May 30, 1997
Dear Shareholder:
We are pleased to present your Bailard, Biehl & Kaiser Diversa Fund semi-annual
shareholders' report for the six months ended March 31, 1997. In this report, we
will discuss the impact of changing market conditions upon the Diversa Fund's
performance. We will also review our market outlook and current investment
strategy.
Market Review and Performance Update
The six months covered by this report can be divided into two distinct periods -
the fourth quarter of 1996 and the first quarter of 1997. During the fourth
quarter of 1996, the global stock and bond markets rallied strongly amidst
optimism that the U.S. economy would continue to grow at a slow, steady, low
inflationary pace. Led by strong U.S. stock performance, the Diversa Fund
advanced 5.3%* for the three months ended December 31, 1996.
During the first quarter of 1997, however, market sentiment changed dramatically
as signs of stronger economic growth rekindled inflationary fears. The bond
markets were the first to react to news that the U.S. economy had grown at a
faster than expected rate in late 1996. U.S. bond yields rose in anticipation of
the Federal Reserve Board's decision to raise short-term interest rates on March
25th. A stronger dollar lowered already modest international bond returns. The
global bond markets therefore ended the quarter on a negative note.
International stocks declined due to weakness in Japan and other Pacific rim
countries. The U.S. stock market also pulled back from its February highs. As a
result of these lackluster market conditions, the Diversa Fund returned -0.4%*
for the quarter ended March 31, 1997, bringing its return for the entire
six-month period to 4.9%.*
During the fourth quarter of 1996, the Diversa Fund generally added value with
its security selection, especially in the international stock area. These gains
were offset by a slightly underweight position in U.S. stocks. However, the
Fund's asset allocation provided some nice downside protection during the more
volatile first quarter of 1997. The U.S. stock portfolio performed in line with
the broader domestic
stock market indices, which tended to lag behind the S&P 500. Both international
stocks and international bonds handsomely outperformed their benchmarks for the
quarter.
Market Outlook
The pendulum of investor sentiment continues to swing between inflationary
concerns and a belief that inflation will remain under control. Fears that
inflation was on the upswing depressed the U.S. stock and bond markets further
in April. However, the financial market rebounded in May when new economic data
indicated that inflation is not yet a problem. To a certain extent, the U.S.
economy has entered unknown territory. Will structural changes, such as
increased global competition, increased productivity,
<PAGE>
Page 2
and the computer revolution, allow us to avoid the inflationary pressures
typical of an economy that is acting at or near full capacity? Or, have we
entered that stage in the economic cycle where capacity- induced wage pressures
will rekindle inflation?
Our belief is that inflation will continue to remain under control. The
structural forces restraining inflation are greater than any cyclical forces
acting to increase prices. Moreover, we expect economic growth to slow later in
1997. U.S. economic conditions will thus be generally favorable for the
financial markets.
Nevertheless, we expect more turbulence in the U.S. stock and bond markets in
the short term. U.S. stocks are in fully valued if not overvalued territory, the
Federal Reserve Board may raise short-term interest rates again, and new
economic data may resurrect fears of inflation.
Investment Strategy
The Diversa Fund has recently made a number of asset allocation shifts in
response to changing market conditions. Among other things, we reduced the
Fund's U.S. stock weighting in late January due to concerns that stocks were
overvalued and added a little back to U.S. stocks in early April, when the U.S.
stock market was down nearly 10% from its February highs. The current asset
allocation targets of the Diversa Fund are 9% cash equivalents, 24% U.S. bonds,
7% international bonds, 42% U.S. stocks, and 18% international stocks. We have
recently purchased an S&P 500 "put" that effectively lowers our U.S.
equity exposure to 40%.
International Stocks 18%
Cash 9%
U.S. Bonds 24%
International Bonds 7%
U.S. Stocks 42%
These are the investment targets for the Bailard, Biehl & Kaiser Diversa Fund as
of May 21, 1997. The Fund's actual asset allocations may fluctuate from time to
time above and below these targets.
<PAGE>
Page 3
Looking forward, we are unlikely to increase the Fund's allocation to U.S.
stocks until either a stock market correction or a decline in interest rates
improves the valuation of stocks relative to bonds. International stocks look
much more attractive to us from a relative valuation point of view. However, we
probably will not add to international stocks until we see more signs that the
recent steep rise in the dollar is over and until an increase in global market
volatility signals that such a move is likely to add value.
Closing Comments
Although general economic conditions remain good in the U.S., we expect to see a
bit more turbulence in the U.S. financial markets in the short term. We have
therefore adopted a more conservative investment posture to help protect the
Diversa Fund from downside risks. We are prepared to invest our cash holdings
when market conditions warrant. Longer term, the signs are building that we are
moving nearer to a period where international assets will play a more dominant
role in investment performance.
Please feel free to contact one of our client service counselors at 800-882-8383
if you have any questions or would like to discuss the Fund in greater detail.
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 March 31, 1997: 3
months: -0.40%; 6 months: 4.90%; 12 months: 8.12%; 5 years: 9.18% annualized;
10 years: 6.42% 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, 1997
(Unaudited)
Par
Value Value
Domestic Securities (62.8%)
Domestic Fixed Income (24.2%)
Government Bonds
United States Treasury Bonds
7.625% 02-15-25 $ 1,110,000 $ 1,165,328
United States Treasury Notes
7.125% 02-29-00 1,000,000 1,013,750
United States Treasury Notes
6.250% 01-31-02 1,210,000 1,184,666
United States Treasury Notes
5.875% 02-15-04 3,050,000 2,888,445
United States Treasury Notes
5.625% 02-15-06 2,500,000 2,285,546
--------------
Total Domestic Fixed Income
(Identified Cost $8,815,239) 8,537,735
--------------
Domestic Stock Market (38.6%) Shares Value
Basic Industry (3.9%)
IMC Global, Inc. 7,000 $ 252,875
Millipore Corp. 7,000 296,625
Monsanto Corp. 14,400 550,800
Nucor Corp. 6,200 283,650
--------------
Total Basic Industry 1,383,950
Capital Goods (5.4%)
Deere (John) & Company 8,100 352,350
Fluor Corp. 4,400 231,000
General Electric Company 6,900 684,825
Harnischfeger Inds. Inc. 8,000 372,000
*Litton Inds. Inc. 6,200 249,550
*Stevens International Inc. Cl A
Warrants Exp. 10/30/97 159 0
--------------
Total Capital Goods 1,889,725
Consumer Cyclicals (4.1%)
Danka Business System Plc ADR 3,600 113,175
*General Nutrition Cos, Inc. 12,100 245,025
*Lear Corp. 9,000 300,375
Sound Advice Inc. Warrant, Exp. 6/14/99 93 0
Sunbeam Corp. 11,000 330,000
Sysco Corp. 14,000 477,750
--------------
Total Consumer Cyclicals 1,466,325
Consumer Staples (4.9%)
Eastman Kodak Co. 3,700 280,738
PepsiCo, Inc. 19,800 645,975
Philip Morris Co. Inc. 2,200 251,075
Procter & Gamble Corp. 3,200 368,000
Unilever NV NY Shrs 1,100 204,875
--------------
Total Consumer Staples 1,750,663
Energy/Resources ( 4.2%)
Kerr McGee Corp. 5,200 321,750
Mobil Corp. 3,450 450,656
Royal Dutch Petroleum Co. NY Reg 2,600 455,000
Valero Energy Corp. 7,500 272,813
--------------
Total Energy/Resources 1,500,219
Finance (4.7%)
Advanta Corp Class A 6,600 177,375
Aetna, Inc. 7,000 601,125
Banc One Corp 7,500 298,125
Chase Manhattan Corp. 6,200 580,475
*National Mercantile Bancorp
Warrants exp. 06/02/99 1,434 0
--------------
Total Finance 1,657,100
<PAGE>
Shares Value
Health Care (2.9%)
Johnson & Johnson 8,400 $ 444,150
Pharmacia & Upjohn, Inc. 10,200 373,575
Teva Pharmaceutical Inds Ltd. ADR 3,600 199,800
-------------
Total Health Care 1,017,525
High Technology (5.1%)
*Cisco Systems, Inc. 6,000 288,750
Computer Associates International Inc. 4,900 190,488
Electronic Data Systems Corp. 4,200 169,575
Intel Corp. 2,700 375,638
*Microsoft Corp. 2,900 265,894
Xerox Corp. 8,800 500,500
-------------
Total High Technology 1,790,845
Transportation (1.7%)
*AMR Corp. 3,000 247,500
Rollins Truck Leasing Corp. 25,700 340,525
-------------
Total Transportation 588,025
Utilities (1.7%)
Northeast Utilities 20,900 164,588
Ohio Edison 20,800 439,400
-------------
Total Utilities 603,988
Total Domestic Stock Market
(Identified Cost $11,006,237) 13,648,365
-------------
Total Domestic Securities (62.8%)
(Identified Cost $19,821,476) 22,186,100
-------------
International Securities (24.6%) Par Value
(Local Currency)
International Fixed Income (6.7%)
Asian Development Bank (Y) 15,000,000 $ 143,638
5.625% 02-18-02
British Telecom PLC (pound) 30,000 47,838
7.125% 09-15-03
German Federal Republic DM 410,000 279,627
8.375% 05-21-01
Government of Australia A$ 150,000 129,782
10.000% 10-15-02
Government of Canada C$ 150,000 119,295
8.500% 04-01-02
Government of France OAT FF 1,550,000 323,169
9.500% 01-25-01
Government of Netherlands NLG 300,000 182,053
8.500% 03-15-01
Government of Sweden SEK 1,400,000 233,427
13.000% 06-15-01
Kingdom of Denmark DKr 1,125,000 195,178
8.000% 05-15-03
Ontario Hydro Global Bond C$ 25,000 20,621
10.000% 03-19-01
Societe Nat'l. Des Chemins De Fer (Y) 8,000,000 75,055
6.750% 03-01-00
Treuhandanstalt DM 450,000 303,185
7.750% 10-01-02
U.K. Treasury (pound) 180,000 325,332
9.750% 08/27/02 ------------
Total International Fixed Income
(Identified Cost $2,449,582) 2,378,200
------------
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1997 (Continued)
(Unaudited)
International Stocks (17.9%) Shares Value
Argentina (0.4%)
Perez Companc SA ADR 1,000 $ 15,750
Telefon De Argentina ADR 1,300 38,188
Transp Gas Del Sur (TGS) ADR 1,600 20,840
YPF SA ADR 2,300 60,950
------------
Total Argentina 135,728
Australia (0.3%)
Australia & New Zealand Bank Group 2,200 13,936
Broken Hill Proprietary Ltd. 2,500 33,318
CRA Ltd. 1,200 17,742
Davids Ltd. 7,700 8,692
National Australia Bank Ltd. 1,200 15,193
The News Corp. Ltd. 2,900 13,527
------------
Total Australia 102,408
Belgium (0.5%)
Fortis 162 28,959
Fortis Strip 12 2
CBR Cimeneteries NPV 150 14,998
Delhaize Le Lion NPV 200 11,162
D'Ieteren Trading 130 24,372
Electrabel NPV 110 25,323
Kredietbank NPV 80 28,835
PetroFina SA NPV 50 17,440
Powerfin NPV 50 7,092
Tessenderlo Chemie 40 18,312
------------
Total Belgium 176,495
Brazil (.6%)
Companhia Cervejaria Brahma ADR 1,000 13,500
Electrobras Pfd. ADR 1,900 41,914
Itaubanco SA Pfd ADR 40,000 20,694
Light Service Elet Sa 60,000 25,376
Petrobras ADR 1,400 29,050
Telebras ADR 900 92,138
------------
Total Brazil 222,672
Canada (.6%)
Alcan Aluminum Ltd. 300 10,163
Bank of Montreal 400 14,145
Barrick Gold Corp. 700 16,625
Bombardier, Inc. Class B 700 12,668
Canadian Imperial Bank of Commerce 1,000 22,612
*Canadian Natural Resources 600 14,521
*Cott Corp 1,500 14,629
Imperial Oil Ltd. 300 13,988
Loblaw Co. Ltd. 1,200 14,304
*Newbridge Networks Corp 750 21,469
Noranda, Inc. 800 17,714
Quebecor, Inc. Class B 700 12,566
*Renaissance Energy Ltd. 400 11,371
Telus Corp. 500 7,730
Thomson Corp. 600 11,855
Transcanada Pipelines Ltd. 700 12,688
------------
Total Canada 229,048
Czech Republic (.1%)
*CEZ 550 20,005
*SPT Telecom 250 29,736
------------
Total Czech 49,741
Denmark (.5%)
Carlsberg B 200 12,498
D/S Svendborg B 1 44,152
Den Danske Bank 300 27,058
Novo Nordisk A/S B 300 31,402
Sophus Berendsen B 150 19,691
Teledanmark A/S B 500 26,287
------------
Total Denmark 161,088
<PAGE>
Shares Value
Finland (.6%)
Nokia Corp. ADR 3,600 $ 209,700
------------
France (1.1%)
Air Liquide L 121 19,159
Alcatel Alsthom CGE 200 24,152
Axa S A 150 9,947
CIE De St Gobain 300 45,525
CIE Financiere De Paribas A Shares 200 13,953
CLF Dexia France 200 21,623
Carrefour Super Marche 88 54,717
Eaux (CIE Generale Des) 100 13,625
Eridania Beghin Say SA 100 15,763
Michelin Class B 300 17,874
Peugeot SA 150 17,125
Sanofi 370 36,245
Seita 300 10,858
Soc Natl Elf Aquitaine Bearer 500 51,385
Societe Generale Paris 200 23,439
Technip SA 200 21,515
------------
Total France 396,905
Germany (1.3%)
BASF AG 1,000 37,787
Bayer AG 1,000 41,625
Berliner Kraft & Licht Class A 70 19,271
CKAG Colonia Konzern AG 400 37,667
Commerzbank AG 650 18,712
Degussa 30 12,812
Deutsche Bank AG Bearer 950 53,504
Deutsche Telekom 1,100 25,269
Ind - Werke Karl - Aug (IWKA) AG 110 26,787
SAP AG Pfd 110 18,869
SGL Carbon 100 13,735
Veba AG 850 48,153
Viag AG 50 23,632
Volkswagen AG 120 66,361
------------
Total Germany 444,184
Greece (.5%)
Alpha Credit Bank 1,000 73,451
Attica Enterprises S.A. 2,000 15,106
Ergo Bank 553 35,189
Hellenic Bottling Co. 500 16,257
Hellenic Telecom Org 900 19,543
Titan Cement Co. 300 21,639
------------
Total Greece 181,185
Hong Kong (.5%)
Cheung Kong Holdings 2,000 17,616
First Pacific Co 12,000 15,254
Gold Peak Industrial 13,000 8,389
HSBC Holdings 800 18,532
Hong Kong & China Gas 12,000 22,533
Hong Kong & China Gas
Warrants Exp. 9/30/97 1,000 452
Hong Kong & Shanghai Hotels Ord. 5,000 7,969
Hong Kong Telecommunications 7,000 12,015
New World Development Co. Ltd 3,000 16,338
Peregrine Investment
Warrants Exp. 5/15/98 800 194
Shanghai Industrial Holdings 2,000 8,775
Sun Hung Kai Properties Ltd. 2,000 21,229
Swire Pacific Class A 2,000 15,745
------------
Total Hong Kong 165,041
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1997 (Continued)
(Unaudited)
Shares Value
Hungary (.5%)
Egis Rt. 500 $ 31,030
*Graboplast Textil 850 38,226
Magyar Olaj-Es Gaz 2,400 41,833
OTP Bank (Regd) 850 18,689
**Richter (Gedeon) GDR 144A 500 31,000
------------
Total Hungary 160,778
Indonesia (.1%)
Bank International Indonesia Wts 1/17/00 1,812 641
Bank International Indonesia (Fgn Regd) 20,384 15,494
Citra Marga Nusaphala Persad (Fgn Regd) 12,000 10,746
Gudang Garam (Fgn Regd) 2,000 8,725
Kalbe Farma 17,000 19,117
------------
Total Indonesia 54,723
Ireland (.2%)
Allied Irish Banks 2,000 13,765
Bank Of Ireland 1,500 15,020
CRH 2,500 24,716
Greencore Group Plc 2,500 14,027
Irish Life Plc 1,000 5,261
Smurfit (Jefferson) Plc 2,500 6,635
Waterford Wedgewood Units 1,000 1,391
------------
Total Ireland 80,815
Japan (1.9%)
Amway Japan Ltd. 1,000 27,493
Bridgstone Metalapha Corp. 3,000 23,530
Chugoku Bank 1,000 12,695
Chugoku Elec Power 1,000 16,576
Dai Ichi Kangyo Bank 3,000 31,778
Daikyo, Inc. 5,000 16,213
Fuji Photo Film Co 1,000 32,910
Fujitsu 5,000 50,942
Hokkaido Takushoku 12,000 14,846
Honda Motor Co 1,000 29,837
Komai Tekko 2,000 11,967
Mitsubishi Heavy Industries Ltd. 5,000 32,546
Mitsubishi Oil Co. 3,000 13,318
Mori Seiki Co 1,000 13,746
Nikko Securities 3,000 16,835
Nippon Shokubai 2,000 11,935
NKK Corp. 7,000 14,717
Ricoh Co 2,000 22,803
Sankyo Co. Ltd. 2,000 55,147
Seino Transportation Co. 2,000 19,568
Sekisui House Ltd. 5,000 48,921
Sumitomo Electric Industries 2,000 27,169
Suzuki Motor Corp. 3,000 29,110
Toho Gas Co. 8,000 17,142
Tokyo Ohka Kokyo Co. Ltd. 2,000 47,061
Toyo Trust & Banking Co. Ltd. 3,000 20,692
------------
Total Japan 659,497
Malaysia (.3%)
Commerce Asset Holdings Berhad 1,500 10,532
DCB Holdings Berhad 4,000 15,091
Genting Berhad 1,400 9,491
Petronas Gas Berhad 4,000 14,768
Sime Darby Berhad 4,000 14,607
Sime UEP Properties Berhad 5,000 11,803
Telekom Malaysia 2,000 15,575
Tractors Malaysia Holdings 5,000 10,290
------------
Total Malaysia 102,157
Mexico (.4%)
Alfa SA De Cv Class A 2,200 12,360
Cemex SA ADR 3,100 25,188
Cifra SA De Cv ADR 6,500 8,743
Fomento Economico Mexicano (Femsa) B 3,500 15,471
<PAGE>
Shares Value
Mexico- Continued
**Grupo Bancomer SA De C ADR 144A 1,100 $ 9,147
Grupo Carso A1 4,700 27,532
**Grupo Indl Maseca SA ADR 144A 500 7,813
*Grupo Televisa GDR 300 7,463
Kimberly Clark de Mexico SA ADR Class A 1,100 22,963
Telefonos de Mexico ADR 600 23,100
------------
Total Mexico 159,780
Netherlands (1.1%)
ABN-AMRO Holdings NV 500 34,404
Fortis Amev NV 500 19,496
Getronics NV 600 19,522
ING Groep NV 1,750 68,981
Koninklijke Ahold NV 400 27,886
Nutricia Ver Bedrijven CVA 300 46,405
OCE - Van Der Grinten NV 200 25,902
Royal Dutch Petroleum Co. 550 99,921
Samas-Groep NV 300 13,122
Van Ommeren (Koninklijke) 300 13,121
Ver Ned Uitgever (VNU) 1,000 20,589
------------
Total Netherlands 389,349
New Zealand (.4%)
Brierley Investment Ltd 12,000 11,170
Carter Holt Harvey Ltd 15,000 31,782
Fletcher Challenge Buildings 7,000 18,868
Fletcher Challenge Energy 7,000 20,813
Telecom Corp. Of New Zealand 10,000 45,503
------------
Total New Zealand 128,136
Norway (.5%)
Awilco As B 1,200 14,832
Elkem A/S 1,000 18,805
Kvaerner AS 400 21,717
Leif Hoegh & Co. 600 12,102
Norsk Hydro As 1,300 65,059
Orkla A/S 400 32,211
------------
Total Norway 164,726
Philippines (.3%)
Davao Union Cement 60,000 12,517
*Empire East Land 45,000 17,495
Far East Bank & Trust 8,000 35,501
*Filinvest Land Inc. 30,900 9,845
*Mondragon International 35,000 14,934
Philippine Long Distance 300 18,035
*Philippine National Bank 600 7,168
------------
Total Philippines 115,495
Poland (.4%)
*Agros Holdings Series C 500 12,604
*Agros Holdings Series D 100 2,277
Bank Przemyslowo Handlowy (BPH) 400 24,199
*Big Bank (Bk Inicjatyw Gospod) 13,000 16,913
*Debica Series A 600 15,905
Elektrim SA Bearer 2,700 23,711
Mostostal Export Bearer 5,000 15,206
*Okocimskie Zaklady Piwowarskie 1,800 10,772
Polifarb Cieszyn Bearer 3,000 19,515
Rolimpex 1,300 7,738
------------
Total Poland 148,840
Portugal (.4%)
Banco Espirito Santo Reg 2,400 46,354
EST Jeronimo Martins Filho Admin 300 16,636
*Inparsa-Industr Part 450 4,025
*Mundial Confianca 1,000 12,165
Portugal Telecom ADR 1,450 53,288
*Somague - SGPS 1,800 18,247
------------
Total Portugal 150,715
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1997 (Continued)
(Unaudited)
Shares Value
Singapore (.2%)
DBS Land 4,000 $ 13,679
Jardine Strategic 3,000 10,380
Jardine Strategic Wts Exp: 7/7/97 150 0
Keppel Corp. 2,000 12,600
Overseas Chinese Bank (Fgn Regd) 1,000 11,907
Singapore Airlines Ltd (Fgn Regd) 2,000 16,061
United Overseas Land
Wts Exp. 5/28/01 450 280
* Want Want Holdings 7,000 20,090
------------
Total Singapore 84,997
South Africa (.3%)
De Beers Centenary Link Units 700 25,501
Gencor Ltd 4,700 21,801
Sasol Ltd 1,800 19,244
South Africa Brews 700 22,174
------------
Total South Africa 88,720
South Korea (.1%)
Kepco - Korea Electric Power Corp. 210 6,097
Korea Long Term Credit Bank 420 5,675
Samsung Electronics 100 7,893
------------
Total South Korea 19,665
Spain (.5%)
Acerinox S.A. 100 14,136
Autopistas Cesa 525 6,057
Banco Bilbao Vizcaya (Fgn Regd) 400 24,293
Banco De Santander (Fgn Regd) 300 20,704
Endesa 500 32,313
Iberdrola SA 1,600 17,668
Repsol SA 500 20,881
Tabacalera SA Series A 100 5,026
Telefonica de Espana SA 1,000 24,173
------------
Total Spain 165,251
Sweden (.5%)
ABB AB A 100 11,302
AGA AB Series B Free 700 10,586
Astra AB Series A Free 700 33,846
Ericsson Tele Series B Free 1,000 35,286
Investor AB Class B 500 23,480
Scania AB Warrants Exp. 6/04/99 500 444
Stora Kopparbergs Series A 900 12,774
Svenska Handelsbanken Series A 800 24,408
Swedish Match AB 500 1,791
Volvo AB Class B 500 13,398
------------
Total Sweden 167,315
Switzerland (.8%)
Adecco SA Bearer 60 19,566
*Ciba Specialty Chem 76 6,288
Clariant AG (Regd) 50 24,649
Credit Suisse Group (Regd) 320 38,437
Nestle AG (Regd) 30 35,148
Novartis AG (Regd) 76 94,379
Roche Holdings AG (Div Right Cert) 3 25,960
Swiss Bank Corp. (Regd) 100 21,381
------------
Total Switzerland 265,808
Thailand (0.0%)
Bangkok Bank Pcl (Fgn Regd) 1,500 14,564
------------
United Kingdom (2.0%)
Associated British Foods 3,000 27,096
<PAGE>
Shares Value
United Kingdom- Continued
BAA Group 2,100 $ 17,655
Barclays Bank Plc 4,000 67,190
Bass Plc 3,300 44,221
BG Plc 5,000 13,326
British Aerospace 1,000 22,441
*British Biotechnology 5,620 23,208
British Petroleum Plc 4,000 46,460
British Steel Plc 9,300 24,940
British Telecom Plc 8,600 63,103
*Centrica 5,000 5,181
General Accident Plc 2,000 26,980
General Electric Company Plc 3,500 21,536
Great Universal Stores Plc 3,600 39,445
Hyder Plc Pfd. 2,520 4,326
Imperial Chem 1,400 16,030
Ladbroke Group 6,500 24,061
Lloyds TSB Group Plc 6,500 53,361
Mirror Group Plc 13,600 46,763
Prudential Corp. 1,800 16,820
Shell Transport & Trading 1,300 23,206
Smithkline Beecham 3,057 45,465
Tate & Lyle Plc 2,500 17,892
Tesco Plc 4,000 23,033
Yorkshire Electricity Group 1,200 18,183
Yorkshire Water Plc 720 4,158
------------
Total United Kingdom 736,080
Total International Stocks
(Identified Cost $5,730,788) 6,331,606
------------
Total International Securities
(Identified Cost $8,180,370) 8,709,806
------------
Total Bonds and Equity Securities (87.4%)
(Identified Cost $28,001,846) 30,895,906
------------
Short-Term Investments (12.2%)
Brown Brothers Harriman & Co.
(Grand Cayman Branch)
5.000% Call Account 4,303,000
------------
Total Short-term Investments
(Identified Costs $4,303,000) 4,303,000
------------
Total Investments (99.6%)
(Identified Cost $32,304,846) $ 35,198,906
------------
Other Assets less Liabilities (0.4%) 102,693
------------
Net Assets (100.0%) $ 35,301,599
============
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 Knona
-------------------------------------------------------
* Non-income producing security
** Exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may resold in transactions exempt from registration,
normally to qualified institutional buyers. On March 31, 1997, these
securities were values at $47,960, less than 0.2% of Net Assets.
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at value
(Identified cost $32,304,846) $ 35,198,906
Cash 18,804
Receivables:
Dividend, interest and recoverable foreign taxes receivable $ 193,330
Portfolio securities sold 92,440
Fund shares sold 3,130 288,900
Prepaid expenses ------------ 13,511
-------------
Total assets 35,520,121
-------------
Liabilities
Payables:
Portfolio securities purchased 70,135
Unrealized loss on forward currency contracts open (Note 5) 24,787
Shares of the Fund redeemed 2,000 96,922
Accrued management fees (Note 3) ------------ 28,390
Other accrued expenses 93,210
-------------
Total liabilities 218,522
-------------
Net assets (equivalent to $12.38 per share, representing
the offering and redemption price for 2,850,856
shares outstanding, unlimited number of shares authorized) $ 35,301,599
=============
Net assets consist of:
Capital paid in $ 30,710,838
Accumulated undistributed net investment income 146,275
Accumulated net realized gain on investments
and foreign currency transactions 1,579,908
Unrealized appreciation (depreciation) on:
Investments $ 2,894,060
Foreign currency (29,482) 2,864,578
------------ -------------
$ 35,301,599
=============
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1997
Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Dividends (net of foreign taxes withheld of $7,403) $ 167,713
Interest (net of foreign taxes withheld of $590) 491,624
-------------
659,337
Expenses
Advisory fees $ 174,545
Custodian fees 63,629
Audit and legal fees 40,127
Transfer agent fees 18,398
Administrative fees 16,409
Trustees' fees and expenses 11,571
Insurance 3,249
Registration fees 3,629
Miscellaneous expenses 2,478
------------
Total expenses 334,035
-------------
Net investment income 325,302
-------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized gain on investments 1,510,001
Net unrealized loss on investments (160,339)
-------------
Net gain on investments 1,349,662
-------------
Net realized gain on foreign currency 184,272
Net unrealized loss on foreign currency
and foreign currency denominated assets and
liabilities (62,867)
-------------
Net gain on foreign currency 121,405
-------------
Net gain on investments and foreign currency 1,471,067
-------------
FOREIGN CURRENCY
Net increase in net assets resulting from operations $ 1,796,369
=============
</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, 1997 For the year ended
(Unaudited) September 30, 1996
----------- ------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 325,302 $ 812,328
Net realized gain on investments 1,510,001 3,636,128
Net unrealized loss on investments (160,339) (708,875)
Net realized gain on foreign currency 184,272 42,779
Net unrealized gain (loss) on foreign currency and
foreign currency denominated assets and liabilities (62,867) 72,952
------------ ------------
Net increase resulting from operations 1,796,369 3,855,312
------------ ------------
Distributions to shareholders:
From net investment income (754,782) (950,677)
From net realized gains (3,707,053) (2,284,254)
------------ ------------
Total distributions (4,461,835) (3,234,931)
------------ ------------
Fund share transactions:
Proceeds from shares sold 515,955 2,017,739
Net asset value of shares issued on
reinvestment of distributions 3,958,531 2,932,877
Cost of shares redeemed (3,073,676) (9,693,163)
------------ ------------
Net increase (decrease) resulting from
Fund share transactions 1,400,810 (4,742,547)
------------ ------------
Net decrease (1,264,656) (4,122,166)
Net Assets
Beginning of period 36,566,255 40,688,421
------------ ------------
End of period (including undistributed net
investment income of $146,275 and
$575,755, respectively) $ 35,301,599 $ 36,566,255
============ ============
Number of Fund Shares
Sold 40,036 153,963
Issued on reinvestment of distributions 319,660 228,096
Redeemed (238,890) (734,896)
------------ ------------
Net increase (decrease) 120,806 (352,837)
============ ============
</TABLE>
See "Notes to Financial Statements"
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For a share outstanding throughout the period:
Year Ended September 30,
For the six-months -----------------------------------------------------
ended March 31, 1997 1 1
(Unaudited) 1996 1995 1994 1993 1992
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.39 $13.20 $12.01 $12.68 $10.93 $10.64
--------- --------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income 0.12 0.31 0.38 0.26 0.39 0.34
Net Realized/Unrealized Gain (Loss) on
Securities and Foreign Currency 0.53 0.96 1.13 (0.66) 1.66 0.30
--------- --------- -------- -------- -------- --------
Total from Investment Operations 0.65 1.27 1.51 (0.40) 2.05 0.64
--------- --------- -------- -------- -------- --------
Less Distributions:
From Net Investment Income (0.28) (0.32) (0.26) (0.05) (0.30) (0.35)
From Net Realized Gains (1.38) (0.76) (0.06) (0.22) - -
--------- --------- -------- -------- -------- --------
Total Distributions (1.66) (1.08) (0.32) (0.27) (0.30) (0.35)
--------- --------- -------- -------- -------- --------
Net Asset Value, End of Period $12.38 $13.39 $13.20 $12.01 $12.68 $10.93
========= ========= ======== ======== ======== ========
Total Return 4.90% 10.09% 12.83% (3.18%) 19.05% 6.16%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $35,302 $36,566 $40,688 $46,047 $49,584 $50,487
3
Ratio of Expenses to Average Net Assets 1.82% 1.99% 1.85% 1.82% 1.70% 1.90%
Ratio of Net Investment Income to 3
Average Net Assets 1.77% 2.09% 2.97% 2.03% 2.88% 2.75%
Portfolio Turnover Rate 43% 68% 166% 137% 96% 94%
2
Average Commission Rate Paid $0.0106 $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.
3. Annualized.
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
- --------------------------------------------------------------------------------
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 six months ended March 31, 1997, purchases and sales of investment
securities other than U.S. Government obligations and short-term investments
aggregated $7,852,453 and $10,787,756, respectively. Purchases and sales of U.S.
Government obligations aggregated $7,516,516 and $10,963,296, 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.
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, 1997, 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,
1997.
Each outside Trustee is compensated by the Fund at the rate of $4,000 per year
plus an attendance fee of $666 for each Trustees' meeting attended and related
travel expenses.
<PAGE>
BAILARD, BIEHL & KAISER DIVERSA FUND
NOTES TO FINANCIAL STATEMENTS-(Continued)
Unaudited
- --------------------------------------------------------------------------------
Note 4 - Unrealized Appreciation (Depreciation) on a Tax Basis
Unrealized appreciation (depreciation) at March 31, 1997 based on cost of
securities of $32,304,846 for federal income tax purposes, consists of the
following:
Gross unrealized appreciation $ 4,105,512
Gross unrealized depreciation (1,211,452)
-----------
Net unrealized appreciation $ 2,894,060
===========
Note 5 - Forward Foreign Currency Contracts
At March 31, 1997, 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 March 31, 1997
were as follows:
Unrealized
Currency Currency Delivery Appreciation
Receivable Deliverable Date (Depreciation)
---------- ----------- ---- --------------
$ 177,965 DKr 1,106,940 04/29/97 $ 3,406
59,146 A$ 76,416 05/30/97 (742)
138,059 (Y) 16,677,500 05/30/97 1,991
156,997 DM 268,308 06/10/97 (4,750)
138,521 (pound) 85,924 06/10/97 (3,021)
185,372 FF 1,068,114 06/10/97 (5,823)
259,309 NLG 499,170 06/11/97 (8,365)
41,970 CHF 61,200 06/12/97 (173)
39,875 (pound) 25,000 06/17/97 (1,225)
31,330 NLG 59,715 06/17/97 (705)
44,102 SEK 337,825 06/17/97 (887)
284,710 DM 480,305 06/18/97 (5,002)
150,000 C$ 205,268 06/20/97 885
27,411 ITL 46,473,000 06/20/97 (376)
---------
$ (24,787)
=========
Currency Legend:
A$ - Australian Dollar ITL - Italian Lira
C$ - Canadian Dollar NLG - Netherlands Guilder
CHF - Swiss Franc SEK - Swedish Krona
Dkr - Danish Kroner (pound) - British Sterling
DM - German Mark (Y) - Japanese Yen
FF - French Franc
