may invest in debt securities of U.S.
and foreign companies. These securities will consist of all types of long or
short-term debt obligations, such as bonds, debentures, notes, mortgage and
asset-backed obligations, equipment lease certificates, equipment trust
certificates, conditional sales contracts and commercial paper. See "Debt
Securities of the U.S. Government and its Agencies" for information concerning
mortgage-backed securities.

MORTGAGE AND ASSET BACKED SECURITIES: The Bond Fund may invest in mortgage
backed debt obligations issued by government and private entities, such as
direct pass-through certificates of the Government National Mortgage Association

                                       B-2
<PAGE>
("GNMA"), which are backed by the full faith and credit of the United States.
Mortgage-backed securities are often subject to more rapid repayment than their
stated maturity date would indicate as a result of the pass-through of
prepayments of principal on the underlying mortgage obligations. Thus, mortgage
backed securities may be less effective than other types of securities as a
means of "locking in" attractive long-term interest rates. Also, mortgage backed
securities may have less potential for capital appreciation during periods of
declining interest rates than other debt securities of comparable maturities
because of the prepayment feature, although such obligations may have a
comparable risk of decline in market value during periods of rising interest
rates. The Bond Fund may also invest in asset backed securities which are
collateralized by assets other than mortgage loans. The most common types of
asset backed securities are collateralized by credit card receivables,
automobile loans or home equity loans. The value of these securities may be
significantly affected by changes in the market's perception and the
creditworthiness of the issuers and the other parties involved. Asset backed
bonds are generally subject to a lower level of prepayment risk due to changes
in interest rates than bonds backed by mortgages.

CONVERTIBLE DEBT SECURITIES: The Bond Fund may invest in convertible debt
obligations of U.S. and foreign companies. Convertible bonds typically offer
lower coupon rates and stated yields to maturity than nonconvertible bonds.
However, a convertible bond also gives the bondholder an option to exchange the
bond for a specified number of common shares at a specified price or ratio and,
thus, to share in the price appreciation in the common stock. In general, a
convertible security performs more like a stock when the underlying stock's
price is high (because it is assumed that it will be converted) and more like a
bond when the underlying stock's price is low (because it is assumed that it
will mature without being converted). Most convertible bonds are callable at the
option of the issuer and, if the issuer exercises its right to call the bond,
bondholders typically are given a limited time in which to convert. Convertible
debt obligations are generally less liquid, more difficult to price and have
higher transaction costs than non-convertible bonds. Furthermore, the value of
convertible debt obligations may be affected by fluctuations in the market value
of the underlying common stock.

PREFERRED STOCK: The Bond Fund may invest in preferred stock. Preferred stock is
an equity security that entitles the holder to certain preferences over the
common stock of the issuer. Preferred stock is not a debt instrument and is
junior to debt in regard to recoverability in the case of default by the issuer.
Preferred stock is generally callable, is less liquid than its common stock
counterpart and ordinarily carries limited or no voting rights.

TAXABLE MUNICIPAL DEBT SECURITIES: The Bond Fund may invest in taxable municipal
debt securities. Municipal securities are issued to raise money for a variety of
public and private purposes, including general financing for state and local
governments and financing for a specific project or public facility. Municipal
securities may be fully or partially backed by the local government, by the
credit of a private issuer, by the current or anticipated revenues from a
specific project or specific assets, or by domestic or foreign entities
providing credit support such as letters of credit, guarantees, or insurance.
The municipal market is volatile and can be significantly affected by adverse
tax, legislative or political changes and the financial condition of the issuers
and insurers of municipal securities. Because many municipal securities are
issued to finance similar projects, especially those relating to education,
health care, transportation, and utilities, conditions in those sectors can also
affect the overall municipal market.

INDEXED SECURITIES: The Bond Fund may invest in indexed securities, the value of
which is linked to interest rates, currencies, commodities, indices or other
financial indicators ("reference instruments"). Indexed securities may provide
for periodic interest payments to holders, or they may be structured as "zero
coupon" instruments with no payments prior to maturity. They may be subject to a
"cap" on the maximum principal amount, or a "floor" on the minimum principal
amount, to be repaid on maturity. Indexed securities may be traded on an
exchange or over-the-counter. Unlike other debt securities, the interest rate or
the principal amount payable at maturity of an indexed security may vary based
on changes in one or more reference instruments, such as a change in an
inflation index or a change in the interest rate of the reference instrument
compared with a fixed interest rate. The reference instrument need not be
related to the terms of the debt security. For example, the interest rate or the

                                       B-3
<PAGE>
principal amount of a U.S. dollar-denominated indexed security may vary based on
a change in a foreign security or basket of foreign securities. An indexed
security may also be positively or negatively indexed, so that its value may
increase or decrease as the value of the reference instrument increases or
decreases. Further, the change in the interest rate or the principal amount
payable of an indexed security may be some multiple of the change (positive or
negative) in the value of the reference instrument. Investment in indexed
securities involves certain risks. In addition to the credit risk of the
security's issuer and the normal risks of price fluctuations in response to
changes in interest rates, the interest rate or principal amount of indexed
securities may decrease, sometimes substantially, as a result of changes in the
value of the reference instruments. Further, indexed securities may be more
volatile than the reference instruments, particularly those that are negatively
indexed to the reference instrument and those that are based on a multiple of
the change in the value of the reference instrument. Because it is common for
indexed securities to be individually negotiated with the issuer, such
securities also tend to be less liquid than other debt securities and may be
more difficult to value.

RULE 144A SECURITIES; The Bond Fund may invest in Rule 144A debt securities
issued by U.S. and foreign companies. Rule 144A securities are securities issued
in private placements that are subject to resale restrictions and may be resold
only to qualified institutional buyers. The market for Rule 144A securities may
be less liquid than the market for publicly traded debt securities, particularly
during adverse market conditions. Accordingly, the Bond Fund may be unable to
sell such securities at a time or a price that would otherwise be desirable.

BANK OBLIGATIONS: The Bond Fund may invest in obligations of U.S. and foreign
banks, bank holding companies and other financial institutions (consisting of
certificates of deposit, bankers' acceptances and other short-term debt
obligations) that, at the date of investment, have total assets in excess of $1
billion. Under normal circumstances, the Fund would not expect to invest a
substantial portion of its assets in such obligations. However, if short-term
interest rates exceed long-term interest rates, the Fund may hold a greater
proportion of its assets in these instruments.

TEMPORARY INVESTMENTS: When the Adviser believes that investing for temporary
defensive purposes is appropriate (such as during periods of unusual market
conditions or when it is anticipated that interest rates will rise), the Bond
Fund may invest up to 100% of its total assets in money market securities,
denominated in dollars or in the currency of any foreign country, issued by
entities organized in the United States or any foreign country, consisting of:
short-term (less than twelve months to maturity) obligations issued or
guaranteed by the United States government or the government of a foreign
country or their agencies or instrumentalities; finance company and corporate
commercial paper, and other short-term corporate obligations; and obligations of
banks (including certificates of deposit, time deposits and bankers'
acceptances). Within certain limitations, the Bond Fund can also invest in U.S.
and foreign repurchase agreements. The Fund's investment objective may not be
achieved when the Fund is invested for temporary defensive purposes.

EQUITY FUND:

EQUITY INVESTMENTS: The Equity Fund will invest in the equity securities of
foreign issuers, including U.S. companies whose assets or operations are
primarily located overseas. For this purpose, equity securities are common
stocks, preferred stocks and convertible securities (such as convertible debt
securities and warrants). Warrants do not entitle the holder to voting,
liquidation or dividend rights with respect to the issuer of the underlying
securities. The Equity Fund may also invest in American Depository Receipts
(ADRs), Global Depository Receipts (GDRs), and International Depository Receipts
(IDRs). A purchaser of an unsponsored ADR, GDR or IDR may have limited voting
rights and may receive less information about the issuer of the underlying
security than with a sponsored ADR, GDR or IDR.

                                       B-4
<PAGE>
CASH EQUIVALENTS: The Equity Fund may invest in the short-term obligations of
U.S. and foreign companies and governments pending investment or for protection
against market declines. Short-term obligations will consist of short-term
notes, commercial paper, certificates of deposit, and, within certain
limitations, repurchase agreements.

SECURITIES LENDING: The Equity Fund may engage in securities lending with the
primary objective of increasing its income through fees and through investment
of cash collateral in short-term, interest-bearing obligations. The Fund will do
so only to the extent that it will not lose the tax treatment available to
regulated investment companies. Lending portfolio securities involves the risk
that the borrower may fail to return the securities in a timely manner or at
all, or to provide additional collateral. The Adviser will loan portfolio
securities only to broker-dealers and other institutional investors it deems
creditworthy. In addition, the Adviser will require that each loan be secured by
collateral consisting of U.S. Government securities, letters of credit, cash or
cash equivalents maintained daily in an amount at least equal to the current
market value of the securities loaned, that the Fund be able to call the loan at
any time, that the Fund receive any interest or dividends paid and retain any
voting rights with respect to the securities loaned, and that the aggregate
market value of securities loaned not exceed one-third of the total assets of
the Fund. The 1940 Act prohibits funds from making loans to persons who control
or are under common control with the fund. The Adviser will not engage in any
securities lending for the Equity Fund until specific policies and procedures
relating to this practice are reviewed and approved by the Board of Directors.

BOND FUND AND EQUITY FUND

TYPES OF INVESTMENTS: As a general rule, the Bond Fund and the Equity Fund will
purchase securities that are traded on exchanges or over-the-counter markets
which are often based in the respective countries, including the U.S., in which
the various issuers of such securities are principally based. There is no
limitation on the percentage of the Funds' assets that may be invested in
securities of issuers located within any one country, other than restrictions
that may be imposed from time to time by the Company's Board of Directors, nor
is there any minimum asset or net worth requirement with respect to issuers in
which the Funds' assets may be invested.

INVESTMENT COMPANIES: The Bond Fund and the Equity Fund may invest in domestic
and foreign investment companies whose portfolios are invested primarily in the
securities of foreign issuers. Either Fund's purchase of securities of another
investment company results in the layering of expenses, so that a shareholder
will directly bear the expenses of the Fund and indirectly bear a proportionate
share of the expenses of the other investment company. Except as permitted under
the 1940 Act, the Funds will not invest their assets in more than 3% of the
outstanding voting stock of any other investment company. In addition, they not
invest more than 5% of their total assets in any other investment company or
more than 10% of its total assets in investment companies as a group. The Funds,
together with other investment companies having the same investment adviser,
will not invest in more than 10% of the outstanding voting stock of any
closed-end investment company, unless the security is acquired pursuant to a
plan of reorganization or a Securities and Exchange Commission approved offer of
exchange. Finally, the Funds will not purchase the securities of any investment
company that is sponsored or managed by the Adviser.

REPURCHASE AGREEMENTS: Repurchase agreements represent agreements in which the
Bond Fund or the Equity Fund buys securities from a seller who agrees to
repurchase such securities at a later date at a specified time and price. When
the Funds invest in U.S. repurchase agreements, the securities acquired by the
Funds will be U.S. Treasury securities, and the Funds will enter into repurchase
agreements only with registered broker-dealers and with domestic banks or other
financial institutions regulated by the FDIC and having total assets in excess
of $10 billion. The seller's obligation to repurchase is fully collateralized
with other securities in which the Funds can invest, although the Funds may
experience delays in acquiring control of the collateral upon a default by the
seller. The value of the collateral, including accrued interest, will be marked

                                       B-5
<PAGE>
to market daily. The Funds' right to liquidate its collateral in the event of a
default by the seller could involve certain costs, losses on delays, and, to the
extent that proceeds from any sale upon a default of the obligation to
repurchase are less than the repurchase price, the Funds could suffer a loss. If
the value of the collateral should decrease below the resale price of the
securities acquired, including accrued interest, additional collateral is
required to be deposited.

The Bond Fund and the Equity Fund may also invest in international repurchase
agreements involving foreign instruments that are subject to similar
restrictions and risks.

EURO: On January 1, 1999, eleven major European countries participating in the
Economic and Monetary Union (the "EMU") adopted a new single currency, the Euro,
which will replace the national currencies of the participating countries. Most
of the affected securities have already been redenominated in Euros. However, no
one knows how smooth the conversion to the Euro will actually be. The monetary
conversion affects clearing and payment systems, as well as financial
institutions' operating systems. These and other factors, including political
and economic risk, could cause market disruptions after the introduction of the
Euro. Although it is not possible to fully predict the impact of the Euro on the
Fund, the Adviser is taking steps to make the transition as smooth as possible.

HEDGING TRANSACTIONS

HEDGING TRANSACTIONS INVOLVING FOREIGN CURRENCIES: The Bond Fund and the Equity
Fund may hedge foreign currency risk through the use of direct hedges, indirect
hedges and cross hedges. The Funds may directly hedge a currency risk when they
believe that the currency in which a particular portfolio security is
denominated may suffer a substantial adverse movement against the U.S. dollar.
For example, to directly hedge a position, the Funds could sell an amount of
such foreign currency, or buy an amount of the U.S. dollar, approximating the
value of some or all of the Fund's portfolio securities denominated in such
foreign currency.

Indirect hedges are similar to direct hedges, except that in an indirect hedge,
the Funds hedge a portfolio security's currency risk with a different, or proxy,
currency that is expected to trade closely to the portfolio security's
underlying currency. Indirect hedges may used when the Funds believe that the
currency risk associated with a portfolio position can be hedged more
effectively through the purchase or sale of the proxy currency due to better
liquidity, lower transaction costs and/or relative currency expectations.

The Funds may enter into a cross-hedge when they believe that the currency in
which a particular portfolio security is denominated may suffer a substantial
adverse movement against a currency other than the U.S. dollar. If one currency
is expected to decrease against another currency, the Funds may sell the
currency expected to weaken and buy the currency expected to strengthen. The
Funds may also initiate a foreign currency position that increases the exposure
of the Funds to that currency. Typically, this would be done when the Funds like
the currency of a country but not the stocks or bonds of that country. To offset
an underweight (or no) securities position in that country, the Funds may add a
foreign currency position that is larger than the securities position. Under
such circumstances, the Bond Fund's or the Equity Fund's foreign currency
position in a country will not exceed that of its neutral weighting for the
country.

HEDGING A RISK ASSOCIATED WITH OR AS A SUBSTITUTE FOR A MARKET, ECONOMIC SECTOR
OR INDUSTRY: Generally, to hedge a risk associated with or as a substitute for a
market, economic sector or industry, the Equity Fund may enter into a
transaction involving a stock index Option, a stock index Futures Contract or
Option on a stock index Futures Contract. A stock index is a composite of the
market prices of the stocks that make up the index. An index may be broad based
(comprised of many stocks and designed to be representative of an overall
market, e.g., the CAC-40 Index of French securities) or narrow based (designed
to be representative of a particular industry or market sector, e.g., the Morgan
Stanley Global Utilities Index). An index may also be composed of U.S. stocks
(e.g., the S&P 500 Stock Index) or foreign stocks (e.g., the International
Market Index) or a combination of both (e.g., the Morgan Stanley World Index).
Stock indices are used as the underlying value of stock index Options, stock
index Futures Contracts and Options on stock index Futures.

                                       B-6
<PAGE>
HEDGING A RISK ASSOCIATED WITH ADVERSE CHANGES IN INTEREST RATES OR DEBT
SECURITIES: Generally, to hedge a risk associated with changes in interest rates
or as to serve as a substitute for an underlying securities position, the Bond
Fund may enter into a transaction involving an Option, a Futures Contract or an
Option on a Futures Contract based on debt securities. The debt security is
typically a representative government bond, such as the ten-year Japanese
government bond. It may be a U.S. or foreign debt security. These debt
securities are used as the underlying value of the associated Options, Futures
Contracts and Options on Futures.

The Bond Fund and the Equity Fund will not engage in a transaction involving
Forward Contracts or Futures Contracts, and will not write Options or Options on
Futures Contracts unless their positions are "covered" by an offsetting position
or transaction, or liquid assets equal to the amount of the Funds' contingent
obligations are held by the Funds' custodian in a segregated account. For a more
detailed description of cover transactions, see Appendix B.

FORWARD CONTRACTS. A Forward Contract is an obligation to purchase or sell a
specific currency for an agreed price at a future date and is individually
negotiated and privately traded by currency traders and their customers. The
precise matching of the Forward Contract amounts and the value of the securities
involved will not generally be possible since the future value of such
securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the Forward Contract
is entered into and the date it matures. Forward Contracts may limit potential
gain from a positive change in the relationship between currencies, and
unanticipated changes in currency prices may result in poorer overall
performance for the Bond Fund or the Equity Fund than if it had not engaged in
such contracts.

OPTIONS. The Bond Fund may purchase and write call and put Options on debt
securities and foreign currencies. The Equity Fund may purchase and write call
and put Options on stock indices and foreign currencies. Call Options on debt
securities and foreign currencies give the holder the right, in exchange for a
premium, to buy the underlying security or currency at a stated price while the
counterparty is obligated, upon exercise, to sell such security or currency. Put
Options on debt securities and foreign currencies give the holder the right, in
exchange for a premium, to sell the underlying security or currency at a stated
price while the counterparty is obligated, upon exercise, to buy such security
or currency. An Option on a stock index is similar to an Option on a security or
foreign currency, except that exercise of the Option results in the payment of a
cash settlement instead of the purchase or sale of securities that underlie the
index. The amount of the cash settlement depends on the change in the value of
the index underlying the Option.

The purchase of an Option may constitute an effective hedge against fluctuations
in currency exchange or interest rates, or changes in market conditions,
although, in the event of movements adverse to the Bond Fund's or Equity Fund's
positions, the Funds may forfeit the entire amount of the premium plus related
transaction costs. The writing of Options constitutes only a partial hedge, up
to the amount of the premium received, and the Funds could be required to
purchase or sell debt securities, foreign currencies, or other assets at
disadvantageous rates, thereby incurring losses.

Options written or purchased by the Bond Fund and the Equity Fund will be traded
on U.S. and foreign exchanges or, provided a sufficiently liquid secondary
market exists, over-the-counter markets. Over-the-counter Options purchased by
the Funds and the value of securities used to cover over-the-counter Options
written by the Funds will be deemed to be illiquid subject to the Fund's policy
limits on investments in illiquid securities.

FUTURES CONTRACTS. Generally, a Futures Contract is an exchange traded contract
for the purchase or sale for future delivery of the underlying asset. A sale of
a Futures Contract on a debt security or foreign currency is the acquisition of
a contractual obligation to deliver the security or currency called for by the
contract at a specified price in a fixed delivery month. A purchase of a Futures
Contract on a debt security or foreign currency means the acquisition of a
contractual obligation to acquire the security or currency called for by the
contract at a specified price in a fixed delivery month. A Futures Contract on a
stock index, like an Option on a stock index, results in the payment of a cash
settlement instead of the delivery of the securities that underlie the index.

                                       B-7
<PAGE>
The amount of the cash settlement depends on the change in the value of the
index underlying the Futures Contract. The successful use of Futures Contracts
will usually depend on the Bond Fund's and the Equity Fund's ability to
correctly predict currency exchange and interest rate movements and market
conditions. Should rates or markets move in an unexpected manner, the Funds may
not achieve the anticipated benefits of Futures Contracts or may realize losses.
Losses from Futures Contracts are potentially unlimited.

OPTIONS ON FUTURES CONTRACTS. The Bond Fund and the Equity Fund may purchase and
write call and put options on Futures Contracts. Call Options on Futures
Contracts give the holder the right, in exchange for a premium, to take the
position of a buyer in a specified Futures Contract while the counterparty is
obligated, upon exercise, to take the position of a seller in that Futures
Contract. Put Options on Futures Contracts give the holder the right, in
exchange for a premium, to take the position of a seller in a specified Futures
Contract while the counterparty is obligated, upon exercise, to take the
position of a buyer in that Futures Contract. An Option on a Futures Contract
may entail more or less risk than ownership of the Futures Contract upon which
it is based or the underlying asset. Options on Futures Contracts hedge
positions and transactions in a manner similar to Options. For more information
on the uses and limits of Options on Futures Contracts, see "Options."

SWAPS: The Bond Fund may engage in swap transactions, which are individually
negotiated agreements to exchange the right to receive payment on a particular
type of obligation for a different type of payment. In a typical interest rate
Swap, one party agrees to pay a fixed rate of interest while the counterparty
agrees to pay a floating rate. Interest rate Swaps also permit counterparties to
exchange a floating rate obligation (based on one or more reference rates, such
as the London Interbank Offered Rate ("LIBOR"), a specified bank's prime rate or
U.S. Treasury Bill rates), for a floating rate obligation based on a different
reference rate. A currency Swap allows the parties to exchange fixed or floating
rate obligations (and, in some cases, principal obligations) denominated in
different currencies.

Caps, floors and collars are forms of Swap transactions that have additional
features. The purchase of a cap permits the purchaser, to the extent that a
specified index exceeds a predetermined rate, to receive payments from the
seller. The purchase of a floor entitles the purchaser, to the extent that a
specified index falls below a predetermined rate, to receive payments from the
seller. A collar combines the elements of purchasing a cap and selling a floor
protecting against rate fluctuation above the maximum amount or to the minimum
amount. The Bond Fund will deem the obligations owed to it under a Swap to be
illiquid for purposes of the restrictions on investments in illiquid securities,
except to the extent that a third party (such as a large commercial bank) has
guaranteed the Bond Fund's ability to offset the Swap at any time.

SPOT TRANSACTIONS. The Bond Fund and the Equity Fund also engage in foreign
currency exchange transactions on a spot (i.e., current) basis in connection
with the investment of cash balances held by the Funds outside of the United
States. The purpose of these cash balances is to provide liquidity for
operations. The Funds expect to invest their cash balances primarily in bank
accounts or similar investments denominated in foreign currencies in lieu of
dollar-denominated bank accounts or investments. This should permit the Funds to
profit from declines in the value of the dollar during periods when the dollar
is declining relative to the foreign currencies in which its cash balances are
invested. There is, however, no guarantee that the Adviser will correctly
anticipate currency fluctuations. Accordingly, if the Bond Fund's and the Equity
Fund's cash balances are maintained in investments denominated in foreign
currencies during periods when the value of the dollar is appreciating relative
to those foreign currencies, the Funds will experience losses. The Funds will
also incur service charges in connection with each currency conversion.

RISKS OF HEDGING TRANSACTIONS: Hedging Transactions cannot eliminate all risks
of loss to the Bond Fund and the Equity Fund and may prevent the Funds from
realizing some potential gains. The projection of short-term currency exchange
and interest rates and other market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain. Among
the risks of Hedging Transactions are: incorrect prediction of the movement of
currency exchange and interest rates and other market conditions; imperfect
correlation of currency movements in cross-hedges and indirect hedges; imperfect
correlation in the price movements of Futures Contracts and Options on Futures
Contracts with the assets on which they are based; lack of liquid secondary

                                       B-8
<PAGE>
markets and the inability to effect closing transactions; costs associated with
effecting such transactions; inadequate disclosure and/or regulatory controls in
certain markets; counterparty default with respect to transactions not executed
on an exchange; trading restrictions imposed by governments, or securities and
commodities exchanges; and governmental actions affecting the value or liquidity
of currencies, securities and indices. Hedging Transactions may be effected in
foreign markets or on foreign exchanges and are subject to the same types of
risks that affect foreign securities.

Indirect hedges and cross-hedges are more speculative than other hedges because
they are not directly related to the position or transaction being hedged. With
respect to indirect hedges, movements in the proxy currency may not precisely
mirror movements in the currency in which portfolio securities are denominated.
Accordingly, the potential gain or loss on an indirect hedge may be more or less
than if the Bond Fund or the Equity Fund had directly hedged a currency risk.
Similar risks are associated with foreign currency cross-hedge transactions. In
a cross-hedge, the foreign currency in which a portfolio security is denominated
is hedged against another foreign currency, rather than the U.S. Dollar.
Cross-hedges may also create a greater risk of loss than other Hedging
Transactions because they may involve hedging a currency risk through the U.S.
Dollar rather than directly to the U.S. Dollar or another currency. Moreover, in
some cases, the Funds' exposure to a foreign currency will be greater than its
exposure to the securities of that country.

In order to help reduce certain risks associated with Hedging Transactions, the
Board of Directors has adopted the requirement that Forward Contracts, Options,
Futures Contracts and Options on Futures Contracts be used as a hedge or as a
substitute for an underlying securities or currency position and not for
speculation. In addition to this requirement, the Board of Trustees has adopted
the following percentage restrictions on the use of Options, Futures Contracts
and Options on Futures Contracts:

   (i)  The Bond Fund and the Equity Fund will not write a put or call Option
        if, as a result thereof, the aggregate value of the assets underlying
        all such Options (determined as of the date such Options are written)
        would exceed 25% of a Fund's net assets.

  (ii)  The Bond Fund and the Equity Fund will not purchase a put or call Option
        or Option on a Futures Contract if, as a result thereof, the aggregate
        premiums paid on all Options or Options on Futures Contracts held by a
        Fund would exceed 20% of a Fund's net assets.

 (iii)  The Bond Fund and the Equity Fund will not enter into any Futures
        Contract or Option on a Futures Contract if, as a result thereof, the
        aggregate margin deposits and premiums required on all such instruments
        held by a Fund would exceed 5% of a Fund's net assets.

In order to help reduce the risk of counterparty default in Forward Contracts
and Options traded over-the-counter, the Equity Fund and the Bond Fund will only
enter into such transactions with registered broker-dealers, or with banks or
other financial institutions regulated by the FDIC or having assets in excess of
$1 billion, in each case having a net worth of at least $20 million. For a more
detailed discussion of the uses, risks and costs of Hedging Transactions, see
Appendix B.

FUNDAMENTAL POLICIES: The Bond Fund and the Equity Fund seek to limit the risk
of investment losses by adhering to the following "fundamental policies." These
investment restrictions can be changed only with the approval of a vote of a
"majority of the outstanding voting securities" of each Fund as defined in the
Investment Company Act of 1940 (the "1940 Act"). This requires a vote of (a) 67%
or more of the shares of the Fund represented at a meeting where more than 50%
of the Fund's shares are represented, or (b) more than 50% of the outstanding
shares of the Fund, whichever is less. The fundamental policies provide that
each Fund will not:

1. Invest more than 25% of its total assets in the securities of companies
primarily engaged in any one industry (other than the United States Government
and its agencies and instrumentalities).

                                       B-9
<PAGE>
     For the purposes of this restriction, water, communications, electric and
gas utilities shall each be considered a separate industry. Furthermore, neither
all national, regional or local governments (United States or foreign), as a
group, nor all international organizations (government or private), as a group,
nor all finance companies (as a group) shall be considered within a single
industry.

     For the purposes of this restriction, each Fund currently deems each
national government and such government's agencies and instrumentalities to be a
single industry. Similarly, each Fund deems a particular regional government or
local government (including the agencies and instrumentalities of such
government) to be a separate industry so long as securities issued by such
government are backed by the assets and revenues of such government. Each Fund
treats all international organizations (government or private) that have been
assigned the same Standard Industrial Classification Code as a single industry.

     In determining the issuer of a foreign security, each national government
and each political subdivision, agency and instrumentality of each nation and
each supra-national entity of which such nation is a member is considered a
separate issuer. Issuers representing more than one nation will be excluded in
determining the percentage of any individual nation. Where foreign securities
are backed only by assets and revenues of a particular political subdivision,
agency or instrumentality, only that entity is considered to be the issuer.

2. Acquire more than 10% of the outstanding voting securities of any one issuer
or invest for the purpose of exercising control.

3. Invest in companies for the purpose of exercising control or management.

4. Purchase or sell real estate; provided that the Funds may invest in
securities secured by real estate or interests therein or issued by companies,
which invest in real estate or interests therein.

5. Purchase or sell commodities or commodity contracts or invest in put, call,
straddle or spread options or in interests in oil, gas or other mineral
exploration or development programs; provided, however, that this policy will
not prevent the purchase, ownership or sale of warrants or other rights where
the grantor of the warrants is the issuer of the underlying securities ("grantor
warrants"); provided that each Fund will not purchase a grantor warrant if, as a
result thereof, the aggregate market value of all purchased grantor warrants
then owned exceed 10% of the total assets of the Fund taken at market value at
the time of the purchase of such grantor warrant. (Accordingly, this 10%
limitation will not apply to the acquisition or ownership of grantor warrants
other than as a result of a purchase.) Moreover, and notwithstanding the
restriction, the Bond Fund may purchase and sell foreign currencies on a current
basis, and may engage in interest rate, and foreign currency hedging
transactions, including investing in, writing and purchasing forward contracts,
options, future contracts and options on futures contracts, swaps and related
caps, floors and collars, and similar instruments involving debt securities and
foreign currencies. Similarly, the Equity Fund may purchase and sell foreign
currencies on a current basis, and may engage in foreign currency and market
hedging transactions, including investing in, writing and purchasing forward
contracts on foreign currencies, and options, futures contracts and options on
futures contracts on foreign currencies and stock indices.

6. Issue senior securities, borrow money, or pledge its assets, except that the
Funds may borrow from a bank as a temporary measure for extraordinary or
emergency purposes in amounts not exceeding 5% of its total assets and except
that the Funds may obtain such credit as may be necessary for the clearance of
purchases or sales of securities. For the purposes of this restriction, margin
or collateral arrangements with respect to forward contracts, options, futures
contracts or options on futures contracts and (for the Bond Fund only) swaps are
not deemed to be a pledge of assets and neither such arrangements nor the
purchase or sale of forward contracts, options, futures contracts or options on
futures contracts or (for the Bond Fund only) swaps, are deemed to be the
issuance of a senior security or borrowing.

7. Purchase any securities on margin or effect short sales, except that the
Funds may obtain such credit as may be necessary for the clearance of purchases
or sales of securities. The deposit by the Funds of initial or variation margin
in connection with forward contracts, options, futures contracts and options on
future contracts will not be considered the purchase of a security on margin.

                                      B-10
<PAGE>
8. Engage in the business of underwriting securities issued by others, or
knowingly purchase securities subject to contractual restrictions on disposition
or legal restrictions on disposition in all of the principal markets where
traded, if such purchase will result in more than 10% of the value of its assets
(taken at market value) then being invested in such securities. This restriction
also applies to repurchase agreements maturing in over seven days. This
restriction will not, however, preclude the Funds from buying securities which
are not registered for sale with the Securities and Exchange Commission or
otherwise marketable in the United States, if marketable elsewhere.

     If through (i) the appreciation of portfolio securities which are not
readily marketable, (ii) the depreciation of other investments of the Funds, or
(iii) the sale of assets to meet redemptions, the Funds should be in a position
in which more than 10% of the value of their assets are invested in securities
which are not readily marketable, the Funds will consider what steps, if any, to
take to protect against the resulting liquidity.

9. Participate on a joint or a joint and several basis in any trading account in
securities. (The "bunching" or combining of orders for the sale or purchase of
marketable securities with other accounts under the management of the Adviser to
save brokerage costs or achieve an average price among them is not deemed to
result in a securities trading account.)

10. Make loans of money or securities to any person or firm, except through the
purchase of debt securities in accordance with each Fund's investment objectives
and policies; provided that the Equity Fund may lend its portfolio securities
subject to any restrictions imposed by applicable law and the adoption of
procedures by the Board of Directors.

11. Purchase securities from or sell securities to its officers or directors or
other "interested persons" of the Fund as defined in the 1940 Act.

Unless otherwise specified, if a percentage restriction on an investment or
utilization of assets set forth above is adhered to at the time an investment is
made, a later change in percentage resulting from changing values or a similar
event (such as a reduction in the size of the Funds occasioned by the redemption
of shares) will not be considered a violation of the Funds' investment
restrictions.

NET ASSET VALUE

     The net asset value per share, on which purchase, exchange and redemption
prices are based, is calculated in accordance with the formula and at the times
set forth in the Prospectus. As of the date of this Statement of Additional
Information, the Funds understand that the New York Stock Exchange will be
closed (and, thus, no net asset value will be calculated) on the following U.S.
holidays: New Year's Day, Martin Luther King, Jr.'s Birthday, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.

     Equity securities traded on an exchange or on the NASDAQ National Market
System are valued at the closing price. If there has been no sale on such date
or if the closing price is not the last sale price, then the security is valued
at the mean of the closing bid and asked prices on such day. Equity securities
that are not traded on an exchange or on the NASDAQ National Market System are
valued at the mean of the closing bid and asked prices.

     Short-term debt obligations with a remaining maturity of 60 days or less
are valued at amortized cost. Other debt securities are valued at prices
provided by one or more pricing services or by one or more bona fide
market-makers as of the closing of the relevant market.

                                      B-11
<PAGE>
     Options on futures contracts, and exchange-traded options other than index
options, are valued at the last sale price listed on the exchange on which they
are traded, unless no sales of such options have taken place that day, in which
case they will be valued at the mean between their closing bid and asked prices.
Exchange-traded index options are valued at the last sale price only if that
price falls on or between the closing bid and asked prices on that day. If the
last sale price falls outside of the range of the closing bid and asked prices,
or if there has been no sale that day, then the index option will be valued
using the mean of the closing bid and asked prices. Options traded
over-the-counter are valued at the most recent bid quotation in the case of
purchased options and at the most recent asked quotation in the case of written
options. When the Funds write an option, an amount equal to the premium received
is included as an asset, and an equivalent deferred credit is included as a
liability and marked to market on a daily basis. If a call option written by the
Funds is exercised, the proceeds are increased by the premium received. If a
call option written by the Funds expires, the Funds have a gain in the amount of
the premium. If the Funds enter into a closing purchase transaction, the Funds
will have a gain or loss depending on whether the premium was more or less than
the cost of the closing transaction. If a put option held by the Funds is
exercised, the amount the Funds receive on sale of the underlying investment is
reduced by the amount of the premium paid by the Funds.

     Futures contracts are valued at the last settlement price as of the close
of the commodity exchange on which they are traded. Forward currency contracts
are valued based on their amortized forward points and the closing spot price of
their underlying currencies as of 11:00 A.M. New York time. Foreign securities
and cash are converted into U.S. dollar values at the mean of the bid and asked
prices for the underlying currencies as of the same time.

     All prices are taken from the primary market in which the portfolio
security or other asset is traded.

     The Board of Directors has delegated to the Funds' Custodian and the
Adviser the authority to make valuations of marketable securities and rate of
exchange determinations in accordance with the standards described above. If
market quotations are not readily available for valuation purposes, portfolio
securities and other assets will be valued by, or under the direction of, the
Board of Directors in such manner as the Board of Directors deems, in good
faith, appropriate to reflect the fair value thereof.

PURCHASE, EXCHANGE AND REDEMPTION OF SHARES

You may purchase, redeem or exchange shares on any day the NYSE is open as
provided in the Funds' prospectus.

GOOD ORDER. A purchase, redemption or exchange request is deemed to be received
in good order when all required paperwork, stock powers, monies, signatures and
signature guarantees are received by the transfer agent, or an authorized broker
or its designee.

AUTHORIZED BROKERS. The Funds have authorized one or more brokers to receive
purchase and redemption orders, and to designate other intermediaries to receive
such orders, on its behalf. The Funds will be deemed to have received a purchase
or redemption order when an authorized broker or designee receives the order.
Orders will be priced at the Funds' net asset value next determined after
receipt by an authorized broker or designee in good order.

CERTIFICATES AND STOCK POWERS. Because of the costs and risks involved to
stockholders of holding shares in certificate form, any shares purchased will be
held by the transfer agent and not issued in certificate form unless a
certificate is requested by the stockholder. In the case where a certificate is
issued and the stockholder requests a redemption, the certificate and a stock
power endorsed by the stockholder exactly as the shares are registered must be
returned to the Funds' transfer agent before the redemption request will be
processed.

                                      B-12
<PAGE>
SIGNATURE GUARANTEE. Some redemption requests may require a signature guarantee
depending on the amount being requested and where the proceeds are to be sent. A
signature guarantee is a widely accepted way to protect stockholders and the
Funds by verifying the signature on the request. Signature guarantees should not
be qualified in any way, whether by date or otherwise. Signatures must be
guaranteed by an "Eligible Guarantor Institution" and not by a notary public or
any other person or entity. An "Eligible Guarantor Institution" means a bank,
trust company, broker, dealer, municipal or government securities broker or
dealer, credit union, national securities exchange, registered securities
association, clearing agency or savings association that is a participant in the
Securities Transfer Agents Medallion Program ("STAMP") endorsed by the
Securities Transfer Association. To find out if your redemption request requires
a signature guarantee please contact the Funds' transfer agent at 800-541-4366.

SYSTEMATIC WITHDRAWAL PLAN. You or the Funds may terminate the Systematic
Withdrawal Plan at any time upon written notice to the other. The Plan will also
be terminated by the Funds' transfer agent on receipt of satisfactory evidence
of your death or incapacity. Until it has received such notice, the Funds'
transfer agent will not be liable for any deductions or payments made in
accordance with the Plan.

TELEPHONE TRANSACTIONS. Interruptions in telephone service may mean that you
will be unable to effect a transaction by telephone when desired. When telephone
transactions are difficult to implement, you should mail or send by overnight
delivery a written request directly to the Funds' transfer agent. By making
telephone exchanges or redemptions you may be giving up a measure of security
that you may have had if such transactions had been in writing. The Funds and
its transfer agent will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. The Funds and its transfer
agent may be liable for any losses due to unauthorized or fraudulent
instructions if such procedures are not followed. For your protection, the
Funds' transfer agent records all telephone calls. Exchanges by telephone can
only be made between accounts with identical registrations and only if your
account registration has not changed within 30 days. Redemption proceeds are
sent only to a stockholder's registered address or to a bank account previously
designated by the stockholder. It is also the Funds' policy to mail a written
confirmation to you at your address of record within five business days after
any telephone transaction. The Funds or its transfer agent may refuse to honor
any telephone transaction request if the Funds or its transfer agent believes,
for any reason, that the request is unauthorized. You will be promptly notified
of any refused telephone transaction request. Neither the Funds nor its transfer
agent will be liable for following telephone instructions that the Funds'
transfer agent reasonably believes to be genuine. Since you may bear the risk of
loss in the event of an unauthorized telephone transaction, you should verify
the accuracy of telephone transactions immediately upon receipt of the written
confirmation.

Telephone transaction procedures may be modified or suspended without notice
during periods of drastic economic or market changes, and may be modified or
terminated on 60 days' notice to stockholders at any time. Shares held by a
Keogh plan or IRA and shares issued in certificate form are not eligible for
telephone exchange or redemption.

PURCHASES IN KIND. The Bond Fund, at the discretion of the Adviser, may from
time to time permit investors to purchase its shares in exchange for marketable
debt securities that are suitable for investment by the Bond Fund. The Bond Fund
will value these securities at the mean between the bid and asked quotations
provided by one or more bona fide market makers, at prices provided by a pricing
service used for the Bond Fund's portfolio securities, or by another methodology
approved by the Board of Directors.

DISTRIBUTIONS AND TAXES

For the fiscal year ended September 30, 2000, the Funds believe that they have
qualified as a "regulated investment company" ("RIC") under Subchapter M of the
Internal Revenue Code of 1986 (the "Code") and intend to be able to continue to
so qualify in future years. Qualification as a RIC allows the Funds to qualify
for "pass-through" treatment under the federal income tax laws, which means the
Funds, subject to certain conditions and requirements, will not be subject to
U.S. federal income tax on amounts it distributes to stockholders.

                                      B-13
<PAGE>
To qualify as a RIC, the Funds must, among other things, (a) derive in each
taxable year at least 90% of their gross income from dividends, interest, gains
from the sale or other disposition of stocks, securities or foreign currencies,
or certain other sources, (b) diversify their holdings so that, at the end of
each quarter of the taxable year, (i) at least 50% of the market value of each
Funds' total assets is represented by cash and cash items, U.S. government
obligations and other securities limited in respect of any one issuer to an
amount not greater than 5% of each Fund's total assets and not more than 10% of
the outstanding voting securities of such issuer, and (ii) not more than 25% of
the value of each Fund's total assets is invested in the securities of any one
issuer (other than U.S. government obligations, securities of other regulated
investment companies or the securities of other regulated investment companies),
and (c) distribute in each year at least 90% of its taxable and net tax-exempt
income to stockholders.

For any year in which they do not qualify as a RIC, (a) the Funds will be taxed
as an ordinary corporation, (b) distributions to stockholders will not be
deductible by the Funds in computing taxable income, and (c) the Funds'
distributions, to the extent made out of the Funds' current or accumulated
earnings and profits, will be taxable to stockholders as dividends (regardless
of whether they would otherwise have been considered long-term capital gains).
Should the Funds be deemed a personal holding company, its undistributed income
would be taxed at the highest marginal rate applicable to corporations and it
could be subject to an additional personal holding company tax generally equal
to 39.6% of its net undistributed dividend and interest income.

RICs are subject to a nondeductible 4% excise tax on the excess (if any) of the
"required distribution" for a calendar year over the "distributed amount" for
such year. To avoid imposition of such tax, a RIC generally will have to
distribute in each calendar year at least 98% of its ordinary income for such
calendar year and at least 98% of its capital gains for the 12-month period
ending on October 31 of such year. The Funds intend to make sufficient
distributions each year to avoid imposition of the excise tax.

Events subsequent to a dividend or distribution may cause the dividend or
distribution to be recharacterized, in whole or in part, for U.S. federal income
tax purposes. For example, if the Funds incurs foreign currency losses that
eliminate their tax-basis "earnings and profits," then distributions made during
the year may be recharacterized as return of capital distributions for U.S.
income tax purposes, rather than income distributions, thereby reducing each
stockholder's basis in his Fund shares.

HEDGING AND OTHER TRANSACTIONS. The Funds are currently authorized to engage in
Forward Contracts and to invest in or write Options, Futures Contracts and
Options on Futures Contracts to hedge against changes in interest and foreign
currency exchange rates and market movements and as a substitute for an
underlying investment ("Hedging Transactions"). Certain of these transactions
may be "Section 1256 contracts." Gains or losses on Section 1256 contracts
generally are treated as 60% long-term and 40% short-term ("60/40") capital
gains or losses. Also, any Section 1256 contracts that are held by the Funds at
the end of a taxable year (and, generally, for purposes of the 4% excise tax, on
October 31 of each year) are "marked-to-market" with the result that unrealized
gains or losses are treated as though they were realized and the resulting gain
or loss is generally treated as a 60/40 gain or loss.

Generally, any Hedging Transactions undertaken by the Funds may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains or losses realized by the Funds. For example, Hedging
Transactions may convert gains, which would otherwise be taxable as long-term
capital gain into short-term capital gain, which is taxed as ordinary income
when distributed to stockholders. In addition, any losses realized by the Funds
on positions that are part of a straddle may be deferred under the straddle
rules, rather than being taken into account in calculating the taxable income
for the taxable year in which such losses are realized. Because the straddle
rules are complex and their interpretation unclear, the tax consequences to the
Funds of Hedging Transactions are uncertain.

The Funds may make one or more of the elections available under the Code that
are applicable to straddles. If the Funds make any of the elections, the amount,
character and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
elections made. The rules applicable under certain of the elections may operate
to accelerate the recognition of gains or losses from the affected straddle
positions.

                                      B-14
<PAGE>
Because application of the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle positions, the amount which must be distributed to
stockholders, and that will be taxed to stockholders as ordinary income or
long-term capital gain, may be increased or decreased as compared to a fund that
did not engage in Hedging Transactions.

In addition, under the "conversion transaction" provisions of the Code, certain
gains derived from the Funds' hedging or other activities may be recharacterized
as ordinary income for federal income tax purposes. While some regulations have
been issued under these provisions, the application of these provisions is
expected to be further defined by additional regulations to be issued by the
Treasury Department. The Adviser will take these provisions, regulations and any
subsequent regulations into account in assessing the hedging and other
strategies of the Funds.

The diversification and income requirements applicable to the Funds' assets and
other restrictions imposed on the Funds by the Code may limit the extent to
which the Funds will be able to engage in transactions in, Forward Contracts,
Options, Futures Contracts or Options on Futures Contracts.

CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR LOSSES. Under the Code, gains or
losses attributable to fluctuations in exchange rates that occur between the
time the Funds accrue interest or other receivables or accrue expenses or other
liabilities denominated in a foreign currency and the time the Funds actually
collect such receivables or pays such liabilities generally are treated as
ordinary income or ordinary loss. Gains or losses with respect to Forward
Contracts and certain Options, Futures Contracts and Options on Futures
Contracts are generally treated as ordinary income or loss, although an election
is available under certain circumstances that would result in capital gain or
loss treatment. In addition, gains or losses on the disposition of debt
securities denominated in a foreign currency attributable to fluctuations in the
value of the foreign currency between the date of acquisition of the security
and the date of disposition are generally treated as ordinary gain or loss.
These gains or losses, referred to under the Code as "Section 988" gains or
losses, may increase or decrease the amount of the Funds' investment income to
be distributed to its stockholders as ordinary income, rather than increasing or
decreasing the amount of the Funds' capital gains or losses.

CERTAIN FOREIGN TAX CONSEQUENCES. Foreign securities, such as those purchased by
the Funds, may be subject to foreign taxes that could reduce the yield on such
securities, although a stockholder otherwise subject to United States federal
income taxes may be entitled to claim a credit or deduction for such tax
purposes, subject to certain limitations.

Dividends and interest received by the Funds in connection with foreign
securities investments may give rise to withholding and other taxes imposed by
foreign countries, generally at rates from 10% to 35%. Tax conventions between
certain countries and the United States may reduce or eliminate such taxes.
Investors may be entitled to claim U.S. foreign tax credits with respect to such
taxes, subject to the limitations of the Code. Foreign countries generally do
not impose taxes on capital gains in respect of investments by foreign
investors.

Some investments made by the Funds may be treated as "passive foreign investment
companies" ("PFICs") for U.S. income tax purposes. Investment by the Funds in
PFICs could accelerate the stockholders' taxation, alter the timing or
characterization of certain distributions to stockholders or subject the Funds
to federal income tax or other charges in certain circumstances

BACKUP TAX WITHHOLDING. Certain stockholders may be subject to backup tax
withholding at a 31% rate. Generally, a stockholder will be subject to backup
withholding if the stockholder fails to provide the Funds with its correct
taxpayer identification number, or if the IRS notifies the Funds that the
stockholder has underreported interest or dividends. In addition, stockholders
who fail to certify that they are not subject to backup withholding (on the
grounds only of underreporting and notice from the IRS) will be subject to
backup withholding. Accordingly, to avoid being subject to backup withholding,
investors who acquire shares in the Funds must certify that they have provided
their correct taxpayer identification numbers and that they are not subject to
backup withholding in the appropriate spaces on the application at the end of
the Prospectus.

The discussion in the Prospectus, together with the foregoing, is a general and
abbreviated summary of the tax consequences of investment in the Funds.
Investors are urged to consult their own tax advisors to determine the effect of
investment in the Funds upon their individual tax situations.

                                      B-15
<PAGE>
DIRECTORS AND OFFICERS

     The management of the Company, including the general overall supervision of
the Funds' portfolio transactions, is the responsibility of the Board of
Directors. The names and business addresses of the Directors and officers of the
Company and their principal occupations and other affiliations during the past
five years are set forth below:

<TABLE>
<CAPTION>
                                                           Principal Occupations
                                 Positions Held            And Other Affiliations
Name, Address and Age            With the Company          During the Past 5 Years
---------------------            ----------------          -----------------------
<S>                              <C>                       <C>
Peter M. Hill1 (50)              Director and Chairman     Director and Chief Investment Officer of
950 Tower Lane, Suite 1900                                 Bailard, Biehl & Kaiser, Inc., the Funds' Investment
Foster City, CA  94404                                     Adviser (the "Adviser").  Director of BB&K Fund
                                                           Services, Inc., the Funds' Distributor (the
                                                           "Distributor"), since June 1992.  President and
                                                           Director of the Bailard, Biehl & Kaiser Technology
                                                           Exchange Fund, LLC (the "Tech Fund"), since March
                                                           2000.  President and Director of the Bailard, Biehl &
                                                           Kaiser New Leaders Technology Exchange Fund,
                                                           LLC (the "New Leaders Fund") and the Bailard,
                                                           Biehl & Kaiser Decathlon Exchange Fund, LLC (the
                                                           "Decathlon Fund"), since August 2000,

Burnice E. Sparks, Jr.(1) (52)   Director and President    Director and President of the Adviser. Director and
950 Tower Lane, Suite 1900                                 Chief Executive Officer of the Distributor since June
Foster City, CA 94404                                      1992. President of the Bailard, Biehl & Kaiser Fund
                                                           Group, Inc. (the "Fund Group").

Barbara V. Bailey(1) (42)        Treasurer                 Treasurer of BB&K Holdings, Inc. and Executive Vice
950 Tower Lane, Suite 1900                                 President and Treasurer/ Secretary of the Adviser
Foster City, CA  94404                                     since December 1995.  Treasurer of the Fund Group
                                                           since September 1996.  Secretary of the Distributor
                                                           and Treasurer and Secretary of the Bailard, Biehl &
                                                           Kaiser Real Estate Investment Trust, Inc. (the
                                                           "REIT"), since January 1996.  Treasurer of the Tech
                                                           Fund since March 2000.  Treasurer of the New Leaders
                                                           Fund and the Decathlon Fund since August 2000.

Janis M. Horne(1) (45)           Secretary and Chief       Senior Vice President and Investment Counselor of the
950 Tower Lane, Suite 1900       Compliance Officer        Adviser.  Secretary of the Fund Group.  Chief
Foster City, CA  94404                                     Compliance Officer of the Adviser since June 1996 and
                                                           of the Fund Group since September 1996.
</TABLE>

----------
(1)  "Interested person" of the Company, as defined in the 1940 Act.

                                      B-16
<PAGE>
<TABLE>
<CAPTION>
                                                           Principal Occupations
                                 Positions Held            And Other Affiliations
Name, Address and Age            With the Company          During the Past 5 Years
---------------------            ----------------          -----------------------
<S>                              <C>                       <C>
Sofi Kyriakidis(1) (28)          Assistant Treasurer and   Employee of the Adviser since November 1995, most
950 Tower Lane, Suite 1900       Assistant Secretary       recently as Senior Vice President.  Assistant
Foster City, CA 94404                                      Treasurer and Assistant Secretary of the Fund Group
                                                           since September 1996.  Assistant Treasurer of the
                                                           REIT since June 1996.  Treasurer of the Distributor
                                                           since January 1996.  Secretary of the Tech Fund since
                                                           March 2000.  Secretary of the New Leaders Fund and
                                                           the Decathlon Fund since August 2000.

Shirley L. Clayton(2) (63)       Director                  President of Raven Biotechnologies, a biotechnology
122 Campo Bello Lane                                       firm, since January 1999.  Chief Financial Officer of
Menlo Park, CA 94025                                       Orquest, a biotechnology firm, from May 1998 to
                                                           January 1999.  President and Chief Operating Officer
                                                           of TopoMetrix, a manufacturer of scanning probe
                                                           microscopes, from June 1993 to 1998. Trustee of the
                                                           Fund Group.

Scott F. Wilson(2) (56)          Director                  General Partner of Venture Management Associates, an
Venture Management Associates                              investment banking firm, since 1991.  Shareholder of
540 Cowper Street, Ste. 200                                Milbank Winthrop & Co., an investment adviser, since
Palo Alto, CA  94301                                       1981.  Trustee of the Fund Group.

James C. Van Horne(2) (65)       Director                  A.P. Giannini Professor of Finance at Graduate School
Graduate School of Business                                of Business of Stanford University from September
Stanford University                                        1976 to the present. Director of Sanwa Bank
Stanford, CA  94305                                        California and Montgomery Street Income Securities,
                                                           Inc., a registered investment company.  Trustee of
                                                           the Fund Group.
</TABLE>

----------
(2)  Member of the Audit Committee.

                                      B-17
<PAGE>
     The following table sets forth the compensation paid to the Company's
Directors during the fiscal year ended September 30, 2000.

                               Compensation Table

<TABLE>
<CAPTION>
                                        Pension or Retirement   Estimated     Total Compensation
                           Aggregate     Benefits Accrued as      Annual       From Company and
   Name of Person         Compensation     Part of Company     Benefits Upon    Fund Complex(1)
    and Position          From Company         Expenses         Retirement     Paid to Directors
    ------------          ------------         --------         ----------     -----------------
<S>                        <C>                 <C>                <C>               <C>
Peter M. Hill
Director                   $     0(2)          $     0            $     0           $     0

Burnice E. Sparks, Jr.     $     0(2)          $     0            $     0           $     0

Shirley L. Clayton
Director                   $13,333(3)          $     0            $     0           $20,000

Scott F. Wilson
Director                   $13,333(3)          $     0            $     0           $20,000

James C. Van Horne
Director                   $13,333(3)          $     0            $     0           $20,000
</TABLE>

     The Company and the Fund Group reimburse each Director and Trustee for
travel and other out-of-pocket disbursements incurred in connection with
attending Board meetings. The Company and the Fund Group also reimburse other
travel expenses of Directors, Trustees and officers, including international
travel expenses, incurred incident to the performance of duties as a Director,
Trustee or officer.

----------
(1)  A Fund Complex consists of investment companies that hold themselves out to
     investors as related companies for purposes of investment and investor
     services, have a common investment adviser or have an investment adviser
     that is an affiliated person of the investment adviser of any of the other
     related investment companies. The Company and the Fund Group are considered
     to be part of the same Fund Complex.

(2)  Does not include fees paid to the Adviser pursuant to the Management
     Agreement as described below under "INVESTMENT ADVISORY AND OTHER
     SERVICES".

(3)  Consists of a $8,000 annual Director fee plus $1,333 for each Board meeting
     attended in person.

                                      B-18
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES

MANAGEMENT AGREEMENT

     The Funds have entered into an Investment Management Agreement (the
"Management Agreement") with Bailard, Biehl & Kaiser, Inc., a California
corporation (the "Adviser" or "Bailard, Biehl & Kaiser"), for investment
advisory and certain portfolio transaction and administrative services dated
October 1, 1993, as amended on December __, 2000. The Adviser, subject to the
general supervision of the Company's Board of Directors, is responsible for the
overall management of the Funds' portfolio in accordance with the Funds'
investment objectives, policies and restrictions. The Adviser is also
responsible for making investment recommendations as to securities to be
acquired, purchased or sold, for reviewing and selecting firms to effect the
execution of portfolio transactions and for reviewing the execution of such
transactions to ensure their overall reasonableness. In addition, the Adviser
provides certain administrative services to the Funds, including the oversight
of the various agents, records and reports of the Funds.

     From October 1, 1993 to December __, 2000, the Adviser was paid a monthly
fee calculated at an annual rate equal to 0.95% of the average daily net assets
of the Equity Fund and 0.75% of the average daily net assets of the Bond Fund.
As of December X, 2000, the advisory fee for the Bond Fund was reduced to 0.50%
of the daily average net assets of the Bond Fund. While these rates may be
higher than the rates charged by most other advisers, the Funds believe that
they are justified by the complexity of investing in multiple international
markets and engaging in Hedging Transactions and by the administrative services
provided by the Adviser. Prior to October 1, 1993, the Equity Fund employed
other investment advisers and the Adviser received no fees from the Equity Fund.
However, investors in the Funds who were advisory clients of the Adviser paid
separate advisory fees directly to the Adviser. Since October 1, 1993, the
separate advisory fees payable to the Adviser by its advisory clients have been
reduced by an approximation of the amount of fees it receives from the Funds
attributable to the assets of its advisory clients.

     The Management Agreement may be terminated at any time, without penalty
upon 60 days' written notice, by majority vote of the Board of Directors of the
Company or by a vote of the holders of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Funds. The Management Agreement
may also be terminated by the Adviser upon not less than 180 days' written
notice to the Funds and terminates automatically upon its assignment (as defined
in the 1940 Act).

     The Adviser has granted the Funds the right to use the designation
"Bailard, Biehl & Kaiser" in its name and has reserved the right to withdraw its
consent to the use of such designation by the Funds under certain conditions,
including the condition that Bailard, Biehl & Kaiser ceases to act as the Funds'
investment adviser, and to grant the use of such name to others, including any
other investment company.

EXPENSES OF THE FUNDS

     The Funds pay all of their own expenses (except for those expressly to be
paid by the Adviser), including without limitation the following: organization
costs, taxes, investment management fees, expenses for legal and auditing
services, costs of printing proxies, stock certificates, stockholder reports,
prospectuses and statements of additional information, charges of the Funds'
custodian, any sub-custodian and transfer and dividend disbursing agent,
expenses of redemption of the Funds' shares, Securities and Exchange Commission
fees, expenses of registering the Funds' shares under federal, state and foreign
laws, fees and actual out-of-pocket expenses of Directors, accounting and
pricing costs (including the daily calculation of the net asset value),
insurance, interest, brokerage costs, litigation and other extraordinary or
non-recurring expenses, and other similar expenses.

                                      B-19
<PAGE>
     For the fiscal years ended September 30, 1998, 1999 and 2000 the Equity
Fund paid investment management fees of $1,280,698, $1,149,030 and XXXXX to the
Adviser, respectively. For those same time periods, the Bond Fund paid fees of
$391,334, $450,467 and XXXXX, respectively.

     The Adviser pays certain expenses incurred in the Funds' day-to-day
management, including the costs of office space and other facilities used by the
Adviser, and salaries and expenses of personnel of the Adviser. As an
accommodation to the Funds, from time to time, the Adviser directly pays certain
expenses of the Funds (such as insurance premiums, Directors' fees, and fees
relating to state securities law filings) for which the Adviser is later
reimbursed by the Funds. Disbursements by the Adviser on behalf of the Funds and
their subsequent reimbursement by the Funds are effected only upon the prior
approval of an officer of the Company. For the fiscal year ended September 30,
2000, the Equity Fund reimbursed the Adviser approximately $XXXX. For that same
time period, the Bond Fund reimbursed the Adviser approximately $XXXX.

OTHER SERVICES

     BB&K Fund Services, Inc., 950 Tower Lane, Suite 1900, Foster City,
California 94404 (the "Distributor"), is a registered broker/dealer and serves
as the sole distributor for the Funds' shares pursuant to an agreement with the
Funds. The Distributor receives no commissions or other compensation from the
Funds. The Funds' shares may also be purchased directly from the Funds.

     The Adviser and the Distributor are wholly owned subsidiaries of BB&K
Holdings, Inc. ("Holdings"), which may be deemed to be a controlling person of
the Adviser and the Distributor. In addition, Thomas E. Bailard and his spouse,
Terri, may be deemed to be controlling persons of the Adviser and the
Distributor, by virtue of their beneficial ownership of more than 25% of the
securities of Holdings, as individuals or Directors.

     Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, acts as Custodian of the Funds' assets and has been authorized to cause
securities and other assets of the Funds to be held in separate accounts with
various subcustodians in conformity with Section 17(f) of the 1940 Act and the
rules thereunder. As part of the Custodian Agreement, the Funds' Custodian has
agreed to act as the Funds' financial agent, and will maintain certain books and
records for the Funds, perform the calculations necessary to compute the value
of the Funds' investment securities and other assets and the net asset value of
the Funds' shares, confirm all share purchases and redemptions to the Funds'
Transfer Agent, provide financial reports to the Funds necessary to prepare its
financial statements, and provide additional services of a similar nature. For
services performed by the Custodian during the 1998, 1999 and 2000 fiscal years,
the Equity Fund paid the Custodian $466,363, $457,968 and XXXXX respectively.
For that same time period, the Bond Fund paid $109,602, $116,494, and XXXXXX
respectively.

     The Company, on behalf of the Funds, has entered into an Administration
Agreement dated as of October 1, 1991, as amended, with Investment Company
Administration LLC ("ICA"), 2020 E. Financial Way, Suite 200, Glendora,
California 91741. Pursuant to such agreement, ICA provides certain
administrative services in connection with the management of the Funds'
operations. Such services include: (i) assisting the Funds' accountants in
preparing financial reports, (ii) assisting the Funds' attorneys in preparing
amendments to the Funds' registration statement, any proxy materials and other
forms and reports to be filed with the SEC, (iii) preparing periodic reports to
stockholders, (iv) monitoring compliance with the Funds' investment policies and
restrictions, and (v) other administrative matters. As compensation for such
services, the Funds pays ICA an annual fee of $32,500 each.

     Transfer agent and dividend paying agent services are provided by Chase
Global Funds Services Company ("CGFSC"), P.O. Box 2798, Boston, Massachusetts
02208, an affiliate of The Chase Manhattan Bank, N.A. CGFSC also files
applications under state law to register the Funds' shares for sale, and to
register the Company and/or the Company's officers to sell the Funds' shares.
For services performed by CGFSC during the 1998, 1999 and 2000 fiscal years, the
Equity Fund paid CGFSC $39,384, $36,366 and XXXXX respectively. For that same
time period, the Bond Fund paid $38,836, $36,077 and XXXXX, respectively.

                                      B-20
<PAGE>
     PricewaterhouseCoopers LLP, 333 Market Street, San Francisco, California
94105, serves as the Funds' independent accountants, providing audit services,
including review and consultation in connection with various filings by the
Funds with the Securities and Exchange Commission and tax authorities.

PERSONAL SECURITIES TRANSACTIONS

     Officers, Directors and employees of the Company, the Distributor and the
Adviser are permitted to invest in securities for their own account, including
securities that may be purchased or held by the Funds. To address potential
conflicts with the interests of the Funds that might arise from personal
securities transactions, the Company, the Distributor and the Adviser have
adopted a written code of ethics pursuant to Rule 17j-1 under the 1940 Act.

BROKERAGE

     The Adviser is responsible for the allocation of brokerage and reviews the
efficiency of execution and reasonableness of the commissions charged. In
effecting portfolio transactions, the Adviser seeks to obtain the best net
results for the Funds, taking into account such factors as price, size of order,
difficulty of execution and operational facilities of the firm involved. The
Adviser generally seeks reasonably competitive commission rates in domestic and
foreign transactions. Ordinarily, the Adviser purchases securities from the
primary market, whether over-the-counter or listed, and listed securities may be
purchased in the over-the-counter market if, in the judgment of the Adviser, it
is the primary market.

     Within the framework of the above policies, the Adviser may also consider
research, investment information and other related services, such as price
quotations, provided by brokers. In recognition of research services, the
Adviser has the authority to cause the Funds to pay brokerage commissions (which
are negotiated in the case of domestic stock exchange transactions, but which
are often fixed in the case of foreign stock exchange transactions) in excess of
that which other brokers might charge for effecting the same transaction. As a
consequence, the Funds could pay a broker that furnishes research services for
the Adviser a higher commission than that which might be paid to another broker
that does not furnish research services, or that furnishes research services
deemed to be of lesser value, if such commission is deemed reasonable in
relation to the value of the brokerage and research services provided by the
broker, viewed in terms of either that particular transaction or the overall
responsibilities of the Adviser with respect to the Funds. Research services
that could be provided could include analyses of industries, statistical or
economic information or analyses of issuers. The Funds may also place orders for
securities transactions with its Custodian in return for a discount on the
Funds' custodial fees. This practice will have the effect of reducing the amount
of expenses reported in the Funds' financial statements. The Adviser will
review, from time to time, brokerage commissions paid on behalf of the Funds
with a view to determining their reasonableness in relation to brokerage
commissions paid by other similarly situated investors.

     The extent to which commissions charged by brokers may reflect an element
of value for research services cannot be determined. To the extent that research
services of value are provided by brokers through whom the Funds places
portfolio transactions, the Adviser may be relieved of expenses that it might
otherwise bear. Research services furnished by brokers could be useful and of
value to the Adviser in serving its other clients as well as the Funds. On the
other hand, certain research services obtained by the Adviser as a result of the
placement of portfolio brokerage of other clients could be useful and of value
to it in serving the Funds. It is not the Funds' practice to allocate portfolio
securities business on the basis of sales of its shares. For the fiscal year
ended September 30, 2000, the Adviser estimates that the Equity Fund paid XXXXX
in brokerage commissions, involving XXXXX of portfolio transactions, to brokers
with whom the Adviser had an arrangement to receive research or related
services. The Bond Fund did not pay commissions to any such brokers for the
fiscal year ended September 30, 2000.

                                      B-21
<PAGE>
     There are occasions on which portfolio transactions for the Funds may be
executed as part of concurrent authorizations to purchase or sell the same
security for other accounts served by the Adviser, some of which accounts have
investment objectives similar to the Funds' investment objectives. Although such
concurrent authorizations potentially could be either advantageous or
disadvantageous to the Funds, they will be effected only when the Adviser
believes that to do so will be in the best interest of the Funds. When such
concurrent authorizations occur, the objective will be to allocate the
executions in a manner that is deemed equitable by the Adviser to the accounts
involved, including the Funds. The Adviser has adopted a Trade Policy to ensure
that all clients will be treated fairly when trades are aggregated.

     No brokerage commissions will be paid to any broker that was at the time of
the transaction an "affiliated person" of the Funds or indirectly affiliated
with the Funds through a common "affiliated person" as that term is defined in
the 1940 Act. Neither the Adviser nor any of its affiliates receives any
brokerage commissions from portfolio transactions. During the Equity Fund's
fiscal years ended September 30, 1998, 1999 and 2000, the Fund paid brokerage
commissions on portfolio transactions of approximately $732,427, $762,793 and
XXXXXX, respectively. The Bond Fund did not pay any brokerage commissions over
those time periods.

STOCKHOLDER INFORMATION

     As of September 30, 2000, all officers and Directors of the Company as a
group held of record and beneficially less than 1% of the outstanding shares of
each Fund. No stockholders held of record or, to the Funds' knowledge,
beneficially in excess of 5% of the outstanding shares of either Fund on that
date.

DESCRIPTION OF CAPITAL STOCK

The Funds are series within the Bailard, Biehl & Kaiser International Fund
Group, Inc., an open-end management investment company organized on June 12,
1990 as a Maryland corporation (the "Company"). Further series may be added
without stockholder approval, but the Company has no immediate plans to do so.

The Company has authorized the issuance of up to 1,000,000,000 shares of Common
Stock, par value $.0001, in one or more series. Currently, the Funds are each
authorized to issue 100,000,000 shares of Common Stock. When issued, shares in
the Funds will be fully paid and non-assessable and will have no preemptive,
conversion or exchange rights.

Shares of each series are entitled to one vote for all purposes. Shares of each
series vote as a single body with respect to matters, such as election of
Directors, that affect all series in substantially the same manner. As to
matters affecting each series separately, such as approval of agreements with
investment advisers, shares of each series vote as separate series. Shares of
each series are entitled to dividends as determined by the Board of Directors
and, upon liquidation, are entitled to receive the net assets of that series.
Stockholders are entitled to require the Funds to redeem their shares, and the
Funds may redeem shares under certain circumstances, as set forth under
"Redemption of Shares." The transfer of shares, other than by redemption, is
subject to restrictions in some jurisdictions.

The voting rights of the shares are non-cumulative, which means that the holders
of more than 50% of the shares voting for the election of Directors can elect
100% of the Directors if they choose to do so. In such event, the holders of the
remaining shares voting will not be able to elect any Director. The Company is
not required to hold annual meetings for the election of Directors or otherwise.
Special meetings may be called by the Chairman of the Board, the Board of
Directors, or the President or by stockholders entitled to cast at least 10% of
the shares entitled to vote. The Company will assist in stockholder
communications with respect to any meeting duly called by the holders of its
shares.

                                      B-22
<PAGE>
A full statement of the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the shares of each
series of stock that the Company is authorized to issue and the differences in
the relative rights and preferences between the shares of each series to the
extent that they have been set, and the authority of the Board of Directors to
set the relative rights and preferences of subsequent series, will be furnished
by the Company to any stockholder, without charge, upon request to the Secretary
of the Company at its principal office.

PERFORMANCE DATA

     The Funds may compute their average annual compounded rate of total return
during specified periods that would equate a hypothetical initial investment of
$1,000 to the ending redeemable value of such investment by (a) adding one to
the computed average annual total return, (b) raising the sum to a power equal
to the number of years covered by the computation and (c) multiplying the result
by $1,000 (which represents the hypothetical initial investment). The ending
redeemable value is determined by assuming a complete redemption at the end of
the periods covered by the average annual total return computation.

     The annual compounded rate of total return for the Equity Fund for the one
year period ended September 30, 2000 was 6.10%. The average annual compounded
rate of total return for the Equity Fund for the five year period from October
1, 1995 to September 30, 2000 was 9.43% . The average annual compounded rate of
total return for the Equity Fund for the ten year period from October 1, 1990 to
September 30, 2000 was 6.65%.

     The annual compounded rate of total return for the Bond Fund for the one
year period ended September 30, 2000 was -3.52%. The average annual compounded
rate of total return for the Bond Fund for the five year period from October 1,
1995 to September 30, 2000 was 3.83%. The average annual compounded rate of
total return for the Bond Fund since inception on October 1, 1990 to September
30, 2000 was 4.66%.

     The above figures assume that all dividends and distributions by the Funds
were reinvested at net asset value on the reinvestment dates. Periods prior to
October 1, 1993 include an assumed 1% annual advisory fee, payable quarterly,
charged by the Adviser to its clients.

     These figures represent past performance and an investor should be aware
that past performance is no indication of future results, and that the
investment return and principal value of an investment in the Funds will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.

                              FINANCIAL STATEMENTS

Incorporated by reference herein are portions of the Funds' annual reports to
stockholders for the fiscal year ended September 30, 2000 under the headings:
"SCHEDULE OF INVESTMENTS BY COUNTRY," "SCHEDULE OF INVESTMENTS BY INDUSTRY,"
"STATEMENT OF ASSETS AND LIABILITIES," "STATEMENT OF OPERATIONS," "STATEMENT OF
CHANGES IN NET ASSETS," "FINANCIAL HIGHLIGHTS," "NOTES TO FINANCIAL STATEMENTS,"
and "REPORT OF INDEPENDENT ACCOUNTANTS." Copies of the annual reports are
available upon request and without charge by contacting BB & K Fund Services,
Inc., 950 Tower Lane, Suite 1900, Foster City, California 94404, (800) 882-8383.

     The Prospectus and this Statement of Additional Information, together, do
not contain all of the information set forth in our registration statement filed
with the Securities and Exchange Commission. Certain information is omitted in
accordance with rules and regulations of the Commission. The registration
statement may be inspected at the Public Reference Room of the Commission at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and
copies thereof may be obtained from the Commission at prescribed rates.

                                      B-23
<PAGE>
APPENDIX A
BOND, COMMERCIAL PAPER, PREFERRED STOCK AND MUNICIPAL DEBT RATINGS

BONDS

MOODY'S INVESTORS SERVICE, INC. ("MOODY'S"): Bonds rated Aaa by Moody's are
judged by Moody's to be of the highest quality by all standards. Together with
bonds rated Aa, they comprise what are generally known as high-grade bonds. Aa
bonds are rated lower than Aaa bonds because margins of protection may not be as
large as those of Aaa bonds, or fluctuations of protective elements may be of
greater amplitude, or there may be other elements present which make the
long-term risks appear somewhat larger than those applicable to Aaa securities.
Bonds that are rated A by Moody's possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment sometime in the future.

Moody's Baa rated bonds are medium grade obligations, i.e., they are neither
highly protected nor poorly secured. Interest payments and principal security
appear adequate for the present, but certain protective elements may be lacking
or may be characteristically unreliable over any length of time. Such bonds lack
outstanding investment characteristics and may have speculative characteristics
as well. They are still considered investment grade bonds.

Moody's Ba rated bonds are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

Moody's B rated bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Bonds with a Caa rating from Moody's are of poor standing. Such bonds may be in
default or there may be present elements of danger with respect to principal or
interest.

Bonds with a Ca rating from Moody's represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

Bonds with a C rating from Moody's are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

STANDARD & POOR'S CORPORATION ("S&P"): Bonds rated AAA are considered by S&P to
be the highest grade obligations, and the capacity to pay interest and principal
is extremely strong. Bonds rated AA by S&P are judged by S&P to have a very
strong capacity to pay interest and principal and differ only in a small degree
from issues rated AAA. Bonds rated A by S&P have a strong capacity to pay
principal and interest, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions.

S&P's BBB rated bonds, or medium-grade category bonds, are regarded as having
adequate capacity to pay principal and interest. Whereas BBB bonds normally
exhibit adequate protection parameters, adverse economic conditions or changes
in circumstances are more likely to lead to a weakened capacity to pay interest
and principal. They are still considered investment grade bonds.

                                      B-24
<PAGE>
Bonds rated BB and B by S&P are regarded as having significant speculative
characteristics. Bonds rated BB are less vulnerable to nonpayment than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial or economic conditions. Bonds rated B are more
vulnerable to nonpayment than those rated BB, but the obligor currently has the
capacity to meet its financial commitment on the obligation. Adverse business,
financial, or economic conditions will likely impair the obligor's capacity or
willingness to meet its financial commitment on the bond.

A bond rated CCC by S&P is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the bond. In the event of adverse business,
financial, or economic conditions, the obligor is not likely to have the
capacity to meet its financial commitment on the obligation. An obligation rated
CC is currently highly vulnerable to nonpayment.

The C rating may be used by S&P to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this bond are
being continued.

Bonds rated D by S&P are in payment default. The D rating category is used when
payments on a bond are not made on the date due even if the applicable grace
period has not expired, unless S&P believes that such payments will be made
during the grace period. The D rating also will be used upon the filing of a
bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.

The ratings from AA to CCC from S&P may be modified by the addition of a plu sor
minus sign to show relative standing within the major rating categories.

COMMERCIAL PAPER

MOODY'S: The Prime rating is the highest commercial paper rating assigned by
Moody's. Issuers within this Prime category may be given ratings 1, 2 or 3,
depending on their capacity for repayment. Issuers rated Prime-1 (or supporting
institutions) have a superior ability for repayment of senior short-term debt
obligations. Prime 1 repayment ability will often be evidenced by the issuer's
leading market position in well-established industries, high rates of return on
funds employed, conservative capitalization structures with moderate reliance on
debt, and ample asset protection. Also, a Prime-1 issuer may have broad margins
in earnings coverage of fixed financial charges, high internal cash generation
and a well established access to a range of financial markets and assured
sources of alternative liquidity.

Issuers rated Prime-2 (or supporting institutions) have a strong capacity for
repayment of senior short-term debt obligations. Issuers rated Prime-2 will
evidence many of the characteristics of Prime-1 issuers, although to a lesser
degree. Earnings trends and coverage ratios are sound but more subject to
variation. Capital characteristics may be more affected by external conditions.
Ample alternative liquidity is maintained.

Issuers rated Prime-3 (or supporting institutions) have an acceptable capacity
for repayment. The effects of industry characteristics and market composition
may be more pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements. Adequate alternative
liquidity is maintained.

S&P: Ratings are graded into four categories, ranging from "A" for the highest
quality obligations to "D" for the lowest. Issues rated A are regarded as having
the greatest capacity for timely payment. Issues in this category are further
refined with the designations 1, 2, and 3 to indicate the relative degree of
safety. Issues rated A-1 have a very strong degree of safety regarding timely
payment. Issues rated A-2 have a strong capacity for timely payment. However,
the relative degree of safety is not as overwhelming as for issues designated
A-1. Issues rated A-3 have a satisfactory capacity for timely payment. They are,
however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.

                                      B-25
<PAGE>
PREFERRED STOCK

MOODY'S: An issue rated "aaa" by Moody's is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks. Issues rated
"aa" by Moody's are considered to be high-grade preferred stock with reasonable
assurance that earnings and asset protection will remain relatively well
maintained in the foreseeable future. Issues rated "a" are considered to be
upper-medium-grade preferred stock. While risks are judged to be somewhat
greater than in the "aaa" and "aa" classifications, earnings and asset
protection are, nevertheless, expected to be maintained at adequate levels.

An issue rated "baa" by Moody's is considered to be a medium-grade preferred
stock, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present, but may be questionable over any great
length of time.

An issue rated "ba" by Moody's is considered to have speculative elements. Its
future cannot be considered well assured. Earnings and asset protection may be
very moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.

An issue rated "b" by Moody's generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small.

An issue which is rated "caa" by Moody's is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future status
of payments.

An issue which is rated "ca" is speculative in a high degree and is likely to be
in arrears on dividends with little likelihood of eventual payments.

Issues with a "c" rating from Moody's are the lowest rated class of preferred or
preference stock. Issues so rated can thus be regarded as having extremely poor
prospects of ever attaining any real investment standing.

Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

S&P: AAA is the highest rating that may be assigned by S&P to a preferred stock
issue and indicates an extremely strong capacity to pay the preferred stock
obligations. An issue rated AA also qualifies as a high-quality issue. The
capacity to pay preferred stock obligations is very strong, although not as
overwhelming as for issues rated AAA. Issues rated A are backed by a sound
capacity to pay the preferred stock obligations, although they are somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions.

An issue rated BBB by S&P is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issuers in the A category.

Preferred stock rated BB, B, and CCC by S&P are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. BB indicates the lowest degree of speculation and CCC the
highest. While such issues will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

The rating CC is reserved by S&P for a preferred stock issue in arrears on
dividends or sinking fund payments but that is currently paying.

                                      B-26
<PAGE>
A preferred stock rated C by S&P is currently a nonpaying issue.

A preferred stock rated D by S&P is a nonpaying issue with the issuer in default
on debt instruments.

The ratings from AA to CCC from S&P may be modified by the addition of a plu sor
minus sign to show relative standing within the major rating categories.

MUNICIPAL DEBT

MOODY'S: Ratings for municipal debt are not provided by Moody's.

S&P: Debt rated AAA has the highest rating assigned by S&P as the capacity to
pay interest and repay principal is extremely strong. Debt rated AA by S&P also
has a strong capacity to pay both interest and principal and differs from AAA
only slightly. Debt rated A by Moody's has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.

Debt rated BBB by S&P is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

Debt rated BB by S&P has less near term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

Debt rated B by S&P has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

Debt rated CCC by S&P has a currently identifiable vulnerability to default and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.

The rating CC is typically applied by S&P to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.

The rating C is typically applied by S&P to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

The rating CI is reserved by S&P for income bonds on which no interest is being
paid.

The ratings from AA to CCC from S&P may be modified by the addition of a plu sor
minus sign to show relative standing within the major rating categories.

                                      B-27
<PAGE>
APPENDIX B
HEDGING AND OTHER TRANSACTIONS

FORWARD CONTRACTS. The Bond Fund and the Equity Fund may enter into forward
foreign currency exchange contracts to attempt to minimize the risk to the Funds
from adverse changes in currency exchange rates and as a substitute for an
underlying currency position ("Forward Contracts"). All Forward Contracts will
be covered. In the case of a Forward Contract obligating the Funds to purchase a
foreign currency (a "long position"), the Funds may establish a segregated
account containing liquid assets ("Liquid Assets") equal to the purchase price
of the Forward Contract due on the settlement date (less any margin on deposit).
Liquid Assets include cash, U.S. Government securities and other securities
determined by the Adviser to be liquid in accordance with guidelines adopted by
the Board of Trustees. Alternatively, the Funds may cover a long position by
purchasing a put option on the same Forward Contract with a strike price as high
or higher than the price of the Forward Contract held by the Funds (or, if lower
than the price of the Forward Contract held by the Funds, the Funds may
segregate Liquid Assets equal to the difference).

In the case of a Forward Contract obligating the Funds to sell a foreign
currency (a "short position"), the Funds may segregate Liquid Assets equal to
the market value of the currency underlying the Forward Contract (less any
margin on deposit, but not less than the market price at which the short
position was established). Alternatively, the Funds may cover the Forward
Contract by (i) entering into an offsetting position or transaction, (ii) owning
the currency underlying the Forward Contract or (iii) holding a call option
permitting the Funds to purchase the same Forward Contract at a price no higher
than the price at which the short position was established (or, if higher, the
Funds may segregate Liquid Assets equal to the difference).

OPTIONS ON DEBT SECURITIES AND FOREIGN CURRENCIES. The Bond Fund may write
covered call and put options and purchase call and put options ("Options") on
debt securities and foreign currencies that are traded on United States and
foreign exchanges and over-the-counter, to attempt to minimize the risks to the
Bond Fund from adverse changes in currency exchange and interest rates, and as a
substitute for an underlying securities or currency position. The Equity Fund
may write covered call and put options and purchase call and put options
("Options") on foreign currencies that are traded on United States and foreign
exchanges and over-the-counter, to attempt to minimize the risks to the Equity
Fund from adverse changes in currency exchange rates and as a substitute for an
underlying currency position

For example, a decline in the value of a foreign currency in which portfolio
securities are denominated will reduce the value of such securities in U.S.
Dollars, even if their value in the foreign currency remains constant. In order
to protect against such reductions in the value of portfolio securities, the
Bond Fund and the Equity Fund may purchase put Options on the foreign currency.
If the value of the foreign currency does decline, the Funds will have the right
to sell such currency for a fixed amount and will thereby offset, in whole or in
part, the adverse effect on their portfolios that otherwise would have resulted.

Conversely, when the Bond Fund or the Equity Fund predict an increase in the
value of a currency in which securities to be acquired are denominated, the
Funds may purchase call Options on the foreign currency. The purchase of such
Options could offset, at least partially, the effects of the adverse movements
in exchange rates. However, the benefit to the Funds derived from purchases of
Options will be reduced by the amount of the premium and related transaction
costs. In addition, where currency exchange rates do not move in the direction
or to the extent predicted, the Funds could sustain losses that would require
them to forego a portion or all of the benefits of advantageous changes in such
rates.

The Bond Fund may also purchase Options on debt securities to hedge against
interest rate changes that adversely affect the value of a portfolio security.
For example, when the Bond Fund anticipates a decline in the market value of a
portfolio security due to rising interest rates, it may purchase put Options on
the security. If the value of the security does decline, the Bond Fund will have
the right to sell the security for a fixed amount and will thereby offset, in
whole or in part, the adverse effect that would otherwise have been caused by
rising interest rates.

                                      B-28
<PAGE>
Where the Bond Fund predicts a change in the market value of a security to be
acquired that would increase the cost of such security, the Bond Fund may
purchase call Options thereon. The purchase of such Options could offset, at
least partially, the effect of declining interest rates. The use of Options to
hedge against adverse movements in interest rates is subject to the same
limitations and risks of loss as the use of Options to hedge against adverse
movements in exchange rates.

The Bond Fund and the Equity Fund may write put and call Options for the same
types of hedging purposes. For example, when the Funds anticipate a decline in
the value of foreign currency-denominated securities due to adverse fluctuations
in exchange rates they could, instead of purchasing a put Option, write a call
Option on the relevant currency. If the expected decline occurs, the Option will
most likely not be exercised and the diminution in value of portfolio securities
will be fully or partially offset by the amount of the premium received.
Similarly, instead of purchasing a call Option to hedge against an anticipated
increase in the cost of securities to be acquired, the Funds could write a put
Option on the relevant currency that, if rates move in the manner projected,
will expire unexercised and allow the Fund to hedge such increased cost up to
the amount of premium. The writing of an Option constitutes only a partial hedge
up to the amount of the premium, and only if interest or exchange rates move in
the expected direction. If this does not occur, the Option may not be offset by
the amount of the premium. Through the writing of Options, the Funds may also be
required to forego all or a portion of the benefits that might otherwise have
been obtained from favorable movements in interest or exchange rates.

All put and call Options written by the Bond Fund and the Equity Fund will be
covered. The Funds may cover a put Option by (i) establishing a segregated
account containing Liquid Assets equal to the strike price of the put Option
written by the Funds (less any margin on deposit), (ii) selling short the
security or currency underlying the put Option at the same or higher price than
the strike price of the put Option written by the Funds (or, if lower, the Funds
may segregate Liquid Assets equal to the difference), or (iii) purchasing a put
Option with a strike price the same as or higher than the strike price of the
put Option sold by the Funds (or, if lower, the Funds may segregate Liquid
Assets equal to the difference).

The Funds may cover a call Option by (i) segregating Liquid Assets equal to the
market value of the security or currency underlying the call Option (less any
margin on deposit) but not less than the strike price of the call Option, (ii)
owning the security or currency underlying the Option or (iii) purchasing a
separate call Option on that security or currency with a strike price no higher
than the strike price of the Option sold by the Funds (or, if higher, the Funds
may segregate Liquid Assets equal to the difference).

If the Bond Fund or the Equity Fund, as the writer of an Option, wish to
terminate its obligation, it may effect a closing purchase transaction. This is
accomplished by buying an Option of the same series as the Option previously
written. The effect of the purchase is that the Fund's position will be
canceled. However, a writer may not effect a closing purchase transaction after
being notified of the exercise of an Option. Likewise, where the Fund holds an
Option, it may liquidate its position by effecting a closing sale transaction.
This is accomplished by selling an Option of the same series as the Option
previously purchased. There is no guarantee that either a closing purchase or a
closing sale transaction can be effected.

The Bond Fund and the Equity Fund will realize a profit from a closing
transaction if the price of the transaction is less than the premium received
from writing the Option or is more than the premium paid to purchase the Option;
the Funds will realize a loss from a closing transaction if the price of the
transaction is more than the premium received from writing the Option or is less
than the premium paid to purchase the Option. Because increases in the market
price of a call Option will generally reflect increases in the market price of
the underlying security or currency, any loss resulting from the purchase of a
call Option to close out a previously written call Option is likely to be offset
in whole or in part by appreciation of the Funds' portfolio securities
denominated in such currency.

OPTIONS ON STOCK INDICES. The Equity Fund may write covered put and call Options
and purchase put and call Options on stock indices to attempt to minimize the
risks to the Equity Fund from adverse changes in market conditions and as a
substitute for an underlying investment. Options on stock indices are similar to

                                      B-29
<PAGE>
Options on debt securities and foreign currencies. For additional information on
the risks and benefits of Options on stock indices, see "Options on Debt
Securities and Foreign Currencies."

Call Options on stock indices written by the Equity Fund will be covered (i) by
segregating a portfolio of securities substantially replicating the movement of
the index, (ii) by holding a call Option on the same index with a strike price
no higher than the strike price of the Option written by the Fund or (iii) in
such other manner as may be in accordance with the rules of the exchange on
which the Option is traded and applicable laws and regulations.

The Equity Fund will cover put Options on stock indices by (i) segregating
Liquid Assets equal to the Option's exercise price, (ii) holding a put Option on
the same index with a strike price no higher than the strike price of the put
Option written by the Fund or (iii) in such other manner as may be in accordance
with the rules of the exchange on which the Option is traded and applicable laws
and regulations.

The Equity Fund will receive a premium for writing a put or call Option that
will increase the Fund's gross income in the event the Option expires
unexercised or is closed out at a profit. If the value of an index on which the
Equity Fund has written a call Option falls or remains the same, the Fund will
realize a profit in the form of the premium received (less transaction costs)
that will offset all or a portion of any decline in the value of the securities
it owns. If the value of the index rises, however, the Equity Fund will realize
a loss in its call Option position, which will reduce the benefit of any
unrealized appreciation in the Fund's securities holdings. By writing a put
Option, the Equity Fund assumes the risk of a decline in the index. To the
extent that the price changes of securities owned by the Equity Fund correlate
with changes in the value of the index, writing covered put Options on indices
will increase the Fund's losses in the event of a market decline, although such
losses will be offset in part by the premium received for writing the Option.

FUTURES CONTRACTS ON DEBT SECURITIES, STOCK INDICES AND FOREIGN CURRENCIES. The
Bond Fund may enter into exchange-traded contracts for the purchase or sale for
future delivery of debt securities and foreign currencies to attempt to minimize
the risk to the Fund from adverse changes in currency exchange and interest
rates, and as a substitute for an underlying investment ("Futures Contracts").
The Equity Fund may enter into exchange-traded contracts for the purchase or
sale for future delivery of stock indices and foreign currencies to attempt to
minimize the risk to the Fund from adverse changes in currency exchange and
market conditions, and as a substitute for an underlying investment ("Futures
Contracts").

The acquisition or sale of Futures Contracts is designed to protect the Bond
Fund and the Equity Fund from fluctuations in currency exchange and interest
rates and market movements without actually buying or selling the underlying
currencies or securities. For example, if the Bond Fund owns long-term bonds,
and interest rates were expected to increase, the Bond Fund might enter into a
Futures Contract for the sale of debt securities. Such a sale would have much
the same effect as selling an equivalent value of long-term bonds owned by the
Bond Fund. If interest rates did increase, the value of the debt securities in
the portfolio would decline, but the value of the Futures Contract to the Bond
Fund would increase at approximately the same rate, thereby keeping the net
asset value of the Fund from declining as much as it otherwise would have. The
Bond Fund could accomplish similar results by selling bonds with long maturities
and investing in bonds with short maturities. However, since the futures market
generally is more liquid than the cash market, the use of Futures Contracts as
an investment technique allows the Bond Fund to maintain a defensive position
without having to sell its portfolio securities.

Similarly, when it is expected that interest rates may decline, Futures
Contracts may be purchased to attempt to hedge against anticipated purchases of
long-term bonds at higher prices. Since the fluctuations in the value of Futures
Contract should be similar to that of long-term bonds, the Bond Fund could take
advantage of the anticipated rise in the value of long-term bonds without
actually buying them until the market had been established. At that time, the
Futures Contract could be liquidated and the Bond Fund could then buy long-term
bonds on the cash market.

All Futures Contracts to which the Bond Fund or the Equity Fund is a party will
be covered. A Futures Contract obligating the Funds to purchase a security,
financial index or currency is covered if the Funds segregate, in a special
account with the Custodian, Liquid Assets equal to the price of the Futures

                                      B-30
<PAGE>
Contract due on the settlement date (less any margin on deposit). The Funds may
also cover a long position by purchasing a put Option on the same Futures
Contract with an exercise price as high or higher than the price of the Futures
Contract held by the Funds (or, if lower, the Funds may segregate Liquid Assets
equal to the difference).

A Futures Contract in which the Bond Fund or the Equity Fund has the position of
a seller is covered if the Fund segregates Liquid Assets equal to the market
value of the security, index or currency underlying the Futures Contract (less
any margin on deposit, but not less then the market price at which the position
was established). Alternatively, the Funds may cover such a Futures Contract by
(i) owning the security or currency underlying the Futures Contract, or, in the
case of a financial index, segregating a portfolio of securities substantially
replicating the movement of the index or (ii) holding a call Option permitting
the Funds to purchase the same Futures Contract at a price no higher than the
price at which the position was established (or, if higher, the Funds may
segregate Liquid Assets equal to the difference).

If the Bond Fund or the Equity Fund enters into a Futures Contract, it will be
subject to initial and variation margin requirements. At the time a Futures
Contract is purchased or sold, the Funds must allocate cash or securities as an
initial margin deposit ("initial margin"). It is expected that initial margin
will be approximately 1-1/2% to 5% of a Futures Contract's face value. A Futures
Contract is valued ("marked to market") daily. The Funds will be required to
increase their margin deposit ("variation margin") when the value of a Futures
Contract decreases and, conversely, the Funds will receive payment for any
increase in the Futures Contract's value.

At the time of delivery of securities pursuant to such a contract, adjustments
may be made to recognize differences in value arising from the delivery of
securities with a different interest rate from that specified in the contract.
In some (but not many) cases, securities called for by a Futures Contract may
not have been issued when the contract was written.

Although Futures Contracts, by their terms, call for the actual delivery or
acquisition of an asset, in most cases the contractual obligation is fulfilled
(or "offset") before the expiration date of the Futures Contract without having
to make or take delivery of the underlying asset. Offset of a Futures Contract
is accomplished by buying (or selling, as the case may be) on a commodities
exchange an identical Futures Contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels
the obligation to make or take delivery of the underlying asset.

The ordinary spreads between prices in the cash and futures markets, due to
differences in the natures of those markets, are subject to distortions that may
prevent the Bond Fund or the Equity Fund from successfully using Futures
Contracts. First, all participants in the futures markets are subject to initial
and variation margin requirements. Rather than meeting variation margin
requirements, investors may close Futures Contracts through offsetting
transactions, which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures markets depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion. Third, from the
point of view of speculators, margin requirements in the futures market are less
onerous than margin requirements in the cash market. Therefore, increased
participation by speculators in the futures market may cause temporary price
distortions. Due to the possibility of distortion, a correct prediction of
general interest and currency exchange rates or market conditions by the Bond
Fund or the Equity Fund may not result in a successful transaction.

If the Bond Fund or the Equity Fund makes an erroneous judgment about the
general direction of interest rates, currency exchange rates or market
conditions, the Fund's overall performance would be worse than the performance
the Fund would have achieved had it not entered into any such contract. If the
Funds have hedged against the possibility of a movement in interest rates or
exchange rates or market conditions that would adversely affect the price of
their portfolio securities and such rates or markets did not move as
anticipated, the Funds would lose part or all of the benefit of the increased
value of the hedged securities because they will have offsetting losses in
futures positions. In addition, in such situations, if the Funds had
insufficient cash and were unable to effect a closing transaction, they might
have to sell securities from its portfolio to meet daily variation margin

                                      B-31
<PAGE>
requirements. Such sales of securities may, but will not necessarily, be at
increased prices that reflect the rising market. The Funds may also have to sell
securities at a time when it may be disadvantageous to do so.

OPTIONS ON FUTURES CONTRACTS ON DEBT SECURITIES, STOCK INDICES AND FOREIGN
CURRENCIES. The Bond Fund may purchase and write options on Futures Contracts to
attempt to minimize the risk to the Fund from adverse changes in currency
exchange and interest rates, and as a substitute for an underlying investment
("Options on Futures Contracts"). The Equity Fund may purchase and write options
on Futures Contracts on foreign currencies and stock indices to attempt to
minimize the risk to the Fund from adverse changes in currency exchange rates
and market conditions and as a substitute for an underlying securities or
currency position. ("Options on Futures Contracts").

A call Option on a Futures Contract written by the Bond Fund or the Equity Fund
constitutes a partial hedge against declining prices of the asset or currency
that are deliverable upon exercise of the Futures Contract. If the price of the
Futures Contract at expiration of the Option is below the exercise price, the
Funds will retain the full amount of the Option premium, which provides a
partial hedge against any decline that may have occurred in the Funds'
portfolio. A put Option on a Futures Contract written by the Funds constitutes a
partial hedge against increasing prices of the asset that is deliverable under
the Futures Contract. If the price of the Futures Contract at expiration of the
Option is higher than the exercise price, the Funds will retain the full amount
of the Option premium, which provides a partial hedge against an increase in the
price of securities that the Funds intend to purchase.

If a put or call Option on a Futures Contract that the Bond Fund or the Equity
Fund has written is exercised, the Funds will incur a loss, which will be
reduced by the amount of the premium the Funds received. Depending on the degree
of correlation between changes in the value of its portfolio securities and
changes in the value of its futures positions, the Funds' losses from Options on
Futures Contracts may be reduced or increased by changes in the value of their
portfolio securities.

All Options on Futures Contracts written by the Bond Fund or the Equity Fund
will be covered. In the case of the sale of a call Option on a Futures Contract,
the Funds may cover by (i) entering into a long position on the same Futures
Contract at a price no higher than the strike price of the call Option on the
Futures Contract (or, if higher, the Funds may segregate Liquid Assets equal to
the difference), (ii) owning the security or currency underlying the Futures
Contract on which the Funds hold the Option, or, with respect to a financial
index, a portfolio of securities substantially replicating the movement of the
index, or (iii) holding a separate call Option permitting the Funds to purchase
the same Futures Contract at a price no higher than the strike price of the call
Option on the Futures Contract sold by the Funds (or, if higher, the Funds may
segregate Liquid Assets equal to the difference.)

In the case of the sale of a put Option on a Futures Contract obligating the
Bond Fund or the Equity Fund to buy a Futures Contract, the Funds may establish
a segregated account containing Liquid Assets equal to the settlement value of
the Futures Contract underlying the Option on a Futures Contract. Alternatively,
the Funds may cover the Option on a Futures Contract by holding a put Option
permitting the Funds to sell the same Futures Contract at a price the same as or
higher than the strike price of the put Option sold by the Funds (or, if lower,
the Funds may segregate Liquid Assets equal to the difference).

The amount of risk the Bond Fund or the Equity Fund assumes when purchasing an
Option on a Futures Contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed above, the
purchase of such an option also entails the risk that changes in the value of
the underlying Futures Contract will not be fully reflected in the value of the
option purchased.

Swaps and Related Caps, Floors and Collars. The Bond Fund may enter into
interest rate and foreign currency swaps and related caps, floors and collars to
minimize the risk to the Bond Fund from adverse changes in currency exchange and
interest rates and as a substitute for an underlying securities or currency
position (collectively, "Swaps").

                                      B-32
<PAGE>
An interest rate Swap is an agreement between two borrowers to exchange a stream
of interest payments on an agreed hypothetical or "notional" principal amount.
No principal amount is exchanged between the counterparties to an interest rate
Swap. In the typical Swap, one party agrees to pay a fixed rate on a notional
principal amount, while the counterparty pays a floating rate based on one or
more reference interest rates such as the London Interbank Offered Rate
("LIBOR"), a specified bank's prime rate, or U.S. Treasury Bill rates. Interest
rate Swaps also permit counterparties to exchange a floating rate obligation
based upon one reference interest rate (such as LIBOR) for a floating rate
obligation based upon another reference interest rate (such as U.S. Treasury
Bill rates).

A currency Swap is an agreement to exchange fixed or floating rate interest
obligations - and, in some transactions, principal obligations - in different
currencies on the basis of (i) the actual principal amount or a notional
principal amount and (ii) one or more reference interest rates.

For example, the Bond Fund may have the right to receive interest at fixed rates
on some of its portfolio securities. If interest rates were rising (and
therefore the value of portfolio securities were declining), the Bond Fund could
hedge the value of such securities by swapping its right to receive a fixed rate
of interest for a counterparty's right to receive a floating rate. Similarly,
the Bond Fund may have the right to receive interest payments on its portfolio
securities denominated in the French Franc. If the Franc were suffering an
adverse movement of its exchange rate, the Bond Fund could hedge the value of
such securities by swapping its right to receive Francs for the right to receive
U.S. Dollars or another currency.

The Bond Fund will usually enter into Swaps on a net basis, i.e., where the two
parties make net payments, with the Bond Fund receiving or paying, as the case
may be, only the net amount of the two payments. The net amount of the excess,
if any, of the Bond Fund's obligations over its entitlements, with respect to
each Swap will be accrued, and an amount of Liquid Assets having an aggregate
net asset value at least equal to the accrued excess will be maintained in a
segregated account. If the Bond Fund enters into a Swap on other than a net
basis, the Bond Fund will maintain in the segregated account the full amount of
the Fund's obligations under the Swap. Neither a Swap nor any margin or
collateral arrangement with respect to a Swap is deemed to involve a pledge of
the Bond Fund's assets, the issuance of a senior security or a borrowing.

The Swap market has grown substantially in recent years with a significant
number of banks and financial services firms acting both as principals and as
agents utilizing standardized Swap documentation. Caps, floors and collars are
more recent innovations, and they are less liquid than other Swaps. There can be
no assurance that the Bond Fund will be able to enter into or offset Swaps at
any specific time or at prices or on other terms that are advantageous. In
addition, although the terms of Swaps may provide for termination under certain
circumstances, there can be no assurance that the Bond Fund will be able to
terminate or offset a Swap on favorable terms.

Additional Risks of Forward Contracts, Options, Futures Contracts, Options on
Futures Contracts and Swaps. Hedging transactions may be effective to protect
the Bond Fund and the Equity Fund against certain changes in interest and
currency exchange rates or market movements. However, such transactions do not
eliminate fluctuations in the prices of portfolio securities or prevent losses
if the prices of such securities decline.

The ability of the Bond Fund and the Equity Fund to hedge all or a portion of
their portfolios through transactions in Forward Contracts, Options, Futures
Contracts, Options on Futures Contracts and Swaps depends on the degree to which
price movements in underlying currencies and securities correlate with price
movements in the relevant portion of the Funds' portfolio. In addition, the use
of Futures Contracts and Options on Futures Contracts involves the risk of
imperfect correlation of movements in the prices of Futures Contracts and
Options on Futures Contracts, and movements in the prices of the underlying
assets. If the price of a Futures Contract or an Option on a Futures Contract
moves more or less than the price of the hedged asset, the Bond Fund and the
Equity Fund will experience a gain or loss that may not be completely offset by
movements in the price of the asset that is the subject of the hedge.

                                      B-33
<PAGE>
The Equity Fund may cover stock index Options that it has written, stock index
Futures Contracts to which it is a party, and Options on stock index Futures
Contracts that it has written through the segregation of a portfolio of stocks
that substantially replicates the movement of the underlying stock index. The
portfolio of securities used to cover such transactions may not match the actual
composition of the index. In that event, the Equity Fund will not be fully
covered and would be subject to a risk of loss in the event of adverse changes
in the value of the index.

The ability of the Bond Fund and the Equity Fund to engage in transactions
involving Options, Futures Contracts and Options on Futures Contracts and Swaps
will depend on the degree to which liquid secondary markets in such instruments
exist. Reasons for the absence of a liquid market include the following: (i)
there may be insufficient trading interest in a particular instrument; (ii)
restrictions may be imposed by an exchange on opening transactions or closing
transactions or both; (iii) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of Options, Futures
Contracts or Options on Futures Contracts; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or the Options Clearing Corporation ("OCC"), which effects the
settlement of exchange traded Options, may not be adequate at all times to
handle current trading volume; or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of a particular instrument (or a particular class or series of such
instrument). There can be no assurance that a liquid secondary market will exist
for any particular investment at any specific time. Thus, it may not be possible
for the Bond Fund and the Equity Fund to close certain positions.

The costs to the Bond Fund and the Equity Fund of hedging transactions vary
among the various hedging techniques and also depend on such factors as the
security, currency or stock index involved, market conditions and the length of
the contract or option period. Forward Contracts and Swaps are usually conducted
on a principal basis, and no fees or commissions are therefore involved.
However, the Bond Fund and the Equity Fund will incur brokerage commissions and
related transaction costs when they purchase, write or invest in Options,
Futures Contracts and Options on Futures Contracts. Furthermore, the Funds'
ability to engage in hedging transactions may be limited by tax considerations.

Forward Contracts and Options on foreign currencies and Swaps are not traded on
markets regulated by the Commodity Futures Trading Commission ("CFTC") or (with
the exception of certain Options traded on national securities exchanges) by the
Securities and Exchange Commission ("SEC"), but are traded through financial
institutions acting as market-makers. In an over-the-counter trading
environment, many of the protections afforded to exchange participants are not
available. For example, there are no daily price fluctuation limits, and
therefore adverse market movements could continue to an unlimited extent over a
period of time. Although the purchaser of an Option cannot lose more than the
amount of the premium plus related transaction costs, this entire amount could
be lost. Moreover, because the performance of over-the-counter Options, Forward
Contracts and Swaps is not guaranteed by the OCC or any other settlement agency,
there is a risk of counterparty default. Option writers and traders of Forward
Contracts could also lose amounts substantially in excess of their initial
investments, due to the margin and collateral requirements associated with such
positions.

Options traded on national securities exchanges are within the jurisdiction of
the SEC, as are other securities traded on such exchanges. As a result, many of
the protections provided to traders on organized exchanges are available with
respect to such transactions. In particular, all Options entered into on a
national securities exchange are cleared and guaranteed by the OCC, thereby
reducing the risk of counterparty default. Further, a liquid secondary market in
Options traded on a national securities exchange may be more readily available
than in the over-the-counter market, potentially permitting the Bond Fund and
the Equity Fund to liquidate open positions at a profit prior to exercise or
expiration, or to limit losses in the event of adverse market movements.

Exchange-traded Options involve certain risks not presented by the
over-the-counter market. For example, exercise and settlement of such Options
must be made exclusively through the OCC, which has established banking
relationships in certain foreign countries for that purpose. As a result, the
OCC may, if it determines that foreign governmental restrictions or taxes would
prevent the orderly exercise or settlement of such Options, or would result in

                                      B-34
<PAGE>
undue burdens on the OCC or its clearing members, impose special procedures on
exercise and settlement, such as technical changes in the mechanics of delivery,
the fixing of dollar settlement prices or prohibitions on exercise.

The exchanges on which Options, Futures Contracts and Options on Futures
Contracts are traded may impose additional limitations governing the maximum
number of positions on the same side of the market and involving the same
underlying instrument that may be held by a single investor, whether acting
alone or in concert with others (regardless of whether such positions are held
or written on the same or different exchanges or held or written in one or more
accounts or through one or more brokers). In addition, the CFTC and the various
markets have established limits, referred to as "speculative position limits,"
on the maximum net long or net short positions that any person may hold or
control in a particular Futures Contract or Option on a Futures Contract. An
exchange may order the liquidation of positions found to be in violation of
these limits and it may impose other sanctions or restrictions. The Bond Fund
and the Equity Fund do not believe that these trading and position limits will
have an adverse impact on the strategies for hedging the portfolios of the
Funds.

Forward Contracts, Options, Futures Contracts, Options on Futures Contracts and
Swaps may be traded in foreign markets or on foreign exchanges. Such
transactions are subject to the risk of governmental actions affecting trading
in or the prices of foreign currencies. The value of such positions also could
be adversely affected by, among other things: (i) other foreign political and
economic factors, (ii) lesser availability of data on which to make trading
decisions, (iii) delays in the Fund's ability to act upon economic events
occurring in foreign markets during non-business hours in the United States,
(iv) the imposition of different exercise and settlement terms and procedures
and margin requirements and (v) lesser trading volume.

                                      B-35
<PAGE>
    As filed with the Securities and Exchange Commission on October 20, 2000

                                                        Registration No. 2-63270
                                                               File No. 811-6146
================================================================================










                                     Part C

                                       of

                                    Form N-1A

                             REGISTRATION STATEMENT


             BAILARD, BIEHL & KAISER INTERNATIONAL FUND GROUP, INC.










================================================================================
<PAGE>
                            PART C. OTHER INFORMATION

ITEM 23. EXHIBITS

     (a)  Artices of Incorporation of Registrant (incorporated by reference to
          Exhibit No. 1 of Post-Effective Amendment No. 29, dated June 29,
          1998).

     (b)  By-laws of Registrant (incorporated by reference to Exhibit No. 2 of
          Post-Effective Amendment No. 29, dated June 29, 1998).

     (c)  Inapplicable.

     (d)  Investment Management Agreement between Registrant and Bailard, Biehl
          & Kaiser, Inc. dated as of October 1, 1993 (incorporated by reference
          to Exhibit No. 5 of Post-Effective Amendment No. 29, dated June 29,
          1998)

     (e)  Distribution Agreement between Registrant and BB&K Fund Services, Inc.
          dated as of October 1, 1993 (incorporated by reference to Exhibit No.
          6 of Post-Effective Amendment No. 29, dated June 29, 1998)

     (f)  Inapplicable.

     (g)  (1)  Custodian Agreement between Registrant and Brown Brothers
               Harriman & Co., dated June 12, 1990, as amended December 22, 1995
               and June 15, 1998. (incorporated by reference to Exhibit No. 8.1
               of Post-Effective Amendment No. 30, dated November 30, 1998).

     (g)  (2)  Foreign Custody Manager Delegation Agreement between Registrant
               and Brown Brothers Harriman & Co., dated as of June 15, 1998.
               (incorporated by reference to Exhibit No. 8.2 of Post-Effective
               Amendment No. 30, dated November 30, 1998).

     (h)  Administration Agreement between Registrant and Investment Company
          Administration Corporation, dated October 1, 1993, as amended July 1,
          1995 (incorporated by reference to Exhibit 9 of Post-Effective
          Amendment No. 29 to Registrant's Form N-1A Registration Statement
          dated June 29, 1998.)

     (i)  (1)  Opinion and Consent of Orrick, Herrington & Sutcliffe
               (incorporated by reference to Exhibit 10.1 of Post-Effective
               Amendment No. 14, dated July 26, 1990).

     (i)  (2)  Opinion and Consent of Piper & Marbury (incorporated by reference
               to Exhibit 10.2 of Post-Effective Amendment No. 14, dated July
               26, 1990).

     (j)  Consent of Independent Accountants - To be filed.

     (k)  Inapplicable.

     (l)  Copies of investment letters provided in connection with the shares
          issued to raise initial capital (incorporated by reference to Exhibit
          13 of Pre-Effective Amendment No. 2 to Registrant's Form N-1
          Registration Statement).

     (m)  Inapplicable.

     (n)  Inapplicable.

     (o)  Inapplicable.

     (p)  Code of Ethics dated June 1, 2000 for Bailard, Biehl & Kaiser, Inc.,
          BB&K Fund Services, Inc., Bailard, Biehl & Kaiser International Fund
          Group, Inc., and Bailard, Biehl & Kaiser Fund Group, filed herewith.

                                      C-1
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

     Registrant's organization has been sponsored by Bailard, Biehl & Kaiser,
Inc. (the "Adviser"), a California corporation and a wholly owned subsidiary of
BB&K Holdings, Inc., a California corporation ("Holdings"). Peter M. Hill,
Burnice E. Sparks, Jr., Janis M. Horne, Barbara V. Bailey, and Sofi Kyriakidis,
who are Directors and/or officers of Registrant, are also Directors and/or
officers of the Adviser and/or BB&K Fund Services, Inc. (the "Distributor"), a
California corporation and a wholly owned subsidiary of Holdings. Mr. Hill, Mr.
Sparks, Ms. Bailey, Ms. Kyriakidis and Ms. Horne are also each shareholders of
Holdings. Registrant's shares are offered to investment advisory or counseling
clients and employees (including officers and relatives of employees and
officers) and Directors of the Adviser. As a result, Holdings, the Adviser
and/or the Distributor may be deemed to be directly or indirectly under common
control with Registrant.

     Mr. Sparks, Ms. Bailey, Ms. Horne and Ms. Kyriakidis, who are officers
and/or Directors of Registrant, are also officers and/or Directors of Bailard,
Biehl & Kaiser Fund Group, a Massachusetts business trust and registered
investment company (the "Fund Group"). Shirley L. Clayton, Scott F. Wilson and
James C. Van Horne, Directors of Registrant, are also Trustees of the Fund
Group. The Adviser serves as the investment adviser to the Fund Group and the
Distributor as the distributor of the Fund Group. As a result, the Fund Group
may be deemed to be directly or indirectly under common control with Registrant.

ITEM 25. INDEMNIFICATION

     Registrant participates in a policy of insurance that insures the Fund and
its directors, officers and employees against any liability arising by reason of
any actual or alleged breach of duty, neglect, error, misstatement, misleading
statement or other act or omission within the scope of their duties.

     The By-laws of Registrant provide for indemnification of Registrant's
directors, officers, employees and agents under certain circumstances as
permitted by Section 2-418 of the Maryland General Corporation Law, and such
provisions may be sufficiently broad to permit indemnification for liabilities
arising under the Securities Act of 1933 (the "1933 Act") and the Investment
Company Act of 1940, but only to the extent permitted under Section 17(h) of the
1940 Act.

     Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted for directors, officers and controlling persons of Registrant
pursuant to the foregoing provisions, or otherwise, Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification by Registrant is against public policy, as expressed in the 1933
Act, and therefore may be unenforceable. In the event that a claim for such
indemnification (except insofar as it provides for the payment by Registrant of
expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against
Registrant by such director, officer or controlling person and the Securities
and Exchange Commission is still of the same opinion, Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.

                                      C-2
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

     The principal business of the Adviser is investment management, and the
principal business address of the Adviser and each of its officers and Directors
is 950 Tower Lane, Suite 1900, Foster City, California 94404. Set forth below is
a list of each other business, profession, vocation or employment of a
substantial nature during the past two fiscal years of each Director and officer
of the Adviser who is a Director or officer of Registrant:

                          Position(s) Held                 Other
Name                      with the Adviser               Employment
----                      ----------------               ----------
Peter M. Hill             Chief Investment        Director of the Distributor;
                          Officer and Director    Chairman of Registrant;
                                                  President and Director of the
                                                  Bailard, Biehl & Kaiser
                                                  Technology Exchange Fund, LLC
                                                  (the "Tech Fund"), Bailard,
                                                  Biehl & Kaiser New Leaders
                                                  Technology Exchange Fund, LLC
                                                  (the "New Leaders Fund"), and
                                                  Bailard, Biehl & Kaiser
                                                  Decathlon Exchange Fund, LLC
                                                  (the "Decathlon Fund").

Burnice E. Sparks, Jr.    President and Director  Chief Executive Officer and
                                                  Director of the Distributor;
                                                  President of the Fund Group;
                                                  President and Director of
                                                  Registrant

Barbara V. Bailey         Senior Vice President   Executive Vice President and
                          and Treasurer/          Treasurer of Holdings;
                          Secretary               Secretary of the Distributor;
                                                  Treasurer of Registrant and
                                                  the Fund Group; Treasurer and
                                                  Secretary of Bailard, Biehl &
                                                  Kaiser REIT (the "REIT");
                                                  Treasurer of the Tech Fund,
                                                  New Leaders Fund and Decathlon
                                                  Fund.

Janis M. Horne            Senior Vice President   Secretary and Chief Compliance
                          and Chief Compliance    Officer of the Fund Group and
                          Officer                 Registrant

Sofi Kyriakidis           Senior Vice President   Assistant Treasurer and
                                                  Assistant Secretary of the
                                                  Fund Group and Registrant;
                                                  Treasurer of the Distributor;
                                                  Assistant Treasurer of the
                                                  REIT; Secretary of the Tech
                                                  Fund, New Leaders Fund and
                                                  Decathlon Fund.

For additional information as to any other business, profession, vocation or
employment of a substantial nature of Bailard, Biehl & Kaiser, its Directors and
officers, reference is made to Part B of this Registration Statement and to Form
ADV, as amended on June 23, 2000, filed under the Investment Advisers Act of
1940 by Bailard, Biehl & Kaiser, SEC File No. 801-8562.

                                      C-3
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS

     The Distributor, located at 950 Tower Lane, Suite 1900, Foster City,
California 94404, is the principal underwriter for the Registrant and for the
Fund Group. Certain information with respect to the officers and Directors of
the Distributor is set forth below. The principal business address of each such
person is 950 Tower Lane, Suite 1900, Foster City, California, 94404.

                          Position(s) With                  Other
Name                      the Distributor                   Employment
----                      ---------------                   ----------
Thomas E. Bailard         Chairman of the Board   Chairman of the Board and
                                                  Chief Executive Officer of
                                                  Holdings; Chairman of the
                                                  Board and Chief Executive
                                                  Officer of the Adviser;
                                                  Chairman of the Board and
                                                  Trustee of the Fund Group;
                                                  Chairman of the REIT; Chairman
                                                  of the Board and Chief
                                                  Executive Officer of the Tech
                                                  Fund, New Leaders Fund and
                                                  Decathlon Fund.

Peter M. Hill             Director                Director, Chief Investment
                                                  Officer of the Adviser;
                                                  Chairman of the Board of
                                                  Registrant

Burnice E. Sparks, Jr.    Chief Executive         Director and President of the
                          Officer and Director    Adviser; President of the Fund
                                                  Group; President and Director
                                                  of Registrant

Sofi Kyriakidis           Treasurer               Assistant Treasurer and
                                                  Assistant Secretary of the
                                                  Fund Group and Registrant;
                                                  Assistant Treasurer of the
                                                  REIT; Secretary of the Tech
                                                  Fund, New Leaders Fund and
                                                  Decathlon Fund.

Barbara V. Bailey         Secretary               Senior Vice President and
                                                  Treasurer/Secretary of the
                                                  Adviser; Senior Vice President
                                                  and Treasurer of Holdings;
                                                  Treasurer of the Fund Group
                                                  and Registrant; Treasurer and
                                                  Secretary of the REIT;
                                                  Treasurer of the Tech Fund,
                                                  New Leaders Fund and Decathlon
                                                  Fund.

                                      C-4
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

         Name and Address
         Maintaining                                 Records, Books and
         Physical Possession                         Accounts Required By:
         -------------------                         --------------------

         Brown Brothers Harriman & Co.               Rule 31a-1(b)(1), (2) (i)-
         40 Water Street (iii), (3), (7) and (8).
         Boston, MA  02109

         Bailard, Biehl & Kaiser, Inc.               Rule 31a-1(b)(4)(5), (6),
         950 Tower Lane, Suite 1900                  (9), (10) and (11)
         Foster City, CA  94404

         Chase Global Funds Services Company         Rule 31a-1(b)(2)(iv)
         73 Tremont St.
         Boston, MA  02108-3913

ITEM 29. MANAGEMENT SERVICES

     Inapplicable.

ITEM 30. UNDERTAKINGS

     Registrant undertakes to call a stockholders meeting, if requested to do so
     by the holders of at least 10% of Registrant's outstanding shares, for the
     purpose of voting upon the question of removal of a director or directors
     and to assist in communications with other stockholders as required by
     Section 16(c) of the 1940 Act.

     Registrant undertakes to furnish each person to whom a Prospectus is
     delivered with a copy of Registrant's latest annual report to stockholders,
     upon request and without charge.

                                      C-5
<PAGE>
                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Foster City, State of California, on the
20th day of October, 2000.

                                        BAILARD, BIEHL & KAISER
                                        INTERNATIONAL FUND GROUP, INC.


                                        By /s/ Peter M. Hill
                                           -------------------------------------
                                           Peter M. Hill
                                           Chief Executive Officer

     Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<PAGE>
      Signature                             Title             Date
      ---------                             -----             ----

/s/ Peter M. Hill                           Chairman;         October 20, 2000
---------------------------------------     Director
Peter M. Hill(1)

/s/ Burnice E. Sparks, Jr.                  President;        October 20, 2000
---------------------------------------
Burnice E. Sparks, Jr.                      Director

/s/ Barbara V. Bailey                       Treasurer         October 20, 2000
---------------------------------------
Barbara V. Bailey(2)

/s/ Shirley L. Clayton                      Director          October 20, 2000
---------------------------------------
Shirley L. Clayton

/s/ Scott F. Wilson                         Director          October 20, 2000
---------------------------------------
Scott F. Wilson

/s/ James C. Van Horne                      Director          October 20, 2000
---------------------------------------
James C. Van Horne

----------
(1)  Principal Executive Officer
(2)  Principal Financial and Accounting Officer

                                      C-7


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