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
August 12, 1998
Fellow Shareholders:
We are very pleased to submit this Annual Report to shareholders and to welcome
the many new shareholders who have joined the Fund over the past twelve months
to take advantage of recent lower gold prices. We are also delighted to announce
that effective May 1, 1998, Thomas B. Winmill, Chief Executive Officer of the
Fund and President of the Fund's Investment Manager, became the Fund's portfolio
manager. Having served on the Investment Policy Committee since 1990, he will
bring a strong depth of experience and discipline to help to Fund achieve its
investment objective of long term capital appreciation in investments with the
potential to provide a hedge against inflation and preserve the purchasing power
of the dollar.
Review and Outlook
Gold demand in the markets monitored by the World Gold Council reached a record
2,935 tons in 1997, 9% above the level for 1996, and 500 tons in excess of
physical supply during the year. Likewise, silver demand exceeded supply for the
ninth straight year. Negative factors, however, persist for gold. In Asia,
traditionally an important source of demand for bullion and jewelry, buying of
both gold and silver has softened as local economic problems has forced bullion
sales by investors seeking liquidity and their currency declines have made gold
jewelry more expensive to purchase for manufacturing uses. The yen's recent
decline against the U.S. dollar, in particular, has negatively impacted gold
markets by raising the cost of gold in Japan, a major consuming country. The
decline of the Canadian dollar and South African rand, however, may improve
revenues and decrease costs of gold mining companies based in these countries
because while their mining costs are denominated in the declining local
currency, their sales of gold are denominated in increasingly valuable U.S.
dollars. Additionally, continuing central banks sales of gold have further
depressed the bullion markets. Reflecting this situation, the Fund's total
return for its June 30 fiscal year was a negative 43.45% while the average
precious metal fund fell 35.47%, as computed by Morningstar Inc.
Recently, however, some evidence may be seen of falling stock prices prompting
increased investment demand for gold, hinting at a return to gold's global role
as a refuge during times of financial market instability. As the dramatic
shakeout across emerging Asia and Eastern Europe continues, the widespread
collapse of these economies is sending shock waves through markets around the
world, weakening prospects for global stability. Further, the U.S. economy is
becoming increasingly dependent on foreign investment to finance the U.S.
current-account deficit of about $200 billion this year, up from $155 billion in
1997.
Over the course of the year, the Fund's strategy has been to concentrate its
investments in equity securities of companies involved directly or indirectly in
mining, processing or dealing in gold or other precious metals and gold bullion.
Given the uncertainty in precious metals markets, the Fund also invested in
securities of companies that own or develop natural resources and other basic
commodities, in securities of selected growth companies, and securities issued
by the U.S. Government, its agencies or instrumentalities. Natural resources
include ferrous and non-ferrous metals (such as iron, aluminum and copper),
strategic metals (such as uranium and titanium), hydrocarbons (such as coal, oil
and natural gases), chemicals, forest products, real estate, food products and
other basic commodities, which historically have been produced and marketed
profitably during periods of rising inflation. The selected growth companies in
which the Fund invested typically had earnings or tangible assets expected to
grow faster than the rate of inflation over time. The Fund also selectively
employed leverage and options and futures strategies in attempts to enhance
returns.
Even though gold prices are near an 18 year low of $276.75, in view of the
volatility of the precious metals markets, we recommend building your account
over time on a regular basis, which can be done safely, automatically, and
conveniently through the Bull & Bear Bank Transfer Plan, the Bull & Bear Salary
Investing Plan, and/or the Bull & Bear Government Direct Deposit Plan. For
information on any of these free services, simply give us a call and we will be
very pleased to help you get started.
<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 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, with no obligation on your
part.
Sincerely,
Robert D. Anderson Thomas B. Winmill
Vice Chairman President
<PAGE>
MUTUAL FUNDS
* Bull & Bear Dollar Reserves A high quality money market fund
investing in U.S. Government
securities. Income is generally free
from state income and intangible
personal property taxes. Free,
unlimited check writing with only a
$250 minimum per check.
* Bull & Bear Gold Investors Seeks long term capital appreciation
in investments with the potential to
provide a hedge against inflation and
preserve the purchasing power of
the dollar.
* Bull & Bear Special Equities Fund Invests aggressively for maximum capital
appreciation.
* Bull & Bear U.S. and Overseas Fund Invests worldwide for the highest
possible total return.
Call toll-free 1-888-503-FUND (1-888-503-3863)
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 Global Income Fund Investing for a high level of income from a
global portfolio of primarily investment
grade fixed income securities.
*Bull & Bear Municipal Income Fund Investing for the highest possible
income exempt from Federal income
tax that is consistent with
preservation of principal.
* Bull & Bear U.S. Government Securities Investing for a high level of
Fund current income, liquidity, and
safety of principal.
DISCOUNT BROKERAGE SERVICES
* Bull & Bear Securities, Inc.
Bull & Bear Securities is 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¢ per share on each
share over 1,000 shares, and earn 100
AAdvantage(R)miles every time you trade!
Call toll-free 1-800-BULL-BEAR (1-800-285-5232).
Total Return Performance. For periods ended 6/30/98, Bull & Bear Gold Investors'
total return for one year was a negative 43.45%, average annual total return for
the past five years was a negative 18.28%, and for the past ten years was a
negative 7.83%. 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 - June 30, 1998
Shares Market Value
COMMON STOCKS AND WARRANTS (97.9%)
North America (86.7%)
170,000 Alta Gold Co.* $297,500
1,380 Aluminum Company of America 90,994
15,000 ASARCO Inc. 333,750
100,000 Banro Resource Corp. Special Warrants* 272,415
10,000 Barrick Gold Corp. 191,875
32,650 Cambior Inc. 191,819
2,600 Continental Materials Corp.* 92,625
238,300 Cornucopia Resources Ltd. Units* 12,983
18,100 Dallas Gold and Silver Exchange, Inc.* 42,987
111,000 Eaglecrest Explorations Ltd. Units* 18,521
15,000 Engelhard Corp. 303,750
10,300 Euro-Nevada Mining Corp. 140,644
5,100 Finlay Enterprises, Inc.* 123,037
15,000 Freeport-McMoRan Copper & Gold, Inc.B 213,750
70,500 Golden Cycle Gold Corp.* (2) 555,188
100,000 Kenrich Mining Corp. Units* 36,776
12,000 LeaRonal Inc. 286,500
10,400 Mail-Well, Inc.* 225,550
2,900 Mine Safety Appliances Co. 217,500
7,500 Mining Services International Corp. 45,937
10,000 Mueller Industries, Inc.* 371,250
5,300 Navistar International Corp.* 153,037
10,000 Newmont Mining Corp. 236,250
10,000 OroAmerica, Inc.* 112,500
333,333 Oxus Resources Corp. Units (1)* 195,000
5,000 Phelps Dodge Corp. 285,938
25,000 The Pioneer Group, Inc. 657,813
6,400 Reliance Steel & Aluminum Co. 247,200
<PAGE>
6,000 Reynolds Metals Co. 335,625
100,000 Rio Narcea Gold Mines, Ltd.* 222,018
13,600 RMI Titanium Co.* 309,400
80,500 River Gold Mines Ltd.* 178,176
12,000 Terex Corp.* 342,000
10,000 Technitrol, Inc. 399,375
4,500 World Fuel Services Corp. 77,906
7,817,589
Australia (.4%)
400,000 Normandy Mining Ltd. Warrants* $ 34,052
Ghana (3.9%)
44,000 Ashanti Goldfields Co. Ltd. 357,500
Mexico (4.4%)
125,000 Industrias Penoles S.A. 397,246
South Africa (2.5%)
6,800 Anglo American Corp. of South Africa Ltd. ADR 223,975
Total Common Stocks and Warrants (cost $10,705,140) 8,830,362
PREFERRED STOCK (2.1%)
5,100 Freeport-McMoRan Copper & Gold, Inc. Preferred Series C* 96,581
5,400 Freeport-McMoRan Copper & Gold, Inc. Preferred Series D* 91,125
Total Preferred Stock (cost: $196,195) 187,706
Total Investments (cost: $10,901,335) (100.0%) $9,018,068
* Indicates non-income producing security.
(1) Restricted security (note 4).
(2) Affiliated company.
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
ASSETS:
Investments at market value
(cost: $10,901,335) (note 1) $9,018,068
Cash 52,098
Collateral for securities loaned,
at market value (note 5) 392,600
Receivables:
Fund shares sold 20,542
Dividends 10,654
Other assets 3,699
Total assets 9,497,661
LIABILITIES:
Payables:
Demand note payable to bank 717,836
Fund shares redeemed 1,006
Collateral for securities loaned (note 5) 392,600
Accrued expenses 53,983
Accrued management and distribution fees 8,108
Total liabilities 1,173,533
NET ASSETS: (applicable to 2,271,207
outstanding shares: 500,000,000 shares
of $.01 par value authorized) $8,324,128
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($8,324,128 ÷ 2,271,207)
At June 30, 1998, net assets consisted of:
Paid-in capital $21,190,403
Undistributed net realized loss on
investments (10,979,502)
Accumulated deficit in net investment
income (3,506)
<PAGE>
Net unrealized depreciation on
investments and foreign currencies (1,883,267)
$8,324,128
STATEMENT OF OPERATIONS
Year Ended June 30, 1998
INVESTMENT INCOME:
Dividends (net of foreign taxes of $1,003) $ 141,145
Interest 20,053
Total investment income 161,198
EXPENSES:
Distribution (note 3) 111,870
Investment management (note 3) 109,871
Interest (note 5) 33,835
Transfer agent 31,032
Shareholder administration (note 3) 30,158
Professional (note 3) 29,779
Custodian 26,021
Registration (note 3) 25,814
Printing 15,487
Directors 8,634
Other 11,003
Total expenses 433,504
Fee reductions (note 4) (7,947)
Net expenses 425,557
Net investment loss (264,359)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS, FOREIGN
CURRENCIES AND FUTURES:
Net realized gain from foreign currency
and futures transactions 127,639
Net realized loss from security
transactions (11,052,895)
Unrealized appreciation of
<PAGE>
investments and foreign
currencies during the period 4,613,405
Net realized and unrealized
loss on investments, foreign
currencies and futures (6,311,851)
Net decrease in net assets resulting
from operations $(6,576,210)
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended June 30,
1998 1997
OPERATIONS:
<S> <C> <C>
Net investment loss $ (264,359) $ (494,487)
Net realized gain (loss) from foreign currency and futures transactions 127,639 (211,090)
Net realized gain (loss) from security transactions (11,052,895) 3,146,892
Unrealized appreciation (depreciation) of investments and foreign currencies 4,613,405 (12,311,707)
during the period
Net decrease in net assets resulting from operations (6,576,210) (9,870,392)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains ($0.41 and $2.27 per share, respectively)
(835,640) (4,153,125)
CAPITAL SHARE TRANSACTIONS:
Change in net assets resulting from capital share transactions (a) 519,320 1,751,181
Total decrease in net assets (6,892,530) (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 $3,506 $8,324,128 $15,216,658
and $3,266, respectively)
</TABLE>
(a) Transactions in capital shares were as follows:
1998 1997
SHARES VALUE SHARES VALUE
Shares sold 808,491 $3,962,860 707,565 $8,366,721
Shares issued in
reinvestment of distributions 193,827 783,480 375,803 3,855,738
Shares redeemed (861,998) (4,227,020) (912,837) (10,471,278)
Net increase (decrease) 140,320 $ 519,320 170,531 $1,751,181
<PAGE>
See accompanying notes to financial statements.
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. At June 30, 1998, the
Fund had an unused capital loss carryforward of approximately $3,474,000 which
expires in 2005. Based upon Federal income tax cost of $10,901,335, gross
unrealized appreciation and gross unrealized depreciation were $470,121 and
$2,353,388, respectively at June 30, 1998. 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 assisted 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 $4,804 for providing certain
administrative and accounting services at cost for the year ended June 30, 1998.
During the year ended June 30, 1998, the Fund paid $39,081 to Bull & Bear
Securities, Inc., an affiliate of the Investment Manager, in commissions for
brokerage services.
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.
<PAGE>
Investor Service Center also received $30,158 for shareholder administration
services which it provided to the Fund at cost for the year ended June 30, 1998.
(4) The Fund has entered into an arrangement with its 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 custodian fees were reduced by $7,947,
under such arrangements. Purchases and proceeds of sales of securities other
than short term notes and bullion aggregated $15,152,195 and $16,124,917,
respectively, for the year ended June 30, 1998. On June 30, 1998, the Fund held
an investment which is not publicly traded and 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 such investment is as follows:
Shares Date of Acquisition Cost Value
333,333 Oxus Resources 8/15/96 $300,000 $195,000
Corp. Units
At June 30, 1998, the total value of such investment represented 2.34% of net
assets.
(5) The Fund has a committed bank line of credit. At June 30, 1998, the balance
outstanding was $717,836 and the interest rate was equal to the Federal Reserve
Funds Rate plus 1.00 percentage point. For the year ended June 30, 1998, the
weighted average interest rate was 6.23% based on the balances outstanding
during the year and the weighted average amount outstanding was $618,636. As of
June 30, 1998, the Fund loaned common stocks having a value of $317,787 and
received cash collateral of $392,600 for the loan.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
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 $7.14 $14.02 $13.13 $15.71 $16.98
Income from investment operations:
Net investment income (loss) (.12) (.25) (.22) _ (.11)
Net realized and unrealized gain (loss) on (2.94) (4.36) 2.72 (1.13) (1.05)
investments
Total from investment operations (3.06) (4.61) 2.50 (1.13) (1.16)
Less distributions:
Distributions from net realized gains on (.41) (2.27) (1.61) (1.45) (.11)
investments
Total distributions (.41) (2.27) (1.61) (1.45) (.11)
Net asset value at end of period $3.67 $7.14 $14.02 $13.13 $15.71
TOTAL RETURN 43.45)% (37.81)% 21.01% (8.01)% (6.92)%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $8,234 $15,217 $27,489 $29,007 $36,603
Ratio of expenses to average net assets (a) (b) 3.57% 2.77% 2.93% 2.82% 2.54%
Ratio of net investment income (loss) to average net
assets (c) (2.09)% (1.89)% (1.49)% .12% (.65)%
Portfolio turnover rate 136% 37% 61% 158% 129%
Average commission per share $.0118 $.0180 $.0202
</TABLE>
(a) Ratiosincluding interest expense were 3.88%, 2.94%, 3.05%, 2.93%, and
2.57%, for the years ending June 30, 1998, 1997, 1996, 1995, and 1994,
respectively.
(b) Ratio aftercustodian credits was 3.51% for the year ended June 30, 1998.
(c) Ratios including interest expense were (2.40%), (2.06)%, (1.61)%, .01%,
and (.68)%, for the years ending June 30, 1998, 1997, 1996, 1995, and 1994,
respectively.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders of
Bull & Bear Gold Investors Ltd.:
We have audited the accompanying statements of assets and liabilities of Bull &
Bear Gold Investors Ltd. including the schedule of portfolio investments as of
June 30, 1998, and the related statement of operations for the year then ended,
the statement 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 statement 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 Gold Investors Ltd. as of June 30, 1998, the results of its operations 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
Total Return Performance Graphs
Bull & Bear Gold Investors ("Fund")
Standard & Poor's 500 Stock Index ("S&P 500")
Morningstar Specialty Fund-Precious Metals
Average ("PMFA")
The performance graph shows returns of an initial investment of $10,000 in Bull
& Bear Gold Investors, in Standard & Poor's 500 Stock Index, and in Morningstar
Specialty Fund-Precious Metals Average from July 1, 1988 to June 30, 1998.
Results in each case reflect reinvestment of dividends and distribu tions. The
Index is unmanaged and fully invested in common stocks. The Fund invests
primarily in gold, platinum and silver bullion, a global portfolio of securities
of companies involved in mining, process ing or dealing in gold or other
precious metals, and may invest in fixed income securities for temporary
defensive purposes.
Returns of $10,000 invested July 1, 1988 through June 30, 1998
Annualized Total Ending
Return Return Value
Fund -7.83% -55.76% $ 4,424
S&P 500 18.55 448.32 54,832
PMFA -4.03 -33.76 6,624
GOLD
INVESTORS
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
GOLD INVESTORS
Investing in Mining Shares and Gold, Platinum and
Silver Bullion for Long Term Capital Appreciation
Independent Accountants
Tait, Weller & Baker
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.
GL-111-6/8
