Special Equities Fund
Invests Aggressively
for Maximum Capital Appreciation
Annual Report
December 31, 1996
11 Hanover Square, New York, NY 10005
1-800-847-4200
1-212-363-1100
http://www.bull-and-bear.com
<PAGE>
February 21, 1997
Fellow Shareowners:
The stock market in 1996 was characterized by extreme divergence,
following the May highs, between the performance of small and large
capitalization issues. While the Russell 2000 Small Company Stock Index closed
the year at a lower level than in May, indexes featuring large capitalization
companies advanced sharply in the second half, propelled primarily by a very
small number of stocks. In the case of the Standard & Poor's 500 Stock Index,
just 15 stocks (only 3% of the 500) accounted for almost 40% of the Index's
advance. Again reflecting this divergence, of 5,400 publicly traded issues with
market capitalization over $10 million but less than $1 billion, approximately
2,000 closed the year down 30% or more from their 52 week highs. With the Fund's
strategy during the year of aggressively investing primarily in smaller
capitalization issues, which typically offer a greater potential for
above-average capital appreciation, performance was negatively impacted. Thus,
Bull & Bear Special Equities Fund's total return for 1996 was +1.05%, versus
+14.76% for the Russell 2000 and returns of +22.96% for the Standard & Poor's
500 Stock Index and +28.71% for the Dow Jones Industrial Average. The Fund's
1996 results were disappointing, particularly following its impressive total
return of +40.47% for 1995.
The stock market was bolstered in early 1996 by generally positive
corporate earnings reports, a high level of investor purchases of equity funds,
low inflation, and relatively low and stable interest rates. The expected
outlook was for more of the same. When April employment reports showed a sharp
slowdown in job creation, the bond market rallied and stock market averages
surged to new highs in May.
In early July, a strong employment gain was reported together with a
significant increase in monthly wages. Combined with indications that second
quarter economic growth was quite strong, this news sent bond and equity prices
down sharply. Investors feared that wage gains would soon lead to monetary
tightening by the Federal Reserve, which would make common stocks relatively
unattractive. Some disappointing earnings reports added significantly to this
concern. As noted, smaller capitalization issues typically suffered greater
declines than large company stocks.
Negative investor sentiment regarding inflation and interest rates
dramatically reversed course as subsequent economic reports pointed to a sharp
slowdown in third quarter growth. Rapid reinvestment of cash reserves built up
in earlier months, significant foreign buying as the dollar moved sharply
higher, and a large amount of program and index buying propelled the major stock
market averages to new highs in September. The liquidity requirements of major
institutional investors and the perceived greater safety of larger
capitalization issues led to heavy buying of large company stocks, and strength
in the major averages which they dominate. Consequently, the renewed
post-election market surge that carried averages to sharply higher year-end
levels continued to be dominated by a narrow list of the largest capitalization
equities.
As we begin 1997, stock market averages have again set new highs,
propelled by renewed strength in cyclical issues. This reflects a somewhat
stronger economy reported for November and December, and inflation statistics
remaining favorable. We believe the outlook for moderate economic growth and
moderate inflation remains unchanged. On February 20, 1997, the investment
decisions for the Fund were assumed by the Investment Policy Committee of Bull &
Bear Advisers, Inc., the Fund's Investment Manager. The Committee's outlook for
the remainder of 1997 is optimistic. Corporate earnings growth continues and the
flow of new cash into the equity markets continue to provide broad support for
stock prices. In view of market correction concerns, however, investors appear
to be following a more selective approach to investing, and placing a greater
emphasis on superior earnings quality and consistency. Accordingly, the Fund's
investments are being reallocated to the stocks of companies perceived to have
these advantages, particularly high growth areas of information
<PAGE>
technology, professional and business services, telecommunications, some
cyclicals such as energy, and some defensive sectors.
As noted in prior Reports, with respect to achieving your long range
financial goals we continue to favor building your account on a regular basis,
which can be done safely, 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 any of these free services,
simply give us a call and we will be very pleased to help you get started.
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 200 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 Representative will be glad to
assist you, as always, without any obligation on your part.
Sincerely,
Robert D. Anderson Thomas B. Winmill
Vice Chairman Co-President
Chart Follows:
Special Equities Fund
Results of an initial investment of $10,000 with subsequent investments of $100
a month from inception, 3/20/96 with all distributions reinvested. Investments
for the period total $22,900
Plot Points:
$12.1, 12.3, 16.4, 24.7, 16.6, 24.7, 33.1, 39.8, 34.4, 49.7, 51.4
Ending Value $51,440
Total Return Performance Graphs
Bull & Bear Special Equities Fund ("Fund")
Russell 2000 ("2000")
The 2000 is a small company index that is unmanaged and fully invested in common
stocks. The Fund invests in common stocks and may also own fixed income
securities, options and use leverage. The $10,000 Performance Graphs are from
January 1, 1987 to December 31, 1996, and results in each case reflects
reinvestment of dividends and distributions.
[The following table was represented as a graph with the following plot points
in the printed material.]
Plot points:
Fund:$10,000, 11,485, 16,342, 10,394, 14,608, 18,754, 21,821, 18,211, 25,581
25,851
2000:$10,000, 11,394, 13,245, 10661, 15,571, 18,437, 21,923, 21,523, 27,645
32,216
Average
Final Total Annual
Value Return Return
Fund...... $25,851 158.51% 9.96%
2000...... $32,216 222.16% 12.41%
Source: Lipper Analytical Services, Inc.
<PAGE>
Mutual Funds
Bull & Bear Dollar
Reserves
A high quality moneymarket fund investing 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
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 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 Global Income Fund Investing for a high level of income from a
global portfolio of primarily investment grade fixed income
Bull & Bear Municipal Investing for the highest possible income exempt from
Income Fund Federal income tax that is consistent with preservation of
principal.
Bull & Bear U.S. Government Securities Fund
Investing for a high level of current income, liquidity and safety of principal.
Discount Brokerage
Services
Bull & Bear
Securities, Inc.
Receive the investment information you 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-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.
<PAGE>
BULL & BEAR SPECIAL EQUITIES FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS - DECEMBER 31, 1996
MARKET
SHARES VALUE
COMMON STOCKS AND WARRANTS (100.0%)
AIR TRANSPORTATION (2.3%)
28,000 Atlas Air Inc.* $ 1,337,000
------------
APPAREL MANUFACTURING (3.6%)
25,000 Liz Claiborne Inc. 965,625
55,000 Quiksilver Inc.* 1,182,500
-------------
2,148,125
BIOLOGICAL PRODUCTS (8.4%)
165,000 NABI Inc.* 1,443,750
145,000 North American Vaccine, Inc.* 3,516,250
-------------
4,960,000
COMMUNICATIONS EQUIPMENT (8.2%)
50,000 Ericsson (L.M.) Telephone Co. ADR 1,509,375
100,000 Fastcomm Communications Corp.* 612,500
55,000 Glenayre Technologies, Inc.* 1,185,937
25,000 Northern Telecom Ltd. 1,546,875
-------------
4,854,687
COMMUNICATIONS SOFTWARE (4.2%)
70,000 Cellular Technical Services Company* 1,400,000
59,000 NICE-Systems Ltd.* 1,062,000
-------------
2,462,000
COMPUTERS EQUIPMENT (2.3%)
18,000 Compaq Computer Corp.* 1,336,500
-------------
COMPUTER INTEGRATED SYSTEMS DESIGN (7.4%)
85,000 Interlink Computer Sciences, Inc.* 1,423,750
40,000 Newbridge Network Corp.* 1,130,000
25,000 3Com Corp.* 1,834,375
-------------
4,388,125
COMPUTER PERIPHERAL EQUIPMENT (3.6%)
65,000 EMC Corp.* 2,153,125
-------------
COMPUTER SOFTWARE (16.4%)
84,000 Business Objects S.A. ADR* 1,134,000
33,000 BMC Software, Inc.* 1,365,375
24,000 Computer Associates International, Inc. 1,194,000
400,000 Computervision Corp.* 3,700,000
50,000 Dataworks Corp.* 1,262,500
25,000 Project Software & Development, Inc.* 1,059,375
-------------
9,715,250
CONSUMER SERVICES, INC. (1.8%)
45,000 CUC International, Inc.* 1,068,750
-------------
DIAGNOSTIC PRODUCTS (3.1%)
80,000 Humascan Inc.* $ 450,000
90,000 Neoprobe Corp.* 1,383,750
-------------
1,833,750
ENERGY SERVICES (3.1%)
35,000 Reading & Bates Corp.* 927,500
30,000 Weatherford Enterra, Inc.* 900,000
--------------
1,827,500
ENGINEERING SERVICES (.3%)
126,500 Essex Corp. Units* 180,063
--------------
OIL AND GAS EXPLORATION & PRODUCTION (.5%)
100,000 Harken Energy Corp.* 300,000
--------------
PERSONAL CREDIT INSTITUTIONS (9.4%)
270,000 AmeriCredit Corp.* 5,535,000
-------------
POLLUTION CONTROL (2.1%)
40,000 U.S. Filter Corp.* 1,270,000
-------------
RETAIL (5.8%)
43,750 Consolidated Stores Corp.* 1,405,469
57,000 Renters Choice, Inc.* 826,500
38,000 The Pep Boys-Manny, Moe & Jack 1,168,500
-------------
3,400,469
SATELLITE COMMUNICATION (4.5%)
80,000 Loral Space & Communications Ltd.* 1,470,000
70,000 Orbital Sciences Corp.* 1,207,500
-------------
2,677,500
SEMI-CONDUCTORS & RELATED DEVICES (7.4%)
45,000 Analog Devices Inc.* 1,524,375
10,000 Intel Corp. 1,309,375
15,000 Intel Corp. Warrants expire (3/14/98)* 1,383,750
75,000 R.F. Power Products, Inc.* 187,500
--------------
4,405,000
SURGICAL & MEDICAL EQUIPMENT & DEVICES (5.6%)
45,000 Sofamor Danek Group, Inc.* 1,372,500
45,000 Staar Surgical Co.* 596,250
45,000 Stryker Corp. 1,344,375
-------------
3,313,125
TOTAL INVESTMENTS (COST: $55,853,434) (100.0%) $59,165,969
===========
* Indicates non-income producing security.
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
ASSETS:
Investments at market value (cost: $55,853,434) (note 1) $59,165,969
======================================================== ===========
Receivables:
============
Investment securities sold 156,000
========================== =======
Fund shares sold 34,431
================ ======
Dividends 8,138
========= =====
Other assets 4,822
============ ------------
Total assets 59,369,360
LIABILITIES:
Payables:
Demand note payable to bank (note 5) 9,147,819
==================================== =========
Investment securities purchased 150,000
=============================== =======
Fund shares redeemed 33,152
==================== ======
Accrued expenses 158,584
================ ============
Accrued management and distribution fees 39,886
======================================== ------------
Total liabilities 9,529,441
NET ASSETS: (applicable to 2,171,070 outstanding shares:
500,000,000 shares of $.01 $49,839,919
par value authorized)
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($49,839,919 _ 2,171,070) $22.96
======
At December 31, 1996, net assets consisted of:
Paid-in capital $46,567,861
Accumulated net realized loss on investments (40,477)
Net unrealized appreciation on investments 3,312,535
-----------
$49,839,919
See accompanying notes to financial statements.
SPECIAL EQUITIES FUND, INC.
<PAGE>
STATEMENT OF OPERATIONS
Year Ended December 31, 1996
INVESTMENT INCOME:
Dividends $ 47,767
Interest 13,146
------------
Total investment income 60,913
------------
EXPENSES:
Distribution (note 3) 548,325
Investment management (note 3) 461,244
Interest (note 5) 255,872
Transfer agent 81,686
Custodian 66,397
Shareholder administration (note 3) 61,675
Professional (note 3) 55,630
Registration (note 3) 32,323
Directors 8,558
Other 28,258
------------
Total expenses 1,599,968
----------
Net investment loss (1,539,055)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions 6,803,639
Unrealized depreciation of investments during the period (4,862,889)
-----------
Net realized and unrealized gain on investments 1,940,750
----------
Net increase in net assets resulting from operations $ 401,695
==========
See accompanying notes to financial statements.
SPECIAL EQUITIES FUND, INC.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
1996
1995
OPERATIONS:
<S> <C> <C>
Net investment loss $ (1,539,055) $ (1,893,065)
=================== ============= =============
Net realized gain from security transactions 6,803,639 14,970,525
============================================ ========= ==========
Unrealized appreciation (depreciation) of investments during the (4,862,889) 4,972,715
================================================================ -------------- -----------
period
Net increase in net assets resulting from operations 401,695 18,050,175
==================================================== ======= ==========
DISTRIBUTIONS TO SHAREHOLDERS:
Distribution from net realized gains ($2.72 and $1.39 per share, (5,342,284) (2,913,388)
================================================================== =========== ===========
respectively)
CAPITAL SHARE TRANSACTIONS:
Decrease in net assets resulting from capital share transactions (a) (1,559,043) (4,411,285)
==================================================================== -------------- ------------
Total change in net assets (6,499,632) 10,725,502
========================== =========== ==========
NET ASSETS:
Beginning of year 56,339,551 45,614,049
================= ------------ -----------
End of year $49,839,919 $56,339,551
=========== =========== ===========
- --------------
(a) Transactions in capital shares were as follows:
</TABLE>
<TABLE>
1996 1995
-------------------------------------- ---------------------
Shares Value Shares Value
<S> <C> <C> <C> <C>
Shares sold 564,667 $14,997,930 6,008,412 $129,150,027
=========== ======= =========== ========= ============
Shares issued in reinvestment of 216,965 4,957,636 108,692 2,697,731
================================ ======= ========= =========== =========
distributions
Shares redeemed (826,992) (21,514,609) (6,287,493) (136,259,043)
=============== --------- ------------ ----------- --------------
Net decrease (45,360) $(1,559,043) $ (4,411,285)
============ ========== ============ == =============
(170,389)
</TABLE>
See accompanying notes to financial statements.
SPECIAL EQUITIES FUND, INC.
<PAGE>
Notes to Financial Statements
(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 capital appreciation. The Fund
seeks capital appreciation by investing aggressively as set forth in the
prospectus, depending on the assessment of economic and market factors, in
equity securities, warrants, convertible securities and debt instruments. 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, securities traded on a national securities exchange and
securities traded on the Nasdaq National Market System ("NMS") are valued at the
last reported sales price on the day the valuations are made. Such securities
that are not traded on a particular day and securities traded in the
over-the-counter market that are not on NMS are valued at the mean between the
current bid and asked prices. Securities for which quotations are not readily
available and other assets are valued at fair value as determined in good faith
by or under the direction of the Board of Directors. Securities denominated in
foreign currencies are translated into U.S. dollars at prevailing exchange
rates. Debt obligations with remaining maturities of 60 days or less are valued
at cost adjusted for amortization of premiums and accretion of discounts.
Futures contracts are marked to market daily and the variation margin is
recorded as an unrealized gain or loss. When a contract is closed, a realized
gain or loss is recorded equal to the difference between the opening and closing
value of the contract. Investment transactions are accounted for on the trade
date (date the order to buy or sell is executed). Dividend income and
distributions to shareholders are recorded on the ex-dividend date and 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.
(The Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all 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 on Federal income
tax cost of $55,893,911, gross unrealized appreciation and gross unrealized
depreciation were $7,409,527 and $4,137,469, respectively at December 31, 1996.
Distributions paid to shareholders during the years ended December 31, 1996 and
1995 differ from net realized gains from security transactions as determined for
financial reporting purposes principally as a result of utilization of capital
loss carryforwards and net operating losses to offset short-term capital gains.
(The Fund retains Bull & Bear Advisers, Inc. as its Investment Manager. Under
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 1% on the first $10 million, 7/8 of 1% from $10
million to $30 million, 3/4 of 1% from $30 million to $150 million, 5/8 of 1%
from $150 million 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. Certain officers and directors of the Fund are officers and
directors of the Investment Manager and Investor Service Center, Inc., the
Fund's Distributor. For the year ended December 31, 1996 the Fund paid $39,674
to Bull & Bear Securities, Inc., an affiliate of the Investment Manager as
commissions for brokerage services. The Fund reimbursed the Investment Manager
$22,062 for providing certain administrative and accounting services at cost for
the year 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 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 $61,675 for shareholder administration services which it
provided to the Fund at cost for the year ended December 31, 1996.
(Purchases and proceeds of sales of securities other than short term notes
aggregated $183,574,428 and $182,808,200, respectively.
(The Fund has a committed bank line of credit. At December 31, 1996, the
balance outstanding was $9,147,819 and the interest rate was equal to the
Federal Reserve Funds Rate plus 1.75 percentage points. For the year ended
December 31, 1996, the weighted average interest rate was 7.04% based on the
balances outstanding during the period and the weighted average amount
outstanding was $3,633,850. Included in interest expense is $1,638 for
commitment fees related to this line of credit.
SPECIAL EQUITIES FUND, INC.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
Years Ended December 31,
PER SHARE DATA* 1996 1995 1994 1993 1992
=============== ------ =----- ======- ------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning $25.42 $ 19.11 $23.13 $ 24.88 $ 19.38
============================ ------ ------- ------ -------- --------
of period
Income from investment
operations:
Net investment loss (.73) (.81) (.55) (.76) (.58)
===================== ===== ===== ===== ===== =====
Net realized and unrealized .99 8.51 (3.28) 4.65 6.08
============================= -------- --------- ========= ---------- ----------
gain (loss) on investments
Total from investment .26 7.70 (3.83) 3.89 5.50
========================= === ==== ====== ==== ====
operations
==========
Less distributions:
Distributions from net (2.72) (1.39) (.19) (5.64) --
======================== --------= ---------= --------- ------ ------
reali ed gains on investments
Net increase (decrease) in (2.46) 6.31 (4.02) (1.75) 5.50
============================== --------= --------- ========== ---------- ----------
net asset value
Net asset value at end of $22.96 $ 25.42 $ 19.11 $ 23.13 $ 24.88
========================= ====== ======= ======== ======== ========
period
TOTAL RETURN 1.0% 40.5% (16.5)% 16.4% 28.4%
====== ======== ===== ====== ========
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period $49,840 $56,340 $45,614 $73,957 $68,314
======= ======= ======= ======= =======
(000' omitted)
Ratio of expenses to average 2.45% 2.88% 2.92% 2.74% 3.07%
======== ========= ========= ========== =========
net assets(a)
Ratio of net investment loss 2.81% 2.70% 2.43% 2.73% 2.78%
======== ========= ========= ========== =========
to average net assets
Portfolio turnover rate 311% 319% 309% 256% 261%
======== ========= ========= ========= =========
Average commission per share $.0714
========
</TABLE>
* Per share net investment loss and net realized and unrealized gain (loss) on
investments have been computed usingcomputations had no effect on net asset
value per share.
(a)Ratios including interest expense were 2.92% and 3.67% for the years ended
December 31, 1996 and 1995, resp
SPECIAL EQUITIES FUND, INC.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareowners of
Bull & Bear Special Equities Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Bull & Bear Special Equities Fund, Inc., including the schedule of portfolio
investments as of December 31, 1996, 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
December 31, 1996, by correspondence with the custodian and brokers. 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 Special Equities Fund, Inc. as of December 31, 1996, 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
January 17, 1997
SPECIAL EQUITIES FUND, INC.
<PAGE>
Special Equities Fund
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.
SPECIAL EQUITIES FUND, INC.
<PAGE>
