GOLD INVESTORS
INVESTING IN MINING SHARES
AND GOLD, PLATINUM AND
SILVER BULLION FOR LONG
TERM CAPITAL APPRECIATION
SEMI-ANNUAL REPORT
DECEMBER 31, 1997
GOLD INVESTORS
11 HANOVER SQUARE, NEW YORK, NY 10005
1-888-503-FUND FOR INVESTMENT INFORMATION
1-888-503-VOICE FOR SHAREHOLDER SERVICES
WWW.MUTUALFUNDS.NET
February 12, 1998
Fellow Shareholders:
We are pleased to submit this Report and to welcome our shareholders
who have opened a new account since our last Report, either directly or through
their discount brokerage accounts at Charles Schwab & Co., Fidelity Brokerage,
Waterhouse Securities, Jack White & Co., or Bull & Bear Securities. The Fund
continues to be popular among long term investors who are either retired or
planning for retirement, as evidenced by the fact that approximately one third
of the Fund's net assets represents investments by shareholders in their IRA and
other qualified retirement plan accounts.
Review and Outlook
1997 will be remembered as a year of unexpected developments of an
unusually negative nature for precious metals and mining shares. These were,
first, Bre-X Minerals, a Canadian mining company whose huge gold discovery in
Indonesia proved to be a hoax. Its collapse from a peak market capitalization of
$4 billion has had a very unfortunate effect on the junior mining sector,
raising questions and creating some liquidity problems irrespective of the
quality of the companies or the projects in which they are involved. Second was
the 21.8% decline in the gold price. The market had become fairly conditioned to
occasional European central bank sales, but the surprise announcement from
Australia, the world's third largest gold producer, that the Australian Reserve
Bank had sold two-thirds of its official reserves, caused the gold price to
break below $320. The more recent announcement that the Swiss are considering
the sale of a portion of their gold reserves at some point in the future, caused
a persistent, nervous sell-off to below $300. These developments, plus short
selling by large hedge funds and commodity pools have combined to depress all
categories of mining stocks. The decline in the gold price over the year led to
a 42.7% fall in the Toronto Gold and Silver Index, and a slump of 40.8% in the
Financial Times Gold Mines Index, a more representative global gold stock index.
Looking Ahead
A most important fundamental factor in stabilizing the gold price is
the industry's cost of production. At current prices around $300, approximately
30% of world production, and 60% of South Africa's production, is operating at a
loss. This situation is untenable for any length of time. If the gold price does
not recover in the near future there will be further mine closures and cutbacks,
thereby
<PAGE>
reducing supply and exerting upward pressure on the gold price, even with gold
demand reaching a new record of 4,025 tons in 1997, versus total mine production
of just 2,402 tons. Some high cost mines in Australia, Canada, Chile and South
Africa have already closed. The most notable, however, was the recent
announcement by Pegasus that it was closing its large Australian gold mine.
Additionally, the outstanding short positions will have to be covered, which
considering their size, could generate a significant rally in the gold price.
Also of interest, Alan Wright, chief executive of Gold Fields of South
Africa Ltd., told Reuters at the World Economic Forum's annual meeting in Davos
that he thought gold prices would remain volatile until the new European Central
Bank indicates what it will hold in reserves, but that gold prices in his
opinion had bottomed out.
Given this background, we see this as an opportune time to consider
adding to precious metals positions. We especially favor building your account
on a regular basis, which can be done automatically and conveniently through the
Bull & Bear Bank Transfer Plan, Bull & Bear Salary Investing Plan and/or Bull &
Bear Government Direct Deposit Plan. For information on these free services,
simply give us a call and we will help you get started.
If you have any questions or would like information on any of the Bull
& Bear Funds, the Regular or Roth Bull & Bear No-Fee IRA(R) 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 your, as
always, without any obligation on your part.
Sincerely,
Robert D. Anderson Thomas B. Winmill
Vice Chairman President
<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 Bull & Bear Securities is
Services Securities, Inc. committed to providing investors
with major commission savings,
free investment ideas and
services, free cash management
services with no minimum for
check writing, and American
Airlines(R) AAdvantage(R) miles
for many of your investing
activities. And now you can take
advantage of Bull & Bear
Securities' web trading flat
commission rate of $19.95 per
trade at www.ebullbear.com on the
first 1,000 shares, plus 2(cent)
per share on each share over 1,000
shares, and earn 200 AAdvantage(R)
miles every time you trade! Call
toll-free 1-800-BULL-BEAR
(1-800-285-5232).
Total Return Performance. For periods ended 12/31/97, Bull & Bear Gold
Investors' total return for one year was a negative 55.69%, average annual total
return for the past five years was a negative 6.72%, and for the past ten years
was a negative 7.38%. Past performance does not guarantee future results.
Investment return will fluctuate, so shares when redeemed may be worth more or
less than their cost. Dollar cost averaging does not assure a profit or protect
against loss in a declining market, and investors should consider their ability
to make purchases when prices are low.
<PAGE>
BULL & BEAR GOLD INVESTORS LTD.
Schedule of Portfolio Investments - December 31, 1997 (Unaudited)
Shares Market Value
COMMON STOCKS AND WARRANTS (97.7%)
North America (86.0%)
15,900 ASARCO Inc. ..........................................$ 356,756
190,200 Augusta Gold Corp.*........................................27,950
2,975 Badger Meter, Inc................................. 121,231
100,000 Banro Resource Corp. Special Warrants*............. 367,377
37,000 Colossal Resources Corp.*........................... 23,125
238,300 Cornucopia Resources Ltd. Units*...................... 43,35
111,000 Eaglecrest Explorations Ltd. Units* (1)............. 13,632
14,300 Engelhard Corp...................................... 248,463
200,000 Fairmile Gold Cop.* (2)............................. 21,693
200,000 Fairmile Gold Corp. Units* (1)....................... 14,107
50,000 Freeport-McMoran Copper &Gold, Inc.................. 787,500
70,500 Golden Cycle Gold Corp.* (2)........................ 467,063
725,000 Goldstake Explorations, Inc.*....................... 124,296
100,000 Kenrich Mining Corp. Units*.......................... 20,993
11,200 LeaRonal Inc....................................... 263,200
5,200 Mail-Well, Inc.*.................................... 210,600
2,900 Mine Safety Appliances Co........................... 189,950
6,600 Mueller Industries, Inc.*........................... 389,400
5,300 Navistar International Corp.*...................... 131,506
15,000 Newmont Mining Corp................................. 440,625
333,333 Oxus Resources Corp. Units (1)..................... 195,000
12,800 Phelps Dodge Corp................................... 796,800
16,900 The Pioneer Group, Inc.............................. 475,313
6,400 Reynolds Metals Co.................................. 384,000
100,000 Rio Narcea Gold Mines, Ltd.*........................ 297,400
80,500 River Gold Mines Ltd.*.............................. 208,425
100,000 SEMAFO Inc.*........................................ 139,953
39,000 Terex Corp.*........................................ 916,500
3,700 Veritas DGCInc.*.................................... 146,150
72,400 Viceroy Resource Corp.*............................. 134,257
500,000 Vista Gold Corp.* (2)............................... 115,461
200,000 Western Pacific Mining Exploration Inc. Units*...... 79,773
166,666 William Resources Inc.* (2)......................... 40,819
................. 8,192,674
Australia (2.3%)
172,600 Emperor Mines Ltd.*...................................$ 50,602
125,000 Normandy Mining Ltd.......................................121,342
400,000 Normandy Mining Ltd. Warrants..............................45,600
......................................................217,544
Ireland (1.3%)
300,000 Glencar Exploration PLC*..................................119,876
Mexico (5.8%)
125,000 Industrias Penoles S.A.................................. 556,624
<PAGE>
South Africa (2.3%)
5,400 Anglo American Corp. of South Africa Ltd. ADR...............218,363
Total Common Stocks and Warrants (cost: $15,152,409).................9,305,081
Contracts Options (1.6%)
200 Barrick Gold Corp., expire 4/1898............................52,500
150 Durban Roodepoort Deep Ltd., expire 12/31/99..................8,091
500 Durban Roodepoort Deep Ltd., expire 6/30/02..................26,970
200 Homestake Mining Co., expire 4/18/98.........................15,000
200 Newmont Mining Corp., expire 3/21/98.........................45,000
Total Options (cost: $524,782)........................................147,561
Par
Value U.S. Government (0.7%)
$70,000 U.S. Treasury Bill, 5.25%, due 1/22/98 (cost: $69,788).......69,788
Total Investments (cost: $15,746,979) (100.0%).................$9,522,430
* Indicates non-income producing security.
(1) Restricted security (note 4).
(2) Affiliated company.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997 (Unaudited)
ASSETS:
Investment at market value
(cost: $15,746,979) (note 1).................................$9,522,430
Cash ..............................................................4,798
Collateral for securities loaned, at market value (note 4)........1,065,487
Receivables:
Option premium written (note 4)..................................49,249
Investment securities sold.......................................41,029
Dividends.........................................................7,813
Other assets..........................................................3,699
Total assets.............................................10,694,505
LIABILITIES:
Payables:
Demand note payable to bank (note 5)............................150,768
Uncovered options written (note 4)...............................56,250
Collateral for securities loaned (note 4).....................1,065,487
Accrued expenses.....................................................49,985
Accrued management and distribution fees..............................9,146
Total liabilities.........................................1,331,636
NET ASSETS: (applicable to 2,250,284
outstanding shares: 500,000,000 shares
of $.01 par value authorized)....................................$9,362,869
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($9,362,869 / 2,250,284)..............................................$4.16
At December 31, 1997, net assets consisted of:
Paid-in capital.................................................$21,325,046
Undistributed net realized loss on
investments.................................................(5,554,219)
Accumulated deficit in net investment
income.......................................................(176,408)
Net unrealized depreciation on
investments and foreign currencies..........................(6,231,550)
.........................................................$9,362,869
STATEMENT OF OPERATIONS
Six Months Ended December 31, 1997 (Unaudited)
INVESTMENT INCOME:
Dividends.......................................................$ 75,220
Interest.......................................................... 3,636
Total investment income......................................78,856
<PAGE>
EXPENSES:
Distribution (note 3).............................................64,885
..........................................................62,995
Transfer agent....................................................27,072
Interest (note 5).................................................24,153
Custodian.........................................................22,734
Professional (note 3).............................................15,377
Registration (note 3).............................................15,123
Shareholder administration (note 3)...............................13,902
Printing.......................................................... 9,075
Director.......................................................... 5,294
Other............................................................. 2,910
Total expenses...........................................263,520
Fee reductions (note 4)..................................(8,256)
Net expenses.............................................255,264
Net investment loss....................................(176,408)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS, FOREIGN
CURRENCIES AND FUTURES:
Net realized loss from foreign currency
and futures transactions.....................................(4,749)
Net realized loss from security
transactions.............................................(5,542,447)
Unrealized appreciation of
investments and foreign
currencies during the period.................................265,122
Net realized and unrealized
loss on investments, foreign
currencies and futures...............................(5,282,074)
Net decrease in net assets resulting
from operations.....................................$(5,458,482)
See accompanying notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1997 (Unaudited) and the Year Ended
June 30, 1997
December 31, June 30,
1997 1997
OPERATIONS:
Net investment loss............................$ (176,408) $ (494,487)
Net realized loss from foreign currency and
futures transactions (4,749) (211,090)
Net realized gain (loss) from security
transactions.....................................(5,542,447) 3,146,892
Unrealized appreciation (depreciation)
of investments and foreign
currencies during the period...................... 265,122 (12,311,707)
Net decrease in net assets resulting
from operations............................ (5,458,482) (9,870,392)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains ($0.41
and $2.27 per share, respectively) (835,640) (4,153,125)
<PAGE>
CAPITAL SHARE TRANSACTIONS:
Change in net assets resulting from capital
share transactions (a) 440,333 1,751,181
Total decrease in net assets.....................(5,853,789) (12,272,336)
NET ASSETS:
Beginning of period...........................15,216,658 27,488,994
End of period (including accumulated
deficit in net investment income of
$176,408 and $3,266, respectively)............$9,362,869 $15,216,658
- --------------
(a) Transactions in capital shares were as follows:
DECEMBER 31, 1997 JUNE 30, 1997
Shares Value Shares Value
Shares sold 344,275 $1,981,547 707,565 $8,366,721
Shares issued in
reinvestment of distributions 193,662 782,794 375,803 3,855,738
Shares redeemed (406,775) (2,324,008) (912,837) (10,471,278)
Net increase 131,162 $ 440,333 170,531 $1,751,181
<PAGE>
Notes to Financial Statements
(Unaudited)
(1) The Fund is a Maryland corporation registered under the Investment Company
Act of 1940, as amended, as a non-diversified, open-end management investment
company. The investment objective of the Fund is long term capital appreciation.
The Fund seeks to achieve its investment objective by investing primarily in
securities of companies involved directly or indirectly in mining, processing or
dealing in gold or other precious metals and in gold, platinum and silver
bullion, as set forth in its prospectus. Income is the secondary objective. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements. With respect to
security valuation, investments in securities traded on a national securities
exchange and securities traded on the Nasdaq National Market System ("NMS") are
valued at the last quoted sales price on the day the valuations are made. Such
securities that are not traded on a particular day, securities traded in the
over-the-counter market that are not on the NMS, and bullion are valued at the
mean between the last reported bid and asked prices. Foreign securities,
currencies and gold, platinum and silver coins are valued in U.S. dollars.
Securities and bullion for which quotations are not readily available and other
assets are valued as determined in good faith by or under the direction of the
Board of Directors. Security transactions are accounted for on the trade date
(the date the order to buy or sell is executed). Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on an accrual basis. Discounts and premiums on securities
purchased are amortized over the life of the respective securities. 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. Based upon Federal income
tax cost of $15,746,979, gross unrealized appreciation and gross unrealized
depreciation were $338,670 and $6,563,219, respectively at December 31,1997.
Distributions paid to shareholders differ from net realized gains from security
transactions as determined for financial reporting purposes principally as a
result of utilization of capital loss carryforwards, wash sales, and capital
gains distributions paid in the subsequent year.
(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 an annual rate of 1% on the first $10 million, 7/8 of 1%
over $10 million up to $30 million, 3/4 of 1% over $30 million up to $150
million, 5/8 of 1% over $150 million up to $500 million, and 1/2 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. Pursuant to the Investment Management Agreement, the
Investment Manager retained Lion Resource Management Limited (the "Subadviser")
regarding portfolio investments. Pursuant to the Subadvisory agreement which
terminated on August 30, 1997, the Subadviser advised and consulted with the
Investment Manager regarding the selection, clearing and safekeeping of the
Fund's portfolio investments and assists in pricing and generally monitoring
such investments. The Subadviser also provided the Investment Manager with
advice as to allocating the Fund's portfolio assets among various countries,
including the United States and among equities, bullion and other types of
investments, including recommendations of specific investments. The Investment
Manager, not the Fund, paid the Subadviser monthly a percentage of the
Investment Manager's net fees based upon the Fund's performance and net assets.
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 $2,950 for providing certain
administrative and accounting services at cost for the six months ended December
31,1997. During the six months ended December 31,1997, the Fund paid $29,336 to
Bull & Bear Securities, Inc., an affiliate of the Investment Manager, in
commissions for brokerage services.
<PAGE>
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 pays
the Distributor a distribution fee in an amount of three-quarters of one percent
per annum of the Fund's average daily net assets and a service fee in an amount
of one-quarter of one percent per annum of the Fund's average daily net assets.
The fee for service activities is intended to cover personal services provided
to shareholders in the Fund and the maintenance of shareholder accounts. The fee
for distribution activities is to cover all other activities and expenses
primarily intended to result in the sale of the Fund's shares. Investor Service
Center also received $13,902 for shareholder administration services which it
provided to the Fund at cost for the six months ended December 31,1997.
(4) The Fund has entered into an arrangement with its transfer agent and
custodian whereby interest earned on uninvested cash balances was used to offset
a portion of the Fund's expenses. During the period, the Fund's transfer agent
fees and custodian fees were reduced by $645 and $7,611, respectively, under
such arrangements. Purchases and proceeds of sales of securities other than
short term notes and bullion aggregated $9,758,634 and $11,677,245,
respectively, for the six months ended December 31,1997. At December 31, 1997,
the Fund loaned common stocks having a value of $1,018,252 and received cash
collateral of $1,065,487 for the loan. At December 31, 1997, uncovered options
written consisted of:
Index Expiration Month and Contracts Value
Exercise Price
Philadelphia Gold
& Silver Index March 70 (premiums 100 $56,250
received, $49,249)
On December 31, 1997, the Fund held certain securities which are subject to
restrictions on resale. Investments in restricted securities are valued at fair
value as determined in good faith by or under the direction of the Board of
Directors. Date of acquisition and cost of restricted securities are as follows:
<TABLE>
<CAPTION>
Date of
Shares Acquisition Cost Value
<S> <C> <C> <C>
46,000 Eaglecrest Explorations, Ltd. Units 12/30/96 $ 68,913 $ 5,649
65,000 Eaglecrest Explorations, Ltd. Units 1/31/97 79,568 7,983
200,000 Fairmile Gold Corp. Units 3/21/96 190,017 14,107
2,000,000 Oxus Resources Corp. Units 8/15/96 333,333 195,000
$671,831 $222,739
</TABLE>
At December 31,1997, the total value of restricted securities represent 2.38% of
net assets.
(5) The Fund has a committed bank line of credit. At December 31,1997, the
balance outstanding was $150,768 and the interest rate was equal to the Federal
Reserve Funds Rate plus 1.00 percentage points. For the six months ended
December 31,1997, the weighted average interest rate was 6.37% based on the
balances outstanding during the year and the weighted average amount outstanding
was $777,899.
<PAGE>
<TABLE>
<CAPTION>
Years Ended June 30,
Six Months
Ended
December
31, 1997* 1997 1996 1995 1994 1993
PER SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period.......... $7.14 $14.02 $13.13 $15.71 $16.98 $11.62
Income from investment operations:
Net investment income (loss).................. (.08) (.25) (.22) - (.11) (.03)
Net realized and unrealized gain (loss) on
investments................................... (2.49) (4.36) 2.72 (1.13) (1.05) 5.39
Total from investment operations........... (2.57) (4.61) 2.50 (1.13) (1.16) 5.36
Less distributions:
Distributions from net realized gains
on investments................................ (.41) (2.27) (1.61) (1.45) (.11) -
Total distributions............................. (.41) (2.27) (1.61) (1.45) (.11) -
Net asset value at end of period................ $4.16 $7.14 $14.02 $13.13 $15.71 $16.98
TOTAL RETURN.................................... (35.90)% (37.81)% 21.01% (8.01)% (6.92)% 46.13%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted)..... $9,363 $15,217 $27,485 $29,007 $36,603 $47,489
Ratio of expenses to average net assets (a) (b). 3.73%** 2.77% 2.93% 2.82% 2.54% 3.01%
Ratio of net investment income (loss) to average
assets (c).................................... (2.37)%** (1.89)% (1.49)% .12% (.65)% (.27)%
Portfolio turnover rate......................... 76% 37% 61% 158% 129% 156%
Average commission per share.................... $.0128 $.0180
</TABLE>
* Unaudited.
** Annualized.
(a) Ratios including interest expense were 4.11%**, 2.94%, 3.05%, 2.93%, 2.57%,
and 3.03% for the six months ended December 31, 1997 and for the years ending
June 30, 1997, 1996, 1995, 1994, and 1993, respectively.
(b) Ratio after transfer agent and custodian credits was 3.60%** for the
six months ended December 31, 1997.
(c) Ratios including interest expense were (2.75%)**,
(2.06)%, (1.61)%, .01%, (.68)%, and (.29)% for the six months ended December 31,
1997 and for the years ending June 30, 1997, 1996, 1995, 1994, and 1993,
respectively.
GOLD INVESTORS
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
