Dollar Reserves
11 Hanover Square, New York, NY 10005
1-800-847-4200
212-363-1100
http://www.bull-and-bear.com
A High Quality Money
Market Fund Investing in
U.S. Government Securities-
Income is Generally Free from State and Local Income Taxes
Semi-Annual Report
December 31, 1996
February 15, 1997
Fellow Shareowners:
We are pleased to welcome our many new shareowners who have joined us
by opening Bull & Bear Dollar Reserves accounts of various types, such as
Gifts/Transfers to Minors, IRA and other qualified retirement plans, and regular
individual, joint and corporate accounts. We know many have chosen Dollar
Reserves as a convenient and competitively yielding "parking place" by moving
assets into the Fund from other investments. We also welcome those joining us
through their Bull & Bear Securities discount brokerage sweep account, in which
cash balances are promptly, automatically and productively put to work in shares
of the Fund.
Review and Outlook
During the second half of the year, the economy was characterized by
moderate growth and consistently low levels of inflation, with "overall" and
"core" Consumer Price Index figures up just 3.3% and 2.6%, respectively.
Reflecting this, the Federal Reserve has maintained its targeted Federal Funds
rate, the amount banks charge each other for overnight loans, at a relatively
low level of 5.25% since January 1996. This is the longest period of unchanged
rates since 1993, and confirms the modestly expanding overall economy and
acceptable rates of inflation we have enjoyed throughout this period.
Over 1.2 million new jobs were created during the past six months.
Although this was about 25% less than were created during the first half, the
unemployment rate nevertheless fell to its lowest level since 1989. Other
measures of employment, such as the length of the average work week and overtime
hours also continue to confirm increased demands for labor. Tightness in labor
markets needs to be monitored closely because it creates the potential for
inflationary pressure on wages, and as personal income rises, the demand for
goods and services rises throughout the economy.
Looking ahead, we see several variables that support the continuation
of last year's moderate growth and low inflation experience. While personal
income continues to grow at a rapid pace, demand pressures should be moderated
by high levels of consumer debt. Demographic trends should also restrain
consumption, particularly demand related to housing and durable goods.
Affordable Plans for Growing Your Account
We therefore anticipate relatively stable intermediate and long term
domestic interest rates over the balance of the year. This, plus the Fund's
all-weather, safety-conscious approach makes it an
Dollar Reserves
<PAGE>
ideal vehicle for a program of steady monthly investing. To make investing in
the Fund as easy, safe, convenient and affordable as possible, we offer the Bull
& Bear Automatic Investment Program, with three different Plans to facilitate an
automatic monthly investment of $50 or more into your Fund account.
- The Bull & Bear Bank Transfer Plan lets you purchase Fund shares on a
certain day each month by transferring electronically the dollar amount you
specify from your regular checking account, NOW account, or bank money market
deposit account.
- In the Bull & Bear Salary Investing Plan, part or all of your salary
may be invested electronically in shares of the Fund on each pay date, depending
upon your employer's direct deposit program.
- The Bull & Bear Government Direct Deposit Plan allows you to deposit
automatically part or all of certain U.S. Government payments into your Fund
account. Eligible U.S. Government payments include Social Security, pension
benefits, military or retirement benefits, salary, veteran's benefits
and most other recurring payments.
If you have any questions or would like information on any of the Bull
& Bear Funds, the Bull & Bear No-Fee IRA(R) or opening a discount brokerage
account at Bull & Bear Securities, where you can earn American Airlines(R)
AAdvantage(R) miles on every trade, we would be very pleased to hear from you.
Just call 1-800-847-4200, and an Investor Service Center Representative will be
glad to assist you, as always, without any obligation on your part.
Sincerely,
Robert D. Anderson Steven A. Landis
Vice Chairman Senior Vice President
Portfolio Manager
<PAGE>
Mutual Funds
Bull & Bear Dollar A high quality moneymarket fund investing in U.S.
Reserves Government securities. Income is generally free from
state income and
intangible personalproperty taxes. Free, unlimited
check writing with only a $250 minimum per check
Bull & Bear Gold Seeks long term capital appreciation in investments
Investors with the potential to provide a hedge against inflation
and preserve the purchasing power of the dollar.
Bull & Bear Invests aggressively for maximum
Special Equities Fund capital appreciation.
Bull & Bear Invests worldwide for the highest possible total
U.S. and Overseas return.
Fund
Call our toll-free number for a prospectus
containing more complete information, including
charges and expenses. Please read it carefully
before you invest.
Closed-end
investment
companies listed on
the American Stock
Exchange
Bull & Bear Investing for a high level of income from a global
Global Income Fund portfolio of primarily investment grade fixed income
securities.
Bull & Bear Bull & Bear Investing for the highest possible
Municipal Income Fund income exempt from Municipal Income Federal income
tax that is consistent with Fund preservation of
principal.
Bull & Bear U.S. Investing for a high level of current income, liquidity
Government and safety of principal.
Securities Fund
Discount Brokerage
Services
Bull & Bear Receive the investment information you need and the
Securities, Inc. low commissions you expect. Plus you can earn American
Airlines(R)AAdvantage(R) miles
every time you trade. And you can save an
additional 10% off our already low commission
rates when you use Bull & Bear PC OnLine
Investment CenterSM and/or Bull & Bear
TeleQuote/ TeleTrade SM. (There is no check
writing minimum for Bull & Bear Performance Plus(R)
accounts.)
Call Toll Free
1-800-VIP-4200
Total Return Performance. For the period ended December 31, 1996, Bull &
Bear Dollar Reserves' 7-day compound yield was 4.75% on a current yield of
4.64%. Past performance does not guarantee future
results. Investment return will fluctuate, and
there can be no assurance a net asset value of $1.00 per share will be able
to be maintained.
BULL & BEAR DOLLAR RESERVES
SCHEDULE OF PORTFOLIO INVESTMENTS - DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
ANNUALIZED
YIELD ON
DATE OF
PRINCIPAL PURCHASE
AMOUNT VALUE*
U.S. GOVERNMENT AGENCIES (100.0%)
<S> <C> <C> <C>
$3,250,000 Federal Farm Credit, due 2/03/97 5.32% $ 3,248,375
1,500,000 Federal Farm Credit, due 2/03/97 5.32 1,500,157
1,000,000 Federal Farm Credit, due 5/02/97 5.39 1,000,416
5,840,000 Federal Farm Credit, due 9/02/97 5.36 5,839,640
3,000,000 Federal Home Loan Banks, due 1/02/97 5.45 3,000,044
1,025,000 Federal Home Loan Banks, due 1/06/97 5.60 1,024,203
3,915,000 Federal Home Loan Banks, due 1/09/97 5.33 3,910,427
5,500,000 Federal Home Loan Banks, due 1/13/97 5.27 5,498,765
2,500,000 Federal Home Loan Banks, due 1/16/97 5.29 2,494,563
1,000,000 Federal Home Loan Banks, due 1/17/97 5.45 1,000,994
4,865,000 Federal Home Loan Banks, due 1/23/97 5.28 4,849,468
1,500,000 Federal Home Loan Banks, due 1/28/97 5.34 1,494,083
3,500,000 Federal Home Loan Banks, due 1/30/97 5.30 3,485,170
1,000,000 Federal Home Loan Banks, due 2/03/97 5.32 1,000,290
1,000,000 Federal Home Loan Banks, due 2/06/97 5.28 994,790
1,500,000 Federal Home Loan Banks, due 2/07/97 5.46 1,491,629
1,000,000 Federal Home Loan Banks, due 2/07/97 5.32 999,341
1,210,000 Federal Home Loan Banks, due 2/20/97 5.40 1,200,992
5,590,000 Federal Home Loan Banks, due 3/20/97 5.36 5,590,000
1,500,000 Federal Home Loan Banks, due 3/27/97 5.37 1,481,229
3,000,000 Federal Home Loan Banks, due 5/28/97 5.43 3,001,641
1,410,000 Student Loan Marketing Assn., due 1/23/97 5.62 1,410,097
5,000,000 Student Loan Marketing Assn., due 2/13/97 5.36 4,999,577
3,020,000 Tennessee Valley Authority, due 1/15/97 5.47 3,020,478
-------------
TOTAL INVESTMENTS (100.0%) $63,536,369
===========
</TABLE>
* Cost of investments for financial reporting and for Federal income tax
purposes is the same as value.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996 (Unaudited)
ASSETS:
<S> <C> <C>
Investments at value which equals amortized cost (note 1)........................ $63,536,369
========================================================= ===========
Cash 58,976
==== ======
Interest receivable 722,357
=================== =======
Other assets 4,789
============ --------------
Total assets 64,322,491
LIABILITIES:
Accrued expenses 105,258
Payable for distributions to shareholders 3,676
Total liabilities 108,934
NET ASSETS: (applicable to 64,143,379 outstanding shares: 500,000,000 shares
of $64,213,557
$.01 par value authorized)
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($64,213,557 _ 64,143,379) $1.00
=====
At December 31, 1996, net assets consisted of:
Paid-in capital $64,221,160
Accumulated net realized loss on investments..................................... (7,603)
-------------
$64,213,557
</TABLE>
See accompanying notes to financial statements.
Dollar Reserves
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1996 (Unaudited)
INVESTMENT INCOME:
<S> <C>
Interest.........................................................................$1,757,795
======== ----------
EXPENSES:
=========
Investment management (note 3)................................................... 162,212
============================== =======
Distribution (note 3)............................................................ 81,106
===================== ======
Transfer agent................................................................... 50,118
============== ======
Professional (note 3)............................................................ 24,483
===================== ======
Custodian........................................................................ 24,406
========= ======
Registration (note 3) 21,095
===================== ======
Shareholder administration (note 3) 12,735
=================================== ======
Printing 12,682
======== ======
Directors 5,265
========= =====
Miscellaneous 970
============= ----------
Total expenses 395,072
============== =======
Investment management fees and distribution plan expenses waived (note 3) (162,212)
========================================================================= ----------
Net expenses 232,860
============ ----------
Net investment income 1,524,935
===================== ----------
NET REALIZED GAIN FROM SECURITY TRANSACTIONS: 392
============================================= ----------
Net increase in net assets resulting from operations $1,525,327
==================================================== ----------
</TABLE>
See accompanying notes to financial statements.
Dollar Reserves
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1996 (Unaudited) and for the Year Ended
June 30, 1996
<TABLE>
DECEMBER 31, JUNE 30,
1996 1996
----- -----
OPERATIONS:
<S> <C> <C>
Net investment income................................................. $ 1,524,935 $2,870,569
===================== ============ ==========
Net realized gain (loss) from security transactions................... 392 (108)
=================================================== ------------- =======-----------
Net increase in net assets resulting from operations.................. 1,525,327 2,870,461
==================================================== ========= =========
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($.024 and $.047 per share,
respectively)......................................................... (1,524,078) (2,871,484)
============= =========== ===========
CAPITAL SHARE TRANSACTIONS:
Change in net assets resulting from capital share transactions (a).... 1,745,027 (2,809,991)
================================================================== ------------- ------------
Total increase (decrease) in net assets............................... 1,746,276 (2,811,014)
======================================= ========= ============
NET ASSETS:
Beginning of period................................................... 62,467,281 65,278,295
=================== ------------ -----------
End of period......................................................... $64,213,557 $62,467,281
============= =========== ===========
- --------------
</TABLE>
(a) Transactions in capital shares were as follows:
<TABLE>
DECEMBER 31, JUNE 30,
1996 1996
---------- ---------
<S> <C> <C>
Shares sold........................................................ $36,199,913 $122,565,315
=========== =========== ============
Shares issued in reinvestment of distributions..................... 1,481,650 2,786,829
============================================== ========= =========
Shares redeemed....................................................(35,936,536) (128,162,135)
=============== ------------ -------------
Net increase (decrease)............................................$ 1,745,027 $ (2,809,991)
======================= ============ ==============
</TABLE>
See accompanying notes to financial statements.
Dollar Reserves
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) The Fund is a diversified series of common stock of Bull & Bear Funds II,
Inc. (the "Company"), a Maryland corporation registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
Bull & Bear Global Income Fund is the other series of the Company. The Fund's
investment objective is to provide its shareholders maximum current income
consistent with preservation of capital and maintenance of liquidity. The Fund
invests exclusively in obligations of the U.S. Government, its agencies and
instrumentalities, as set forth in its prospectus.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The market
value of the Fund's portfolio securities is cost adjusted for amortization of
premiums and accretion of discounts. Dividends from net investment income
(investment income less expenses plus or minus all realized gains or losses on
the Fund's portfolio securities) are declared daily and reinvested or paid
monthly. Security transactions are accounted for on the trade date (the date the
order to buy or sell is executed). Interest income is recorded on the accrual
basis. In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(2) The Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable investment income and net capital gains, if
any, after utilization of any capital loss carryforward, to its shareholders and
therefore no Federal income tax provision is required. At June 30, 1996, the
Fund had an unused capital loss carryforward of approximately $8,900 of which
$8,600 expires in 2003 and $300 in 2004.
(3) The Fund retains Bull & Bear Advisers, Inc. as its Investment Manager. Under
the terms of the Investment Management Agreement, the Investment Manager
receives a management fee, payable monthly, based on the average daily net
assets of the Fund, at the annual rate of .50 of 1% of the first $250 million,
.45 of 1% from $250 million to $500 million, and .40 of 1% over $500 million.
The Investment Manager has agreed to waive all or part of its fee or reimburse
the Fund monthly if and to the extent the aggregate operating expenses of the
Fund exceed the most restrictive limit imposed by any state in which shares of
the Fund are qualified for sale, although currently the Fund is not subject to
any such limits. The Investment Manager voluntarily waived $81,106 of its
management fee for the six months ended December 31, 1996. Certain officers and
directors of the Fund are officers and directors of the Investment Manager and
Investor Service Center, Inc., the Fund's distributor. The Fund reimbursed the
Investment Manager $12,575 for providing certain administrative and accounting
services at cost for the six months ended December 31, 1996.
The Fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plan"). Pursuant to the Plan, the Fund may
pay the Distributor a fee in an amount of one quarter of one percent per annum
of the Fund's average daily net assets as compensation for distribution and
service activities. The fee is intended to cover personal services provided to
shareholders in the Fund and the maintenance of shareholder accounts and all
other activities and expenses primarily intended to result in the sale of the
Fund's shares. The distribution fees were waived by Investor Service Center for
the six months ended December 31, 1996. Investor Service Center also received
$12,735 for shareholder administration services it provided to the Fund at cost
for the six months ended December 31, 1996.
FINANCIAL HIGHLIGHTS
<TABLE>
Six Months
Ended
December 31, Years Ended June 30,
1996* 1996 1995 1994 1993 1992
PER SHARE DATA
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $1.000
Income from investment operations:
Net investment income .024 .047 .044 .026 .26
Less distributions:
Distributions from net investment income (.024) (.047) (.044) (.026) (.026) (.042)
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 1.000
TOTAL RETURN 4.74% 4.81% 4.53% 2.59% 2.63% 4.28
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $64,214 $62,467 $65,278 $76,351 $64,673 $63,832
Ratio of expenses to average net assets (a) .72% .90% .89% .89% .75% .80
Ratio of net investment income (loss) to
average net assets (b) 4.70% 4.70% 4.41% 2.56% 2.59%
4.24
</TABLE>
(a) Ratio prior to waiver by the Investment Manager and Distributor was 1.22%*,
1.40%, 1.39%, 1.39%, 1.25% and 1.22% for the six months ended December 31, 1996
and for the years ended June 30, 1996, 1995, 1994, 1993 and 1992, respectively.
(b) Ratio prior to waiver by the Investment Manager and Distributor was 4.20%*,
4.20%, 3.91%, 2.06%, 2.09% and 3.82% for the six months ended December 31, 1996
and for the years ended June 30, 1996, 1995, 1994, 1993 and 1992, respectively.
* Unaudited.
** Annualized.
Dollar Reserves
11 Hanover Square
New York, NY 10005
1-800-847-4200 1-212-363-1100
http://www.bull-and-bear.com
Call toll-free for Fund performance, telephone purchases, exchanges among the
Bull & Bear Funds, and to obtain information concerning your account.
1-800-847-4200
1-212-363-1100
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. The report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective Prospectus.
Dollar Reserves
<PAGE>
