Bailard, Beihl & Kaiser Diversa Fund
A No-load fund with No 12b-1 Plan
Annual Report
As of September 30, 1995
<PAGE>
November 14, 1995
Dear Shareholder:
We are pleased to present the Bailard, Biehl & Kaiser Diversa Fund's September
30, 1995, annual shareholders' report. This has been a good year for both your
Fund and the financial markets in general. In this report, we will review the
reasons for the markets' upturn, discuss the likelihood of continued strength in
the investment markets and update you on Diversa's current investment strategy.
Performance Update and Market Review
What a difference a year can make! Toward the end of 1994, the global financial
markets were depressed by high interest rates and fears that strong economic
growth would trigger renewed inflation. Twelve months later, these fears have
evaporated amidst increasing evidence that the world has entered a period of
slow, sustainable, low inflationary growth. Although the pace of the market
rally has slowed a little in the second half of 1995, both U.S. and
international bonds have earned double-digit returns in the past year as
interest rates have tumbled to record lows. Even the threat of a government
shut-down can't keep U.S. stocks from reaching new highs. Only international
stocks have been a little slow to participate in the rally in the global
financial markets.
The Diversa Fund rose 3.5%* during the third quarter of 1995, bringing its total
return to 12.8%* for the twelve months ended September 30, 1995 and a handsome
15.0%* for the first nine months of 1995. Although U.S. stocks provided the best
performance, all asset areas posted positive returns. We are particularly
pleased with the value added by the international bond portion of the portfolio,
which has staged a strong recovery from 1994 and has performed very well this
year.
Market Outlook
Given the strength of 1995's bull market, the key question is where do we go
from here? Have stocks and bonds become overvalued? Will the global economic
environment continue to be favorable to the financial markets? Will the
financial markets continue to rally?
Our October asset allocation review concluded that the good times probably will
continue -- at least, for a little while longer. We believe the world's major
economies will continue to experience slow growth and low inflation in the year
ahead, an economic environment that is very favorable for the global financial
markets. Our valuation models suggest that neither stocks nor bonds are
overvalued at this juncture. Despite strong gains this year, even the U.S. stock
market is fairly valued when lower interest rates and strong corporate earnings
growth are taken into account.
<PAGE>
Although our most probable future economic scenario calls for slow growth and
low inflation, the world's economies should start to grow a little faster in
1996. As a result, we expect bond yields to be flat or slightly higher a year
from now. In an environment of reasonably stable interest rates and solid
earnings growth, global stock returns should outperform global bond returns over
the coming year. The dollar is also likely to recover further ground against the
deutschemark and the yen, dampening international returns for U.S. investors.
Investment Strategy
Given this economic and investment outlook, we have reduced our allocation
to U.S. bonds to 21% and increased our allocation to U.S. stocks to 41%. We are
likely to add more to U.S. stocks on any setbacks that might occur in the
market. Currency risk has kept us from increasing our weighting in international
stocks at this time.
[GRAPHIC OMITTED]
These are the investment targets for the Bailard, Biehl & Kaiser Diversa Fund as
of November 14, 1995. The Fund's actual asset allocations may fluctuate from
time to time above and below these targets.
Closing Comments
Both the Diversa Fund and the world's financial markets have rebounded this
year. Our economic and investment outlook calls for continued prosperity in the
months ahead. Global stocks should outperform global bonds over the next year,
due to slightly stronger economic growth in 1996. We will be monitoring the
markets closely to determine whether our economic scenario analysis remains on
track. Should an unexpected event unsettle the financial markets, we believe our
diversified approach will help minimize any downside risk.
<PAGE>
We appreciate your continued trust and confidence. If you have any questions,
please feel free to call one of our Customer Service Representatives at
800-882-8383.
Sincerely,
Thomas E. Bailard Burnie E. Sparks, Jr., CFA
Chairman President
* Average annual total returns for investment periods ended September 30,
1995: 3 months 3.53%; 12 months: 12.83%; 5 years: 9.49% annualized; since
inception (12/18/86): 6.94%, annualized. As required by the Securities and
Exchange Commission, these figures reflect the average compounded return over
the period indicated that would equate an initial amount invested in shares of
the Fund to the ending redeemable value of such shares, assuming that all
dividends and distributions by the Fund were reinvested at net asset value. The
performance data quoted represents past performance, and the investment return
and principal value of an investment in the Bailard, Biehl & Kaiser Diversa Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
S C H E D U L E O F I N V E S T M E N T S
S E P T E M B E R 3 0 , 1 9 9 5
Par
Value Value
<S> <C> <C>
Domestic Securities (60.2%)
Domestic Fixed Income (24.8%)
Government Bonds (24.8%)
United States Treasury Bonds
7.625% 02-15-25 $ 3,500,000 $ 3,960,469
United States Treasury Notes
7.125% 02-29-00 5,900,000 6,146,141
Total Domestic Fixed Income
(Identified Cost $10,268,328) 10,106,610
</TABLE>
<TABLE>
<S> <C> <C>
Domestic Stock Market (35.4%) Shares
Basic Industry (1.4%)
Ferro Corp. 9,000 223,875
Nucor Corp. 7,500 335,625
-------
Total Basic Industry 559,500
Capital Goods (5.0%)
Deere (John) & Co. 4,300 349,913
Fluor Corp. 7,700 431,200
General Electric Company 6,600 420,750
* Litton Ind., Inc. 9,500 413,250
Stewart & Stevenson Svcs Inc. 13,500 435,375
-------
Total Capital Goods 2,050,488
Consumer Durables (1.5%)
General Motors Corp. 7,600 356,250
Shaw Industries, Inc. 16,500 243,375
-------
Total Consumer Durables 599,625
Consumer Services (2.8%)
Danka Business Systems Plc ADR 10,000 360,000
Hilton Hotels Corp. 6,200 396,025
* Sound Advice Inc. Wts Exp: 6/14/99 93 0
Sysco Corp. 14,000 381,500
-------
Total Consumer Services 1,137,525
Consumer Staples (6.3%)
Archer Daniels Midland Co. 24,150 371,306
Eastman Kodak Co. 5,500 325,875
Luxottica Group SpA ADR 9,200 449,650
Pepsico, Inc. 8,600 438,600
Philip Morris Co., Inc. 6,000 501,000
Procter & Gamble Co. 6,200 477,400
-------
Total Consumer Staples 2,563,831
Energy/Resources (2.4%)
Kerr McGee Corp. 6,000 333,000
Texaco Inc. 3,600 232,650
Valero Energy Corp. 7,500 180,000
* Western Atlas Inc. 5,000 236,875
-------
Total Energy/Resources 982,525
Finance (3.9%)
Aetna Life & Casualty Co. 6,700 491,613
Bankamerica Corp. 5,500 329,313
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
S C H E D U L E O F I N V E S T M E N T S
S E P T E M B E R 3 0 , 1 9 9 5 ( C o n t i n u e d )
Shares Value
<S> <C> <C>
Finance (Continued)
Chemical Banking Corp. 5,000 $ 304,375
Lehman Brothers Holding Co. 20,200 467,125
-------
Total Finance 1,592,426
Health Care (3.1%)
* Forest Labs, Inc. (Class A) 11,800 525,100
Johnson & Johnson 4,000 296,500
Warner Lambert Co. 4,700 447,675
-------
Total Health Care 1,269,275
High Technology (3.6%)
Intel Corp. 7,900 474,988
Motorola Inc. 7,200 549,900
Xerox Corp. 3,100 416,563
-------
Total High Technology 1,441,451
Transportation (1.5%)
CSX Corp. 4,600 386,975
Rollins Truck Leasing Corp. 22,800 242,250
-------
Total Transportation 629,225
Utilities (3.1%)
AT&T Corp. 5,400 355,050
Detroit Edison Co. 13,200 425,700
MCI Communications Corp. 18,800 489,975
-------
Total Utilities 1,270,725
Total Domestic Stock Market
(Identified Cost $10,926,256) 14,096,596
----------
Total Domestic Securities
(Identified Cost $21,194,584) 24,203,208
----------
</TABLE>
<TABLE>
<CAPTION>
International Securities (21.5%)
Par Value
International Fixed Income (7.8%) (Local Currency)
<S> <C> <C>
Asian Development Bank
5.625% 02-18-2002 Y 15,000,000 179,735
Dutch Government Bonds
8.500% 03-15-2001 NLG 300,000 209,136
German Federal Republic
8.375% 05-21-2001 DM 650,000 504,476
Government of Australia
10.000% 10-15-2002 A$ 150,000 122,901
Government of Canada
8.500% 04-01-2002 C$ 400,000 312,024
Government of France
9.500% 01-25-2001 FF 1,800,000 406,134
Kingdom of Denmark
8.000% 05-15-2003 DKr 1,125,000 205,333
Kingdom of Sweden
10.250% 05-05-2003 SKr 1,500,000 227,443
Ontario Hydro (Global)
10.000% 03-19-2001 C$ 25,000 20,427
Soc. Natl des Chemins de Fer
6.750% 03-01-2000 Y 26,000,000 317,449
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Par Value
(Local Currency) Value
<S> <C> <C>
International Fixed Income (Continued)
Treuhandanstalt
7.750% 10-01-2002 DM 450,000 $ 338,032
U.K. Treasury
9.750% 08-27-2002 PS 180,000 311,003
-------
Total International Fixed Income
(Identified Cost $3,009,493) 3,154,093
</TABLE>
<TABLE>
<CAPTION>
International Stocks (13.7%) Shares Value
Australia (0.2%)
<S> <C> <C>
Broken Hill Proprietary Co. Ltd. 1,100 15,147
CRA Ltd. 800 12,515
National Australia Bank Ltd. 2,800 24,801
News Corp. 1,500 8,355
Pioneer International Ltd. 4,700 12,432
* TNT Ltd. 1,600 2,455
Western Mining Holdings Corp. 1,100 7,199
Westpac Banking Corp. 3,100 12,558
------
Total Australia 95,462
Denmark (0.1%)
Danisco A/S 200 8,740
Den Danske Bank AF 100 6,357
East Asiatic Co. 100 2,781
FIH Class B 100 2,149
FLS Industries 'B' 100 8,885
Korn-Og Fodestofkomp 100 4,515
Novo Nordisk A/S 'B' 100 12,135
TeleDanmark B 200 10,348
UniDanmark A/S "A" 100 4,370
-----
Total Denmark 60,280
Finland (0.6%)
Enso-Gutzeit Oy Class A 750 6,322
Huhtamaki Oy 250 8,604
Kansallis Thtymae 20,000 20,978
Kymmene Oy 750 23,179
Metra (AB) 250 11,589
Nokia Oy (AB) Pfd 1,250 87,799
Outokumpu A 1,250 22,242
Repola Oy 1,250 28,096
Sampo Insurance A 250 14,633
Stockmann (AB) Oy 250 12,877
------
Total Finland 236,319
France (0.9%)
Bouygues 480 55,220
Credit Local de France 800 64,407
Gruope Danone 400 64,715
LVMH Moet Hennessy 300 56,646
Sanofi 1,100 70,427
Sommer-Allibert 100 34,756
------
Total France 346,171
Germany (0.6%)
Allianz AG 10 18,042
BASF AG 150 32,831
Bayer AG 60 15,297
Deutsche Bank AG 400 19,059
Dresdner Bank AG 900 24,364
Fresenius AG Non Vtg Pfd 40 31,210
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
Germany (Continued)
<S> <C> <C>
Mannesmann AG 90 $ 29,564
Siemens AG 55 27,786
Veba AG 450 17,874
Volkswagen AG 60 19,478
------
Total Germany 235,505
Hong Kong (0.6%)
Cathay Pacific Airways 6,000 9,118
Cheung Kong Holdings 4,000 21,831
China Light & Power Co. 2,000 10,347
Hang Lung Development Co. 6,000 9,700
Hang Seng Bank 3,000 24,736
Hong Kong Electric 2,000 6,687
Hong Kong Telecommunications 18,000 32,826
Hong Kong & China Gas 8,000 12,881
Hopewell Holdings 11,000 7,469
Hutchison Whampoa Ltd. 8,000 43,354
Lai Sun Garment Intl 5,000 5,109
National Mutual Asia 7,000 5,432
Sun Hung Kai Properties Ltd. 3,000 24,445
Swire Pacific Ltd. (Class A) 3,000 23,765
Tai Cheung Holdings 11,000 9,674
-----
Total Hong Kong 247,374
Indonesia (0.1%)
Gadjah Tunggal (Fgn) 18,000 11,918
Indocement Tunggal (Fgn) 3,000 10,925
Indofoods Sukses (Fgn) 2,500 12,056
Indosat ADR 300 10,538
------
Total Indonesia 45,437
Italy (0.3%)
Assicurazioni Generali SpA 1,100 25,431
Banca Comm Italiana 2,800 6,161
Credito Italiano 4,400 5,217
Fiat SpA 7,500 28,078
IMI 700 4,196
INA 2,500 3,378
Mediobanca SpA 1,300 9,629
* Pirelli SpA 3,900 5,366
R.A.S. 600 6,434
Telecom Italia SpA 14,300 23,621
* Telecom Italia Mobile SpA 14,300 23,843
------
Total Italy 141,354
Japan (2.3%)
Aoyama Trading 1,000 27,474
Canon Inc. 1,000 17,879
Chubu Electric Power 1,030 24,970
Chugoku Bank 2,000 34,545
Dai Ichi Kangyo Bank 1,000 18,181
Daiwa House Ind. Co. 1,000 15,758
East Japan Railway Co. 2 9,899
Fuji Bank Ltd 1,000 21,313
Furukawa Electric Co. Ltd. 5,000 26,262
Ishikawajima-Harima Heavy Industry 10,000 41,414
Jaccs Co. 1,000 9,788
Japan Tobacco Inc. 2 17,232
Kajima Corp. 1,000 9,859
Kawasaki Steel 2,000 7,192
* Kobe Steel 6,000 16,909
Marubeni Corp. 8,000 40,000
Matsushita Electric Industrial 2,000 30,707
</TABLE>
<PAGE>
<TABLE>
Shares Value
Japan (Continued)
<S> <C> <C>
Mitsubishi Heavy Industries 1,000 $ 7,677
Mitsubishi Oil Co. 1,000 8,566
Mitsubishi Paper Mills 2,000 11,657
* NKK Corp. 6,000 16,061
Nichiei Co. 2,000 7,677
Nippon Fire & Marine Insurance 1,000 5,727
Nippon Sharyo Seizo Kaisha 1,000 8,192
Nippon Steel Corp. 6,000 20,970
Nissin Food Products 1,000 22,424
Okamoto Industries 1,000 6,263
Okamura Corp. 1,000 7,374
Olympus Optical Co. Ltd. 2,000 18,566
Orix Corp. 1,000 36,869
Promise Co. 1,000 42,424
Sanyo Electric Co. 5,000 28,586
Sekisui House 3,000 37,273
Shizuoka Bank 4,000 54,949
Sumitomo Bank 1,000 19,394
Takeda Chemical Industries Ltd. 1,000 13,939
Teijin Ltd. 6,000 28,788
Toda Construction 1,000 8,657
Tokio Marine & Fire Insurance Co. Ltd. 3,000 32,424
Tokyo Ohka Kokyo 1,000 30,303
Toyota Motor Corp. 3,000 57,273
Yamamura Glass Co. 2,000 12,364
Yamanouchi Pharmaceutical Co. Ltd. 1,000 21,616
------
Total Japan 935,395
Malaysia (0.4%)
AMMB Holdings Bhd 1,000 12,338
Arab Malaysian Finance 2,000 7,363
Genting Bhd 3,000 25,910
Kedah Cement Bhd 10,000 16,796
Kian Joo Can Factory 3,000 12,776
Malayan Banking Bhd 4,000 32,318
Malaysian Pacific Industries 4,000 10,587
Oriental Holdings Bhd 1,000 5,015
Sime Darby Bhd 13,000 34,667
------
Total Malaysia 157,770
Netherlands (2.1%)
ABN-AMRO Holdings NV 900 37,271
AKZO-Nobel NV ORD 200 24,034
Aegon NV 500 18,110
DSM NV 200 16,064
Fortis Amev NV 200 11,673
Heineken NV 200 32,279
Hoogovens NV CVA 100 3,991
Internatio Muller 100 7,044
Internationale Nederlanden Groep NV 1,100 63,925
KLM 200 7,019
Koninklijke Ahold NV 300 11,279
Koninklijke KNP BT NV 200 5,943
Koninklijke PTT Nederland NV 1,100 38,878
Koninklijke Pakhoed NV CVA 200 5,868
Nedlloyd NV 100 3,553
Philips Electronics NV 1,100 53,673
* Pirelli Tyre Holdings 200 1,752
Royal Dutch Petroleum Co. 1,300 159,879
Royal Dutch Petroleum Co. ADR 2,500 306,875
Unilever NV 300 39,016
------
Total Netherlands 848,126
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
Norway (0.1%)
<S> <C> <C>
Aker A/S 100 $ 1,514
Dyno Industrier 100 2,247
Elkem A/S 100 1,219
Hafslund Nycomed Ser 'B' 100 2,597
Kvaerner Industrier 100 4,239
Norsk Hydro AS 300 12,907
Norske Skogindustrier 'A' 100 3,330
Orkla A/S 100 4,828
-----
Total Norway 32,881
Singapore (0.3%)
DBS Land 4,000 11,858
Development Bank of Singapore (Fgn) 1,600 18,209
Jardine Matheson 2,800 18,900
Keppel Corp. 1,900 15,216
Overseas Chinese Bank (Fgn) 1,600 18,096
United Overseas Bank (Fgn) 2,160 18,664
United Overseas Land 4,500 8,061
-----
Total Singapore 109,004
Spain (0.9%)
Acerinox SA 100 11,416
* Amper SA 300 4,105
Autopistas Cesa 1,300 12,735
Banco Bilbao Vizcaya SA 1,600 49,225
Banco de Santander 600 25,163
Banco Popular Espanol 100 15,561
Endesa 1,000 51,330
Fomento Construcciones Y Contratas 100 8,412
Gas Natural 200 25,212
Iberdrola SA 3,100 23,442
Portland Valderrivas 100 6,922
Repsol SA 1,500 47,181
Tabacalera SA 500 17,791
Telefonica de Espana 3,900 53,678
Union Electrica Fenosa 200 967
-------
Total Spain 353,140
Sweden (0.5%)
AGA AB Ser 'B' Free 900 11,750
Asea AB Ser 'B' 100 9,925
Astra AB Ser 'A' Free 1,200 43,020
Atlas Copco AB Free 500 8,331
Autoliv AB Free 100 6,095
Ericsson (LM) Tele Ser 'B' Free 2,100 51,805
Ericsson B Rights Exp 10/27/95 2,100 2,454
Incentive AB Ser 'A' Free 200 9,550
S.K.F. AB 'B' Free 400 8,829
Skandia Forsakrings AB Free 300 7,076
Skanska AB Ser 'B' Free 300 9,175
Svenska Cellulosa Ser 'B' Free 1,000 18,105
Volvo AB Ser 'B' Free 1,000 24,525
------
Total Sweden 210,640
Switzerland (1.6%)
BBC Brown Boveri (BR) 20 23,184
Ciba-Geigy AG (Regd) 80 64,133
CS Holding (Regd) 320 30,058
Danzas Holdings AG (Ptg Cert) 100 18,613
Hero AG (BR) 40 19,219
Holderbank Fn Glarus (BR) 20 15,722
Holderbank Fn Glarus
Wts, exp. 12/20/95 50 61
Intershop Holdings AG (BR) 50 27,184
</TABLE>
<PAGE>
<TABLE>
Shares Value
Switzerland (Continued)
<S> <C> <C>
Nestle S.A. (Regd) 110 $ 112,657
Roche Holding AG (Ptg Cert) 20 141,286
Sandoz AG (Regd) 75 57,138
* SwissAir (Regd) 15 10,389
Union Bank of Switzerland (BR) 85 87,127
Winterthur (Regd) 30 19,583
Zurich Insurance (Regd) 105 29,452
------
Total Switzerland 655,806
United Kingdom (2.9%)
3I Group Plc 5,300 33,750
ASDA Group 4,500 7,395
Abbey National 2,000 17,113
Amstrad Plc 1,400 5,420
B.A.T. Industries Plc 6,500 54,333
BBA Group 2,600 11,894
BOC Group Plc 200 2,525
BPB Industries 2,900 14,566
BTR Plc 2,900 14,893
Barclays Plc 6,000 70,443
Bass Plc 2,300 23,133
British Aerospace 800 9,260
British Gas Plc 4,900 20,518
British Petroleum Plc 8,500 63,513
British Steel Plc 10,000 28,601
British Telecom Plc 10,700 66,954
Commercial Union Plc 2,200 20,402
Dixons Group Plc 7,300 39,681
Forte Plc 8,500 33,578
GKN 1,000 13,068
General Electric Company Plc 2,300 11,539
Glaxo Wellcome Plc 5,100 61,891
Hanson Plc 10,000 31,919
Hays Plc 2,700 14,762
Imperial Chemical Industries Plc 1,400 17,764
Land Securities Plc 1,600 15,485
Lloyds Abbey Life 3,300 23,517
Lloyds Bank Plc 1,000 10,919
Lonrho Plc 2,400 6,295
MEPC Plc 2,200 13,697
National Westminster Bank 2,100 21,038
Northumbrian Water Plc 1,700 26,594
Norweb Plc 800 13,653
RTZ Corp. Plc 1,700 24,781
Sears Plc 23,400 40,488
Shell Transport & Trading 500 5,878
Smith & Nephew Plc 2,200 6,536
Smiths Industries 2,000 18,330
Smithkline Beecham (Class A) 7,300 73,709
South Western Electricity Plc 1,800 25,456
Standard Chartered 1,200 8,552
Tesco Plc 5,000 24,650
Thorn EMI 1,300 30,217
Unilever Plc 1,700 33,820
Welsh Water Plc Preferred 2,520 4,111
Welsh Water Plc 2,333 28,717
Whitbread Plc 3,100 30,027
Zeneca 400 7,213
-----
Total United Kingdom 1,182,598
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Total International Stocks
(Identified Cost $5,403,903) $ 5,893,262
Total International Securities
(Identified Cost $8,413,396) 9,047,355
Real Estate (5.2%)
Avalon Properties Inc. 2,000 40,750
BRE Properties Inc. Cl A 2,200 73,700
Bay Apartment Communities Inc. 1,200 25,800
Burnham Pacific Properties 1,000 11,750
Camden Ppty Tr. 1,100 24,338
Chateau Properties Inc. 1,000 21,625
DeBartolo Realty Corp. 6,500 91,000
Developers Diversified Realty Corp. 2,500 75,313
Equity Residential Property Tr. 3,000 90,375
Federal Realty Investment Tr. 5,000 116,875
IRT Property Co. 2,000 19,250
Irvine Apartment Community Inc. 1,800 31,725
Kimco Realty Corp. 4,700 187,413
Liberty Property Trust 2,000 42,500
Manufactured Home Cmntys Inc. 1,800 31,050
Merry Land & Investment Co. 2,000 42,250
Mid-America Realty Invest Inc. 1,000 7,875
New Plan Realty Trust 1,000 22,125
Oasis Residential Inc. 1,400 31,500
Post Properties Inc. 3,000 93,000
ROC Communities Inc. 1,200 27,750
Real Estate Invest Tr - Calif. 1,500 24,938
Security Capital Indl Tr. 6,000 97,500
Security Capital Pacific Tr 5,000 95,000
Simon Property Group Inc. 7,000 177,625
South West Property Tr Inc. 2,000 25,500
Spieker Properties 2,500 60,000
Summit Properties Inc. 2,000 37,750
Taubman Centers Inc. 7,000 70,000
United Dominion Realty Trust 5,540 78,945
Urban Shopping Centers, Inc. 1,500 33,000
Vornado Realty Trust 800 30,000
Washington Real Estate Inv Tr. 2,000 30,500
Weingarten Realty Investors 5,900 208,713
Wellsford Residential Ppty Tr. 700 14,963
Western Inv. Real Estate Tr. 4,000 45,500
Total Real Estate
(Identified Cost $2,017,205) 2,137,898
Total Bonds and Equity Securities
(Identified Cost $31,625,185) $35,388,459
</TABLE>
<TABLE>
<CAPTION>
Par
Value Value
Short-Term Investments (13.8%)
<S> <C> <C>
Brown Brothers Harriman & Co.
(Grand Cayman Branch)
5.50% Call Account $ 5,601,000 $ 5,601,000
Total Investments (100.7%)
(Identified Cost $37,226,185) 40,989,459
Liabilities Less Other Assets (-0.7%) (301,038)
Net Assets (100.0%) $ 40,688,421
</TABLE>
<TABLE>
<CAPTION>
Currency Legend:
<S> <C> <C>
A$ - Australian Dollar PS - British Sterling
C$ - Canadian Dollar Y - Japanese Yen
DKr - Danish Kroner NLG - Netherlands Guilder
DM - German Mark SKr - Swedish Kroner
FF - French Franc
<FN>
* This security is non-income producing.
</FN>
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
S T A T E M E N T O F A S S E T S A N D L I A B I L I T I E S
S E P T E M B E R 3 0 , 1 9 9 5
Assets
<S> <C> <C>
(Identified cost $37,226,185) $ 40,989,459
Foreign Currency, at value
(Identified cost $45,572) 46,007
Cash 139,446
Receivables:
Dividends, interest and recoverable foreign taxes $ 319,034
Portfolio securities sold 155,019
Fund shares sold 99,362 573,415
------
Prepaid expenses 5,288
----------
Total assets 41,753,615
----------
Liabilities
Payables:
Forward currency contracts open (Note 5) 35,712
Forward currency contracts offset 3,160
Portfolio securities purchased 893,817
Shares of the Fund redeemed 4,460 937,149
-------
Accrued management fees (Note 3) 31,500
Other accrued expenses 96,545
------
Total liabilities 1,065,194
---------
Net assets (equivalent to $13.20 per share, representing
the offering and redemption price for 3,082,887
shares outstanding, unlimited number of shares authorized) $ 40,688,421
==================
Net assets consist of:
Capital paid in $ 34,046,254
Accumulated undistributed net investment income 687,154
Accumulated net realized gain on investments
and foreign currency transactions 2,231,306
Unrealized appreciation (depreciation) on:
Investments $ 3,763,274
Foreign currency (39,567) 3,723,707
------- ---------
$ 40,688,421
==================
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
S T A T E M E N T O F O P E R A T I O N S
F O R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 1 9 9 5
<S> <C> <C>
Investment Income
Dividends (net of foreign taxes withheld of $27,809) $ 573,115
Interest (net of foreign taxes withheld of $4,402) 1,450,454
---------
2,023,569
Expenses
Advisory fees $ 398,374
Custodian fees 145,700
Audit and legal fees 101,998
Transfer agent fees 36,008
Administrative fees 38,110
Trustees' fees and expenses 31,599
Insurance 4,850
Printing fees 5,001
Registration fees 9,328
Miscellaneous expenses 5,193
-----
Total expenses 776,161
-------
Net investment income 1,247,408
---------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain from investments 2,659,873
Net unrealized gain on investments 1,243,444
---------
Net gain on investments 3,903,317
---------
Net realized loss on foreign currency
and forward currency contracts (199,310)
Net unrealized gain on foreign currency
and foreign currency denominated assets and
liabilities 40,362
------
Net loss on foreign currency (158,948)
--------
Net gain on investments and foreign currency 3,744,369
---------
FOREIGN CURRENCY
Net increase in net assets resulting from operations $ 4,991,777
=================
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
S T A T E M E N T O F C H A N G E S I N N E T A S S E T S
For the year ended
September 30,
Increase (Decrease) in Net Assets 1995 1994
Operations:
<S> <C> <C>
Net investment income $ 1,247,408 $ 1,015,031
Net realized gain on investments 2,659,873 2,246,820
Net unrealized gain (loss) on investments 1,243,444 (3,961,816)
Net realized loss on foreign currency (199,310) (1,717,817)
Net unrealized gain on foreign currency and
foreign currency denominated assets and liabilities 40,362 700,555
------ -------
Net increase (decrease) resulting from operations 4,991,777 (1,717,227)
--------- ----------
Distributions to shareholders:
From net investment income (931,330) (219,293)
From net realized gains (184,888) (858,021)
-------- --------
Total distributions (1,116,218) (1,077,314)
---------- ----------
Fund share transactions:
Proceeds from shares sold 1,839,930 8,277,995
Net asset value of shares issued on
reinvestment of distributions 1,013,443 954,594
Cost of shares redeemed (12,087,247) (9,975,179)
----------- ----------
Net decrease resulting from Fund share
transactions (9,233,874) (742,590)
---------- --------
Net decrease (5,358,315) (3,537,131)
Net Assets
Beginning of year 46,046,736 49,583,867
---------- ----------
End of year (including undistributed net investment
income of $687,154 and $151,406, respectively) $ 40,688,421 $ 46,046,736
============== =============
</TABLE>
<TABLE>
<S> <C> <C>
Number of Fund Shares
Sold 152,238 640,963
Issued on reinvestment of distributions 83,514 77,796
Redeemed (985,362) (797,065)
-------- --------
Net decrease (749,610) (78,306)
======== =======
</TABLE>
See Notes to Financial Statements
<PAGE>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
N O T E S T O F I N A N C I A L S T A T E M E N T S
Note 1 - Summary of Significant Accounting Policies
Bailard, Biehl & Kaiser Diversa Fund (the "Fund") is the sole series of the
Bailard, Biehl & Kaiser Fund Group, which was organized as a Massachusetts
business trust in August 1986 and is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. The following
significant accounting policies are followed by the Fund in the preparation of
its financial statements and are in conformity with generally accepted
accounting principles.
Security Valuation
Each listed investment security is valued at the closing price reported by the
principal securities exchange on which the issue is traded or, if no sale is
reported, the mean of the closing bid and asked prices. Securities which are
traded over-the-counter are normally valued at the mean of the closing bid and
asked prices quoted by major dealers of such securities, or, in the absence of
such prices, as determined in good faith by, or under procedures determined by,
the Trustees of the Fund. Short-term obligations with a maturity of 60 days or
less are valued at amortized cost which approximates market.
The Fund's investment in foreign securities may entail risks due to the
potential of political and economic instability in the countries in which the
securities are offered or the issuers conduct their operations. It is the Fund's
policy to continuously monitor its exposure to these risks.
Foreign Currency
Foreign currency amounts, other than the cost of investments, are translated
into U.S. dollar values at the mean of the bid and offer price of such currency
against U.S. dollars last quoted on the valuation date. The cost of investments
is translated at the rates of exchange prevailing on the dates the portfolio
securities were acquired.
Effective October 1, 1994, the Fund adopted AICPA Statement of Position 93-4,
under which the Fund includes foreign exchange gains and losses from dividends
and interest receivable and other foreign-currency denominated payables and
receivables in realized and unrealized gain (loss) on foreign currency. The Fund
does not isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from fluctuations arising from
changes in the market price of securities for financial reporting purposes.
Fluctuations in foreign exchange rates on investments are included with net
realized and unrealized gain (loss) on investments.
Forward Foreign Currency Exchange Contracts
In connection with purchases and sales of securities denominated in foreign
currencies, the Fund may enter into forward foreign currency exchange contracts
("contracts"). Additionally, from time to time the Fund may enter into contracts
to sell foreign currencies to hedge certain foreign currency assets. All
commitments are "marked-to-market" daily at the applicable translation rates
supplied by a quotation service and any resulting unrealized gains or losses are
included as unrealized appreciation (depreciation) on foreign currency
denominated assets and liabilities. The Fund records realized gains or losses at
the time the forward contract is settled. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
Federal Income Taxes
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision is made for Federal
income taxes.
In accordance with AICPA Statement of Position 93-2, the Fund has reduced
capital paid-in by approximately $163,000, increased undistributed net
investment income by $196,000, and reduced accumulated net realized gains by
$33,000, primarily to reflect differences in the book and tax treatment of
foreign currency losses and of gains on securities of issuers designated as
"passive foreign investment companies" for tax purposes.
<PAGE>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
N O T E S T O F I N A N C I A L S T A T E M E N T S - (Continued)
Note 1 - Continued
Approximately $185,000 ($0.06 per share) of distributions paid during the 1995
fiscal year from available tax-basis prior year gains have been designated as
distributions of long-term capital gains for Federal income tax purposes.
Other
Investment security transactions are accounted for on the trade date (the date
the order to buy or sell is executed). Dividend income is recorded on the
ex-dividend date or when the Fund first becomes aware of such dividends.
Interest income is recorded on the accrual basis. Distributions to shareholders
are recorded on the ex-dividend date.
The Fund uses the identified cost method for determining realized gain or loss
on investments.
Note 2 - Purchases and Sales of Securities
For the year ended September 30, 1995, purchases and sales of investment
securities other than U.S. Government obligations and short-term investments
aggregated $23,146,953 and $38,065,234, respectively. Purchases and sales of
U.S. Government obligations aggregated $40,346,219 and $36,157,594,
respectively.
Note 3 - Management Fee and Other Transactions with Affiliates The Fund has
an Investment Advisory and Management Agreement with Bailard, Biehl & Kaiser,
Inc. (the Advisor). The Agreement requires the payment of a monthly fee computed
on an annual basis as follows:
.95% of the first $75,000,000 of the average daily net assets of the Fund;
.80% on the next $75,000,000;
.65% on amounts in excess of $150,000,000.
The Advisor has agreed to reimburse the Fund to the extent that the Fund's
operating expenses (as defined) exceed 2.5% of the first $30 million, 2.0% of
the next $70 million, and 1.5% of the remaining average net assets of the Fund.
As approved by the Trustees, the Fund has entered into an agreement with its
custodian, Brown Brothers Harriman & Co. ("BBH & Co."), whereby brokerage
commissions charged on U.S. equity trades executed through BBH & Co. are
available to offset custody transaction charges. For the year ended September
30, 1995, there were no such credits. In addition, the Fund did not receive any
other credits which reduced its expenses for the year ended September 30, 1995.
Certain officers and Trustees of the Fund are currently officers and directors
of Bailard, Biehl & Kaiser, Inc. and receive compensation of $500 per year. Each
other Trustee is compensated by the Fund at the rate of $6,000 per year plus an
attendance fee of $1,000 for each Trustees' meeting attended and related travel
expenses.
Note 4 - Unrealized Appreciation (Depreciation) on a Tax Basis
Unrealized appreciation (depreciation) at September 30, 1995 based on cost of
securities of $37,259,512 for federal income tax purposes, consists of the
following:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 4,231,831
Gross unrealized depreciation ( 501,884)
- -------
Net unrealized appreciation $ 3,729,947
==============
</TABLE>
<PAGE>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
N O T E S T O F I N A N C I A L S T A T E M E N T S - (Continued)
Note 5 - Commitments
At September 30, 1995, the Fund had entered into forward foreign currency
contracts which obligated the Fund to exchange currencies at specified future
dates. At the maturity of a forward contract, the Fund may either make delivery
of the foreign currency from currency held, if any, or from the proceeds of
portfolio securities sold, or terminate its obligation to deliver the foreign
currency by purchasing an offsetting contract. The value of the amounts due to
the Fund under the contracts, including contracts which have been offset but
remained unsettled, have been netted against the value of the currency to be
delivered by the Fund. Open forward foreign currency exchange contracts
outstanding at September 30, 1995 were as follows:
<TABLE>
<CAPTION>
Unrealized
Currency Currency Delivery Appreciation
Receivable Deliverable Date (Depreciation)
<S> <C> <C> <C> <C>
$ 150,000 (Y) 14,437,500 10/31/95 $ 3,388
307,873 FF 1,565,534 11/08/95 (10,312)
100,001 DM 146,852 11/08/95 (3,067)
187,536 NLG 312,810 11/15/95 (8,657)
160,052 (pound) 103,537 11/15/95 (3,435)
132,406 DM 197,285 11/16/95 (6,108)
88,546 (Y) 9,001,588 11/20/95 (3,129)
145,208 C$ 197,098 11/22/95 (1,399)
196,554 DKr 1,100,700 11/27/95 (2,323)
56,968 A$ 76,416 11/30/95 (670)
$ (35,712)
<FN>
Currency Legend:
A$ - Australian Dollar FF - French Franc
C$ - Canadian Dollar NLG - Netherlands Guilder
DKr - Danish Kroner (pound) - British Sterling
DM - German Mark (Y) - Japanese Yen
</FN>
</TABLE>
<PAGE>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
F I N A N C I A L H I G H L I G H T S
<TABLE>
<CAPTION>
For a share outstanding throughout the year:
1
Year Ended September 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.01 $12.68 $10.93 $10.64 $9.71
Income from Investment Operations:
Net Investment Income 0.38 0.26 0.39 0.34 0.44
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 1.13 (0.66) 1.66 0.30 0.90
Total from Investment Operations 1.51 (0.40) 2.05 0.64 1.34
Less Distributions:
From Net Investment Income (0.26) (0.05) (0.30) (0.35) (0.41)
From Net Realized Gains (0.06) (0.22) - - -
Total Distributions (0.32) (0.27) (0.30) (0.35) (0.41)
Net Asset Value, End of Year $13.20 $12.01 $12.68 $10.93 $10.64
Total Return 12.83% (3.18%) 19.05% 6.16% 13.97%
Ratios/Supplemental Data:
Net Assets, End of Year (000's) $40,688 $46,047 $49,584 $50,487 $57,546
Ratio of Expenses to Average Net Assets 1.85% 1.82% 1.70% 1.90% 1.46%
Ratio of Net Investment Income to
Average Net Assets 2.97% 2.03% 2.88% 2.75% 3.01%
Portfolio Turnover Rate 166% 137% 96% 94% 254%
<FN>
1. In 1995 and 1994, net investment income per share has been computed before adjustments for book/tax differences.
</FN>
</TABLE>
5
<PAGE>
B A I L A R D , B I E H L & K A I S E R D I V E R S A F U N D
R E P O R T O F I N D E P E N D E N T A C C O U N T A N T S -
To the Shareholders and the Board of Trustees of
Bailard, Biehl & Kaiser Diversa Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Bailard, Biehl & Kaiser Diversa
Fund at September 30, 1995, and the results of its operations, the changes in
its net assets and its financial highlights for the periods indicated in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1995 by
correspondence with the custodian and brokers (and the application of
alternative auditing procedures where confirmations from brokers were not
received), provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
November 17, 1995
8
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Average Annual Total Return
------------------------------------------------------------------------------
------------------------- -------------------------- -------------------------
1 Year 5 Year Since Inception
------------------------- -------------------------- -------------------------
------------------------- -------------------------- -------------------------
<S> <C> <C> <C>
12.83% 9.49% 6.94%
------------------------- -------------------------- -------------------------
</TABLE>
As mandated by the Securities and Exchange Commission, the above graph shows the
historic growth of a $10,000 investment in the Bailard, Biehl & Kaiser Diversa
Fund since December 18, 1986. We compare this investment to the growth of the
Morgan Stanley World stock index over the same time period. This index, which
measures the performance of the domestic and international equity markets, is
given in both U.S. dollar and local currency terms. The index does not measure
the performance of the Fund's other asset classes, including domestic and
international bonds and real estate securities. As the graph indicates, a
$10,000 investment in the Bailard, Biehl & Kaiser Diversa Fund would have grown
to $18,203 by September 30, 1995.
* Average annual total returns for investment periods ended September 30,
1995: 12 months: 12.83%; 5 years: 9.49% annualized; since inception (12/18/86):
6.94%, annualized. As required by the Securities and Exchange Commission, these
figures reflect the average annual compounded return over the period indicated
that would equate an initial amount invested in shares of the Fund to the ending
redeemable value of such shares, assuming that all dividends and distributions
by the Fund were reinvested at net asset value. The performance data quoted
represents past performance, and the investment return and principal value of an
investment in the Bailard, Biehl & Kaiser Diversa Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
<PAGE>
Investment Adviser
Bailard, Biehl & Kaiser, Inc.
2755 Campus Drive
San Mateo, California 94403
Transfer Agent
Chase Global Funds Services Company
Boston, Massachusetts
Custodian And Accountant
Brown Brothers Harriman & Co.
Boston, Massachusetts
Counsel
Howard, Rice, Nemerovski, Canady, Falk & Rabkin
San Francisco, California
Distributor
BB&K Fund Services, Inc.
2755 Campus Drive
San Mateo, California 94403
Independent Accountants
Price Waterhouse LLP
Boston, Massachusetts
IRA Custodian
Chase Manhattan Bank, N.A.
New York, New York
Diversa Fund Officers And Trustees
Thomas E. Bailard, Chairman, Trustee
Burnice E. Sparks, Jr., President, Trustee
Tina Thomas, Treasurer
Janis M. Horne, Secretary
Shirley L. Clayton, Trustee
David B. Shippey, Trustee
James C. Van Horne, Trustee
Investor Services Department
(800) 882-8383
This report is submitted for the general information of the shareholders of
Bailard, Biehl & Kaiser Diversa Fund. The report is not authorized for
distribution to prospective investors in the Fund unless preceded or accompanied
by an effective prospectus.
