May 30, 1996
Dear Shareholder:
We are pleased to present your March 31, 1996, Bailard, Biehl & Kaiser Diversa
Fund semi-annual shareholders' report. In this report, we reproduce our April
29, 1996, letter updating you on the performance and investment strategy of the
Diversa Fund. We also publish the Fund's portfolio holdings as of March 31,
1996, and the Fund's March 31, 1996, financial statements.
Neither our investment outlook nor our Fund's investment strategy has changed
since we wrote our April 29, 1996, shareholders' letter. We continue to believe
the U.S. economy remains on a slow growth, low inflation path. As today's fears
of inflation subside, interest rates should decline both here and abroad,
setting the stage for stronger returns in the world's financial markets.
However, as we have noted before, returns are likely to be more volatile and
less robust than they were in 1995.
If you have any questions or comments about your investment in the Bailard,
Biehl & Kaiser Diversa Fund, please feel free to contact Sofi Zacharias or Grant
Matthews, your client service counselors, at 800-882-8383. They look forward to
assisting you.
Sincerely,
/s/ Thomas E. Bailard /s/ Burnie E. Sparks
Thomas E. Bailard Burnie E. Sparks, Jr., CFA
Chairman President
<PAGE>
April 29, 1996
Dear Shareholder:
We are pleased to present your Bailard, Biehl & Kaiser Diversa Fund semi-annual
shareholders' letter for the six months ended March 31, 1996. It comes to you
one month earlier than usual, as a result of a project we have undertaken to
enhance the quality and timeliness of our shareholder communications. From now
on, we will produce our shareholders' letters within one month after the end of
the reporting period, thereby providing you with more timely updates on the
performance and investment strategy of the Diversa Fund. We will, of course,
send you under separate cover the Fund's March 31, 1996, semi-annual
shareholders' report as soon as it becomes available, toward the end of May.
Performance Update and Market Review
The Diversa Fund rose 6.8%* for the six months and 17.2%* for the twelve months
ended March 31, 1996. These results continue to reflect the power of last year's
rally in the world's financial markets, when slow growth, low inflation and
declining interest rates helped fuel double-digit returns in most major asset
classes.
However, the six months covered by this shareholders' letter can be broken into
two distinct periods. During the fourth quarter of 1995, the Diversa Fund
returned 4.8%,* as all asset areas benefited from 1995's bull market. In the
first quarter of 1996, the Fund's growth rate slowed to 1.9%.* Although the
global stock markets continued to produce positive returns, these gains were
partially offset by weakness in the world's bond markets. In the U.S., for
example, the S&P 500 U.S. stock index returned 5.4% for the first quarter, while
the Merrill Lynch 7-10 year U.S. Treasury bond index declined 3.4%.
What caused this dichotomy between equity and fixed-income returns during the
first three months of 1996? In mid-February, the slow growth, low inflation
consensus that had fueled last year's bull markets was undermined by an
unusually strong employment report and other economic data that raised the
specter of more robust, inflationary growth in the U.S. As a result of this
"growth scare," the yield on 30-year U.S. Treasury bonds rose from just under 6%
at the end of 1995 to 6.7% on March 31, 1996. European interest rates also
increased, despite the absence of any signs of stronger growth overseas.
It is noteworthy that, last fall, we had reduced our U.S. bond holdings and
increased our U.S. stock holdings in the belief that stocks were likely to
outperform bonds. We also increased the U.S. stock sector by another 3% in
December. These asset allocation shifts served you well during the first quarter
of 1996.
<PAGE>
Market Outlook
Does the recent increase in yields mark the beginning of another bear market in
bonds? We don't think so. We believe the investment markets' concerns about
inflationary growth are overdone. The U.S. economy remains on a slow growth, low
inflation trajectory. The debt-burdened consumer is unlikely to increase
spending. For the corporate sector, the inventory correction is not yet over and
capital spending is slowing. Higher interest rates are also hurting the housing
industry. Net export growth will see gradual improvement at best, until the
economies of Europe, Canada and Japan grow stronger. With unit labor costs
staying low too, inflation will continue to remain under control. As a result,
we expect domestic interest rates to decline in the second half of 1996. If our
analysis is correct, the yield on 30-year U.S. Treasury bonds could fall from
today's 6.8% to 6.0% (or lower) by year end.
Similarly, we expect European bond yields to decline in the coming months. The
European Central Banks are following an expansionary policy in an effort to
stimulate economic growth. A week before this letter was written, Germany,
Canada, Denmark and Holland all announced another round of short-term interest
rate cuts. Lower interest rates and higher productivity should lead to modest
economic growth in Europe in the second half of 1996. The Japanese monetary
authorities are also following an accommodative policy, which should allow
Japan's recovery to stay on track despite continued structural problems in its
economy.
This slow growth, low inflationary global economic environment will likely be
generally favorable for the world's financial markets. However, returns will
probably not be as robust or as "straight-line" as they were in 1995. Investors
can expect continued volatility until it is clearer that the U.S. economy has
not embarked on another round of inflationary growth.
Investment Strategy
During the first quarter of 1996, we took advantage of the rise in U.S. interest
rates to increase the Diversa Fund's domestic bond holdings from 21% to 29% of
the total portfolio. We also sold all of the publicly traded real estate
investment trusts held by the Fund.
After lengthy analysis, we have changed our strategic view regarding investing
in publicly traded real estate investment trusts (REITs). First, REITs are not
particularly attractive at this point in time, because they may already be
overdiscounting the recovery of the real estate market from its cyclical lows of
the late 1980s. Second, the return and risk characteristics of REITs are very
similar to that of the stock market as a whole. This does not mean that we won't
invest in REITs in the future. It does mean, however, that we will treat
investing in REITs like we do investing in any other industry within the stock
market.
<PAGE>
The current asset allocation of the Diversa Fund is 2% cash equivalents, 29%
U.S. bonds, 9% international bonds, 45% U.S. stocks and 15% international
stocks.
[GRAPHIC OMITTED]
These are the investment targets for the Bailard, Biehl & Kaiser Diversa Fund as
of April 19, 1996. The Fund's actual asset allocations may fluctuate from time
to time above and below these targets.
Closing Comments
Although the recent volatility in the financial markets may have jangled many
investors' nerves, we believe the world's major economies remain locked on a
slow growth, low inflationary path that bodes well for investors over the
remainder of 1996. We will continue to monitor the investment markets closely,
with the goal of making the appropriate strategy shifts should there be any
changes in our investment or economic outlook.
<PAGE>
We hope our new reporting schedule will prove of value to you. Please let us
know if you have any comments or questions by calling one of our client service
counselors at 800-882-8383. We are quite appreciative of being able to serve you
and welcome any opportunity to expand our role regarding your money management
needs.
Sincerely,
/s/ Thomas E. Bailard /s/ Burnie E. Sparks
Thomas E. Bailard Burnie E. Sparks, Jr., CFA
Chairman President
*Average annual total returns for investment periods ended March 31, 1996: 3
months: 1.94%; 6 months: 6.82%; 12 months: 17.24%; 5 years: 8.08% annualized;
since inception (12/18/86): 7.31%, 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
MARCH 31, 1996
Unaudited
Par
Value Value
Domestic Securities (72.9%)
Domestic Fixed Income (29.0%)
Government Bonds (29.0%)
United States Treasury Bonds
7.625% 02-15-25 $ 3,045,000 $ 3,359,016
United States Treasury Notes
7.125% 02-29-00 4,765,000 4,942,198
United States Treasury Notes
5.625% 02-28-01 700,000 686,766
United States Treasury Notes
5.625% 02-15-06 2,500,000 2,373,828
-------------
Total Domestic Fixed Income
(Identified Cost $11,632,327) 11,361,808
-------------
Domestic Stock Market (43.9%) Shares
Basic Industry (0.9%)
Nucor Corp. 6,200 366,575
-------------
Capital Goods (5.6%)
Deere (John) & Co. 8,100 338,175
Fluor Corp. 3,700 252,525
General Electric Company 11,800 918,925
Harnischfeger Inds Inc. 9,500 368,125
*Litton Ind., Inc. 6,200 285,200
-------------
Total Capital Goods 2,162,950
Consumer Durables (1.1%)
*Lear Seating Corp. 9,000 293,625
Shaw Industries, Inc. 11,700 128,700
-------------
Total Consumer Durables 422,325
Consumer Services (2.4%)
Danka Business Systems Plc ADR 11,100 468,975
Sound Advice Inc. Wts Exp: 6/14/99 93 0
Sysco Corp. 14,000 460,250
-------------
Total Consumer Services 929,225
Consumer Staples (6.9%)
Archer Daniels Midland Co. 21,100 387,713
Eastman Kodak Co. 6,500 461,500
Pepsico, Inc. 10,800 683,100
Philip Morris Co., Inc. 4,900 429,975
Procter & Gamble Co. 8,600 728,850
-------------
Total Consumer Staples 2,691,138
Energy/Resources (3.3%)
Kerr McGee Corp. 7,200 457,200
Texaco Inc. 2,800 240,800
Valero Energy Corp. 10,300 253,638
*Western Atlas Inc. 5,600 336,000
-------------
Total Energy/Resources 1,287,638
Finance (4.9%)
Aetna Life & Casualty Co. 7,000 528,500
Bankamerica Corp. 3,900 302,250
Chemical Banking Corp. 10,300 726,150
Lehman Brothers Holding Co. 13,900 371,825
-------------
Total Finance 1,928,725
Shares Value
Health Care (4.6%)
*Forest Labs, Inc. (Class A) $ 7,700 $ 375,375
Johnson & Johnson 4,200 387,450
Teva Pharmaceutical Inds ADR 9,700 373,450
Warner Lambert Co. 6,400 660,800
--------------
Total Health Care 1,797,075
High Technology (5.4%)
*Cisco Systems Inc. 6,000 278,250
Intel Corp. 10,800 614,250
*Microsoft Corp. 6,900 711,563
Xerox Corp. 4,100 514,550
--------------
Total High Technology 2,118,613
Transportation (1.9%)
CSX Corp. 10,600 483,625
Rollins Truck Leasing Corp. 25,700 266,638
--------------
Total Transportation 750,263
Utilities (6.9%)
AT&T Corp. 14,900 912,625
DTE Energy Co. 25,800 867,525
MCI Communications Corp. 15,300 462,825
Ohio Edison Co. 20,800 470,600
--------------
Total Utilities 2,713,575
Total Domestic Stock Market
(Identified Cost $13,696,294) 17,168,102
-------------
Total Domestic Securities
(Identified Cost $25,328,621) 28,529,910
-------------
International Securities (24.6%)
Par Value
International Fixed Income (9.0%) (Local Currency)
Asian Development Bank
5.625% 02-18-2002 (Y) 15,000,000 163,184
British Telecom Plc
7.125% 09-15-2003 (pound) 30,000 43,647
Dutch Government Bonds
8.500% 03-15-2001 NLG 300,000 205,204
German Federal Republic
8.375% 05-21-2001 DM 810,000 619,476
Government of Australia
10.000% 10-15-2002 A$ 150,000 124,087
Government of Canada
8.500% 04-01-2002 C$ 400,000 311,140
Government of France
9.500% 01-25-2001 FF 2,050,000 470,432
Government of Spain
10.300% 06-15-2002 ESP 43,000,000 360,336
Kingdom of Denmark
8.000% 05-15-2003 DKr 1,125,000 208,409
Ontario Hydro (Global)
10.000% 03-19-2001 C$ 25,000 20,420
Soc. Natl des Chemins de Fer
6.750% 03-01-2000 (Y) 32,000,000 352,090
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
Unaudited (Continued)
Par Value
(Local Currency) Value
International Fixed Income (Continued)
Treuhandanstalt
7.750% 10-01-2002 DM 450,000 $ 333,362
U.K. Treasury
9.750% 08-27-2002 (pound) 180,000 300,190
--------------
Total International Fixed Income
(Identified Cost $3,456,438) 3,511,977
--------------
International Stocks (15.6%) Shares
Belgium (0.2%)
Fortis 100 12,246
Generale Banque 20 7,120
Kredietbank 60 16,575
Powerfin 200 25,779
Societe Generale de Belgigue 200 15,823
--------------
Total Belgium 77,543
France (1.0%)
Air Liquide (L) 150 27,305
Axa SA 300 18,432
Carrefour 22 16,106
Credit Local de France 500 39,146
Ecco 200 46,094
Eridania Beghin Say 100 16,973
Michelin CL B 800 38,114
Puegeot SA 150 22,868
Rhone Poulenc SA Ser A 400 10,315
Saint Louis 100 28,069
Sanofi 370 26,882
Seita 800 33,191
Soc Natl Elf Aquitaine 700 47,454
Societe Generale 200 22,233
UAP Companie 800 16,389
--------------
Total France 409,571
Germany (0.8%)
BASF AG 70 18,898
Bankgesellschaft Berlin AG 110 25,412
Bayer AG 60 20,442
Berliner Kraft & Light 70 19,443
CKAG Colonia Konzern AG 40 30,079
Deutsche Bank AG 400 20,142
Gehe AG 50 28,792
Hoechst AG 50 17,716
Ind-Werke Karl-Aug (IWKA) AG 50 8,638
Mannesmann AG 50 18,224
Munich Reinsurance Part Pd Regd. 10 20,832
Siemens AG 85 46,787
Veba AG 550 26,734
Volkswagen AG 60 21,035
--------------
Total Germany 323,174
Hong Kong (1.2%)
Amoy Properties 7,000 8,146
Bank of East Asia 2,400 8,254
Cheung Kong Holdings 6,000 42,668
China Light & Power Co. 3,000 13,538
Chinese Estates Holdings Ltd. 8,000 7,241
Consolidated Electric Power Asia 8,000 13,189
Dickson Concept Intl Ltd. 20,000 21,852
Shares Value
Hong Kong - Continued
Electric & Eltek Intl Holdings Ltd. 65,000 $ 13,783
Goldlion Holdings Ltd. 10,000 7,952
Hang Seng Bank 5,000 51,396
Hong Kong & China Gas 10,000 19,653
Hong Kong & Shanghai Hotels 5,000 8,178
Hong Kong Telecommunications 23,200 46,346
Hutchison Whampoa 9,000 56,555
Kowloon Motor Bus Co. 12,000 20,326
New World Development Co. Ltd. 10,000 46,806
Regal Hotels International 28,000 6,915
Sime Darby Hong Kong 10,000 9,310
Sun Hung Kai Properties Ltd. 3,000 27,347
Varitronix Intl 5,000 9,116
Wharf Holdings 7,000 26,157
-------------
Total Hong Kong 464,728
Indonesia (0.0%)
Indosat ADR 300 10,238
-------------
Italy (0.4%)
Autostrade CEC Pfd. 6,000 6,580
Banca Comm Italiana 2,800 5,854
Credito Italiano 4,400 4,719
*ENI SpA 2,000 7,271
Fiat SpA 7,500 23,579
Fidis 5,500 15,238
IMI 3,700 25,367
INA 12,800 17,486
*Pirelli SpA 3,900 5,465
R.A.S. 660 6,446
Telecom Italia SpA 9,500 15,070
Telecom Italia Mobile SpA 4,800 8,733
-------------
Total Italy 141,808
Japan (4.2%)
Canon Inc. 1,000 19,074
Canon Sales 1,050 27,882
Chugoku Bank 3,000 52,454
Daikyo Inc. 5,000 35,764
Daiwa Bank 4,000 29,397
Dowa Fire & Marine 9,000 49,649
Fuji Bank Ltd 1,000 21,786
Furukawa Electric Co. Ltd. 5,000 28,191
*Haseko Corp. 6,000 24,572
Hitachi Ltd. 5,000 48,621
Hokkaido Takushoku 3,000 8,050
Ishikawajima Harima Heavy Ind 10,000 46,751
JACCS Co. 2,000 18,700
JGC Corp. 2,000 24,123
Japan Tobacco Inc. 7 64,797
Kajima Corp. 1,000 10,753
*Kenwood Ind 1,000 5,853
Kitz Corp. 3,000 13,913
Komai Tekko 2,000 15,316
Makita Corp. 1,000 15,054
Marubeni Corp. 8,000 44,806
Mitsubishi Heavy Industries 9,000 77,756
Mitsubishi Motors 2,000 17,092
Mitsubishi Oil Co. 1,000 8,425
Mitsui & Co. 6,000 54,362
Nagase & Co. 2,000 19,074
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
Unaudited (Continued)
Shares Value
Japan - Continued
Nichiei Co. Ltd. (Yokohama) 5,000 $ 21,833
Nippon Fire & Marine Insurance 1,000 6,190
Nippon Steel Corp. 11,000 37,849
Nippon Yakin Kogyo 4,000 17,952
Nissin Food Products 1,000 24,871
Olympus Optical Co. Ltd. 2,000 19,448
Orient Corp. 2,000 12,062
Promise Co. 1,000 44,413
Santen Pharmaceutical Co. 1,100 22,730
Sanyo Electric Co. 5,000 29,921
Sekisui House 5,000 62,646
Shizuoka Bank 4,000 50,491
*Sogo Company Ltd. 7,000 30,827
Sumitomo Bank 3,000 60,589
Sumitomo Electric 2,000 26,928
Sumitomo Forestry 2,000 30,669
Toda Corp. 4,000 36,466
Toho Gas Co. 8,000 25,806
Tokyo Gas Co. 9,000 32,314
Tokyo Ohka Kokyo 1,000 27,770
Toyo Trust & Banking 3,000 28,022
Toyota Motor Corp. 3,000 66,199
Yamaichi Securities Co. 9,000 69,425
Yamamura Glass Co. 2,000 11,950
Yamanouchi Pharmaceutical Co. Ltd. 1,000 22,253
Yamatake Honeywell 3,000 52,174
---------------
Total Japan 1,654,013
Netherlands (1.9%)
ABN-AMRO Holdings NV 1,000 49,757
Aegon NV 300 14,165
Fortis Amev NV 400 28,208
Heineken NV 100 21,580
Hoogovens NV CVA 100 3,668
ING Groep NV 900 65,375
KLM 400 13,922
Philips Electronics NV 500 18,190
Pirelli Tyre Holdings 200 1,792
Royal Dutch Petroleum Co. 500 70,823
Royal Dutch Petroleum Co. NY 3,000 423,750
Unilever NV 200 27,276
---------------
Total Netherlands 738,506
Singapore (0.6%)
Acma Ltd. 2,000 6,223
Amcol Holdings 2,000 5,143
City Developments 3,000 26,639
DBS Land 4,000 15,344
Development Bank of Singapore (Fgn) 1,600 19,663
Fraser & Neave 1,200 13,554
Jardine Matheson 2,800 21,840
Jardine Strategic 6,000 18,960
Keppel Bank Ltd. 4,000 12,503
Keppel Corp. 1,900 17,276
Neptune Orient Lines 10,000 11,366
Overseas Chinese Bank (Fgn) 2,600 34,908
Sembawang Corp. Ltd. 2,000 10,016
Singapore Airlines Ltd. 2,000 20,743
Singapore Telecomm 3,000 7,374
United Overseas Land 4,500 9,494
---------------
Total Singapore 251,046
Shares Value
Spain (0.8%)
Acerinox SA 100 $ 11,285
*Amper SA 100 1,306
Autopistas Cesa 500 5,078
Argentaria 1,700 71,942
Banco de Santander 300 14,292
Endesa 600 34,387
Fuerzas Electricas de Cataluna (FECSA) 1,000 6,529
Gas Natural 100 17,298
Iberdrola SA 5,500 50,762
Repsol SA 500 18,862
Sevillana de Electricidad 1,200 8,657
Tabacalera SA 100 4,675
Telefonica de Espana 2,300 36,523
Union Electrica Fenosa 2,700 14,756
Vallehermoso SA 200 3,595
---------------
Total Spain 299,947
Switzerland (1.3%)
BBC Brown Boveri (BR) 20 24,333
Ciba-Geigy AG (Regd) 50 62,597
CS Holding (Regd) 320 29,394
Intershop Holdings AG (BR) 20 12,561
Nestle S.A. (Regd) 60 67,701
Roche Holding AG (Ptg Cert) 20 166,141
Sandoz AG (Regd) 25 29,323
Union Bank of Switzerland (BR) 70 77,689
Zurich Insurance (Regd) 105 30,193
---------------
Total Switzerland 499,932
United Kingdom (3.2%)
ASDA Group 33,900 54,975
Amstrad Plc 1,400 4,017
B.A.T. Industries Plc 6,500 48,017
BAA Group 2,100 17,148
BTR Plc 5,100 24,598
Barclays Plc 6,000 66,760
Bardon Group Plc 31,900 17,771
Bass Plc 2,300 26,118
Bellway Plc 4,000 16,728
British Aerospace 1,000 13,103
*British Biotechnology 500 19,079
British Petroleum Plc 8,500 74,338
British Steel Plc 4,300 12,470
British Telecom Plc 14,600 82,395
Burton Group 21,600 47,556
Cobham Group Plc 4,300 35,145
Dixons Group Plc 7,300 49,805
Electrocomponents Plc 2,500 13,546
GKN 1,900 27,579
General Accident 2,000 18,728
General Electric Company Plc 3,500 19,552
Glaxo Wellcome Plc 5,100 63,986
Harris Phillip Plc 3,600 13,709
Hays Plc 2,700 16,731
Hyder Plc 2,333 26,831
Hyder Plc Pfd. 2,520 3,885
Imperial Chemical Industries Plc 1,400 19,744
Invesco Plc 9,000 35,235
Lloyds Abbey Life 1,800 14,836
Lloyds TSB Group Plc 8,382 40,491
Mirror Group Plc 13,600 45,148
National Power Plc 3,300 23,522
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
Unaudited (Continued)
Shares Value
United Kingdom - Continued
National Westminster Bank 2,100 $ 20,369
Prudential Corp. 1,800 11,704
Shell Transport & Trading 1,000 13,202
Smithkline Beecham (Class A) 3,000 30,083
Standard Chartered Plc 1,800 16,718
Thorn EMI Plc 1,300 33,404
Unichem Plc 12,600 46,348
Unilever Plc 2,500 46,667
Yorkshire Water Plc 400 4,170
Zeneca Group Plc 1,500 31,094
-------------
Total United Kingdom 1,247,305
Total International Stocks
(Identified Cost $5,603,246) 6,117,811
-------------
Total International Securities
(Identified Cost $9,059,684) 9,629,788
-------------
Total Bonds and Equity Securities
(Identified Cost $34,388,305) 38,159,698
-------------
Par Value Value
Short-Term Investments (1.2%)
Brown Brothers Harriman & Co.
(Grand Cayman Branch)
5.00% Call Account $ 446,000 $ 446,000
(Identified Cost $446,000) --------------
Total Investments (98.7%)
(Identified Cost $34,834,305) 38,605,698
Other Assets less Liabilities (1.3%) 515,296
--------------
Net Assets (100.0%) $ 39,120,994
==============
Currency Legend:
A$ - Australian Dollar (pound) - British Sterling
C$ - Canadian Dollar (Y) - Japanese Yen
DKr - Danish Kroner NLG - Netherlands Guilder
DM - German Mark SKr - Swedish Kroner
FF - French Franc ESP - Spanish Peseta
- --------------------------
* This security is non-income producing.
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
UNAUDITED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Investments, at value
(Identified cost $34,834,305) $ 38,605,698
Foreign Currency, at value
(Identified cost $25,425) 25,194
Cash 466
Receivables:
Dividends, interest and recoverable foreign taxes $ 311,634
Portfolio securities sold 354,179
Fund shares sold 14,477 680,290
Prepaid expenses ---------------- 12,977
------------------
Total assets 39,324,625
------------------
Liabilities
Payables:
Forward currency contracts open (Note 5) 1,111
Distributions to shareholders 3,084
Shares of the Fund redeemed 60,559
Portfolio securities purchased 9,090 73,844
Accrued management fees (Note 3) ---------------- 32,522
Other accrued expenses 97,265
------------------
Total liabilities 203,631
------------------
Net assets (equivalent to $13.14 per share, representing
the offering and redemption price for 2,976,458
shares outstanding, unlimited number of shares authorized) $ 39,120,994
===================
Net assets consist of:
Capital paid in $ 32,553,034
Accumulated undistributed net investment income 578,411
Accumulated net realized gain on investments
and foreign currency transactions 2,221,982
Unrealized appreciation (depreciation) on:
Investments $ 3,771,393
Foreign currency (3,826) 3,767,567
---------------- ------------------
$ 39,120,994
===================
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1996
UNAUDITED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income
Dividends (net of foreign taxes withheld of $8,082) $ 285,866
Interest (net of foreign taxes withheld of $567) 493,549
-----------------
779,415
Expenses
Advisory fees $ 192,992
Custodian fees 67,476
Audit and legal fees 53,497
Transfer agent fees 18,499
Administrative fees 16,499
Trustees' fees and expenses 15,751
Insurance 2,369
Printing fees 2,500
Registration fees 2,839
Miscellaneous expenses 2,731
Total expenses ------------- 375,153
-----------------
Net investment income 404,262
-----------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain from investments 2,263,116
Net unrealized gain on investments 8,119
-----------------
Net gain on investments 2,271,235
-----------------
Net realized gain on foreign currency
and forward currency contracts 16,808
Net unrealized gain on foreign currency
and foreign currency denominated assets and
liabilities 35,741
-----------------
Net gain on foreign currency 52,549
-----------------
Net gain on investments and foreign currency 2,323,784
-----------------
Net increase in net assets resulting from operations $ 2,728,046
=================
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months
ended March 31, 1996 For the year ended
Increase (Decrease) in Net Assets (Unaudited) September 30, 1995
-------------------- ------------------
<S> <C> <C>
Operations:
Net investment income $ 404,262 $ 1,247,408
Net realized gain on investments 2,263,116 2,659,873
Net unrealized gain on investments 8,119 1,243,444
Net realized gain (loss) on foreign currency 16,808 (199,310)
Net unrealized gain on foreign currency and
foreign currency denominated assets and liabilities 35,741 40,362
-------------------- ----------------
Net increase resulting from operations 2,728,046 4,991,777
-------------------- ----------------
Distributions to shareholders:
From net investment income (513,005) (931,330)
From net realized gains (2,289,248) (184,888)
-------------------- ----------------
Total distributions (2,802,253) (1,116,218)
-------------------- ----------------
Fund share transactions:
Proceeds from shares sold 1,303,390 1,839,930
Net asset value of shares issued on
reinvestment of distributions 2,561,961 1,013,443
Cost of shares redeemed (5,358,571) (12,087,247)
-------------------- ----------------
Net decrease resulting from Fund share
transactions (1,493,220) (9,233,874)
-------------------- ----------------
Net decrease (1,567,427) (5,358,315)
Net Assets
Beginning of period 40,688,421 46,046,736
-------------------- ----------------
End of period (including undistributed net investment
income of $578,411 and $687,154, respectively) $ 39,120,994 $ 40,688,421
==================== ===================
Number of Fund Shares
Sold 99,638 152,238
Issued on reinvestment of distributions 199,993 83,514
Redeemed (406,060) (985,362)
-------------------- ----------------
Net decrease (106,429) (749,610)
==================== ===================
</TABLE>
(See "Notes to Financial Statements")
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
- --------------------------------------------------------------------------------
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.
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
UNAUDITED
- --------------------------------------------------------------------------------
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 six months ended March 31, 1996, purchases and sales of investment
securities other than U.S. Government obligations and short-term investments
aggregated $13,059,978 and $14,229,079, respectively. Purchases and sales of
U.S. Government obligations aggregated $4,065,730 and $2,676,933, 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 six months ended March
31, 1996, there were no such credits. In addition, the Fund did not receive any
other credits which reduced its expenses for the six months ended March 31,
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. 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 March 31, 1996 based on cost of
securities of $34,834,305 for federal income tax purposes, consists of the
following:
Gross unrealized appreciation $ 4,375,782
Gross unrealized depreciation ( 604,389)
--------------
Net unrealized appreciation $ 3,771,393
==============
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
UNAUDITED
- --------------------------------------------------------------------------------
Note 5 - Commitments
At March 31, 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 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 March
31, 1996 were as follows:
<TABLE>
<CAPTION>
Unrealized
Currency Currency Delivery Appreciation
Receivable Deliverable Date (Depreciation)
---------- ----------- ---- --------------
<S> <C> <C> <C> <C> <C>
$ 191,519 DKr 1,100,700 04/29/96 $ (1,886)
56,258 A$ 76,416 05/31/96 (3,268)
140,170 (Y) 14,437,500 05/31/96 3,982
200,000 DM 294,280 06/07/96 (223)
211,843 FF 1,068,114 06/10/96 (791)
49,559 (pound) 32,455 06/10/96 58
107,835 (pound) 70,944 06/14/96 (364)
190,447 NLG 312,810 06/14/96 104
327,630 DM 480,305 06/18/96 638
169,913 C$ 230,912 06/21/96 332
93,398 (Y) 9,837,613 06/24/96 307
---------------
$ (1,111)
==============
</TABLE>
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
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For a share outstanding throughout the period:
1
Year End September 30
For the Six-months---------------------------------------------------------------------
Ended March 31, 1996 1 1
(Unaudited) 1995 1994 1993 1992 1991
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.20 $ 12.01 $ 12.68 $ 10.93 $ 10.64 $ 9.71
---------- ---------- --------- ---------- ---------- ---------
Income from Investment Operations:
Net Investment Income 0.14 0.38 0.26 0.39 0.34 0.44
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 0.73 1.13 (0.66) 1.66 0.30 0.90
---------- ---------- --------- ---------- ---------- ---------
Total from Investment Operations 0.87 1.51 (0.40) 2.05 0.64 1.34
---------- ---------- --------- ---------- ---------- ---------
Less Distributions:
From Net Investment Income (0.17) (0.26) (0.05) (0.30) (0.35) (0.41)
From Net Realized Gains (0.76) (0.06) (0.22) -- -- --
---------- ---------- --------- ---------- ---------- ---------
Total Distributions (0.93) (0.32) (0.27) (0.30) (0.35) (0.41)
---------- ---------- --------- ---------- ---------- ---------
Net Asset Value, End of Period $ 13.14 $ 13.20 $ 12.01 $ 12.68 $ 10.93 $ 10.64
========== ========== ========== ========== ========== =========
Total Return 6.82% 12.83% (3.18%) 19.05% 6.16% 13.97%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $ 39,121 $ 40,688 $ 46,047 $ 49,584 $ 50,487 $ 57,546
2
Ratio of Expenses to Average Net Assets 1.84% 1.85% 1.82% 1.70% 1.90% 1.46%
Ratio of Net Investment Income to 2
Average Net Assets 1.98% 2.97% 2.03% 2.88% 2.75% 3.01%
Portfolio Turnover Rate 45% 166% 137% 96% 94% 254%
3
Average Commission Rate Paid $ 0.0374 -- -- -- -- --
</TABLE>
- -----------------------------------------
1. In 1995 and 1994, net investment income per share has been computed before
adjustments for book/tax differences.
2. Annualized.
3. 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")
