<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
AND BJB INTERNATIONAL EQUITY FUND
ANNUAL REPORT
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
I am pleased to report on the activity and performance of the BJB Investment
Funds for the fiscal year ended October 31, 1996. Each Fund performed well
during the year in both absolute and relative terms. Reflecting trends in the
underlying markets, the BJB Global Income Fund did well during the first fiscal
quarter, treaded water for the next few months, and then advanced strongly in
the latter half of the year. The equity market pattern was somewhat different
and the BJB International Equity Fund achieved its gains during the first 8
months of the year and held steady thereafter.
BJB GLOBAL INCOME FUND
For the fiscal year ended October 31, 1996, the BJB Global Income Fund
('Income Fund') returned 8.25% compared with 5.61% for the equally blended
Salomon Brothers World Government Bond Index and the Lehman Brothers
Intermediate Government/Corporate Bond Index.
The twelve months ended October 1996 can be characterized for the bond
markets as the year of the 'high-yielders.' In Europe, Italy and Spain were the
best performing markets, while among the 'dollar-bloc' markets, Australia and
New Zealand performed well. Cuts in short term interest rates and increased
optimism over the single European currency produced an environment good for
so-called 'convergence trades' in Europe. In Australia and New Zealand, strong
currencies supplemented declining bond yields to produce positive returns.
In the U.S., the Federal Reserve began the year by cutting the Fed Funds
rate by 25 basis points to 5.25%. This was in response to the benign inflation
outlook and as 'insurance' against a faltering economy. The bond market rally
that ensued was quickly reversed, after some stronger-than-expected employment
data pointed to a rebound in growth. The yield on the 30-year bond rose more
than 100 basis points as the market began to anticipate that a rise in interest
rates would be necessary. In fact, however, there was no official action and the
Fed remained on hold. A weakening in data towards the end of the Income Fund's
fiscal year vindicated this decision, and the bond market closed October having
rallied approximately 80 basis points in yield from its high-point and with a
firm tone.
The peripheral 'dollar-bloc' markets, with the exception of New Zealand, saw
a series of interest rate cuts. The Bank of Canada brought short-term rates
substantially below those in the U.S., forcing a sharp contraction in spreads on
longer maturity bonds. Weakness in the Canadian dollar observed early in the
year was reversed in September and October as the perception that growth was
recovering took hold. Consequently, the exchange rate moved from about the 1.37
level down to 1.33 versus the U.S. dollar. In Australia, declining inflation
allowed the Reserve Bank to cut rates by 50 basis points to 7%. In New Zealand
the combination of easy fiscal policy offset by tight monetary policy supported
the New Zealand dollar and added to performance. Both Australia and New Zealand
experienced substantial inflows of capital from Japan over the year, attracted
by the high yields available. This helped both currencies to appreciate versus
the U.S. dollar.
In Japan, the continued weakening of the yen left the bond market as the
worst performing market during the year. The authorities continued to support
the bond market in an attempt to allow the troubled banking system to rebuild
balance sheets. Indeed, the bond market rallied in the latter part of the year
on concerns that the economic recovery was faltering. However, with yields on
10-year bonds now well below the 3% level and a belief that the economic
recovery is sustainable, we continue to see no value in the Japanese bond
market.
In Europe, the high yielding markets have seen tough budgets and declining
inflation. With increasing optimism that both Spain and Italy will reduce their
respective deficits to levels that will allow them to participate in the single
European currency in the first round, these markets have performed well. Growth
remained subdued and although official interest rates started to decline in
response to lower inflation, there is still potential for substantially lower
rates. The exception to this is the United Kingdom, where the economy is
improving and rates are rising. This has supported sterling, which began to rise
in October. In the core European countries, a declining deutschemark versus the
dollar meant that these markets performed relatively poorly in dollar terms. The
Bundesbank continued to cut rates, partly to give a boost to prospects for the
common currency, but also in response to subdued domestic activity. This led to
the deutschemark falling towards 1.55 versus the U.S. dollar.
The Adviser's outlook for the coming year calls for no substantial
change in the overall level of growth among the G7 countries, but a
marked change in the make-up of that growth. Growth is likely to
increase in core Europe, led by a rebound in Germany, but to slow in the
U.K. The economies of the high-yield countries will remain subdued and,
therefore, despite the recent strong performance, these markets are
expected to continue to improve. In the U.S., activity has declined.
Although there is a risk of an increase in inflation arising from wage
pressures associated with the very low level of unemployment, it is
likely that the Federal Reserve will remain on hold and even lower rates
in 1997. The peripheral 'dollar-bloc' markets of Australia and New
Zealand, where substantially higher yields are available, are still
expected to
<PAGE>
outperform the indices. As mentioned earlier, we see no value in the
Japanese bond market and will await markedly higher yields before
reentering that market. In currencies, the outlook for the dollar is
negative if the growth mix described above takes hold, but it may be
that the dollar will remain well supported in the near-term.
THE INTERNATIONAL EQUITY FUND
The BJB International Equity Fund ('Equity Fund') outperformed both the MSCI
EAFE Index and our average competitor over the 6 and 12 month periods ending
October 31, 1996. The Equity Fund returned 2.79% for the past 6 months and
12.73% over the past 12 months versus MSCI EAFE returns of -2.42% and +10.47%
over comparable periods. Returns for the Lipper International Equity Fund Index,
a reasonable proxy for our competitors, were +0.50% and +12.65% respectively.
The Adviser's major strategy for geographic allocation has been to
overweight Europe at the expense of Japan. The Equity Fund holds 67% of its
assets in Europe versus 54% for the MSCI EAFE index. We sense that Europe is
still in the early stages of a multi-year earnings growth expansion and many
companies will be beneficiaries of positive structural changes taking place on
the Continent. The fiscal-monetary policy mix in Europe referred to earlier is
normally quite favorable for share prices. The Equity Fund holds only 12% of its
assets in Japan versus 35% for the market capitalization weighted index.
Although Japan is now far more favorably valued than it was during the 'bubble
years' of the mid to late 1980s, we are waiting for clearer signs that domestic
Japanese money managers are ready to return to the market. Ironically, weakness
in Japan's government bond market may be the signal that shares are ready to
benefit from local funds flows, for local investors have had few reasons to
venture beyond the bond market in recent years. The underweight Japan/overweight
Europe strategy has been a major contributor to the Equity Fund's return
advantage over the EAFE index. The trailing 12 months return for the MSCI Europe
Index was a gain of 17.47% versus a loss of -0.83% for Japan over the same
period.
We have a strategic allocation of between 5% and 25% of Equity Fund assets
to countries we view as emerging markets. Currently, our 17% weighting is in the
middle of this range, and has roughly doubled from our exposure level 12 months
ago. The past year generally has not been kind to investors in developing
countries, particularly in Asia. Investors in Asian shares have been forced to
reassess their vision of endless growth amid billions of consumers. Export
growth has slowed, particularly for countries dependent on the volatile
electronics industry. The legendary savings habits of the overseas Chinese
community that dominates the business community in many smaller Asian countries
result in high investment rates, but have also led to a degree of
over-investment. This has created excess capacity that has reduced pricing
flexibility and profit margins in industries as diverse as petrochemicals,
semiconductor production, and paper manufacturing. Banks in Asia are extremely
dependent on the health of the real estate sector. Property declines in Thailand
led to a massive downward revision to financial sector share prices. High local
interest rates in many countries also were an impediment to share markets. The
keys to success with emerging markets over the past twelve months were to own
Eastern Europe and Russia in the first half of 1996, own Hong Kong in the second
half of 1996, and to own Telebras throughout. We are pleased to report some
success on all three fronts. We also believe emerging markets generally offer
real strategic benefits for the Equity Fund, and future progress may be somewhat
easier as we get further away from the overly speculative boom of 1993.
The U.S. dollar rose 8% and 12% versus the deutschemark and yen respectively
over the past year. We hedged roughly 20% of our foreign assets back into U.S.
dollars to reduce currency risk. Currency hedging will continue to be used as
needed, but it is done in moderation within prescribed ranges. We believe the
best long term results are unlikely to flow from an overly aggressive hedging
policy.
We remain optimistic about general prospects for international shares and
continue to keep the Equity Fund close to 100% invested. We expect slower growth
in U.S. corporate profitability over the coming year relative to European and
Japanese companies. Stronger relative overseas growth in a low inflation
environment will, we think, confirm the wisdom of international diversification
for our shareholders.
Sincerely,
/s/David E. Bodner
David E. Bodner
President
December 6, 1996
2
<PAGE>
BJB Investment Funds
BJB Global Income Fund
- -------------------------------------------------------------------------------
It is the Income Fund's policy to distribute dividends of net investment
income monthly and capital gains, if any, annually.
Average Annual Total Return* (unaudited)
- -------------------------------------------------
Year Ended 10/31/96 ............................. 8.25%
Inception (7/1/92) through 10/31/96.............. 7.14%
- ---------------
* All average annual total return figures shown reflect the reinvestment
of dividends and capital gains. The Income Fund shares commenced
operation on July 1, 1992 and the service providers waived their
advisory, sub-advisory and administration fees from 7/1/92 to
10/31/92; without such waivers and reimbursements, total returns would
be lower.
Growth of $10,000 invested in
Class A shares of BJB Global Income Fund
vs. a Blended Lehman Brothers and Salomon Brothers Index
July 1, 1992--October 31, 1996+
[PERFORMANCE GRAPH]
Income Fund Salomon & Lehman
Class A Shares Combined
-------------- ----------------
July 1992 $10,000 $10,000
Oct. 1992 10,468 10,314
Apr. 1993 10,781 10,987
Oct. 1993 11,341 11,546
Apr. 1994 11,018 11,331
Oct. 1994 10,939 11,538
Apr. 1995 11,690 12,622
Oct. 1995 12,460 13,327
Apr. 1996 12,755 13,354
Oct. 1996 13,488 14,075
- ---------------
+ Hypothetical illustration of $10,000 invested on July 1, 1992 assuming
reinvestment of dividends and capital gains through October 31, 1996.
This period was one in which stock and bond prices fluctuated and the
results should not be considered as a representation of the dividend
income or capital gain or loss which may be realized from an
investment in the Income Fund today. No adjustment has been made for
shareholder tax liability on dividends or capital gains. The benchmark
index for performance comparison consists of 50% of Salomon Brothers
World Government Bond Index and 50% of the Lehman Brothers
Intermediate Government/Corporate Bond Index.
Note: All figures cited here and on the following pages represent past
performance of the Income Fund and do not guarantee future results.
Investment return and principal value of an investment will fluctuate
so that an investor's shares upon redemption may be worth more or less
than original cost.
3
<PAGE>
BJB Investment Funds
BJB International Equity Fund
- -------------------------------------------------------------------------------
It is the Equity Fund's policy to distribute dividends of net investment
income monthly and capital gains, if any, annually.
Average Annual Total Return* (unaudited)
- -------------------------------------------------
Year Ended 10/31/96 ............................. 12.73%
Inception (10/4/93) through 10/31/96............. (1.52)%
- ---------------
* All average annual total return figures shown reflect the reinvestment
of dividends and capital gains. The Equity Fund shares commenced
operation on October 4, 1993. Total returns for the Fund reflect
expenses, waived and reimbursed, if applicable, by the Advisor and/or
Administrator. Without such waivers and reimbursements, total returns
would be lower.
Growth of $10,000 invested in
Class A shares of BJB International Equity Fund
vs. Morgan Stanley EAFE Index
October 4, 1993--October 31, 1996+
[PERFORMANCE GRAPH]
Equity Fund Morgan Stanley
Class A Shares EAFE Index
-------------- --------------
Oct. 1993 $10,000 $10,000
Apr. 1994 9,608 10,798
Oct. 1994 9,440 11,261
Apr. 1995 7,970 11,401
Oct. 1995 8,462 11,219
Apr. 1996 9,281 12,701
Oct. 1996 9,540 12,394
- ---------------
+ Hypothetical illustration of $10,000 invested on October 4, 1993
assuming reinvestment of dividends and capital gains through October
31, 1996.
This period was one in which stock and bond prices fluctuated and the
results should not be considered as a representation of dividend
income or capital gain or loss which may be realized from an
investment in the Equity Fund today. No adjustment has been made for
shareholder tax liability on dividends or capital gains. The Morgan
Stanley EAFE Index is a composite portfolio consisting of equity total
returns for the countries of Europe, Australia, New Zealand and
countries in the Far East, weighted based on each country's gross
domestic product.
Note: All figures cited here and on the following pages represent past
performance of the Equity Fund and do not guarantee future results.
Investment return and principal value of an investment will fluctuate
so that an investor's shares upon redemption may be worth more or less
than original cost.
4
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
<S> <C>
FOREIGN GOVERNMENT BONDS -- 36.8%
UNITED KINGDOM -- 9.8%
United Kingdom Gilts:
GBP 365,000 9.750% due 8/27/2002.............................................................. $ 659,748
360,000 6.750% due 11/26/2004............................................................. 558,957
134,000 7.500% due 12/07/2006............................................................. 216,237
-----------
1,434,942
-----------
ITALY -- 4.8%
Government of Italy,
ITL 960,000,000 10.500% due 11/01/2000............................................................ 698,573
AUSTRALIA -- 4.7%
Government of Australia,
AUD 740,000 10.000% due 12/15/2006............................................................ 687,743
DENMARK -- 3.7%
Kingdom of Denmark,
DKK 3,070,000 7.000% due 12/15/2004............................................................. 541,395
NEW ZEALAND -- 2.5%
New Zealand Government,
NZD 490,000 8.000% due 4/15/2004.............................................................. 360,517
FRANCE -- 2.3%
Government of France (B-TAN),
FRF 1,700,000 4.500% due 10/12/1998............................................................. 336,509
SWEDEN -- 2.0%
Sweden Caisse #1036,
SEK 1,700,000 10.250% due 5/05/2000............................................................. 291,942
CANADA -- 1.9%
Canada-Global Bond,
USD 275,000 6.750% due 8/28/2006.............................................................. 277,063
SPAIN -- 1.9%
Government of Spain,
ESP 31,560,000 10.100% due 2/28/2001............................................................. 275,048
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
<S> <C>
FOREIGN GOVERNMENT BONDS -- CONTINUED
GERMANY -- 1.9%
Deutschland BundesRepublic,
DEM 390,000 6.875% due 5/12/2005.............................................................. $ 272,761
NORWAY -- 1.3%
Norwegian Government,
NOK 1,085,000 9.000% due 1/31/1999.............................................................. 182,607
-----------
TOTAL FOREIGN GOVERNMENT BONDS (COST $5,100,857).................................. 5,359,100
-----------
FOREIGN CORPORATE BONDS -- 11.7%
UNITED KINGDOM -- 4.9%
USD 700,000 Smithkline Beecham-Euro Medium Term Note,
7.375% due 11/10/1997............................................................. 709,450
NORWAY -- 3.3%
USD 500,000 Telenor,
5.750% due 3/26/2001,............................................................. 486,500
AUSTRALIA -- 2.4%
USD 360,000 Telstra Corp. Ltd,
6.500% due 11/28/2005,............................................................ 352,800
NETHERLANDS -- 1.1%
USD 170,000 DSL Finance,
5.250% due 3/13/2001.............................................................. 162,860
-----------
TOTAL FOREIGN CORPORATE BONDS (COST $1,724,793)................................... 1,711,610
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 21.0%
Federal Home Loan Mortgage Corporation,
USD 195,000 6.750% due 5/30/2006.............................................................. 197,048
Federal National Mortgage Association:
USD 1,000,000 5.300% due 12/10/1998............................................................. 983,750
1,000,000 6.250% due 8/12/2003.............................................................. 971,250
Government National Mortgage Association (Pass-Through),
USD 908,377 7.500% due 9/15/2025.............................................................. 911,926
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $2,964,182)........................ 3,063,974
-----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
<S> <C>
U.S. TREASURY OBLIGATIONS -- 19.5%
U.S. Treasury Notes:
USD 535,000 6.625% due 6/30/2001.............................................................. $ 546,182
410,000 6.625% due 7/31/2001.............................................................. 418,585
335,000 7.000% due 7/15/2006.............................................................. 349,449
780,000 6.500% due 10/15/2006............................................................. 787,067
U.S. Treasury Bond,
USD 425,000 6.500% due 8/15/2005.............................................................. 429,067
U.S. Treasury Strip,
USD 400,000 5.94% due 2/15/2001............................................................... 310,000
-----------
TOTAL U.S. TREASURY OBLIGATIONS (COST $2,789,599)................................. 2,840,350
-----------
ASSET-BACKED SECURITIES -- 1.8%
UNITED STATES
USD 261,938 Toyota Auto Receivables Grantor Trust Series 1996-A,
6.300% due 7/20/2001 (Cost $261,929).............................................. 263,325
-----------
SHORT-TERM INVESTMENTS -- 7.4%
USD 727,881 Investors Bank & Trust Repurchase Agreement, dated 10/31/1996, due 11/01/1996,
with a maturity value of $727,985 and an effective yield of 5.15%, collateralized
by a Federal Home Loan Mortgage Corporation Bond, with a rate of 5.15%, a maturity
date of 9/01/2018, and a market value of $764,369 (at amortized cost)............. 727,881
USD 355,000 U.S. Treasury Bill,
4.999% due 1/30/1997.............................................................. 350,710
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $1,078,591).................................... 1,078,591
-----------
TOTAL INVESTMENTS -- 98.2% (COST $13,919,951)*.................................... 14,316,950
OTHER ASSETS AND LIABILITIES (NET) -- 1.8%........................................ 267,282
-----------
NET ASSETS -- 100.0%.............................................................. $14,584,232
-----------
-----------
</TABLE>
- ------------------
* Aggregate cost for federal income tax purposes.
See Notes to Financial Statements.
7
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
OCTOBER 31, 1996
FORWARD FOREIGN EXCHANGE CONTRACTS TO BUY
CONTRACTS TO RECEIVE
--------------------
EXPIRATION LOCAL VALUE IN IN EXCHANGE NET UNREALIZED
DATE CURRENCY USD FOR USD APPRECIATION
- ---------- -------------------- -------- ----------- --------------
11/04/96 GBP 499,042 812,344 789,983 $ 22,361
11/04/96 NLG 336,000 198,088 196,248 1,840
11/08/96 DEM 425,000 280,685 279,914 771
--------
Net unrealized appreciation of forward foreign
exchange contracts................................ $ 24,972
========
FORWARD FOREIGN EXCHANGE CONTRACTS TO SELL
CONTRACTS TO DELIVER
-------------------- NET UNREALIZED
EXPIRATION LOCAL VALUE IN IN EXCHANGE APPRECIATION
DATE CURRENCY USD FOR USD (DEPRECIATION)
- ---------- -------------------- -------- ----------- --------------
11/04/96 GBP 499,042 812,344 781,000 $(31,344)
11/04/96 NLG 336,000 198,088 197,067 (1,021)
11/08/96 FRF 1,438,200 281,433 279,914 (1,519)
11/12/96 AUD 856,000 678,183 675,384 (2,799)
11/12/96 NOK 1,170,900 183,546 180,000 (3,546)
11/15/96 DKK 3,217,683 553,997 550,031 (3,966)
11/29/96 SEK 1,846,572 280,945 281,061 116
--------
Net unrealized depreciation of forward foreign
exchange contracts................................ $(44,079)
========
FORWARD FOREIGN CROSS CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACTS TO DELIVER CONTRACTS TO RECEIVE
-------------------- -------------------- NET UNREALIZED
EXPIRATION LOCAL VALUE IN LOCAL VALUE IN APPRECIATION
DATE CURRENCY USD CURRENCY USD (DEPRECIATION)
- ---------- ------------------- -------- --------------------- -------- --------------
<S> <C>
11/08/96 CAD 566,000 422,508 NLG 717,009 422,819 $ 311
11/08/96 DEM 851,187 562,155 CAD 755,000 563,593 1,438
11/08/96 NLG 715,288 421,804 CAD 566,000 422,509 705
07/09/97 DEM 600,000 402,506 ITL 627,600,000 409,007 6,501
07/09/97 ITL 627,600,000 409,007 DEM 607,975 407,856 (1,151)
--------
Net unrealized appreciation of forward foreign exchange contracts...... $ 7,804
========
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
GLOSSARY OF CURRENCIES
AUD -- Australian Dollar ITL -- Italian Lira
CAD -- Canadian Dollar NLG -- Netherlands Guilder
DEM -- German Deutschemark NOK -- Norwegian Krona
DKK -- Danish Krone NZD -- New Zealand Dollar
ESP -- Spanish Peseta SEK -- Swedish Krona
FRF -- French Franc USD -- United States Dollar
GBP -- British Pound Sterling
See Notes to Financial Statements.
9
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- 84.6%
AUSTRALIA-2.2%
Aberfoyle Limited...................................................................... 15,000 $ 31,389
Australia & New Zealand Bank Group..................................................... 24,421 142,663
Lend Lease Corp Ltd.................................................................... 45 763
Sydney Harbor Casino Ltd **............................................................ 60,000 85,606
The News Corporation Ltd............................................................... 19,154 109,010
Western Mining Corp Holding Ltd........................................................ 7,500 47,143
-----------
416,574
-----------
AUSTRIA-0.3%
Mayr-Melnhof**......................................................................... 1,000 49,069
-----------
BELGIUM-0.5%
Barco NV (Industries)**................................................................ 303 49,836
Generale de Banque SA.................................................................. 145 50,673
-----------
100,509
-----------
BRAZIL-0.7%
Cia Cervejaria Brahma.................................................................. 125,000 77,262
Telecomunicacoes Brasileiras........................................................... 800 59,600
-----------
136,862
-----------
CANADA-0.4%
Barrick Gold Corp...................................................................... 3,000 78,375
-----------
DENMARK-1.5%
Carlsberg AS-Class B................................................................... 2,000 126,284
Magasin Wessel & Vett**................................................................ 720 48,064
Oticon Holding......................................................................... 700 112,606
-----------
286,954
-----------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
FINLAND-3.6%
Nokia (ORD)............................................................................ 3,000 $ 138,589
Orion AS Class B**..................................................................... 2,900 98,159
Raision Tehtaat Oy..................................................................... 2,760 170,408
Tt Tieto Oy Class B.................................................................... 1,100 73,665
Upm-Kymmeme............................................................................ 6,000 121,720
Valmet Class A......................................................................... 6,000 92,613
-----------
695,154
-----------
FRANCE-9.5%
Banque National de Paris............................................................... 2,700 101,029
Canal Plus............................................................................. 450 111,433
Carrefour Supermarche.................................................................. 90 49,942
Cent Assurances Gen France............................................................. 3,000 88,489
Cie Generale des Eaux.................................................................. 660 78,877
Compagnie de Saint Goban............................................................... 650 87,726
Compagnie Financiere de Paribas........................................................ 82 5,277
Credit National........................................................................ 1,900 100,342
Dassault Aviation SA................................................................... 800 162,269
Dassault Systemes**.................................................................... 3,000 129,095
Lafarge Coppee......................................................................... 28 1,680
Lagardere Groupe....................................................................... 3,700 116,880
L'Oreal................................................................................ 357 120,874
LVMH Company........................................................................... 435 99,635
Michelin, Class B (Registered)......................................................... 2,020 97,395
SEB Group.............................................................................. 400 80,978
Sidel.................................................................................. 1,040 69,388
Synthelabo............................................................................. 1,100 104,998
Technip SA............................................................................. 425 37,151
Total SA-Class B....................................................................... 1,124 87,919
Valeo.................................................................................. 1,340 80,413
-----------
1,811,790
-----------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
GERMANY-9.4%
Adidas (ORD)........................................................................... 1,300 $ 111,387
Allianz AG Holdings.................................................................... 3 5,383
Altana Ind-Aktien...................................................................... 150 119,810
Bayer AG............................................................................... 4,000 151,073
Daimler Benz AG........................................................................ 1,800 105,697
Deutsche Bank AG....................................................................... 3,000 139,026
Fresenius AG........................................................................... 650 140,521
Fresenius Medical Care ADR **.......................................................... 3,000 89,250
Hoechst AG............................................................................. 4,000 150,571
Mannesmann AG.......................................................................... 290 112,694
Puma AG **............................................................................. 2,100 62,034
Rhoen-Klinikum......................................................................... 600 72,084
Siemens AG German (ORD)................................................................ 1,000 51,654
Veba AG................................................................................ 2,000 106,634
Volkswagen AG.......................................................................... 400 158,354
Vossloh AG............................................................................. 3,500 111,592
Wella AG Dm50.......................................................................... 190 108,364
-----------
1,796,128
-----------
HONG KONG-2.6%
Cheung Kong Infrastructure **.......................................................... 32,000 59,595
Cheung Kong............................................................................ 8,000 64,147
China-HK Photo Product Hld Ltd......................................................... 90,000 34,046
Consolidated Electric Power............................................................ 25,000 58,198
HKR International Ltd.................................................................. 54,560 69,151
HSBC Holdings Plc...................................................................... 3,315 67,524
New World Development.................................................................. 12,102 70,431
Wing Lung Bank......................................................................... 10,680 66,299
-----------
489,391
-----------
HUNGARY-0.1%
Mol Magyar Olaj-Es Gazipari............................................................ 1,950 19,891
-----------
INDIA-0.4%
State Bank of India-GDR ** (a)......................................................... 6,000 84,900
-----------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
INDONESIA-0.4%
Pt Darya Varia Laboratoria-Foreign..................................................... 29,120 $ 43,756
Pt Hm Sampoerna-Foreign................................................................ 3,500 32,531
-----------
76,287
-----------
IRELAND-1.0%
Bank of Ireland........................................................................ 14,839 121,996
Smurfit (Jefferson).................................................................... 24,371 66,455
-----------
188,451
-----------
ITALY-3.3%
ENI SPA................................................................................ 42,000 200,874
Istituto Mobiliare Italiano............................................................ 10,000 79,201
Mediaset SPA **........................................................................ 25,000 117,457
Stet D Risp Port (Non Convertible)..................................................... 35,000 93,386
Telecom Italia Mobile.................................................................. 70,000 150,414
-----------
641,332
-----------
JAPAN-12.4%
Autobacs Seven......................................................................... 1,000 78,170
Canon Sales Co. Inc.................................................................... 4,000 101,533
Circle K Japan Co Ltd.................................................................. 3,300 137,675
Daihatsu Motor Co Ltd.................................................................. 16,000 98,511
DDI Corporation........................................................................ 17 127,662
Fuji Photo Film........................................................................ 3,000 86,162
Hitachi Ltd............................................................................ 10,000 88,709
Honda Motor Co Ltd..................................................................... 6,000 143,340
Jusco Co............................................................................... 5,000 148,434
Kawasaki Steel......................................................................... 44,000 135,646
Kokusai Denshin Denwa Co. Ltd.......................................................... 1,400 121,119
Mitsubishi Corp........................................................................ 8,000 89,236
Mitsubishi Heavy....................................................................... 11,000 84,537
Nintendo Corp Ltd...................................................................... 3,500 223,793
Nomura Securities Co Ltd............................................................... 4,000 66,049
Promise Co Ltd......................................................................... 3,200 149,242
Rohm Corp.............................................................................. 2,000 118,572
Sankyo Co Ltd.......................................................................... 5,000 123,842
Sumitomo Marine & Fire................................................................. 12,000 86,004
Taisei Corp............................................................................ 14,000 86,074
Toshiba Corporation.................................................................... 14,000 87,550
-----------
2,381,860
-----------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
LUXEMBOURG-0.3%
Audiofina.............................................................................. 1,175 $ 50,707
-----------
MALAYSIA-0.3%
Lion Land Berhad....................................................................... 50,000 50,069
-----------
MEXICO-0.8%
Empresas Ica Sociedad--Sponsored ADR **................................................ 1,900 24,700
Grupo Posadas SA-Class L............................................................... 180,000 75,471
Telefonos de Mexico ADR................................................................ 1,500 45,750
-----------
145,921
-----------
NETHERLANDS-4.3%
Akzo Nobel............................................................................. 780 98,290
Baan Company NV **..................................................................... 1,500 55,698
Heineken NV............................................................................ 600 113,341
ING Groep NV........................................................................... 3,815 118,948
Koninklijke Ahold NV................................................................... 1,700 99,195
Ranstad Holdings NV.................................................................... 1,700 137,471
Telegraaf Holdingsmij-CVA.............................................................. 1,672 35,970
Vendex International NV................................................................ 2,016 81,393
Wolters Kluwer NV **................................................................... 600 77,128
-----------
817,434
-----------
NEW ZEALAND-0.6%
Carter Holt Harvey Ltd................................................................. 24,000 54,162
Lion Nathan............................................................................ 27,000 69,242
-----------
123,404
-----------
NORWAY-1.6%
Ekjop.................................................................................. 2,100 50,848
Netcom Asa **.......................................................................... 7,000 63,080
Norsk Hydro............................................................................ 1,800 82,936
Uni-Storebrand AS-Class A.............................................................. 20,000 117,227
-----------
314,091
-----------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
PERU-0.6%
Banco Wiese-Sponsored ADR.............................................................. 4,600 $ 24,150
Cementos Lima SA-Trabajo............................................................... 19,314 26,361
Cia de Minas Buenaventura.............................................................. 2,698 20,942
Cia de Minas Buenaventura-Class B **................................................... 674 5,746
Telefonica de Peru..................................................................... 22,000 46,549
-----------
123,748
-----------
PHILIPPINES-0.5%
San Miguel Corporation, Class B (ORD).................................................. 16,500 59,646
Southeast Asia Cement Holdings......................................................... 381,600 36,301
-----------
95,947
-----------
POLAND-0.7%
Bank Rozwoju Eksportu SA............................................................... 1,300 38,607
Electrim SA............................................................................ 5,000 41,790
Gorazdze............................................................................... 800 21,197
Mostostal-Export SA.................................................................... 10,000 25,429
-----------
127,023
-----------
PORTUGAL-1.3%
Cimentos de Portugal SA................................................................ 2,000 42,039
Filmes Lusomundo SA **................................................................. 4,400 49,448
Jeronimo Martins....................................................................... 500 45,606
Portugal Telecom....................................................................... 4,250 110,519
-----------
247,612
-----------
RUSSIA-1.4%
Gazprom ** (a)......................................................................... 3,500 55,125
JSC Chernogorneft ADR **............................................................... 7,000 73,063
Lukoil Oil Co ADR...................................................................... 3,530 139,435
-----------
267,623
-----------
SOUTH AFRICA-0.5%
Barlow Limited......................................................................... 3,200 27,891
Nedcor Ltd............................................................................. 2,820 41,166
South African Breweries Ltd............................................................ 1,321 34,345
-----------
103,402
-----------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
SOUTH KOREA-0.2%
Korea Electric Power Corp ADR.......................................................... 2,500 $ 45,000
-----------
SPAIN-4.1%
Banco Central Hispano.................................................................. 5,340 124,716
Banco Popular Espanola-(Registered).................................................... 500 95,576
Centros Comerciales Pryca.............................................................. 5,200 119,409
Empresa Nacional de Electricidad....................................................... 1,500 91,814
General de Aguas D'Barcelona........................................................... 1,800 73,639
Repsol SA.............................................................................. 2,000 65,285
Tabacalera SA-Class A.................................................................. 2,040 74,664
Telefonica de Espana................................................................... 7,000 140,444
-----------
785,547
-----------
SWEDEN-4.1%
Autoliv AB............................................................................. 2,350 99,703
Ericsson AB, Class B................................................................... 3,960 107,190
Lindex AB.............................................................................. 5,850 114,758
Nordbanken AB.......................................................................... 5,800 152,585
Sandvik AB-Class B Fria................................................................ 4,500 106,068
Sparbanken Sverige..................................................................... 6,200 98,054
Stadshypotex AB........................................................................ 3,700 97,057
Tornet Fastighets AB................................................................... 620 7,873
-----------
783,288
-----------
SWITZERLAND-3.3%
Holderbank Finance Glarus Class B...................................................... 130 90,038
Kuoni Reisen Holding (Registered)...................................................... 43 96,834
Nestle SA (Registered)................................................................. 90 97,811
Roche Holdings AG...................................................................... 50 61,345
Sandoz AG (Registered)................................................................. 60 69,529
Swissair (Registered) **............................................................... 82 63,933
Zurich Versicherungs (Registered)...................................................... 550 150,631
-----------
630,121
-----------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
THAILAND-1.1%
Advanced Info Services (FB)............................................................ 5,600 $ 75,999
Land & House Plc (Alien Shares)........................................................ 3,800 31,598
Siam Cement Co Ltd-Foreign (Registered)................................................ 1,300 44,464
Siam Commercial Bank (Alien Shares).................................................... 6,300 57,329
-----------
209,390
-----------
TURKEY-0.4%
Eregli Demir Ve Celik Fabrik........................................................... 240,000 28,020
Hurriyet Gazeteci...................................................................... 600,000 30,511
Petkim Petrokimya Holding AS........................................................... 34,000 13,761
-----------
72,292
-----------
UNITED KINGDOM-10.2%
3I Group Plc (ORD)..................................................................... 10,000 78,711
British Aerospace Plc (ORD)............................................................ 7,107 134,789
British Airways Plc (ORD).............................................................. 10,180 91,812
British Petroleum Co Plc (ORD)......................................................... 10,468 112,644
DFS Furniture Co. Plc (ORD)............................................................ 4,800 42,626
General Electric Plc (ORD)............................................................. 12,000 74,137
Glaxo Wellcome Plc (ORD)............................................................... 4,500 70,474
Granada Group Plc (ORD)................................................................ 7,119 102,392
Harvey Nichols Group Plc (ORD) **...................................................... 10,000 54,536
HSBC Holdings Plc (ORD)................................................................ 5,000 105,003
Imperial Tobacco Plc (ORD) **.......................................................... 11,000 64,377
Ladbroke Group (ORD)................................................................... 23,000 74,698
Lloyds TSB Group Plc (ORD)............................................................. 16,000 101,584
London Clubs International (ORD)....................................................... 28,000 143,129
Lonrho Plc (ORD)....................................................................... 37,000 90,351
Marks & Spencer Plc (ORD).............................................................. 9,300 78,122
Rentokil Initial Plc (ORD)............................................................. 11,000 73,868
Rolls Royce Plc (ORD).................................................................. 17,000 70,184
Royal & Sun Alliance Insurance Group (ORD)............................................. 15,000 102,927
Sage Group Plc (ORD)................................................................... 12,500 97,474
Siebe Plc (ORD)........................................................................ 7,193 112,883
Tesco Plc (ORD)........................................................................ 15,145 81,979
-----------
1,958,700
-----------
TOTAL COMMON STOCKS (COST $14,962,921)................................................. 16,204,846
-----------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
MUTUAL FUNDS -- 1.0%
SOUTH KOREA-0.3%
Korea Fund............................................................................. 3,000 $ 50,628
-----------
TAIWAN-0.5%
Taipei Fund-Units...................................................................... 1,200 101,928
-----------
MULTI-NATIONAL-0.2%
Morgan Stanley Africa Investments Fund, Inc............................................ 3,100 39,525
-----------
TOTAL MUTUAL FUNDS (COST $195,201)..................................................... 192,081
-----------
RIGHTS & WARRANTS -- 0.4%
HUNGARY-0.4%
Egis Rights............................................................................ 780 48,115
Pick Szeged Rights..................................................................... 526 23,696
-----------
71,811
-----------
POLAND-0.0%
Mostostal-Export SA-Rights............................................................. 10,000 --
BRAZIL-0.0%
Brahma Warrants, expires 4/30/2003..................................................... 9,993 573
-----------
SWITZERLAND-0.0%
Roche Holdings Warrants, expires 5/05/1998............................................. 5 --
-----------
TOTAL RIGHTS & WARRANTS (COST $49,379)................................................. 72,384
-----------
<CAPTION>
CORPORATE CONVERTIBLE BOND -- 0.1%
PAR
VALUE
------
<S> <C> <C>
SWITZERLAND-0.1%
Winterthur-(Virgin Island) 2.500% due 12/31/98 (Cost $13,199) CHF 15,360 14,474
----------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- -------- ---------- -------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 25.1%
USD 4,815,769 Investors Bank & Trust Repurchase Agreement, dated 10/31/1996, due 11/01/1996,
with a maturity value of $4,816,458 and an effective yield of 5.15%,
collateralized by a Federal National Mortgage Association Obligation, with a rate
of 5.15%, a maturity date of 4/01/2024, and a market value of $5,057,017 (at
amortized cost)................................................................... $ 4,815,769
-------------
TOTAL INVESTMENTS-111.2% (COST $20,036,469) * 21,299,554
OTHER ASSETS AND LIABILITIES (NET)-(11.2%) (2,138,367)
-------------
TOTAL NET ASSETS-100.0% $ 19,161,187
=============
</TABLE>
PORTFOLIO FOOTNOTES:
ADR American Depository Receipt
ORD Ordinary Shares
<TABLE>
<S> <C>
* Aggregate cost for federal income tax purpose was $20,062,038. (See Note 4)
** Non-income producing security.
(a) Securities that may be resold to 'qualified institutional buyers' under Rule 144A or
securities offered pursuant to Section 4(2) of the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines established by the Board of
Trustees.
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS-INDUSTRY SECTOR (UNAUDITED)
OCTOBER 31, 1996
(PERCENTAGE OF NET ASSETS)
At October 31, 1996, sector diversification of the fund's equity investments
was as follows:
<TABLE>
<CAPTION>
MARKET
% OF NET VALUE
ASSETS (NOTE 1)
-------- -----------
<S> <C> <C>
INDUSTRY SECTOR:
Banking...................................................................................... 9.4% $ 1,809,171
Communication................................................................................ 7.2 1,387,250
Retail Trade................................................................................. 6.4 1,235,410
Food & Beverage.............................................................................. 6.4 1,228,906
Health....................................................................................... 5.7 1,083,353
Industrial................................................................................... 4.8 913,141
Utilities.................................................................................... 4.5 859,314
Finance...................................................................................... 4.3 818,614
Transportation............................................................................... 3.9 754,406
Motor Vehicles & Equipment................................................................... 3.3 630,164
Insurance.................................................................................... 2.9 565,135
Chemicals.................................................................................... 2.8 547,972
Consumer Goods............................................................................... 2.6 498,851
Natural Resources............................................................................ 2.4 468,186
Construction................................................................................. 2.4 452,576
Metals & Mining.............................................................................. 2.1 404,759
Electronics.................................................................................. 2.0 388,275
Publishing................................................................................... 1.9 358,546
Entertainment................................................................................ 1.8 352,881
Paper & Forest Products...................................................................... 1.7 329,857
Consumer Services............................................................................ 1.4 266,566
Computer & Office Equipment.................................................................. 1.2 226,837
Communication................................................................................ 1.2 221,048
Lodging...................................................................................... 0.9 172,305
Other........................................................................................ 2.8 510,262
-------- -----------
TOTAL INVESTMENTS (EXCLUDES SHORT-TERM INVESTMENTS)............................................ 86.0 16,483,785
OTHER ASSETS AND LIABILITIES (NET)............................................................. 14.0 2,677,402
-------- -----------
NET ASSETS..................................................................................... 100.0% $19,161,187
======== ===========
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
OCTOBER 31, 1996
FORWARD FOREIGN EXCHANGE CONTRACTS TO SELL
<TABLE>
<CAPTION>
CONTRACTS TO DELIVER
------------------------------------------- NET UNREALIZED
EXPIRATION LOCAL VALUE IN IN EXCHANGE APPRECIATION
DATE CURRENCY USD FOR USD (DEPRECIATION)
- ---------- --------------------- --------- ----------- --------------
<S> <C> <C> <C> <C>
12/03/96 JPY 64,281,000 567,143 600,000 $ 32,857
12/03/96 JPY 55,465,000 489,360 500,000 10,640
12/16/96 DEM 1,513,000 1,001,736 993,434 (8,302)
--------------
Net unrealized appreciation of forward foreign exchange contracts................ $ 35,195
==============
</TABLE>
GLOSSARY OF CURRENCIES
CHF -- Swiss Franc
DEM -- German Deutschemark
JPY -- Japanese Yen
USD -- United States Dollar
See Notes to Financial Statements.
21
<PAGE>
BJB INVESTMENT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
BJB BJB
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
------------- --------------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost $13,192,070 and $15,220,700,
respectively).................................................................... $13,589,069 $ 16,483,785
Repurchase agreements, at amortized cost............................................ 727,881 4,815,769
Cash and foreign currency, at value (Cost $0 and $95,191, respectively)............. -- 96,599
Receivables:
Investments sold................................................................. 352,239 344,244
Interest and dividends........................................................... 357,208 13,273
Tax reclaim...................................................................... -- 15,009
Unrealized appreciation of forward foreign exchange contracts.................... 34,043 43,497
Other Assets:
Unamortized organization costs (Note 6).......................................... 14,979 9,737
Prepaid expense.................................................................. 8,996 8,130
------------- --------------------
Total Assets..................................................................... 15,084,415 21,830,043
------------- --------------------
LIABILITIES:
Payables:
Investments purchased............................................................ 350,710 2,451,464
Fund shares redeemed............................................................. -- 126,632
Unrealized depreciation of forward foreign exchange contracts.................... 45,346 8,302
Investment advisory fee payable (Note 2)......................................... 22,808 17,419
Custody and administration fee payable........................................... 26,400 29,809
Distribution and shareholder servicing fees payable (Note 3)..................... 9,243 8,880
Accrued expenses and other payables.............................................. 45,676 26,350
------------- --------------------
Total Liabilities................................................................ 500,183 2,668,856
------------- --------------------
NET ASSETS............................................................................ $14,584,232 $ 19,161,187
============= ===================
NET ASSETS CONSIST OF:
Par value........................................................................... $ 1,215 $ 1,677
Paid in capital in excess of par value.............................................. 15,121,195 22,425,428
Undistributed accumulated net investment income (loss).............................. 140,813 (891)
Accumulated net realized loss on investments sold, forward foreign exchange
contracts and foreign currency transactions...................................... (1,068,574) (4,562,409)
Net unrealized appreciation on investments, forward foreign exchange contracts,
foreign currency transactions and net other assets............................... 389,583 1,297,382
------------- --------------------
NET ASSETS............................................................................ $14,584,232 $ 19,161,187
============= ====================
SHARES OUTSTANDING.................................................................... 1,214,595 1,677,125
============= ====================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE........................................ $ 12.01 $ 11.43
============= ====================
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
BJB INVESTMENT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
BJB BJB
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
------------- --------------------
<S> <C> <C>
INVESTMENT INCOME (LOSS):
Interest............................................................................ $ 1,110,683 $ 18,122
Dividends+.......................................................................... -- 192,320
------------- -----------
1,110,683 210,442
EXPENSES:
Investment advisory fee (Note 2).................................................... 101,220 117,362
Custody and administration fees..................................................... 107,544 103,519
Distribution and shareholder servicing fees (Note 3)................................ 38,931 29,340
Auditing fees....................................................................... 24,800 10,600
Transfer agent fees................................................................. 24,015 21,416
Amortization of organization costs (Note 6)......................................... 22,697 5,552
Shareholder reports................................................................. 17,423 14,410
Insurance premium expense........................................................... 16,403 9,356
Registration and filing fees........................................................ 14,772 11,458
Trustees' fees and expenses (Note 2)................................................ 12,857 11,575
Legal fees.......................................................................... 12,284 11,558
Miscellaneous fees.................................................................. 1,056 1,056
Fees waived by investment advisor (Note 2).......................................... -- (58,681)
------------- -----------
Total Gross Expenses............................................................. 394,002 288,521
Less: Fees paid indirectly (Note 2).............................................. (16,003) (10,208)
------------- -----------
Net Expenses..................................................................... 377,999 278,313
------------- -----------
NET INVESTMENT INCOME (LOSS).......................................................... 732,684 (67,871)
------------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 4):
Realized gain (loss) on:
Security transactions++.......................................................... 470,194 148,734
Forward foreign exchange contracts............................................... 145,241 124,574
Foreign currency transactions.................................................... (45,312) 14,872
------------- -----------
Net realized gain on investments............................................... 570,123 288,180
------------- -----------
Net change in unrealized appreciation (depreciation) of:
Securities....................................................................... (141,377) 1,069,465
Forward foreign exchange contracts............................................... 26,258 11,774
Currencies and net other assets.................................................. (3,521) (2,155)
------------- -----------
Net change in unrealized appreciation (depreciation) of investments............ (118,640) 1,079,084
------------- -----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS....................................... 451,483 1,367,264
------------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................. $ 1,184,167 $1,299,393
============= ===========
</TABLE>
- ------------------
+ Net of foreign withholding tax of $24,000 for the Equity Fund.
++ Net of foreign capital gains withholding tax of $24,038 for the Equity Fund.
See Notes to Financial Statements.
23
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income................................................................. $ 732,684 $ 1,041,135
Net realized gain on investments...................................................... 570,123 930,422
Net change in unrealized appreciation (depreciation) of investments................... (118,640) 439,503
---------------- ----------------
Net increase in net assets resulting from operations.................................. 1,184,167 2,411,060
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A shares................................................................... (1,396,952) (950,161)
Class B shares................................................................... -- (903)
FUND SHARE TRANSACTIONS:
Net decrease from Fund share transactions (Note 5):
Class A shares................................................................... (2,529,620) (12,750,548)
Class B shares................................................................... -- (26,996)
---------------- ----------------
Net decrease in net assets.......................................................... (2,742,405) (11,317,548)
NET ASSETS:
Beginning of period................................................................... 17,326,637 28,644,185
---------------- ----------------
End of period (including undistributed net investment income of $140,813 and $672,807,
respectively)....................................................................... $ 14,584,232 $ 17,326,637
================ ================
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss................................................................... $ (67,871) $ (58,518)
Net realized gain (loss) on investments............................................... 288,180 (2,069,254)
Net change in unrealized appreciation of investments.................................. 1,079,084 479,443
---------------- ----------------
Net increase (decrease) in net assets resulting from operations....................... 1,299,393 (1,648,329)
FUND SHARE TRANSACTIONS:
Net increase (decrease) from Fund share transactions (Note 5):
Class A shares................................................................... 8,218,480 (3,540,598)
Class B shares................................................................... -- (13,361)
---------------- ----------------
Net increase (decrease) in net assets............................................... 9,517,873 (5,202,288)
NET ASSETS:
Beginning of period................................................................... 9,643,314 14,845,602
---------------- ----------------
End of period (including accumulated net investment loss of $(891) and $(48,428),
respectively)....................................................................... $ 19,161,187 $9,643,314
================ ================
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/96 10/31/95# 10/31/94# 10/31/93 10/31/92*
-------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period............................... $ 12.11 $ 11.16 $ 12.28 $ 12.36 $ 12.00
-------- --------- --------- -------- ---------
Income (Loss) from investment operations:
Net investment income............................................ 0.59 0.59 0.39 0.37 0.16**
Net realized and unrealized gain (loss) on securities............ 0.36 0.92 (0.81) 0.58 0.42
-------- --------- --------- -------- ---------
Total income (loss) from investment operations................ 0.95 1.51 (0.42) 0.95 0.58
Less Distributions:
Dividends from net investment income............................... (1.05) (0.56) (0.27) (0.37) (0.16)
Distributions from net realized gains.............................. -- -- -- (0.66) --
Distributions from Capital (Note 1)................................ -- -- (0.43) -- (0.06)
-------- --------- --------- -------- ---------
Total distributions........................................... (1.05) (0.56) (0.70) (1.03) (0.22)
-------- --------- --------- -------- ---------
Net Asset Value, end of period..................................... $ 12.01 $ 12.11 $ 11.16 $ 12.28 $ 12.36
======== ========= ========= ======== =========
Total Return***.................................................... 8.25% 13.90% (3.54)% 8.15% 4.86%
======== ========= ========= ======== =========
Ratios/Supplemental Data:
Net assets, end of period (in 000's)............................... $ 14,584 $17,327 $28,619 $ 57,682 $28,647
Ratio of net investment income to average net assets............... 4.71% 5.19% 3.29% 2.24% 3.95%+
Ratio of total expenses to average net assets...................... 2.53%## 2.15%## 1.66% 1.78% 1.00%+**
Portfolio turnover rate............................................ 219% 319% 320% 291% 43%
</TABLE>
- ------------------------------
<TABLE>
<S> <C>
* The BJB Global Income Fund commenced operations on July 1, 1992.
** Net investment income and annualized operating expenses before waiver of fees by the investment adviser,
sub-investment adviser or administrator were $0.13 and 1.75%.
*** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
+ Annualized.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed income method does not accord with results of
operations.
## Includes indirectly paid expenses. Excluding indirectly paid expenses the ratio of total expenses to average net
assets would have been 2.43% and 2.05% for the years ended October 31, 1996 and 1995, respectively.
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
PERIOD PERIOD
ENDED ENDED
9/19/95** 10/31/94*
--------- ---------
<S> <C> <C>
Net Asset Value, beginning of period..................................................... $ 11.16 $ 12.18
--------- ---------
Income (Loss) from investment operations:
Net investment income #................................................................ 0.33 0.29
Net realized and unrealized gain (loss) on securities.................................. 0.92 (0.73)
--------- ---------
Total income (loss) from investment operations...................................... 1.25 (0.44)
--------- ---------
Less Distributions:
Dividends from net investment income..................................................... (0.40) (0.23)
Distributions from Capital (Note 1)...................................................... -- (0.35)
--------- ---------
Total distributions................................................................. (0.40) (0.58)
--------- ---------
Net Asset Value, end of period........................................................... $ 12.01 $ 11.16
========= =========
Total Return ***......................................................................... 11.39% (3.72)%
========= =========
Ratios/Supplemental Data:
Net assets, end of period (in 000's)..................................................... $ 0 $ 25
Ratio of net investment income to average net assets+.................................... 2.56% 2.56%
Ratio of total expenses to average net assets+........................................... 2.37%## 2.38%
Portfolio turnover rate.................................................................. 319% 320%
</TABLE>
- ------------------
<TABLE>
<S> <C>
* The BJB Global Income Fund commenced selling Class B shares on November 30, 1993.
** Class B shares were completely redeemed as of September 19, 1995. The net asset value of $12.01 represents the final
stated number at which shares were redeemed on that date.
*** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
+ Annualized.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed income method does not accord with results of
operations.
## Includes indirectly paid expenses. Excluding indirectly paid expenses the ratio of total expenses to average net
assets would have been 2.28% for the period ended September 19, 1995.
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/96 10/31/95# 10/31/94 10/31/93*
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period................................ $ 10.13 $ 11.30 $ 13.10 $ 12.00
-------- --------- -------- ---------
Income from investment operations:
Net investment loss++............................................. (0.02) (0.06) (0.21) (0.02)
Net realized and unrealized gain (loss) on securities.......... 1.32 (1.11) (1.56) 1.12
-------- --------- -------- ---------
Total income (loss) from investment operations................. 1.30 (1.17) (1.77) 1.10
-------- --------- -------- ---------
Less distributions:
In excess of net investment income.................................. -- -- (0.03) --
-------- --------- -------- ---------
Net Asset Value, end of period...................................... $ 11.43 $ 10.13 $ 11.30 $ 13.10
======== ========= ======== =========
Total Return **..................................................... 12.73% (10.35)% (13.53)% 9.17%
======== ========= ======== =========
Ratios/Supplemental Data:
Net assets, end of period (in 000's)................................ $ 19,161 $ 9,643 $ 14,831 $11,292
Ratio of net investment loss to average net assets.................. (0.58)% (0.63)% (1.26)% (3.83)%+
Ratio of total expenses to average net assets....................... 2.46%(a)(c) 2.84%(b)(c) 2.16% 2.09%+
Portfolio turnover rate............................................. 67% 116% 169% 20%
Average brokerage commission rate................................... $0.00464 N/A N/A N/A
</TABLE>
- ------------------------------
<TABLE>
<S> <C>
* The BJB International Equity Fund commenced operations on October 4, 1993.
** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
+ Annualized.
++ Net investment loss before waiver of fees by the investment adviser was ($0.05) and ($0.11) for the years ended
October 31, 1996 and 1995, respectively.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed income method does not accord with results of
operations.
(a) Figure is net of the voluntary expense waiver by the Adviser. Excluding this waiver, the ratio of total expenses to
average net assets would have been 2.96%.
(b) Figures are net of the expense reimbursement by the Adviser in connection with the voluntary and involuntary expense
limitation. Before the expense reimbursement the ratio of total expenses to average net assets would have been
3.36%.
(c) Includes indirectly paid expenses. Excluding indirectly paid expenses the ratio of total expenses to average net
assets would have been 2.37% and 2.67% for the years ended October 31, 1996 and 1995, respectively.
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
PERIOD PERIOD
ENDED ENDED
9/19/95**# 10/31/94*
---------- ---------
<S> <C> <C>
Net Asset Value, beginning of period......................................................... $11.30 $ 13.01
---------- ---------
Income from investment operations:
Net investment loss........................................................................ (0.03)++ (0.13)
Net realized and unrealized gain (loss) on securities...................................... (1.02) (1.55)
---------- ---------
Total loss from investment operations................................................... (1.05) (1.68)
---------- ---------
Less Distributions:
In excess of net investment income........................................................... -- (0.03)
---------- ---------
Net Asset Value, end of period............................................................... $10.25 $ 11.30
========== =========
Total Return***.............................................................................. (9.29)% (12.93)%
========== =========
Ratios/Supplemental Data:
Net assets, end of period (in 000's)......................................................... $ 0 $ 15
Ratio of net investment loss to average net assets+.......................................... (0.27)% (1.97)%
Ratio of total expenses to average net assets+............................................... 2.48%(b)(c) 2.86%
Portfolio turnover rate...................................................................... 116% 169%
</TABLE>
- ------------------
<TABLE>
<S> <C>
* The BJB International Equity Fund commenced selling Class B shares on November 30, 1993.
** Class B shares were completely redeemed as of September 19, 1995. The net asset value of $10.25 represents the final
stated number at which shares were redeemed on that date.
*** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
+ Annualized.
++ Net investment loss before waiver of fees by the investment adviser and/or administrator was ($0.07) for the period
ended September 19, 1995.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed income method does not accord with results of
operations.
(b) Figures are net of the expense reimbursement by the Adviser in connection with the voluntary and involuntary expense
limitation. Before the expense reimbursement the ratio of total expenses to average net assets would have been 2.89%
for the period ended September 19, 1995.
(c) Includes indirectly paid expenses. Excluding indirectly paid expenses the ratio of total expenses to average net
assets would have been 2.34% for the period ended September 19, 1995.
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
BJB Investment Funds (the 'Trust') is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended (the
'1940 Act'), as an open-end management investment company that currently offers
two investment funds: BJB Global Income Fund (the 'Income Fund') and BJB
International Equity Fund (the 'Equity Fund') (individually, a 'Fund' and
collectively, the 'Funds'). The Trust was organized as a Massachusetts business
trust under the laws of the Commonwealth of Massachusetts on April 30, 1992. The
Income Fund commenced operations on July 1, 1992 and the Equity Fund commenced
operations on October 4, 1993.
The Income Fund's investment objective is to maximize current income
consistent with the protection of principal by investing in a non-diversified
portfolio of fixed income securities of governmental, supranational and
corporate issuers denominated in various currencies, including U.S. dollars. The
Equity Fund's investment objective is long-term growth of capital from investing
in a diversified portfolio of common stocks of foreign issuers of all sizes.
The Funds currently offer only Class A shares, on a no-load basis. No class
B shares, which were subject to a contingent deferred sales charge, were offered
or outstanding after September 19, 1995. Both classes of shares had identical
rights and privileges except with respect to the effect of the respective sales
charges on each class, if any, the distribution and/or service fees borne by
each class, expenses allocable exclusively to each class, voting rights on
matters affecting a single class and the exchange privilege of each class.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
presentation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from these estimates.
Portfolio valuation: Generally, each Fund's investments are valued at
market value or, in the absence of a market value, at fair value as determined
by or under the direction of the Trust's Board of Trustees. A security which is
traded primarily on a United States or foreign stock exchange is valued at the
last sale price on that exchange or, if there were no sales during the day, at
the mean of the current quoted bid and asked prices. Portfolio securities which
are traded primarily on foreign securities exchanges are generally valued at the
preceding closing values of such securities on their respective exchanges,
except that when an occurrence subsequent to the time that a value was so
established is likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors by or under the
direction of the Trust's Board of Trustees or its delegates. Debt securities
(other than government securities and short-term obligations) are valued by
independent pricing services approved by the Trust's Board of Trustees.
Investments in government securities (other than short-term securities) are
valued at the mean of the quoted bid and asked prices in the over-the-counter
market. Short-term investments that mature in 60 days or less are valued at
amortized cost.
Repurchase agreements: The Funds may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, a Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
This arrangement results in a fixed rate of return that is not subject to market
fluctuations during a Fund's holding period. The value of the collateral at all
times is equal to at least 100% of the total amount of the repurchase
obligations, including interest. In the event of counterparty default, the Fund
has the right to use the collateral to offset losses incurred. There is
potential loss to a Fund in the event the Fund is delayed or prevented from
exercising its rights to dispose of the collateral securities, including the
risk of a possible decline in the value of the underlying securities during the
period while the Fund seeks to assert its rights. The Funds' investment
advisers,
30
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
acting under the supervision of the Board of Trustees, reviews the value of the
collateral and the creditworthiness of those banks and dealers with which the
Funds enter into repurchase agreements to evaluate potential risks.
Foreign currency: The books and records of the Funds are maintained in
United States (U.S.) dollars. Foreign currencies, investments and other assets
and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated on the respective dates of such
transactions. Unrealized gains or losses on investments which result from
changes in foreign currencies have been included in the net unrealized
appreciation (depreciation) of investments. Net realized currency gains and
losses include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Funds and the amount actually received. The portion
of foreign currency gains and losses related to fluctuations in exchange rates
between the purchase trade date and sale trade date is included in realized
gains and losses on security transactions.
Forward foreign currency contracts: Forward foreign currency contracts are
valued at the forward rate and are marked-to-market daily. The change in market
value is recorded by the Funds as an unrealized gain or loss. When the contract
is closed, the Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline in
the value of the currency holdings, they also limit any potential gain that
might result should the value of the currency increase. In addition, the Fund
could be exposed to risks if the counterparties to the contracts are unable to
meet the terms of their contracts.
Option contracts: Purchase of put and call options are recorded as an
investment, the value of which is marked-to-market daily. When a purchased
option expires, the Fund will realize a loss equal to the premium paid. When the
Fund enters into a closing sale transaction, the Fund will realize a gain or
loss depending on whether the sales proceeds from the closing sale transaction
are greater or less than the premium paid. When a Fund exercises a put option,
it will realize a gain or loss from the sale of the underlying security and the
proceeds from such sale will be decreased by the premium originally paid. When a
Fund exercises a call option, the cost of the security which the Fund purchases
upon exercise will be increased by the premium originally paid.
When a Fund writes a call option or a put option, an amount equal to the
premium received by a Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, a Fund realizes a gain
equal to the amount of the premium received. When a Fund enters into a closing
purchase transaction the Fund realizes a gain (or loss if the cost of the
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is eliminated. When a call option is
exercised, a Fund realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale are increased by the premium originally
received. When a put option is exercised, the amount of the premium originally
received will reduce the cost of the security which a Fund purchased upon
exercise.
Unlike options on specific securities, all settlements of options on stock
indices are in cash and gains or losses depend on general movements in the
stocks included in the index rather than price movements on a particular stock.
There is no physical delivery of securities.
The risk associated with purchasing options is limited to the premium
originally paid. The risk in writing a call option is a Fund may forego the
opportunity of profit if the market price of the underlying security increases
and the option is exercised. The risk in writing a put option is that a Fund may
incur a loss if the market price of the underlying security decreases and the
option is exercised.
31
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
There is also the risk a Fund may not be able to enter into a closing
transaction because of an illiquid secondary market. In addition, the Fund could
be exposed to risks if the counterparties to the transactions are unable to meet
the terms of the contracts.
Securities transactions and investment income: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date.
Dividends and distribution to shareholders: Distributions to shareholders
are recorded on the ex-dividend date. Each Fund intends to distribute annually
to its shareholders substantially all of its taxable income. The Income Fund
declares and pays monthly dividends of any investment income. The Equity Fund
intends to declare and pay annually dividends from its net investment income.
Both Funds will annually distribute any net realized capital gains. Additional
distributions of net investment income and capital gains may be made at the
discretion of the Board of Trustees to avoid the application of the excise tax
imposed under Section 4982 of the Internal Revenue Code of 1986 for certain
undistributed amounts. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by a Fund, timing differences and differing characterization of distributions
made by a Fund as a whole. Permanent differences incurred during the year ended
October 31, 1996 resulting from differences in book and tax accounting have been
reclassified at year-end to undistributed net investment income, and accumulated
net realized loss as follows:
<TABLE>
<CAPTION>
INCREASE
IN UNDISTRIBUTED (DECREASE)
NET INVESTMENT IN ACCUMULATED
INCOME REALIZED LOSS
---------------- --------------
<S> <C> <C>
Income Fund............................................................................. $ 132,274 $ (132,274)
Equity Fund............................................................................. $ 115,408 $ (115,408)
</TABLE>
Federal income taxes: The Trust intends that each Fund separately qualify
as a regulated investment company for U.S. Federal income tax purposes.
Accordingly, the Funds do not anticipate that any income taxes will be paid. It
is expected that certain capital gains earned by the Funds and certain dividends
and interest received by the Funds will be subject to foreign withholding taxes.
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS
Julius Baer Investment Management Inc. ('Julius Baer Investment
Management') serves as the Income Fund's investment adviser pursuant to an
investment advisory agreement. The Income Fund pays Julius Baer Investment
Management a quarterly fee for its investment advisory services calculated at an
annual rate of 0.65% of the Income Fund's average daily net assets. Bank Julius
Baer & Co., Ltd. - New York Branch ('Bank Julius Baer') serves as the Income
Fund's servicing agent pursuant to a servicing agent agreement with Julius Baer
Investment Management. Out of its advisory fee, Julius Baer Investment
Management pays Bank Julius Baer a quarterly fee calculated at an annual rate of
0.15% of the Income Fund's average daily net assets.
Bank Julius Baer serves as the Equity Fund's investment adviser pursuant to
an investment advisory agreement. The Equity Fund pays Bank Julius Baer a
quarterly fee for its investment advisory services calculated at an annual rate
of 1.00% of the Equity Fund's average daily net assets. During the year ended
October 31, 1996, the adviser agreed to waive half (0.50%) of its 1.00% fee.
The Advisers have agreed that if, in any fiscal year, the expenses borne by
a Fund exceed applicable expense limitations imposed by the securities
regulations of any state in which shares of a Fund are registered or qualified
for sale to the public, each of them would reduce the fees paid to them by such
Fund to the extent required by such regulations in the proportion that the fee
it retains bears to total management fees. The most restrictive annual expense
limit applicable limits each Fund's allowable operating expenses (excluding
32
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
interest, taxes, a portion of a Fund's 12b-1 distribution fees, a portion of a
Fund's custodian expenses attributable to investments in foreign securities,
brokerage commissions and extraordinary expenses) to 2.5% of the first $30
million of the average net assets of the Fund, 2% of the next $70 million of the
average net assets of the Fund and 1.5% of the remaining average net assets of
the Fund.
No director, officer or employee of Julius Baer Investment Management, Bank
Julius Baer or any affiliates of those entities received any compensation from
the Trust for serving as an officer or Trustee of the Funds. The Funds pay each
of the Trustees who is not a director, officer or employee of Julius Baer
Investment Management, Bank Julius Baer or any affiliate thereof an annual fee
of $5,000 plus $250 for each Board of Trustees meeting attended. In addition,
the Funds reimburse these Trustees for travel and out-of-pocket expenses
incurred in connection with the Board of Trustees meetings.
The Funds have entered into an expense offset arrangement as part of the
custody agreement with Investors Bank & Trust. Under this arrangement, custody
fees are reduced when the Funds maintain cash on deposit at the custodian. For
the year ended October 31, 1996, the Income Fund incurred total custody fees of
$107,544 which, after receiving a credit of $16,003 pursuant to the expense
offset arrangement resulted in a net expense of $91,541. For the year ended
October 31, 1996, the Equity Fund incurred total custody fees in the amount of
$103,519 which, after receiving a credit of $10,208 pursuant to the expense
offset arrangement resulted in a net expense of $93,311. The assets deposited
with Investors Bank & Trust under the expense offset arrangement could have been
invested in an income-producing asset.
For the year ended October 31, 1996, the Funds incurred total brokerage
commissions of $66,653 of which $2,445 was paid in total to Bank Julius Baer,
Frankfurt and Bank Julius Baer, Zurich (affiliates of the Advisers).
3. DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Services Plan and a Distribution Plan
(the 'Plans') pursuant to Rule 12b-1 of the 1940 Act with respect to each class
of shares of the Funds. Under the Plans, the Funds may compensate certain
financial institutions, including Funds Distributor Inc., for certain
distribution, shareholder servicing, administrative and accounting services for
their clients and customers who are beneficial owners of each of the Funds'
shares. With respect to Class A shares of each Fund, a Fund may expend an
aggregate amount on an annual basis not to exceed 0.25% of the value of the
average daily net assets of that class. For the year ended October 31, 1996 the
Income Fund and Equity Fund incurred $38,931 and $29,340, respectively, in
service and distribution fees for Class A shares.
Under their terms, the Plans shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a majority of the
Trustees and a majority of those Trustees who are not 'interested persons' of
the Trust and who have no direct or indirect financial interest in the operation
of the Plans or in any agreement related to the Plans.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding U.S.
government securities and short-term investments, during the year ended October
31, 1996, were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
----------- -----------
<S> <C> <C>
Income Fund................................................................................. $31,821,399 $35,949,775
Equity Fund................................................................................. 14,667,052 7,647,652
</TABLE>
Cost of purchases and proceeds from sales of long-term U.S. government
securities, excluding short-term investments, during the year ended October 31,
1996, were $8,645,838 and $8,450,853, respectively for the Income Fund.
33
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
At October 31, 1996, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost, and aggregate
gross unrealized depreciation for all securities in which there was an excess of
tax cost over value was:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
------------ ------------
<S> <C> <C>
Income Fund................................................................................... $ 430,200 $ 33,201
Equity Fund................................................................................... 1,838,395 600,879
</TABLE>
5. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest of
each Fund, with a par value of $.001 per share. Changes in shares of beneficial
interest on the Income Fund and the Equity Fund were as follows:
<TABLE>
<CAPTION>
YEAR ENDED 10/31/96 YEAR ENDED 10/31/95
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Income Fund Class A shares:
Sold.............................................................. 137,746 $ 1,633,687 58,447 $ 652,663
Issued as reinvestment of dividends............................... 72,439 859,744 49,173 566,530
Redeemed.......................................................... (426,171) (5,023,051) (1,241,882) (13,969,741)
---------- ------------ ---------- ------------
Net decrease...................................................... (215,986) $ (2,529,620) (1,134,262) $(12,750,548)
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 10/31/95
SHARES AMOUNT
---------- ------------
<S> <C> <C>
Income Fund Class B shares:
Sold......................................................................................... -- --
Issued as reinvestment of dividends.......................................................... 78 $ 901
Redeemed..................................................................................... (2,319) (27,897)
---------- ------------
Net decrease................................................................................. (2,241) $ (26,996)
========== ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 10/31/96 YEAR ENDED 10/31/95
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Equity Fund Class A shares:
Sold.............................................................. 929,622 $ 10,454,315 267,288 $ 2,763,238
Issued as reinvestment of dividends............................... -- -- -- --
Redeemed.......................................................... (204,887) (2,235,835) (627,941) (6,303,836)
---------- ------------ ---------- ------------
Net increase (decrease)........................................... 724,735 $ 8,218,480 (360,653) $ (3,540,598)
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 10/31/95
SHARES AMOUNT
---------- ------------
<S> <C> <C>
Equity Fund Class B shares:
Sold......................................................................................... -- --
Issued as reinvestment of dividends.......................................................... -- --
Redeemed..................................................................................... (1,304) $ (13,361)
---------- ------------
Net decrease................................................................................. (1,304) $ (13,361)
========== ============
</TABLE>
34
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. ORGANIZATIONAL COSTS
All costs in connection with the organization of the Funds, including the
fees and expenses of registering and qualifying their shares for distribution
under federal and state securities regulations, are being amortized on the
straight-line method over a period of sixty months from July 1, 1992, the date
that the Income Fund commenced operations, and from October 4, 1993, the date
the Equity Fund commenced operations. In the event that any of the initial
shares of the Funds are redeemed during such amortization period, the Funds will
be reimbursed for any unamortized costs in the same proportion as the number of
initial shares outstanding bears to the total numbers of shares outstanding at
the time of redemption.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments
involves special risks and considerations not typically associated with
investing in U.S. companies and the United States government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of many foreign companies and foreign
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable U.S. companies and the United States
government.
8. CAPITAL LOSS CARRYFORWARD
At October 31, 1996, the Funds had the following available capital loss
carryforwards:
<TABLE>
<CAPTION>
EXPIRING IN EXPIRING IN
2002 2003
----------- -----------
<S> <C> <C>
Income Fund.................................................................................... $ 1,068,573 $ --
Equity Fund.................................................................................... 2,731,559 1,830,291
</TABLE>
35
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
AND BJB INTERNATIONAL EQUITY FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
[LOGO OF KPMG PEAT MARWICK LLP]
The Board of Trustees
BJB Investment Funds
We have audited the accompanying statements of assets and liabilities of
the BJB Global Income Fund and BJB International Equity Fund, portfolios of the
BJB Investment Funds, including the portfolios of investments and schedules of
forward foreign exchange contracts as of October 31, 1996 and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended and the
financial highlights for each of the years in the four-year period then ended
and for the period from July 1, 1992 (commencement of operations) to October 31,
1992 for BJB Global Income Fund and the financial highlights for each of the
years or periods in the three-year period then ended and for the period from
October 4, 1993 (commencement of operations) to October 31, 1993 for the BJB
International Equity Fund. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
BJB Global Income Fund and BJB International Equity Fund as of October 31, 1996,
the results of their operations, the changes in their net assets and the
financial highlights for each of the years or periods referred to in the first
paragraph above in conformity with generally accepted accounting principles.
Boston, Massachusetts
December 6, 1996
36
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
[LOGO OF BJB INVESTMENT FUNDS]
BJB
Global
Income
Fund
BJB
International
Equity
Fund
October 31, 1996
