DOLLAR RESERVES
11 Hanover Square, New York, NY 10005
1-888-503-FUND for Investment Information
1-888-503-VOICE for Shareholder Services
www.mutualfunds.net
August 12, 1998
Fellow Shareholders:
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. 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.
Review and Outlook
Short term interest rates were exceptionably stable during the first half of
1998. The Federal Reserve Bank's Open Market Committee met on four different
occasions between February and July, and consistently resolved to leave monetary
policy unchanged, a policy stance that has resulted in a Federal Funds rate of
5.5% since March 1997. The Fed did adopt a bias toward tightening at the March
31 meeting, and maintained that bias on May 19. The unanimity that typically
characterizes FOMC meetings was abandoned this spring, as the Presidents of two
regional Federal Reserve Banks voted for an immediate tightening. Three month
Treasury bills yielded between 5% and 5.25% since our December 31, 1997 report,
and six month Treasury bills were seldom more than .2% higher. The short term
obligations of the U.S. Government Agencies in which the Fund invests were
acquired with yields generally between .2% and .6% greater that those of
comparable maturity Treasury bills, providing the Fund with an attractive
increase in return for a nominal increase in risk.
Looking forward, we anticipate low inflation and further additional deflationary
impact on the prices of goods due to weakness in Asia. We believe the economy
will continue to operate with high levels of growth, high equity valuations, and
low levels of unemployment. We continue to be skeptical that low unemployment
will lead to a re-emergence of inflationary pressure, and see continuing
stability in money market interest rates.
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, traditional or
Roth IRA or other type 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 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.
<PAGE>
If you have any questions or would like information on any of the Bull & Bear
Funds, the Bull & Bear No-Fee(R) Regular or Roth IRA or opening a discount
brokerage account at Bull & Bear Securities, we would be very pleased to hear
from you. Just call toll-free 1-888-503-FUND (3863), and an Investor Service
Center Representative will be glad to assist you, as always, without any
obligation on your part.
Sincerely,
Thomas B. Winmill Steven A. Landis
President Senior Vice President
Portfolio Manager
<PAGE>
Principal Amt U.S. Government Agencies (100%) Yield* Value**
$ 390,000 Federal Farm Credit, due 7/01/98 5.65% $ 390,000
250,000 Federal Farm Credit, due 7/01/98 5.75 250,000
350,000 Federal Farm Credit, due 7/10/98 5.54 349,523
856,000 Federal Farm Credit, due 7/28/98 5.56 852,527
540,000 Federal Farm Credit, due 7/29/98 5.52 537,732
877,000 Federal Farm Credit, due 7/31/98 5.56 873,046
270,000 Federal Farm Credit, due 8/04/98 5.42 269,926
900,000 Federal Farm Credit, due 9/17/98 5.95 900,420
200,000 Federal Farm Credit, due 9/25/98 5.70 197,420
1,195,000 Federal Farm Credit, due 10/01/98 5.65 1,194,954
500,000 Federal Farm Credit, due 10/01/98 5.46 499,743
1,000,000 Federal Farm Credit, due 12/01/98 5.70 1,000,265
1,500,000 Federal Home Loan Banks, due 7/07/98 5.72 1,500,065
1,000,000 Federal Home Loan Banks, due 7/08/98 5.22 999,962
705,000 Federal Home Loan Banks, due 7/10/98 5.53 704,043
1,500,000 Federal Home Loan Banks, due 7/10/98 6.19 1,500,188
450,000 Federal Home Loan Banks, due 7/15/98 5.59 449,044
4,700,000 Federal Home Loan Banks, due 7/17/98 5.54 4,688,724
500,000 Federal Home Loan Banks, due 7/20/98 5.24 499,886
4,510,000 Federal Home Loan Banks, due 7/21/98 5.64 4,510,060
500,000 Federal Home Loan Banks, due 7/22/98 6.23 500,194
182,000 Federal Home Loan Banks, due 7/27/98 5.56 181,286
400,000 Federal Home Loan Banks, due 8/05/98 5.53 397,892
584,000 Federal Home Loan Banks, due 8/12/98 5.53 580,334
2,000,000 Federal Home Loan Banks, due 8/20/98 5.44 1,999,698
500,000 Federal Home Loan Banks, due 8/21/98 5.54 496,161
1,293,000 Federal Home Loan Banks, due 8/26/98 5.54 1,282,139
2,855,000 Federal Home Loan Banks, due 9/02/98 5.54 2,828,042
2,200,000 Federal Home Loan Banks, due 9/16/98 5.54 2,174,919
<PAGE>
1,000,000 Federal Home Loan Banks, due 9/18/98 5.80 1,000,154
1,000,000 Federal Home Loan Banks, due 9/18/98 5.80 1,000,165
500,000 Federal Home Loan Banks, due 9/21/98 5.90 500,459
483,000 Federal Home Loan Banks, due 9/23/98 5.60 476,914
2,330,000 Federal Home Loan Banks, due 9/24/98 5.69 2,330,329
1,000,000 Federal Home Loan Banks, due 9/30/98 5.74 999,973
4,300,000 Federal Home Loan Banks, due 10/01/98 5.71 4,300,707
1,605,000 Federal Home Loan Banks, due 10/02/98 5.69 1,604,937
1,800,000 Federal Home Loan Banks, due 10/02/98 5.69 1,800,000
1,000,000 Federal Home Loan Banks, due 10/02/98 6.01 1,000,744
701,000 Federal Home Loan Banks, due 10/06/98 5.55 690,914
1350,000 Federal Home Loan Banks, due 10/26/98 5.59 1,326,373
2,000,000 Federal Home Loan Banks, due 10/27/98 5.80 2,001,285
286,000 Federal Home Loan Banks, due 10/30/98 5.59 280,809
426,000 Federal Home Loan Banks, due 11/13/98 5.56 417,453
5,000,000 Federal Home Loan Banks, due 12/03/98 5.41 4,998,424
1,650,000 Federal Home Loan Banks, due 12/04/98 5.57 1,611,748
1,115,000 Federal Home Loan Banks, due 12/28/98 5.60 1,085,397
1,000,000 Student Loan Marketing Assn., due 11/10/98 5.29 999,193
Total Investments (100%) $61,034,171
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.
See accompanying notes to financial statements.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
ASSETS:
Investments at value which equals
amortized cost (note 1) $61,034,171
Cash 26,085
Interest receivable 620,715
<PAGE>
Receivable for fund shares sold 6,708
Other assets 6,471
Total assets 61,694,150
LIABILITIES:
Payables:
Fund shares redeemed 2,532
Distribution 2,147
Accrued expenses 64,770
Accrued management 22,258
Total liabilities 91,707
NET ASSETS: (applicable to 61,602,443
outstanding shares: 500,000,000 shares
of $.01 par value authorized) $61,602,443
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($61,602,443 ÷ 61,602,443) $1.00
At June 30, 1998, net assets consisted of:
Paid-in capital $61,610,246
Accumulated net realized loss on
investments (7,803)
$61,602,443
STATEMENT OF OPERATIONS Year Ended June 30, 1998 INVESTMENT INCOME:
Interest $3,502,320
EXPENSES:
Investment management (note 3) 314,628
Distribution (note 3) 157,314
Transfer agent 66,981
<PAGE>
Professional (note 3) 58,115
Custodian 50,262
Registration (note 3) 40,078
Shareholder administration (note 3) 31,267
Directors 9,661
Other 23,334
751,640
Total expenses (211,225)
Net expenses
Net investment income 2,961,905
NET REALIZED GAIN FROM SECURITY TRANSACTIONS
774
Investment management fees and distribution
plan expenses waived from operations
$2,962,679
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended June 30, 1998 1997
OPERATIONS:
<S> <C> <C>
Net investment income $ 2,961,905 $ 3,026,307
Net realized gain from security transactions 774 401
Net increase in net assets resulting from operations 2,962,679 3,026,708
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.047 and $0.047 per
share, respectively (2,961,905) (3,025,265)
Distributions from paid-in capital ($0.001 per share) (70,279) _
CAPITAL SHARE TRANSACTIONS:
Change in net assets resulting from capital share transactions (a)
Total increase (decrease) in net assets (1,235,973) 439,197
NET ASSETS (1,305,478) 440,640
Beginning of period 62,907,921 62,467,281
End of period $61,602,443 $62,907,921
</TABLE>
a)Transactions in capital shares were as follows:
1998 1997
Shares sold $49,705,407 $ 66,841,991
Shares issued in
reinvestment of distributions 2,981,463 2,945,036
Shares redeemed (53,922,843) (69,347,830)
Net increase (decrease) $(1,235,973) 439,197
(a) Transactions in capital shares were as follows:
Notes to Financial Statements
(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, 1998, the
Fund had an unused capital loss carryforward of approximately $7,800 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 $53,911 of its
management fee for the year ended June 30, 1998. 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 $27,357 for providing certain administrative and accounting services at
cost for the year ended June 30, 1998. 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 year ended June 30, 1998.
Investor Service Center also received $31,267 for shareholder administration
services it provided to the Fund at cost for the year ended June 30, 1998.
<PAGE>
<TABLE>
<CAPTION>
Years Ended June 30,
1998 1997 1996 1995 1994
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 .048 .047 .047 .044 .026
Less distributions:
Distributions from net investment income (.047) (.047) (.047) (.044) (.026)
Distributions from paid-in capital (.001) _ _ _ _
Net asset value at end of period $1.000 $1.000 $1.000 $1.000 $1.000
TOTAL RETURN 4.88% 4.83% 4.81% 4.53% 2.59%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $61,602 $62,908 $62,467 $65,278 $76,351
Ratio of expenses to average net assets (a) .86% .71% .90% .89% .89%
Ratio of net investment income to average net assets (b) 4.71% 4.73% 4.70% 4.41% 2.56%
</TABLE>
(a) Ratio prior to waiver by the Investment Manager and Distributor was 1.20%,
1.21%, 1.40%, 1.39%, and 1.39% for the years ended June 30, 1998, 1997, 1996,
1995, and 1994, respectively. (b) Ratio prior to waiver by the Investment
Manager and Distributor was 4.37%, 4.23%, 4.20%, 3.91%, and 2.06% for the years
ended June 30, 1998, 1997, 1996, 1995, and 1994, respectively.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders of Bull & Bear Dollar Reserves, a
series of Bull & Bear Funds II, Inc.:
We have audited the accompanying statement of assets and liabilities of Bull &
Bear Dollar Reserves, a series of Bull & Bear Funds II, Inc., including the
schedule of portfolio investments as of June 30, 1998, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1998, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statements presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Bull &
Bear Dollar Reserves as of June 30, 1998, the results of its operations
<PAGE>
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 17, 1998
DOLLAR RESERVES
For Fund prospectuses and other
investment information, call toll-free
1-888-503-FUND
1-888-503-3863
For shareholder services by
Investor Access, call toll-free
1-888-503-VOICE
1-888-503-8642
Or, access the Fund on the web at
www.mutualfunds.net
Printed on recycled paper
DOLLAR RESERVES
A High Quality Money
Market Fund Investing in
U.S. Government Securities
- -
Income is Generally Free from State and Local Income Taxes
Annual Report
June 30, 1998
Independent Accountants
Tait, Weller & Baker
<PAGE>
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.
DR-111-6/8
