November 29, 1996
Dear Shareholder:
We are pleased to present your Bailard, Biehl & Kaiser Diversa Fund annual
shareholders' report for the year ended September 30, 1996. With this report, we
have reproduced our October 31, 1996 letter we had previously sent updating you
on the Diversa Fund's performance and investment strategy. We also have included
the Fund's annual financial statements and portfolio holdings as of September
30, 1996.
In our October 31, 1996 letter, we argued that U.S. interest rates were likely
to moderate as it became clearer that the U.S. economy remains on a slow growth,
low inflation trajectory. This is indeed what has occurred. The yield on 30-year
U.S. Treasury bonds has dropped from 6.9% at the end of September to 6.4%
currently, triggering gains in both the U.S. stock and bond markets.
This decline in interest rates has led us to make a minor asset allocation
strategy change. We have shifted 5% of the Diversa Fund's portfolio from U.S.
bonds to U.S. stocks. Bond yields are now within what we would consider a fairly
valued range. With the drop in interest rates, stocks are now significantly less
overvalued relative to bonds. Corporate earnings expectations, as well, have
adjusted to more reasonable levels as the economy has slowed. Finally, the drop
in interest rates may set the stage for better growth later in 1997. All of
these conditions support our slight increase in stock exposure.
As a result of this strategy change, the current asset allocation targets of the
Diversa Fund are 2% cash equivalents, 29% U.S. bonds, 7% international bonds,
44% U.S. stocks, 18% international stocks and 0% real estate. We remain slightly
overweight in U.S. bonds and slightly underweight in U.S. stocks relative to our
long-term norms.
As always, please feel free to call us at 800-882-8383 if you have any questions
or comments. We look forward to hearing from you.
Sincerely,
Thomas E. Bailard Burnie E. Sparks, Jr. CFA
Chairman President
<PAGE>
October 31, 1996
Dear Shareholder:
We are pleased to enclose your BB&K Diversa Fund annual shareholders' letter for
the year ended September 30, 1996. In this letter, we will review market
conditions over the past twelve months, update you on the Diversa Fund's
performance, and discuss our investment outlook and strategy.
Market Review and Performance Update
The twelve months ended September 30, 1996 offer an interesting insight into how
market perceptions can change over time. During this period, investor sentiment
moved from a conviction that the U.S. economy had achieved slow, stable, low
inflationary growth to concern that accelerating economic growth would rekindle
inflation, before turning once again to cautious optimism that moderating
economic growth would allow inflation to remain subdued. This shifting tide of
market opinion can be seen in the swings in the yield of 30-year U.S. Treasury
bonds. These long-term interest rates tend to rise when fears of inflation
increase and fall when fears of inflation subside. Yields on 30-year U.S.
Treasury bonds dropped from about 7.9% at the end of 1994 to just under 6% at
the end of 1995, only to peak at about 7.2% this summer before declining to
about 6.9% at the end of September.
What caused these shifts in investor sentiment? Although conflicting economic
data created some uncertainty about the economic outlook, the primary reason for
the ebb and flow of market opinion is that the U.S. economy has entered
unchartered waters. According to conventional wisdom, inflationary pressures
should have risen when the U.S. unemployment rate dropped below its "natural"
level of 6%. Yet inflation has remained well contained. The true "natural" rate
of unemployment has clearly declined well below 6%, if one exists at all.
Structural changes in the American economy, increased global competition, and
the expansion of free markets worldwide have, so far, allowed the U.S. to
sustain lower unemployment rates without triggering renewed inflation. This
makes it much harder for market participants to predict when inflation is likely
to increase.
During the fourth quarter of 1995, when the market consensus was at it most
optimistic, all of the major asset classes experienced good returns. Starting in
February of 1996, however, the U.S. bond market was hard hit by inflationary
fears and rising interest rates. The U.S. stock market, on the other hand,
shrugged off the increase in interest rates until July, when it corrected
significantly, only to recover the lost ground in August and September. The
disparity in stock and bond returns can be seen in the fact that the S&P 500
rose 20.3%, while the Merrill Lynch 7-10 year U.S. Treasury Index increased only
3.5% for the year ended September 30, 1996. International bonds held up much
better than U.S. bonds, while international stocks lagged their domestic
counterparts.
<PAGE>
The BB&K Diversa Fund's performance mirrored these market movements. After
returning a robust 4.8%* in the fourth quarter of 1995, the Fund's
diversification smoothed out the volatility in the investment markets, allowing
it to grow at a fairly steady pace of 1.9%* in the first quarter of 1996, 1.5%*
in the second quarter of 1996, and 1.5%* in the third quarter of 1996. The
Diversa Fund therefore posted a total return of 10.1% for the year ended
September 30, 1996.
Market Outlook
The financial markets' fears of inflation here in the U.S. are overstated. The
American economy remains on a slow growth trajectory. Consumers are unlikely to
increase spending due to high debt levels, low wage growth and concerns about
job security. The increase in interest rates we saw earlier this year will also
tend to slow growth. Given slow growth, the structural changes in the U.S.
economy, and the pressures from global competition, inflation will remain
subdued. U.S. interest rates should continue to moderate as it becomes clearer
inflation is still under control.
Although this type of economic environment is generally favorable to the equity
markets, we are somewhat cautious about the outlook for domestic stocks. The
U.S. stock market is overvalued at current levels, corporate earnings appear to
have reached their cyclical peak, and investors are too complacent and
overweight in equities. U.S. bonds, on the other hand, offer better valuations
and the prospect of appreciation should interest rates, as we expect, continue
to decline.
Overseas, international stocks are more attractive than international bonds from
both a relative valuation and a prospective return standpoint. Foreign economic
growth has bottomed and is starting to recover. International stocks should
benefit from rising corporate earnings as economic growth strengthens and
foreign companies streamline their operations. International stocks are also
attractively valued relative to U.S. stocks. In contrast, international bonds
have outperformed U.S. bonds and probably have limited upside potential from
here.
Investment Strategy
During the quarter, we increased our weighting in U.S. bonds by 5% from 29% to
34%. In October, we also shifted 3% from international bonds to international
stocks. We are now underweight in U.S. stocks and international bonds and
overweight in U.S. bonds and international stocks. The current asset allocation
targets of Diversa are 2% cash equivalents, 34% U.S. bonds, 7% international
bonds, 39% U.S. stocks and 18% international stocks.
[GRAPHIC OMITTED]
These are the investment targets for the Bailard, Biehl & Kaiser Diversa Fund as
of October 31, 1996. The Fund's actual asset allocations may fluctuate from time
to time above and below these targets.
<PAGE>
Closing Comments
This has been an interesting year, as shifting views of the prospects for
renewed inflation have introduced more volatility into the financial markets. We
believe the U.S. economy remains on a slow growth, low inflation path in which
domestic bonds are relatively more attractive than domestic stocks. Our analysis
suggests we are also approaching that stage in the economic and investment cycle
in which international stocks will be relatively more attractive than U.S.
stocks.
Please let us know if you have any comments or questions by calling one of our
client service counselors at 800-882-8383. We continue to appreciate your
confidence and support.
Sincerely,
Thomas E. Bailard Burnie E. Sparks, Jr., CFA
Chairman President
* Average annual total returns for investment periods ended September 30, 1996:
3 months: 1.51%; 6 months: 3.06%; 12 months: 10.09%; 5 years: 8.73%
annualized; since inception (12/18/86): 7.26%, 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>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Par
Value Value Shares Value
<S> <C> <C> <C> <C> <C>
Domestic Securities (71.9%) Finance (3.6%)
Aetna Inc. 7,000 $ 492,625
Domestic Fixed Income (33.0%) Chase Manhattan Corp. 10,300 825,288
Government Bonds (33.0%) *National Mercantile Bancorp
United States Treasury Bonds Wts Exp: 6/2/99 1,434 0
-----------
7.625% 02-15-25 $ 1,920,000 $ 2,061,300 Total Finance 1,317,913
United States Treasury Notes
7.125% 02-29-00 4,365,000 4,467,305 Health Care (4.3%)
United States Treasury Notes *Forest Labs, Inc. (Class A) 7,700 278,163
5.625% 02-28-01 700,000 678,562 Johnson & Johnson 8,400 430,500
United States Treasury Notes Teva Pharmaceutical Inds Ltd. ADR 10,600 491,575
6.500% 05-31-01 1,100,000 1,101,719 Warner Lambert Co. 5,600 369,600
-----------
United States Treasury Notes Total Health Care 1,569,838
5.875% 02-15-04 1,500,000 1,434,844
United States Treasury Notes High Technology (4.5%)
5.625% 02-15-06 2,500,000 2,320,703 *Cisco Systems Inc. 6,000 372,375
-------------
Intel Corp. 2,700 257,681
Total Domestic Fixed Income *Microsoft Corp. 2,800 369,250
(Identified Cost $11,454,187) 12,064,433 Xerox Corp. 12,300 659,588
------------- -----------
Total High Technology 1,658,894
Domestic Stock Market (38.9%) Shares Value
Transportation (2.2%)
Basic Industry (2.2%) CSX Corp. 10,200 515,100
Millipore Corp. 7,000 276,500 Rollins Truck Leasing Corp. 25,700 289,125
-----------
Nucor Corp. 6,200 314,650 Total Transportation 804,225
Sigma Aldrich Corp. 4,000 228,000
-------------
Total Basic Industry 819,150 Utilities (3.9%)
AT&T Corp. 12,000 627,000
Capital Goods (5.0%) MCI Communications Corp. 15,300 392,063
Deere (John) & Co. 8,100 340,200 Ohio Edison Co. 20,800 403,000
-----------
Fluor Corp. 3,700 227,550 Total Utilities 1,422,063
General Electric Company 8,500 773,500
Harnischfeger Inds Inc. 5,400 203,850 Total Domestic Stock Market
*Litton Ind., Inc. 6,200 305,350 (Identified Cost $11,236,022) 14,217,261
------------- -----------
Total Capital Goods 1,850,450
Total Domestic Securities
Consumer Durables (1.4%) (Identified Cost $23,690,208) 26,281,694
-----------
*Lear Corp. 9,000 297,000
Sunbeam Corp. 7,400 171,125
-------------
Total Consumer Durables 468,125 International Securities (26.3%)
Par Value
Consumer Services (2.4%) International Fixed Income (9.6%) (Local Currency)
Danka Business Systems Plc ADR 6,100 242,475
General Nutrition Cos Inc. 9,700 170,356 Asian Development Bank
*Sound Advice Inc. Wts Exp: 6/14/99 93 0 5.625% 02-18-2002 (Y) 15,000,000 157,170
Sysco Corp. 14,000 470,750 British Telecom Plc
-------------
Total Consumer Services 883,581 7.125% 09-15-2003 (pound) 30,000 45,960
German Federal Republic
Consumer Staples (7.2%) 8.375% 05-21-2001 DM 810,000 603,074
Archer Daniels Midland Co. 22,155 426,484 Government of Australia
Eastman Kodak Co. 5,200 408,200 10.000% 10-15-2002 A$ 150,000 132,815
Pepsico, Inc. 19,800 559,350 Government of Canada
Philip Morris Co., Inc. 4,900 439,775 8.500% 04-01-2002 C$ 400,000 321,586
Procter & Gamble Co. 8,100 789,750 Government of France OAT
-------------
Total Consumer Staples 2,623,559 9.500% 01-25-2001 FF 2,050,000 464,926
Government of Netherlands
Energy/Resources (2.2%) 8.500% 03-15-2001 NLG 300,000 200,225
Kerr McGee Corp. 5,200 316,550 Government of Sweden
Texaco Inc. 2,800 257,600 13.000% 06-15-2001 SEK 2,000,000 377,225
Valero Energy Corp. 10,300 225,313 Kingdom of Denmark
-------------
Total Energy/Resources 799,463 8.000% 05-15-2003 DKr 1,125,000 209,033
Ontario Hydro (Global)
10.000% 03-19-2001 C$ 25,000 20,997
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Par Value
(Local Currency) Value Shares Value
<S> <C> <C> <C> <C> <C>
International Fixed Income (Continued) France - Continued
Soc. Natl des Chemins de Fer Credit Local de France SA 200 17,036
6.750% 03-01-2000 (Y) 32,000,000 $ 335,439 Ecco 50 11,983
Treuhandanstalt Eramet 150 8,947
7.750% 10-01-2002 DM 450,000 328,382 Eridania Beghin Say SA 100 15,429
U.K. Treasury Generale Des Eaux 100 10,861
9.750% 08-27-2002 (pound) 180,000 314,674 Michelin CL B 300 15,303
----------
Peugeot SA 150 16,523
Total International Fixed Income Sagem 20 11,616
(Identified Cost $3,464,573) 3,511,506 St Gobain 100 13,551
----------
Sanofi 370 30,313
International Stocks (16.7%) Shares Seita 300 12,603
Argentina (0.10%) Soc Natl Elf Aquitaine Bearer 500 39,096
Banco Frances Del Rio Della Plata ADR 500 13,063 Societe Generale Paris 200 22,108
Telefonica De Argentina ADR 500 12,438 Technip SA 200 18,271
---------
YPF SA ADR 500 11,438 Total France 375,056
----------
Total Argentina 36,939
Germany (1.2%)
Australia (0.3%) BASF AG 700 22,006
Australia & New Zealand Bank Group Ltd. 2,200 12,592 Bankgesellschaft Berlin AG 1,100 21,973
Broken Hill Proprietary Ltd. 2,500 32,062 Bayer AG 1,000 36,677
CRA Ltd. 1,200 18,050 Bayeriache Motoren Werke AG 30 17,163
Davids Ltd. 7,700 10,728 Berliner Kraft & Licht Class A 70 19,026
National Australia Bank Ltd. 1,200 12,673 CKAG Colonia Konzern AG 600 46,173
The News Corporation Ltd. 2,900 15,221 Degussa 30 10,856
----------
Total Australia 101,326 Deutsche Bank AG Bearer 650 30,609
Fresenius AG Pfd. 90 16,622
Belgium (0.1%) Ind-Werke Karl-Aug (IWKA) AG 50 11,131
Kredietbank NPV 40 13,108 Man AG 60 15,483
Powerfin SA NPV 50 7,174 Mannesmann AG 50 18,731
Societe Generale de Belgique 100 7,811 SAP AG Pfd. 150 25,199
----------
Total Belgium 28,093 Siemens AG Bearer 1,050 55,332
Veba AG 850 44,480
Canada (0.7%) Volkswagen AG 100 37,266
---------
Alcan Aluminum Ltd. 300 9,000 Total Germany 428,727
B C Gas Inc. 800 10,895
Bank of Montreal 800 21,497 Hong Kong (0.9%)
Barrick Gold Corp. 700 17,588 Cheung Kong Holdings 3,000 23,083
Bombardier Inc. CL B 700 9,970 Dickson Concept Intl Ltd. 4,000 12,854
Canadian Imperial Bank of Commerce 900 32,642 Electric & Eltek Intl Holdings Ltd. 65,000 12,356
Canadian Natural Resources 600 13,480 Hang Seng Bank 2,000 21,208
Imasco Ltd. 1,000 21,952 Henderson Land & Development 4,000 34,269
Imperial Oil Ltd. 300 12,750 Hong Kong & China Gas 12,000 20,406
Inco Ltd. 400 12,300 *Hong Kong & China Gas Wts (Ex 9/30/97) 1,000 304
Loblaw Cos Ltd. 1,200 10,044 Hong Kong & Shanghai Hotels 5,000 9,020
Molson Co. Ltd. CL A 600 8,700 Hong Kong Telecommunications 7,000 12,673
*Newbridge Networks Corp. 200 12,750 HSBC Holdings 1,200 22,268
Noranda Inc. 800 16,358 Hutchison Whampoa Ltd. 9,000 60,520
Quebecor Inc. CL B 700 10,484 New World Development Co. Ltd. 5,000 26,316
*Renaissance Energy Ltd. 400 11,732 *Peregrine Investment Wts (Ex 5/15/98) 800 150
Shell Canada Ltd. Class A 300 9,603 Qingling Motor Company 31,000 11,926
Telus Corp. 500 6,846 Shanghai Industrial Holdings 6,000 13,772
Thomson Corp. 600 10,793 Sinocan Holdings Limited 26,000 11,600
Transcanada Pipelines Ltd 700 11,288 Sun Hung Kai Properties Ltd. 3,000 31,909
----------
Total Canada 270,672 Varitronix International 5,000 9,181
---------
Total Hong Kong 333,815
France (1.0%)
Air Liquide (L') 121 18,740 Indonesia (0.1%)
Alcatel Alsthom CGE 200 16,862 Bank International Indonesia (Fgn Regd) 6,115 8,950
Axa SA 150 8,985 Citra Marga Nusaphale Persada (Fgn Regd) 12,000 8,136
Canal Plus 100 24,586 Gudang Garam (Fgn Regd) 2,000 7,533
Carrefour Super Marche 88 49,388 Indah Kiat Pulp & Paper (Fgn Regd) 13,310 10,170
---------
CIE Financiere De Paribas A Shares 200 12,855 Total Indonesia 34,789
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Shares Value Shares Value
<S> <C> <C> <C> <C> <C>
Ireland (0.1%) Korea (0.1%)
Allied Irish Banks 2,000 $ 11,773 Kepco/ Korea Electric Power Corp. 210 $ 6,941
CRH 1,000 10,217 Korea Long Term Credit Bank 400 9,434
Irish Life Plc 1,000 4,042 Samsung Electronics 100 7,845
---------
Kerry Group Class A 1,000 10,746 Total Korea 24,220
Smurfit (Jefferson) Plc 2,500 6,817
Waterford Wedgewood Units 1,000 1,291 Malaysia (0.4%)
----------
Total Ireland 44,886 Commerce Asset Holdings Berhad 1,500 9,336
DCB Holdings Berhad 4,000 13,725
Italy (0.6%) Genting Berhad 1,400 10,166
Banca Comm Italiana 2,800 5,589 Fraser & Neave Holdings Berhad 2,500 11,969
Credito Italiano 4,400 5,053 Petronas Gas Berhad 4,000 16,278
Danieli & Co. 1,700 10,995 Rashid Hussain Berhad 3,000 16,637
Edison SpA 1,800 11,216 Sime Darby Berhad 4,000 13,246
ENI SpA 6,900 35,269 Sime UEP Properties Berhad 5,000 12,269
Fiat SpA ORD 7,500 21,076 Sungei Way Holdings 2,000 10,693
IFI (Istit Fi Ind) Priv 1,000 7,978 Telekom Malaysia 2,000 17,635
Istituto Nazionale Delle Assicurazioni 20,000 28,955 Tractors Malaysia Holdings 5,000 10,473
---------
Istituto Mobilaire Italiano 5,100 43,331 Total Malaysia 142,427
* Olivetti & Co. SpA 20,000 7,327
R.A.S. 660 6,511 Mexico (0.4%)
Telecom Italia SpA 17,700 32,598 Alfa SA De Cv Class A 2,200 9,755
Telecom Italia Mobile SpA 10,800 23,968 Cemex SA ADR 1,500 12,281
----------
Total Italy 239,866 *Cifra SA De Cv ADR 6,500 9,100
Coca Cola Femsa SA De Cv ADR 600 14,250
Japan (3.4%) Empresa La Moderna SA De Cv ADR 800 15,300
Bridgestone Metalpha Corp. 5,000 58,684 Femsa "B" 3,500 10,655
Canon Inc. 1,000 19,621 *,**Grupo Financiero Bancomer SA ADR (144A) 1,100 10,588
Canon Sales Co. Inc. 50 1,357 Grupo Carso A1 2,100 9,617
Chugoku Bank 3,000 49,456 Grupo Ind. Maseca ADR 500 9,438
Daikyo Inc. 5,000 33,642 *Grupo Televisa GDR 300 8,663
Dowa Fire & Marine 9,000 46,284 Kimberly Clark de Mexico SA ADR Class A 300 11,250
Fuji Machine Manufacturing 2,000 51,068 Telefonos de Mexico SA ADR 600 19,275
---------
Hitachi Ltd. 5,000 48,381 Total Mexico 140,172
Hokkaido Takushoku 3,000 7,687
JACCS Co. Ltd. 2,000 16,862 Netherlands (2.2%)
Japan Tobacco Inc. 7 51,552 ABN-AMRO Holdings NV 800 44,331
Kansai Paint Co. 3,000 14,111 Aegon NV 300 14,802
Kitz Corp. 3,000 14,030 D.S.M. NV 200 19,620
Komai Tekko 2,000 14,693 Fortis Amev NV 500 14,948
Kurita Water Industries 3,000 64,776 Getronics NV 1,200 30,410
Makita Corp. 1,000 14,604 Heineken NV 100 18,247
Mitsubishi Heavy Industries Ltd. 9,000 73,135 Hoogovens NV CV A 100 3,579
Mitsubishi Motors Corp. 2,000 16,862 IHC Caland NV 300 15,783
Mitsubishi Oil Co. 3,000 22,846 ING Groep NV 2,250 70,158
Nippon Steel Corp. 11,000 34,099 Koninklijke Ahold NV 200 11,316
Nippon Yankin Kogyo 4,000 16,091 Nutricia Ver Bedrijven CV A 300 39,590
Omron Corp. 1,000 18,725 OCE - Van Der Grinten NV 100 10,913
Promise Co. 1,000 46,589 Royal Dutch Petroleum Co. (new shares) 2,600 405,920
Roland Corp. 2,000 34,942 Royal Dutch Petroleum Co. 650 101,529
Santen Pharmaceutical Co. 1,100 23,948 Van Ommeren NV CV A (Ptg Cert) 300 11,737
---------
Sanwa Bank Ltd. 5,000 90,042 Total Netherlands 812,883
Sanyo Electric Co. 5,000 26,833
Sekisui House Ltd. 5,000 54,652 Norway (0.1%)
Sumitomo Electric Industries 2,000 27,416 Awilco AS B 1,200 10,330
Suzuki Motor Corp. 7,000 85,293 Leif Hoegh & Co. 600 10,053
Toho Gas Co. 8,000 26,018 Norsk Hydro AS 500 23,404
Tokyo Gas Co. 9,000 30,722 Saga Petroleum AS 700 11,298
---------
Tokyo Ohka Kogyo Co. Ltd. 1,000 25,355 Total Norway 55,085
Toyo Trust & Banking Co. Ltd. 3,000 27,416
Yamaichi Securities Co. 4,000 24,549 Phillipines (0.1%)
Yamamura Glass Co. 2,000 10,572 *Filinvest Land Inc. 30,900 11,189
Yamanouchi Pharmaceutical Co. Ltd. 1,000 21,144 *Philippine National Bank 600 9,891
----------
Total Japan 1,244,057 *Pilipino Telephone 6,200 8,508
---------
Total Phillipines 29,588
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Shares Value Shares Value
<S> <C> <C> <C> <C> <C>
Portugal (0.1%) United Kingdom (2.7%)
Banco Totta & Acores (Fgn Regd) 500 $ 8,739 Anglian Water Plc 1,400 $ 11,779
Portugal Telecom ADR 500 12,875 Associated British Foods 3,000 19,206
----------
Total Portugal 21,614 B.A.T. Industries Plc 4,000 26,641
BAA Group 2,100 16,238
Singapore (0.2%) Barclays Bank Plc 6,000 88,186
Acma Ltd. 2,000 4,772 Bardon Group Plc 31,900 17,226
DBS Land 4,000 13,237 Bass Plc 3,300 40,264
Development Bank of Singapore 800 9,828 *British Aerospace 1,000 16,537
(Fgn Regd) *British Biotechnology 5,620 18,473
Jardine Strategic Holdings 3,000 9,540 British Gas Plc 5,000 15,613
Overseas Chinese Bank (Fgn Regd) 1,000 12,001 British Petroleum Plc 5,500 57,077
Singapore Airlines Ltd. (Fgn Regd) 1,000 10,084 British Steel Plc 9,300 28,823
United Overseas Land 4,500 7,094 British Telecom Plc 11,600 64,729
* United Overseas Land Wts Exp: 5/28/01 450 320 East Midland Electric Plc 2,000 16,294
* Want Want Holdings 5,000 11,900 General Accident 2,000 21,319
----------
Total Singapore 78,776 General Electric Company Plc 3,500 21,667
Great Universal Stores Plc 3,600 36,120
Spain (0.4%) Hyder Plc Pfd. 2,520 4,038
Autopistas Cesa 525 6,273 Iceland Group Plc 8,000 11,019
*Argentaria 500 20,705 Imperial Chemical Industries 1,400 18,517
Banco de Santander 300 15,599 Invesco Plc 4,500 16,658
Banco Intercontl 100 11,520 Lloyds Chemists 2,000 15,762
Banco Bilbao Vizcaya (Fgn Regd) 400 18,432 Lloyds TSB Group Plc 12,982 76,810
Endesa 300 17,654 London Clubs International 6,000 28,175
Fuerzas Electrica de Cataluna 1,000 7,488 London Electric Plc 1,500 14,404
(FECSA) Series A Lonrho 5,000 13,344
Iberdrola SA 2,200 21,320 Mirror Group Plc 13,600 46,194
Tabacalera SA Series A 100 4,266 Prudential Corp. 1,800 12,664
Telefonica de Espana SA 1,500 27,847 Reuters Holdings 3,000 34,678
----------
Total Spain 151,104 Shell Transport & Trading 2,500 38,153
Smithkline Beecham 3,057 37,347
Sweden (0.4%) Tate & Lyle 2,500 18,294
ABB AB A 100 10,590 Unichem Plc 4,600 18,072
AGA AB Series B Free 700 11,405 Yorkshire Electricity Group 1,200 14,031
Astra AB Series A Free 700 29,568 Yorkshire Water Plc 400 3,960
Ericsson Tele Series B 1,000 25,193 Zeneca Group Plc 1,500 37,284
-----------
Investor AB Class B 500 19,008 Total United Kingdom 975,596
* Scania AB Wts Exp: 6/04/99 500 528
Stora Kopparbergs Series A 900 11,676 Total International Stocks
Svenska Handelsbanken Series A 800 19,672 (Identified Cost $5,706,030) 6,122,010
-----------
* Swedish Match AB 500 1,509
Volvo AB Free 500 10,749 Total International Securities
----------
Total Sweden 139,898 (Identified Cost $9,170,603) 9,633,516
-----------
Switzerland (1.0%) Total Bonds and Equity Securities (98.2%)
Adecco SA Bearer 60 16,493 (Identified Cost $32,860,811) 35,915,210
-----------
Ciba-Geigy AG (Regd) 20 25,560
Clariant AG (Regd) 50 17,329
CS Holding (Regd) 520 51,374
Danzas Holdings AG (Ptg Cert) 60 11,521
Nestle AG (Regd) 30 33,416
Roche Holding AG (Div Right Cert) 5 36,790
Sandoz AG (Regd) 125 149,988
Swiss Bank Corp. (Regd) 220 41,937
----------
Total Switzerland 384,408
Thailand (0.1%)
Bangkok Bank Public Co. Ltd. (Fgn Regd) 1,500 19,582
Thai Farmers Bank Pcl (Fgn Regd) 800 8,431
----------
Total Thailand 28,013
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1996
Par Value Value
Short-Term Investments (1.5%)
Brown Brothers Harriman & Co.
(Grand Cayman Branch)
5.00% Call Account $ 550,000 $ 550,000
------------
(Identified Cost $550,000)
Total Investments (99.7%)
(Identified Cost $33,410,811) 36,465,210
Other Assets less Liabilities (0.3%) 101,045
------------
Net Assets (100.0%) $ 36,566,255
============
A$ - Australian Dollar FF - French Franc
(pound) - British Sterling (Y) - Japanese Yen
C$ - Canadian Dollar NLG - Netherlands Guilder
DKr - Danish Kroner ESP - Spanish Peseta
DM - German Mark SEK - Swedish Krona
- -----------------
* Non-income producing security
** Exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. On September 30, 1996, these
securities were valued at $10,588, less than .01% of Net Assets.
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments, at value
(Identified cost $33,410,811) $ 36,465,210
Foreign Currency, at value
(Identified cost $16,209) 15,659
Cash 908
Receivables:
Dividend, interest and recoverable foreign taxes receivable $ 305,396
Unrealized gain on forward currency contracts open (Note 5) 37,981
Portfolio securities sold 51,588
Fund shares sold 6,426 401,391
--------------
Prepaid expenses 7,844
-----------------
Total assets 36,891,012
-----------------
Liabilities
Payables:
Portfolio securities purchased 36,337
Shares of the Fund redeemed 81,665 118,002
--------------
Accrued management fees (Note 3) 29,509
Other accrued expenses 177,246
-----------------
Total liabilities 324,757
-----------------
Net assets (equivalent to $13.39 per share, representing
the offering and redemption price for 2,730,050
shares outstanding, unlimited number of shares authorized) $ 36,566,255
=================
Net assets consist of:
Capital paid in $ 29,310,028
Accumulated undistributed net investment income 575,755
Accumulated net realized gain on investments
and foreign currency transactions 3,592,688
Unrealized appreciation on:
Investments $ 3,054,399
Foreign currency 33,385 3,087,784
-------------- -----------------
$ 36,566,255
=================
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
STATEMENT OF OPERATIONS
SEPTEMBER 30, 1996
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Dividends (net of foreign taxes withheld of $19,917) $ 553,367
Interest (net of foreign taxes withheld of $1,160) 1,035,480
----------------
1,588,847
Expenses
Advisory fees $ 370,980
Custodian fees 174,875
Audit and legal fees 106,998
Transfer agent fees 36,999
Administrative fees 32,999
Trustees' fees and expenses 31,502
Insurance 5,464
Printing fees 5,000
Registration fees 6,466
Miscellaneous expenses 5,236
------------
Total expenses 776,519
----------------
Net investment income 812,328
----------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain on investments 3,636,128
Net unrealized loss on investments (708,875)
----------------
Net gain on investments 2,927,253
----------------
Net realized gain on foreign currency 42,779
Net unrealized gain on foreign currency
and foreign currency denominated assets and
liabilities 72,952
----------------
Net gain on foreign currency 115,731
----------------
Net gain on investments and foreign currency 3,042,984
----------------
FOREIGN CURRENCY
Net increase in net assets resulting from operations $ 3,855,312
================
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the year ended September 30,
-----------------------------------------------
1996 1995
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 812,328 $ 1,247,408
Net realized gain on investments 3,636,128 2,659,873
Net unrealized gain (loss) on investments (708,875) 1,243,444
Net realized gain (loss) on foreign currency 42,779 (199,310)
Net unrealized gain on foreign currency and
foreign currency denominated assets and liabilities 72,952 40,362
-------------------- --------------------
Net increase (decrease) resulting from operations 3,855,312 4,991,777
-------------------- --------------------
Distributions to shareholders:
From net investment income (950,677) (931,330)
From net realized gains (2,284,254) (184,888)
-------------------- --------------------
Total distributions (3,234,931) (1,116,218)
-------------------- --------------------
Fund share transactions:
Proceeds from shares sold 2,017,739 1,839,930
Net asset value of shares issued on
reinvestment of distributions 2,932,877 1,013,443
Cost of shares redeemed (9,693,163) (12,087,247)
-------------------- --------------------
Net decrease resulting from Fund share
transactions (4,742,547) (9,233,874)
-------------------- --------------------
Net decrease (4,122,166) (5,358,315)
Net Assets
Beginning of year 40,688,421 46,046,736
-------------------- --------------------
End of year (including undistributed net
investment income of $575,755 and
$687,154, respectively) $ 36,566,255 $ 40,688,421
==================== ====================
Number of Fund Shares
Sold 153,963 152,238
Issued on reinvestment of distributions 228,096 83,514
Redeemed (734,896) (985,362)
-------------------- --------------------
Net decrease (352,837) (749,610)
==================== ====================
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
FINANCIAL HIGHLIGHTS
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
For a share outstanding throughout the year:
Year End September 30
------------------------------------------------------------------------
1 1
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 13.20 $ 12.01 $ 12.68 $ 10.93 $ 10.64
------------ ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Income 0.31 0.38 0.26 0.39 0.34
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 0.96 1.13 (0.66) 1.66 0.30
------------ ---------- ---------- ---------- ----------
Total from Investment Operations 1.27 1.51 (0.40) 2.05 0.64
------------ ---------- ---------- ---------- ----------
Less Distributions:
From Net Investment Income (0.32) (0.26) (0.05) (0.30) (0.35)
From Net Realized Gains (0.76) (0.06) (0.22) -- --
------------ ---------- ---------- ---------- ----------
Total Distributions (1.08) (0.32) (0.27) (0.30) (0.35)
------------ ---------- ---------- ---------- ----------
Net Asset Value, End of Year $ 13.39 $ 13.20 $ 12.01 $ 12.68 $ 10.93
============ ========== ========== ========== ==========
Total Return 10.09% 12.83% (3.18%) 19.05% 6.16%
Ratios/Supplemental Data:
Net Assets, End of Year (000's) $ 36,566 $ 40,688 $ 46,047 $ 49,584 $ 50,487
Ratio of Expenses to Average Net Assets 1.99% 1.85% 1.82% 1.70% 1.90%
Ratio of Net Investment Income to
Average Net Assets 2.09% 2.97% 2.03% 2.88% 2.75%
Portfolio Turnover Rate 68% 166% 137% 96% 94%
2
Average Commission Rate Paid $ 0.0344 -- -- -- --
</TABLE>
- ---------------------------------
1. In 1995 and 1994, net investment income per share has been computed before
adjustments for book/tax differences.
2. Represents average commission rate paid per share on purchases and sales
of equity securities by the Fund, as computed under SEC rule effective
with the Fund's 1996 fiscal year. Prior period rates have not been
presented as permitted by the rule.
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
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.
For the fiscal year ended September 30, 1996, the Fund distributed to
shareholders $2,229,000 of long term capital gains.
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
- --------------------------------------------------------------------------------
Note 1 - Continued
Paid in capital, undistributed net investment income and undistributed realized
net gain have been adjusted for permanent book-tax differences.
Reclassifications between undistributed net investment income and undistributed
realized net gain arose principally from differing book and tax treatments for
foreign currency transactions.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Other
Investment security transactions are accounted for on the trade date (the date
the order to buy or sell is executed). 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, 1996, purchases and sales of investment
securities other than U.S. Government obligations and short-term investments
aggregated $18,372,065 and $23,124,485, respectively. Purchases and sales of
U.S. Government obligations aggregated $6,593,745 and $4,271,988, 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, 1996, 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, 1996.
Certain officers and Trustees of the Fund are currently officers and directors
of Bailard, Biehl & Kaiser, Inc. and receive compensation of $500 per year from
the Fund. 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.
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
- --------------------------------------------------------------------------------
Note 4 - Unrealized Appreciation (Depreciation) on a Tax Basis
Unrealized appreciation (depreciation) at September 30, 1996 based on cost of
securities of $33,448,532 for federal income tax purposes, consists of the
following:
Gross unrealized appreciation $ 4,097,245
Gross unrealized depreciation (1,080,567)
--------------
Net unrealized appreciation $ 3,016,678
==============
Note 5 - Forward Foreign Currency Contracts
At September 30, 1996, the Fund had entered into forward foreign currency
contracts which obligated the Fund to exchange currencies at specified future
dates. At the maturity of a forward contract, the Fund may either make delivery
of the foreign currency from currency held, if any, or from the proceeds of
portfolio securities sold, or it may terminate its obligation to deliver the
foreign currency at any time by purchasing an offsetting contract. The forward
value of amounts due to the Fund under the contracts, including contracts which
have been offset but remained unsettled, has been netted against the forward
value of the currency to be delivered by the Fund and the remaining amount is
shown as receivable (payable) for forward currency contracts in the financial
statements. Open forward foreign currency exchange contracts outstanding at
September 30, 1996 were as follows:
Unrealized
Currency Currency Delivery Appreciation
Receivable Deliverable Date (Depreciation)
---------- ----------- ---- --------------
$ 195,056 DKr 1,106,940 10/29/96 $ 5,804
60,313 A$ 76,416 11/29/96 (77)
134,804 (Y) 14,437,500 11/29/96 4,358
320,578 DM 477,773 12/09/96 6,180
227,842 (pound) 145,924 12/10/96 (459)
211,090 FF 1,068,114 12/10/96 3,462
300,000 NLG 499,170 12/11/96 6,934
50,000 CHF 61,200 12/12/96 819
25,000 FIM 113,580 12/12/96 14
110,318 (pound) 70,944 12/16/96 (674)
185,975 NLG 312,810 12/16/96 2,246
50,648 SEK 337,825 12/16/96 (422)
319,777 DM 480,305 12/18/96 3,500
344,709 C$ 470,872 12/20/96 (2,312)
30,253 ITL 46,473,000 12/20/96 (104)
442,727 (Y) 47,832,713 12/24/96 8,712
------------
$ 37,981
============
Currency Legend:
A$ - Australian Dollar FIM - Finnish Markka
C$ - Canadian Dollar ITL - Italian Lira
CHF - Swiss Franc NLG - Netherlands Guilder
Dkr - Danish Kroner SEK - Swedish Krona
DM - German Mark (pound) - British Sterling
FF - French Franc (Y) - Japanese Yen
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
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, 1996, 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, 1996 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 15, 1996
<PAGE>
BB&K Diversa Fund
Diversa MSWLD(lp MS WORLD ND$
Dec-86 $ 10,000 $ 10,000 $ 10,000
Mar-87 $ 11,192 $ 11,685 $ 12,271
Jun-87 $ 11,302 $ 12,421 $ 12,999
Sep-87 $ 11,716 $ 13,180 $ 13,795
Dec-87 $ 10,807 $ 10,005 $ 11,633
Mar-88 $ 11,129 $ 11,297 $ 12,991
Jun-88 $ 11,420 $ 11,754 $ 12,862
Sep-88 $ 11,249 $ 11,899 $ 12,900
Dec-88 $ 11,529 $ 12,657 $ 14,366
Mar-89 $ 11,777 $ 13,467 $ 14,689
Jun-89 $ 12,343 $ 13,892 $ 14,482
Sep-89 $ 12,776 $ 15,179 $ 16,172
Dec-89 $ 13,009 $ 15,726 $ 16,771
Mar-90 $ 12,599 $ 13,889 $ 14,352
Jun-90 $ 13,166 $ 14,637 $ 15,516
Sep-90 $ 11,474 $ 11,371 $ 12,665
Dec-90 $ 11,762 $ 12,334 $ 13,899
Mar-91 $ 13,087 $ 14,123 $ 15,273
Jun-91 $ 12,793 $ 13,809 $ 14,751
Sep-91 $ 13,091 $ 14,308 $ 15,795
Dec-91 $ 13,656 $ 14,356 $ 16,458
Mar-92 $ 13,456 $ 13,698 $ 15,105
Jun-92 $ 13,469 $ 13,432 $ 15,379
Sep-92 $ 13,903 $ 13,453 $ 15,635
Dec-92 $ 14,266 $ 14,166 $ 15,594
Mar-93 $ 15,352 $ 15,108 $ 16,939
Jun-93 $ 15,717 $ 14,743 $ 17,973
Sep-93 $ 16,571 $ 16,474 $ 18,821
Dec-93 $ 17,366 $ 17,157 $ 19,125
Mar-94 $ 16,425 $ 16,748 $ 19,242
Jun-94 $ 15,945 $ 16,832 $ 19,823
Sep-94 $ 16,040 $ 17,067 $ 20,249
Dec-94 $ 15,730 $ 17,016 $ 20,100
Mar-95 $ 16,492 $ 16,786 $ 21,046
Jun-95 $ 17,490 $ 17,475 $ 21,949
Sep-95 $ 18,111 $ 19,171 $ 23,181
Dec-95 $ 18,982 $ 20,339 $ 24,287
Mar-96 $ 19,352 $ 21,465 $ 25,280
Jun-96 $ 19,650 $ 22,287 $ 26,016
Sep-96 $ 19,948 $ 22,636 $ 26,363
Average Annual Total
Return
1 Year 5 Year Since Inception
10.09% 8.73% 7.26%
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 $19,948 by September 30, 1996.
* Average annual total returns for investment periods ended September 30,
1996: 12 months: 10.09%; 5 years: 8.73% annualized; since inception
(12/18/86): 7.26%, 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.
