<PAGE> 1
[AMERICAN DIVERSIFIED
Global Value Fund LETTERHEAD]
- -------------------------------------------------------------------------------
November 16, 1998
Dear Shareholders,
We are pleased to present this Semi-Annual Report, along with an update on
performance*. American Diversified Global Value Fund again successfully
protected assets in a sharply declining stock market environment. For much of
the past four months, the global markets have been roiled by financial
turbulence. By way of example, the widely followed Value Line Composite, a broad
market index of 1,700 stocks, fell 26% between July 20th and October 9, 1998.
This was double the relatively moderate 13% decline experienced by the Fund
during this same time period. Since inception on June 30, 1976, through November
16, 1998, the Fund provided investors with an annual compounded return of 8.41%.
The stock market correction provided the Fund's management with a number of
stocks selling at reasonable valuations. Taking advantage of these buying
opportunities, management has increased the Fund's equity commitment from 41% on
September 30th to a current level of 62%. The Fund declined 6.7% during the
fiscal year-to-date (April 1, 1998 thru November 16, 1998), again, a reflection
of the hostile market conditions that prevailed through much of this year's
third calendar quarter.
On April 1, Ladas & Hulings, Inc. of Scottsdale, Arizona joined our
investment team. Ladas & Hulings' specialty is global value investing, and the
firm's composite returns for the ten years ending March 31, 1998 are among the
highest of international money managers. The following comments were made to the
shareholders by Mr. William Hulings, President of Ladas & Hulings, Inc. on
October 6, 1998:
"A global financial crisis that spread from Southeast Asia to Japan,
Russia and Latin America finally impacted on the only two bright
spots in the world economy -- the U.S. and Europe. We have not seen
quarterly losses in the global markets this large since the 1987
crash.
Prior to August the Asian problem was viewed as a regional economic
problem that would slow world growth due to lower production and
reduced exports. The U.S. and Europe were thought to be relatively
immune from the economic impact. With the collapse of Russia and the
increasing turmoil in Latin America, it became clear the entire
global financial system was in trouble and there was no place to
hide.
The current financial crisis may turn out to be more of a scare than
a reality. We are in the stage of stabilizing the situation. Once
this occurs, the world markets will return to a more rational mode
and we will be in a position to make a better assessment of the
economic future."
Our investment strategy remains one of preservation of principal, coupled
with growth and income. Since inception of the Fund over 22 years ago, the
American Diversified Global Value Fund has provided Shareholders with attractive
risk-adjusted returns, and has maintained a track record of asset protection.
We are looking forward to an exciting year ahead. The prospects for new
opportunities have never looked brighter.
We wish you a healthy and happy Holiday Season and a prosperous New Year in
1999.
Sincerely,
/s/ JAMES B. REA, JR.
James B. Rea, Jr.
President
* Performance data are based on total return, including reinvestment of
dividends and excluding sales charges.
<PAGE> 2
The chart that appears here is a "mountain chart" that depicts the cumulative
change in value of a $10,000 investment in the Fund made on June 30, 1976,
assuming the reinvestment of net investment income and capital gains
distributions. For the period ended November 16, 1998, the ending value was
$60,898, which represents a cumulative total return of 508.98% and an annual
compount return of 8.41%, measured from June 30, 1976.
The following chart is depicted in conjunction with the mountain chart:
Illustration of an assumed investment of $10,000* with net investment income and
capital gains distributions reinvested.
[AMERICAN DIVERSIFIED GLOBAL VALUE FUND MOUNTAIN CHART]
<TABLE>
<CAPTION>
<S> <C> <C>
PERIOD TOTAL
ENDED VALUE
06/30/76 $10,000
12/31/76 $10,846
12/31/77 $11,194
12/31/78 $12,355
12/31/79 $14,362
12/31/80 $15,837
12/31/81 $18,391
08/19/82** $18,856
03/31/83 $23,035
03/31/84 $23,789
03/31/85 $26,928
03/31/86 $34,380
03/31/87 $37,602
03/31/88 $38,273
03/31/89 $41,182
03/31/90 $43,010
03/31/91 $43,478
03/31/92 $45,797
03/31/93 $49,662
03/31/94 $48,213
03/31/95 $48,291
03/31/96 $54,005
03/31/97 $57,467
03/31/98 $65,215
09/30/98 $57,709
11/15/98 $60,898
</TABLE>
* Net amount invested. The maximum initial sales charge payable on an
investment in the Fund is 4.75%. The public offering price of $10,000 net
investment in the Fund would be $10,499, assuming no waiver or reduction of
sales charges. No adjustment has been made for income taxes payable by
shareholders on net investment income or capital gains distributions. The
average annual total return for 1, 5, and 10 years ended September 30, 1998
was -10.29%, +1.79% and +3.24%, respectively, reflecting the deduction of the
one-time maximum sales charge, deduction of all Fund expenses on an annual
basis and assuming that all distributions are reinvested when paid. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
initial cost. The Fund's past performance is not indicative of the Fund's
future performance, as to which there can be no guarantee.
** Pro forma information through April 29, 1982, the date the Fund succeeded to
the business of Rea, Graham-Plan Fund. Initial public offering date was
August 19, 1982.
2
<PAGE> 3
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
(FORMERLY REA-GRAHAM BALANCED FUND)
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
NAME OF ISSUER --------- ----------
<S> <C> <C>
COMMON STOCKS -- 40.99 %
AIRLINES -- 3.76%
KLM Royal Dutch Airlines ADR
(Netherlands)............. 5,500 $ 136,125
Southwest Airlines Co.
(USA)..................... 9,000 180,000
----------
316,125
----------
AUTOMOTIVE -- 1.71%
Chrysler Corp. (USA)........ 3,000 143,625
----------
CHEMICAL/DIVERSIFIED -- 1.16%
Hoechst AG ADR
(Germany)................. 2,500 97,656
----------
BANKING -- 4.78%
Bank of New York, Inc.
(USA)..................... 6,000 164,248
Corp. Bancaria Espana ADR
(Argentina)............... 1,700 66,619
Fleet Financial Group, Inc.
(USA)..................... 900 66,094
Istituto Mobiliare Itali ADR
(Italy)................... 1,400 55,913
ING GROEP N.V. ADR
(Netherlands)............. 1,100 48,263
----------
401,137
----------
BUILDING PRODUCTS/CEMENT --
0.81%
LaFarge SA ADR (France)..... 2,300 67,846
----------
COMPUTER HARDWARE
SYSTEMS -- 1.07%
International Business
Machines (USA)............ 700 89,600
----------
CONSUMER PRODUCTS/
MISC. -- 1.02%
Unilever N.V. ADR
(Netherlands)............. 1,400 85,750
----------
ELECTRICITY INTEGRATED -- 7.18%
Electricidade de Portugal SA
ADR (Portugal)............ 2,100 95,025
Endessa ADR (Spain)......... 3,600 79,200
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
NAME OF ISSUER --------- ----------
<S> <C> <C>
Energy East Corporation
(USA)..................... 5,000 $ 255,000
Nipsco Industries Inc.
(USA)..................... 5,300 174,238
----------
603,463
----------
ENERGY/OIL/GAS -- 5.92%
Exxon Corp. (USA)........... 1,100 77,206
Repsol SA ADR (Spain)....... 3,700 156,094
Royal Dutch Petroleum ADR
(Netherlands)............. 2,200 104,775
YPF S.A. ADR (Argentina).... 6,100 158,600
----------
496,675
----------
ENTERTAINMENT/T.V./CABLE --
0.74%
Sony Corp ADR (Japan)....... 900 61,875
----------
FOOD/RETAIL -- 0.97%
Albertsons, Inc. (USA)...... 1,500 81,188
----------
INDUSTRIALS/ELECTRONICS --
0.82%
Texas Instruments, Inc.
(USA)..................... 1,300 68,575
----------
INSURANCE -- 0.75%
Exel Limited (USA).......... 1,000 63,125
----------
MEDICAL EQUIPMENT -- 0.84%
Invacare Corp. (USA)........ 3,000 70,500
----------
PHARMACEUTICAL -- 2.89%
Novartis AG ADR
(Switzerland)............. 1,000 80,148
Rhone-Poulenc SA ADR
(France).................. 3,900 162,825
----------
242,973
----------
TECHNOLOGY -- 1.33%
Philips Electronics N.V. ADR
(Netherlands)............. 2,100 112,088
----------
TELECOMMUNICATIONS -- 5.24%
Century Telephone
Enterprises Inc. (USA).... 4,500 212,625
</TABLE>
3
<PAGE> 4
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
(FORMERLY REA-GRAHAM BALANCED FUND)
STATEMENT OF INVESTMENTS, CONTINUED
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
NAME OF ISSUER --------- ----------
<S> <C> <C>
Portugal Telecom SA ADR
(Portugal)................ 3,900 $ 140,400
Telecom Italia SPA ADR
(Italy)................... 1,300 87,100
----------
440,125
----------
TOTAL COMMON STOCKS
(Cost $3,446,838)............. 3,442,326
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
NAME OF ISSUER --------- ----------
<S> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS -- 58.31%
LONG-TERM U.S. GOVERNMENT
OBLIGATIONS -- 36.16%
CMG Gov't Dealership,
5.375%, 06/30/00.......... 1,000,000 $1,015,938
U.S. Treasury Notes, 5.125%,
12/31/98.................. 1,000,000 1,001,876
U.S. Treasury Notes, 5.625%,
05/15/01.................. 500,000 516,876
U.S. Treasury Notes, 4.50%,
09/30/00.................. 500,000 502,188
---------
3,036,878
---------
SHORT-TERM U.S. GOVERNMENT
OBLIGATIONS -- 22.15%
Federal Home Loan Mortgage
Corp. Discount Note,
5.28%, 12/08/98........... 300,000 $ 297,116
U.S. Treasury Bill, 4.10%,
12/10/98.................. 100,000 99,195
U.S. Treasury Bill, 4.62%,
12/10/98.................. 1,200,000 1,190,340
U.S. Treasury Bill, 4.84%,
10/29/98.................. 275,000 273,965
---------
1,860,616
---------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
NAME OF ISSUER --------- ----------
<S> <C> <C>
TOTAL U.S. GOVERNMENT
OBLIGATIONS (Cost
$4,870,750)................. 4,897,494
----------
OTHER SHORT TERM
INVESTMENTS -- 0.45%
Chase Institutional Money
Market (Cost $38,162)..... 38,162
----------
TOTAL INVESTMENTS -- 99.75%
(Cost $8,355,750)+.......... 8,377,982
OTHER ASSETS LESS LIABILITIES
-- 0.25%.................... 21,105
----------
TOTAL NET ASSETS -- 100%...... $8,399,087
----------
----------
</TABLE>
+ Aggregate cost for federal income tax purposes is identical.
See Notes to Financial Statements.
4
<PAGE> 5
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
(FORMERLY REA-GRAHAM BALANCED FUND)
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Cash:..................................................... $ 1,172
Investments at value (cost $8,355,750).................. 8,377,982
Dividends and interest receivable....................... 40,151
Other..................................................... 18,279
---------
Total assets........................................ 8,437,584
---------
LIABILITIES:
Accrued expenses.......................................... 38,497
---------
Total liabilities................................... 38,497
---------
NET ASSETS:
Net assets, equivalent to $14.84 per share on 565,949
shares outstanding (Note 4)............................. 8,399,087
---------
---------
Computation of public offering price:
Net asset value per share............................... 14.84
---------
---------
Offering price per share (100/95.25 x $14.84)............. $ 15.58
---------
---------
</TABLE>
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
(FORMERLY REA-GRAHAM BALANCED FUND)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends............................................... $ 61,134
Interest................................................ 145,273
----------
Total income........................................ 206,407
----------
Expenses:
Investment advisory fee (Note 3)........................ 47,492
Distribution fee (Note 3)............................... 16,868
Custodian fees.......................................... 9,873
Transfer agency fees and expenses....................... 6,622
Administrative expenses................................. 15,197
Registration and filing fees............................ 11,515
Legal................................................... 6,017
Audit and accounting.................................... 14,038
Recordkeeping and pricing fees.......................... 8,266
Directors' fees and meeting expenses.................... 5,695
Printing and postage.................................... 6,668
Other................................................... 1,106
----------
Total expenses...................................... 149,357
Less: Expense reimbursement (Note 3)...................... (29,908)
----------
Net expenses........................................ 119,449
Net investment income............................... 86,958
----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments.......................... (374,931)
Unrealized depreciation of investments for the period..... (850,299)
----------
Net loss on investments............................. (1,225,230)
----------
Net decrease in net assets from operations.......... $(1,138,272)
----------
----------
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
(FORMERLY REA-GRAHAM BALANCED FUND)
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31,
1998 1998
------------- -----------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income..................................... $ 86,958 $ 138,007
Net realized gain (loss) on investments................... (374,931) 266,439
Unrealized appreciation (depreciation) for the period..... (850,299) 883,902
------------ -----------
Net increase (decrease) in net assets from
operations....................................... (1,138,272) 1,288,348
Dividends paid to shareholders from net investment income... -- (143,282)
Capital share transactions (Note 4)......................... (385,178) (1,703,230)
------------ -----------
Total decrease..................................... (1,523,450) (558,164)
NET ASSETS:
Beginning of period....................................... 9,922,537 10,480,701
------------ -----------
End of year (including undistributed net investment income
of $116,828 and $29,870)................................ $ 8,399,087 $ 9,922,537
------------ -----------
------------ -----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 7
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
(FORMERLY REA-GRAHAM BALANCED FUND)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
American Diversified Global Value Fund (formerly Rea-Graham Balanced Fund)
(the Fund) is the only series of shares of American Diversified Funds, Inc.
(formerly Rea-Graham Funds, Inc.), a diversified open-end management investment
company registered under the Investment Company Act of 1940. It was organized in
1982 to succeed to the business of Rea, Graham-Plan Fund, an investment company
organized as a limited partnership which commenced operations June 30, 1976 for
the purpose of investing the partners' capital in securities under professional
investment management. This succession occurred on April 29, 1982 when the
partnership's net assets aggregating $3,436,275 were transferred to the Fund in
exchange for 300,000 shares of the Fund's capital stock. The Fund seeks as its
investment objectives medium-term capital growth, income and safety through
balanced investments in common stocks, preferred stocks, U.S. government
securities and money market instruments.
The selected financial information, for the periods prior to April 29, 1982
(Note 6), gives effect to the assumed issuance of shares for partners' capital
contributions based upon the 300,000 shares issued on April 29, 1982 as
described above.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
(a) Valuation of securities. Investments are stated at value based on
latest sales prices reported on national securities exchanges on the
last business day of the period. Investments for which no sale is
reported, or which are traded over the counter, are valued at the mean
between bid and asked prices.
(b) Income taxes. The Fund intends to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders. Therefore
no provision has been made for federal income taxes.
(c) Use of estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ
from those estimates.
(d) Other. Securities transactions are recorded on the trade date basis.
Interest is accrued as earned and dividend income is recorded on the
ex-dividend date, except that certain dividends from foreign
securities are recorded as soon as information is available to the
Fund. Dividends and capital gain distributions to shareholders are
recorded on the ex-dividend date.
3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
On March 31, 1998, James Buchanan Rea, Inc. ("JBRI") the investment adviser
and principal underwriter of the Fund completed a merger transaction pursuant to
which all of the outstanding voting securities of JBRI were acquired by American
Diversified Asset Management, Inc. ("ADAM"). A new Investment Advisory Agreement
with ADAM, which is substantially similar to the Fund's previous Investment
Advisory Agreement with JBRI and provides for the same investment advisory fee
schedule, became effective on the same date. Under the terms of the agreement
the Adviser receives a monthly fee of 1/12 of 1% of the first $20,000,000 of the
Fund's net assets on the last business day of the month, 1/12 of .75% of the
next $80,000,000, 1/12 of .5% of the next $100,000,000, and 1/12 of .45% of
monthly net assets in excess of $200,000,000. ADAM has voluntarily agreed for a
period of two years following the
7
<PAGE> 8
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
(FORMERLY REA-GRAHAM BALANCED FUND)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
merger to limit the Fund's total operating expenses to 1.88% per annum,
effective August 1, 1998; from April 1, 1998 to July 31, 1998, the limit was
2.80% per annum.
Pursuant to a Plan of Distribution the Fund pays monthly to ADAM, as
Principal Underwriter, a distribution fee equal on an annual basis to 0.35% of
the Fund's average daily net assets. There were no additional expenses borne by
the Fund pursuant to the Plan of Distribution.
During the six months ended September 30, 1998, ADAM earned commissions of
$236 as principal underwriter and authorized dealer in Fund shares.
4. CAPITAL STOCK
At September 30, 1998, there were 20,000,000 shares of capital stock ($1
par value) authorized and capital paid-in amounted to $9,339,131. Transactions
in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1998 MARCH 31, 1998
-------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
------- --------- -------- -----------
<S> <C> <C> <C> <C>
Sold................. 36,207 $ 595,985 4,319 $ 69,856
Issued on
reinvestment of
dividends.......... -- -- 8,269 132,462
Redeemed............. (61,868) (981,163) (119,982) (1,905,548)
------- --------- -------- -----------
Net decrease......... (25,661) $(385,178) (107,394) $(1,703,230)
======= ========= ======== ===========
</TABLE>
5. INVESTMENT TRANSACTIONS
During the six months ended September 30, 1998, purchase and sales of
investment securities, excluding short-term obligations, were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES OF SALES
---------- -----------
<S> <C> <C>
U.S. Government Obligations................ $2,013,541 $ --
Other securities........................... 4,688,529 3,102,766
---------- ----------
$6,702,070 $3,102,766
========== ==========
</TABLE>
The aggregate portfolio turnover of the Fund for the six months ended
September 30, 1998 was 54%. Portfolio turnover on stocks was 78%. Portfolio
turnover on U.S. Government Obligations was 0%.
Realized gains and losses are reported on an identified cost basis.
Accumulated undistributed net realized losses at September 30, 1998 were
$1,079,104. At March 31, 1998 the Fund had tax basis capital losses of $704,173
which may be carried forward to offset future capital gains. Such losses expire
$500,000, on March 31, 1999 and the balance on March 31, 2003.
At September 30, 1998, the aggregate gross unrealized appreciation and
(depreciation) of portfolio securities, based on cost for federal income tax
purposes, was as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................. $ 581,411
Unrealized depreciation.................................. (559,179)
---------
$ 22,232
=========
</TABLE>
8
<PAGE> 9
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
(FORMERLY REA-GRAHAM BALANCED FUND)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
6. SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEARS ENDED MARCH 31,
SEPTEMBER ----------------------------------------------------------------------------
30, 1998 1998 1997 1996 1995 1994 1993 1992 1991
--------- ------ ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD)
Net asset value, beginning of
period............................ $16.77 $14.99 $ 14.36 $ 13.12 $ 13.20 $ 13.68 $ 13.14 $ 12.84 $ 13.56
------ ------ ------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income............. 0.16 0.23 0.27 0.31 0.15 0.07 0.21 0.59 0.75
Net realized and unrealized gain
(loss) on investments........... (2.09) 1.78 0.65 1.24 (0.13) (0.47) 0.59 0.37 (0.65)
------ ------ ------- ------- ------- ------- ------- ------- -------
Total from investment operations... (1.93) 2.01 0.92 1.55 0.02 (0.40) 0.80 0.96 0.10
------ ------ ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment
income.......................... 0.00 (0.23) (0.29) (0.31) (0.10) (0.08) (0.26) (0.66) (0.82)
Dividends from net realized
gains........................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------ ------ ------- ------- ------- ------- ------- ------- -------
Total distributions................ 0.00 (0.23) (0.29) (0.31) (0.10) (0.08) (0.26) (0.66) (0.82)
------ ------ ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period..... $14.84 $16.77 $ 14.99 $ 14.36 $ 13.12 $ 13.20 $ 13.68 $ 13.14 $ 12.84
====== ====== ======= ======= ======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)........................... $8,399 $9,923 $10,481 $12,277 $14,242 $17,877 $24,771 $28,281 $34,758
====== ====== ======= ======= ======= ======= ======= ======= =======
Ratios to average net assets:
Expenses (net of reimbursement)... 2.47%*+ 3.13% 2.89% 2.65% 2.52% 2.37% 2.16% 2.06% 2.04%
Net investment income............. 1.80%* 1.36% 1.70% 2.02% 1.08% 0.49% 1.45% 4.05% 5.27%
Aggregate portfolio turnover
rate.............................. 54% 8% 19% 223% 93% 106% 87% 109% 100%
Portfolio turnover rate on
stocks**.......................... 78% 14% 45% 88% 36%
Net asset value adjusted for
reinvestment of dividends and
distributions:
Beginning of period............... $39.34 $34.67 $ 32.58 $ 29.14 $ 29.09 $ 29.97 $ 28.24 $ 26.23 $ 25.95
====== ====== ======= ======= ======= ======= ======= ======= =======
End of period..................... $34.81 $39.34 $ 34.67 $ 32.58 $ 29.14 $ 29.09 $ 29.97 $ 28.24 $ 26.23
====== ====== ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN (excluding sales
charge)........................... (11.51)% 13.48% 6.41% 11.81% 0.17% (2.94)% 6.13% 7.66% 1.08%
<CAPTION>
YEARS ENDED MARCH 31,
-----------------------------------------------
1990 1989 1988 1987 1986
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD)
Net asset value, beginning of
period............................ $ 13.90 $ 13.83 $ 15.56 $ 16.45 $ 13.65
------- ------- ------- ------- -------
Income from investment operations:
Net investment income............. 0.90 0.78 0.66 0.43 0.50
Net realized and unrealized gain
(loss) on investments........... (0.27) 0.25 (0.46) 0.98 3.06
------- ------- ------- ------- -------
Total from investment operations... 0.63 1.03 0.20 1.41 3.56
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment
income.......................... (0.96) (0.68) (1.03) (0.47) (0.53)
Dividends from net realized
gains........................... (0.01) (0.28) (0.90) (1.83) (0.23)
------- ------- ------- ------- -------
Total distributions................ (0.97) (0.96) (1.93) (2.30) (0.76)
------- ------- ------- ------- -------
Net asset value, end of period..... $ 13.56 $ 13.90 $ 13.83 $ 15.56 $ 16.45
======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)........................... $43,386 $50,554 $49,287 $48,141 $31,531
======= ======= ======= ======= =======
Ratios to average net assets:
Expenses (net of reimbursement)... 1.60% 1.43% 1.41% 1.48% 1.50%
Net investment income............. 5.82% 5.46% 4.82% 3.54% 4.78%
Aggregate portfolio turnover
rate.............................. 125% 88% 226% 111% 208%
Portfolio turnover rate on
stocks**..........................
Net asset value adjusted for
reinvestment of dividends and
distributions:
Beginning of period............... $ 24.85 $ 23.10 $ 22.69 $ 20.73 $ 16.24
======= ======= ======= ======= =======
End of period..................... $ 25.95 $ 24.85 $ 23.10 $ 22.69 $ 20.73
======= ======= ======= ======= =======
TOTAL RETURN (excluding sales
charge)........................... 4.43% 7.58% 1.81% 9.45% 27.65%
</TABLE>
- ------------
* Annualized
** Provided for additional information. Portfolio turnover rate on stocks for
periods prior to 1995 not available.
+ In the absence of the reimbursement, expenses would have been 3.08% for the
six months ended September 30, 1998.
9
<PAGE> 10
6. SELECTED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA INFORMATION + (UNAUDITED)
------------------------------------------
YEARS ENDED APRIL 30,
MARCH 31, 1982 TO JANUARY 1, YEARS ENDED DECEMBER 31,
-------------------- MARCH 31, TO APRIL 29, --------------------------
1985 1984 1983 1982 1981 1980 1979
------- --------- --------- ------------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD)
Net asset value, beginning of
period........................ $ 13.09 $13.89 $11.45 $11.09 $ 9.55 $ 8.66 $ 7.45
------- ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income......... 0.46 0.72 0.43 0.05 0.59 0.56 0.30
Net realized and unrealized
gain
(loss) on investments....... 1.12 (0.27) 2.01 0.31 0.95 0.33 0.91
------- ------ ------ ------ ------ ------ ------
Total from investment
operations.................... 1.58 0.45 2.44 0.36 1.54 0.89 1.21
------- ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income...................... (0.74) (0.33) 0.00 0.00 0.00 0.00 0.00
Dividends from net realized
gains....................... (0.28) (0.92) 0.00 0.00 0.00 0.00 0.00
------- ------ ------ ------ ------ ------ ------
Total distributions............. (1.02) (1.25) 0.00 0.00 0.00 0.00 0.00
------- ------ ------ ------ ------ ------ ------
Net asset value, end of
period........................ $ 13.65 $13.09 $13.89 $11.45 $11.09 $ 9.55 $ 8.66
======= ====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)....................... $13,627 $9,842 $6,863 $3,436 $3,200 $2,631 $3,063
Ratios to average net assets:
Expenses...................... 2.28% 2.45% 1.50%* 3.62%* 2.70% 3.10% 3.07%
Net investment income......... 4.68% 6.46% 5.49%* 2.90%* 6.48% 3.85% 4.63%
Portfolio turnover rate......... 196% 261% 187% 9% 135% 151% 101%
Net asset value adjusted for
reinvestment of dividends and
distributions:
Beginning of period........... $ 14.35 $13.89 $11.45 $11.09 $ 9.55 $ 8.66 $ 7.45
======= ====== ====== ====== ====== ====== ======
End of period................. $ 16.24 $14.35 $13.89 $11.45 $11.09 $ 9.55 $ 8.66
======= ====== ====== ====== ====== ====== ======
TOTAL RETURN (excluding sales
charge)....................... 13.17% 3.31% 21.31% 3.25% 16.13% 10.28% 16.24%
<CAPTION>
PRO FORMA INFORMATION + (UNAUDITED)
--------------------------------------
JUNE 30, 1976
(COMMENCEMENT
YEARS ENDED DECEMBER 31, OPERATIONS)
-------------------- TO DECEMBER 31,
1978 1977 1976
------ ------ ---------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD)
Net asset value, beginning of
period........................ $ 6.75 $ 6.54 $ 6.03
------ ------ ------
Income from investment
operations:
Net investment income......... 0.12 0.18 0.00
Net realized and unrealized
gain
(loss) on investments....... 0.58 0.03 0.51
------ ------ ------
Total from investment
operations.................... 0.70 0.21 0.51
------ ------ ------
Less distributions:
Dividends from net investment
income...................... 0.00 0.00 0.00
Dividends from net realized
gains....................... 0.00 0.00 0.00
------ ------ ------
Total distributions............. 0.00 0.00 0.00
------ ------ ------
Net asset value, end of
period........................ $ 7.45 $ 6.75 $ 6.54
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)....................... $2,169 $1,458 $1,093
Ratios to average net assets:
Expenses...................... 2.90% 2.77% 4.92%*
Net investment income......... 2.72% 2.98% --
Portfolio turnover rate......... 135% 148% 22%
Net asset value adjusted for
reinvestment of dividends and
distributions:
Beginning of period........... $ 6.75 $ 6.54 $ 6.03
====== ====== ======
End of period................. $ 7.45 $ 6.75 $ 6.54
====== ====== ======
TOTAL RETURN (excluding sales
charge)....................... 10.37% 3.21% 8.46%
</TABLE>
- ------------
* Annualized
+ Prepared as if the predecessor partnership (Note 1) had been organized as a
corporation on June 30, 1976, the date of commencement of its operations, and
had initially issued capital stock at a net asset value of $6.03 per share.
10
<PAGE> 11
<TABLE>
<S> <C>
PLEASE CONTACT US
AMERICAN DIVERSIFIED FUNDS, INC.
10900 WILSHIRE BOULEVARD [LOGO]
9TH FLOOR AMERICAN DIVERSIFIED
LOS ANGELES, CALIFORNIA FUNDS
90024
(800) 433-1998
TRANSFER AGENT
PFPC INC.
400 BELLEVUE PARKWAY
SUITE 108
WILMINGTON, DE 19809
(800) 348-5032
PRINCIPAL UNDERWRITER
AMERICAN DIVERSIFIED
ASSET MANAGEMENT, INC.
10900 WILSHIRE BOULEVARD
9TH FLOOR
LOS ANGELES, CALIFORNIA
90024
(310) 209-5090
AMERICAN DIVERSIFIED
Global Value Fund
This report must be preceded SEMI-ANNUAL REPORT
or accompanied by the Prospectus
of American Diversified Global SEPTEMBER 30, 1998
Value Fund.
</TABLE>
