Dollar Reserves
11 Hanover Square, New York, NY 10005
Dollar Reserves
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, 1997
February 12, 1998
Fellow Shareholders:
The Fund's approach of investing exclusively in short term U.S.
Government securities, the income from which is generally free from state income
and personal property taxes, makes it a sound choice for safety conscious
investors, with the added convenience of free, unlimited check writing.
We are very pleased to welcome shareholders of the Fund who have joined
us since our June 30, 1997 Annual Report, either by opening accounts directly,
or through their Bull & Bear Securities discount brokerage accounts, where
customers' cash balances are promptly put to work by being automatically swept
into shares of the Fund.
REVIEW AND OUTLOOK
Thirty year U.S. Treasury bonds began the second half of 1997 yielding
6.90%, and closed the year yielding 5.97%. This yield decline of almost a full
percentage point, however, was not duplicated in the short term money market
securities in which the Fund invests. For most of the last half of the year
three month Treasury bill yields, for example, stayed in a relatively narrow
range around their 5.17% average, reaching a low of 4.90% in late October due to
a "flight to quality" at the height of the Asian financial crisis, and increased
to 5.47% at year end.
The major reasons for the decline in 1997 of intermediate and long term
interest rates was the improvement in the Federal Budget. The deficit dropped to
$22 billion in 1997 from $107 billion in 1996, and may be in surplus in 1998.
Also, as we have noted before, the demand for Treasury securities among
investors remains high, while the supply continues to decline due to lower
Government financing requirements.
We recognize that current low levels of unemployment may lead to higher
interest rates. We continue to believe, however, that competitive price
pressures will prevent producers from passing on much, if any, of their
increased labor costs, and that they will more likely absorb such costs through
reduced profit margins and/or by increases in productivity. Accordingly, we
anticipate low inflation, declining inflation premiums, and somewhat lower
intermediate and long term interest rates in the year ahead.
A CONVENIENT WAY TO GROW YOUR ACCOUNT
The Fund's all-weather, income and safety conscious approach makes it an
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 $100 or more into your regular, IRA or other
type Fund account.
o 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.
o 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.
o The BULL & BEAR GOVERNMENT DIRECT DEPOSIT PLAN allows you to deposit
automatically into your Fund account part or all of certain U.S. Government
payments, such as 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 Regular or Roth IRA or opening a discount
brokerage account at Bull & Bear Securities, as described on page 3, we would be
very pleased to hear from you. Just call toll-free 1-888-503-FUND (3863), and an
Investor Service Representative will be glad to assist you, as always, without
any obligation on your part.
Sincerely,
Thomas B. Winmill
President
Steven A. Landis
Senior Vice President
Portfolio Manager
<PAGE>
Mutual Funds Bull & Bear Dollar A high quality moneymarket fund investing
Reserves in U.S. 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
Investors investments with the potential to provide
a hedge against inflation and preserve
the purchasing power of the dollar.
Bull & Bear Special Invests aggressively for maximum capital
Equities Fund appreciation.
Bull & Bear U.S.and Invests worldwide for the highest
Overseas Fund possible total return.
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 Bull & Bear Investing for a high level of
companies listed on the Global Income Fund income from a global portfolio
American Stock Exchange of primarily investment grade
fixed income securities.
Bull & Bear Investing for the highest
Municipal Income possible income exempt from
Fund Federal income tax that is
consistent with preservation of
principal.
Bull & Bear U.S. Investing for a high level of
Government current income, liquidity and
Securities Fund safety of principal.
Discount Brokerage Bull & Bear Receive the investment information you
Services Securities, Inc. need and the 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-Free1-800-BULL-BEAR (1-800-285-5232)
Total Return Performance. At December 31,
1997, Bull & Bear Dollar Reserves' 7-day
compound yield was 4.83% on a current yield of
4.72%. 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.
<PAGE>
BULL & BEAR DOLLAR RESERVES
SCHEDULE OF PORTFOLIO INVESTMENTS - DECEMBER 31, 1997 (UNAUDITED)
PRINCIPAL
AMOUNT YIELD* VALUE**
U.S. GOVERNMENT AGENCIES (100%)
1,800,000 Federal Farm Credit, due 1/07/98 5.95% $ 1,798,632
1,000,000 Federal Farm Credit, due 2/03/98 5.65 999,914
600,000 Federal Farm Credit, due 2/06/98 4.72 599,442
1,000,000 Federal Farm Credit, due 2/13/98 7.51 1,001,508
1,200,000 Federal Farm Credit, due 3/02/98 5.54 1,199,822
110,000 Federal Farm Credit, due 3/10/98 5.10 109,864
725,000 Federal Farm Credit, due 3/26/98 5.58 715,673
1,000,000 Federal Farm Credit, due 4/09/98 5.76 1,000,097
3,005,000 Federal Home Loan Banks, due 1/07/98 5.95 3,002,736
450,000 Federal Home Loan Banks, due 1/09/98 5.44 449,524
1,490,000 Federal Home Loan Banks, due 1/09/98 5.95 1,488,363
2,000,000 Federal Home Loan Banks, due 1/13/98 5.95 1,996,639
2,300,000 Federal Home Loan Banks, due 1/14/98 5.41 2,295,852
2,375,000 Federal Home Loan Banks, due 1/14/98 5.95 2,370,711
400,000 Federal Home Loan Banks, due 1/21/98 5.43 398,854
3,000,000 Federal Home Loan Banks, due 1/21/98 5.71 3,000,111
1,300,000 Federal Home Loan Banks, due 1/21/98 5.79 1,299,934
525,000 Federal Home Loan Banks, due 1/23/98 5.69 523,257
2,863,000 Federal Home Loan Banks, due 1/23/98 5.95 2,853,901
500,000 Federal Home Loan Banks, due 1/27/98 5.95 498,115
500,000 Federal Home Loan Banks, due 1/30/98 5.88 499,963
475,000 Federal Home Loan Banks, due 2/03/98 7.62 475,608
1,500,000 Federal Home Loan Banks, due 2/04/98 6.00 1,492,534
3,059,000 Federal Home Loan Banks, due 2/06/98 6.00 3,042,729
395,000 Federal Home Loan Banks, due 2/09/98 6.00 392,748
50,000 Federal Home Loan Banks, due 2/12/98 5.64 49,983
1,250,000 Federal Home Loan Banks, due 2/18/98 6.00 1,241,008
925,000 Federal Home Loan Banks, due 2/20/98 6.00 918,063
260,000 Federal Home Loan Banks, due 2/23/98 6.00 257,916
2,000,000 Federal Home Loan Banks, due 2/24/98 7.32 2,004,502
785,000 Federal Home Loan Banks, due 2/25/98 5.70 784,586
4,925,000 Federal Home Loan Banks, due 2/25/98 6.00 4,883,883
2,335,000 Federal Home Loan Banks, due 3/02/98 6.35 2,313,750
250,000 Federal Home Loan Banks, due 3/09/98 7.06 250,560
295,000 Federal Home Loan Banks, due 3/11/98 5.15 294,590
100,000 Federal Home Loan Banks, due 3/11/98 5.27 99,902
300,000 Federal Home Loan Banks, due 3/20/98 6.35 296,439
661,000 Federal Home Loan Banks, due 3/23/98 6.35 653,097
1,000,000 Federal Home Loan Banks, due 4/13/98 6.89 1,002,935
1,070,000 Federal Home Loan Banks, due 4/15/98 5.79 1,070,156
1,500,000 Federal Home Loan Banks, due 4/15/98 6.03 1,501,073
160,000 Federal Home Loan Banks, due 4/15/98 6.40 157,459
1,845,000 Federal Home Loan Banks, due 4/23/98 6.40 1,813,427
414,000 Federal Home Loan Banks, due 4/29/98 6.40 406,573
258,000 Federal Home Loan Banks, due 6/17/98 5.70 251,481
2,000,000 Student Loan Marketing Assn.,
due 2/17/98 5.00 1,999,596
200,000 Student Loan Marketing Assn.,
due 2/25/98 5.54 199,907
5,000,000 Student Loan Marketing Assn.,
due 3/17/98 5.70 4,998,493
-----------
TOTAL INVESTMENTS (100%) $60,955,910
* Represents annualized yield at date of purchase for discount securities, or
coupon for coupon-bearing securities. **Cost of investments for financial
reporting and for Federal income tax purposes is the same as value.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997 (Unaudited)
ASSETS:
Investments at value which equals
amortized cost (note 1)......................... $60,955,910
Interest receivable................................... 687,334
Cash............................................... 41,429
Other assets....................................... 6,408
Total assets.................................. 61,691,081
LIABILITIES:
Payables:
Dividend Payable .................................. 9,759
Accrued expenses91,428
Total liabilities............................. 101,187
NET ASSETS: (applicable to 61,547,885
outstanding shares: 500,000,000 shares
of $.01 par value authorized).................... $61,589,894
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($61,589,894 / 61,547,885)......................... $1.00
At December 31, 1997, net assets consisted of:
Paid-in capital.................................... $61,597,617
Accumulated net realized loss on
investments...................................... (7,723)
............................................ $61,589,894
STATEMENT OF OPERATIONS
For The Six Months Ended December 31, 1997 (Unaudited)
INVESTMENT INCOME:
Interest........................................... $1,776,582
EXPENSES:.............................................
Investment management (note 3)........................ 8,450
Distribution (note 3).............................. 9,225
Transfer agent..................................... 47,816
Custodian.......................................... 24,329
Registration (note 3).............................. 21,795
Professional (note 3).............................. 20,528
Shareholder administration (note 3)................ 13,541
Directors.......................................... 5,323
Other ............................................. 1,361
Total expenses................................ 372,368
Investment management fees and
distribution plan expenses waived
(note 3).................................... (116,726)
Net expenses.................................. 255,642
Net investment income......................... 1,520,940
Net realized gain from security
transactions.................................. 854
Net increase in net assets resulting
from operations............................... $1,521,794
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1997 (Unaudited)
and for the Year Ended June 30, 1997
<PAGE>
DECEMBER JUNE 30,
31,1997 1997
---------- ----------
OPERATIONS:
Net investment income $1,520,940 $3,026,307
Net realized gain from security transactions 854 401
Net increase in net assets resulting
from operations 1,521,794 3,026,708
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.025
and $0.047 per share, respectively) (1,549,290) (3,025,265)
CAPITAL SHARE TRANSACTIONS:
Change in net assets resulting from
capital share transactions (a) (1,290,531) 439,197
Total increase (decrease) in net assets (1,318,027) 440,640
NET ASSETS:
Beginning of period 62,907,921 62,467,281
End of period $61,589,894 $62,907,921
(a) Transactions in capital shares December 31, June 30,
were as follows: 1997 1997
Shares sold $26,095,222 $ 66,841,991
Shares issued in reinvestment of
distributions 1,512,251 2,945,036
Shares redeemed (28,898,004) (69,347,830)
Net increase (decrease) $(1,290,531) $ 439,197
============ =============
See accompanying notes to financial statements.
<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.
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, 1997, the
Fund had an unused capital loss carryforward of approximately $8,600 which
expires in 2003.
(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 $37,501 of its
management fee for the six months ended December 31, 1997. 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 $13,726 for providing certain administrative and accounting
services at cost for the six months ended December 31, 1997. 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, 1997. Investor Service Center also received
$13,541 for shareholder administration services it provided to the Fund at cost
for the six months ended December 31, 1997.
<PAGE>
<TABLE>
<CAPTION>
Years Ended June 30,
Six Months
Ended
December 31,
1997* 1997 1996 1995 1994 1993
1993 PER SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income .025 .047 .047 .044 .026 .026
Less distributions:
Distributions from net investment income (.025) (.047) (.047) (.044) (.026) (.026)
Net asset value at end of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
TOTAL RETURN 4.97%** 4.83% 4.81% 4.53% 2.59% 2.63%
======== ======= ======= ======= ======= ========
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $61,590 $62,908 $62,467 $65,278 $76,351 $64,673
Ratio of expenses to average net assets (a) .81%** .71% .90% .89% .89% .75%
Ratio of net investment income to average net
assets (b) 4.80%** 4.73% 4.70% 4.41% 2.56% 2.59%
</TABLE>
(a) Ratio prior to waiver by the Investment Manager and Distributor was 1.18%**,
1.21%, 1.40%, 1.39%, 1.39%, and 1.25% for the six months ended December 31, 1997
and for the years ended June 30, 1997, 1996, 1995, 1994, and 1993, respectively.
(b) Ratio prior to waiver by the Investment Manager and Distributor was 4.43%**,
4.23%, 4.20%, 3.91%, 2.06% and 2.09% for the six months ended December 31, 1997
and for the years ended June 30, 1997, 1996, 1995, 1994 and 1993, respectively.
* Unaudited. ** Annualized.
For Fund prospectuses and other
investment information, call toll-free
1-888-503-FUND
1-888-503-3863
For shareholder services by
Direct Access, call toll-free
1-888-503-VOICE
1-888-503-8642
Or, access the Fund on the web at
www.mutualfunds.net
