U.S. AND OVERSEAS FUND
INVESTING WORLDWIDE
FOR THE HIGHEST POSSIBLE
TOTAL RETURN
ANNUAL REPORT
DECEMBER 31, 1997
February 12, 1998
Fellow Shareholders:
We are pleased to submit this Annual Report for the year ended December
31, 1997 and to welcome our shareholders who have opened a new account during
the year.
As noted in our June 30, 1997 Semi-Annual Report, investment decisions
for the Fund have since February 20, 1997 been made by the Investment Policy
Committee of Bull & Bear Advisers, Inc., the Fund's Investment Manager. As
reported, in the first quarter of 1997 the Fund had a total return of -3.29%
compared to a total return of +.70% for the Global Funds monitored by Lipper
Analytical Services, Inc., a leading mutual fund rating service. Over the
balance of the year, the Fund showed a total return of +9.23%, comparing more
favorably to the +12.25% for Lipper's Global Funds for the same period. Although
results for the 12 months of +5.64% were negatively impacted by the first
quarter of the year, we are very encouraged by the improvement over the balance
of the year.
Review and Outlook
During the second half of 1997, investors had to reconcile the lowest
rates of unemployment seen in a generation with significant declines in
intermediate and long term yields. The resolution to this apparent contradiction
was found in a continuation of the first half's "Goldilocks" economy - not too
hot and not too cold - with low levels of inflation, the decline in the Federal
deficit from $107 billion in 1996 to $22 billion in 1997, the possibility of a
budget surplus in 1998, and purchases of U.S. Government securities as both a
safe haven from global financial turmoil and in anticipation of an economic
slowdown.
The decline in intermediate and long term rates during the second half
of the year began slowly during the summer, despite lingering concerns regarding
the strength of the economy, and accelerated during the fall, as the Asian
financial crisis took center stage. Thirty year U.S. Treasury bonds began the
second half yielding 6.90%, and closed the year at 5.97%, a decline of almost a
full percentage point. Nevertheless, we continue to believe that monetary policy
is restrictive, and the next move by the Federal Reserve will be to lower the
5.5% Federal Funds rate toward a more neutral stance.
Declines in interest rates of similar magnitudes to those experienced in
the United States took place in the capital markets of many industrialized
countries in 1997. In many less developed countries, even greater declines took
place, prior to the October depreciation of the Hong Kong Dollar. The disarray
in Asian financial markets that began in Thailand in August extended to Latin
America and East Europe by year end. As of this writing, we are impressed by the
rapid response of the International Monetary Fund to the Asian banking crisis
and by the commitment of the "Group of Seven" nations to promote a return to
stability in the region. We believe that many rewarding opportunities are now
offered to investors in Asia, Latin America, and Eastern Europe. Our forecast
that the dollar would continue to strengthen last year was correct. While we
continue to favor dollar denominated investments in 1998, we believe that a
potential increase in the U.S. trade deficit could moderate dollar gains this
year and look to adjust our holdings accordingly. Given these market's
conditions, the Fund's strategy was to remain invested on a global basis,
<PAGE>
generally in highly liquid equity securities of companies with growing earnings.
The Fund sought new investments world-wide in these types of companies over
diverse industries where the stocks were showing price and earnings momentum but
could still be acquired at attractive valuations. To gain access to certain
foreign markets while seeking to minimize risk, expense, and liquidity concerns,
the Fund utilized the techniques of investing in American Depository Receipts
("ADRs") and in single country and regional closed-end investment companies when
available at significant discounts to net asset value.
We therefore see this as an attractive time to add to your investment.
In terms of seeking to achieve your long range financial goals, we especially
favor building your account 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 the Bull & Bear Government Direct Deposit
Plan. An example of how these plans can build an account over time is in the
accompanying illustration of investing $10,000 in the Fund at its inception,
October 29, 1987, followed by regular investments of $100 a month through
December 31, 1997. The ending value of $38,153 represented a gain of more than
70% over the $22,200 invested. For information on any of 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 Bull & Bear No-Fee IRA(R) or opening a discount brokerage
account at Bull & Bear Securities, as described on page 3, we would be pleased
to hear from you. Just call toll-free at 1-888-503-FUND (3863), and an Investor
Service 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
U.S. and Overseas Fund
Results of an initial investment of $10,000 with subsequent investments of $100
a month from inception, 10/29/87, through 12/31/97 with all distributions
reinvested. Investments for the period total $22,200.
Plot Points:
10/29/87 10,000
12/31/87 10040
12/31/88 12120
12/31/89 14763
12/31/90 14620
12/31/91 19266
12/31/92 19948
12/31/93 26664
12/31/94 24271
12/31/95 31702
12/31/96 34615
12/31/97 38153
<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).
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 U.S. AND OVERSEAS FUND
Schedule of Portfolio Investments - December 31, 1997
Shares Market Value
COMMON STOCKS (92.7%)
Australia (2.3%)
2,700 Australia & New Zealand Banking Group Ltd. ADR.......... $88,762
3,200 Westpac Banking Corporation Ltd. ADR.................... 101,600
190,362
Brazil (1.2%)
870 Telecomunicacoes Brasileiras S.A. ADR................... 101,301
Canada (24.5%)
37,500 Air Canada, Class A*.................................... 356,250
3,100 BCE, Inc................................................ 103,269
15,000 Counsel Corporation*.................................... 195,000
16,100 Emco Ltd.*.............................................. 195,213
1,900 Imperial Oil Ltd........................................ 121,481
11,900 International Comfort Products Corp.*................... 99,662
2,900 PLEnergy, Inc........................................... 130,500
3,100 IPSCO, Inc.............................................. 119,544
1,200 Northern Telecom Ltd.................................... 106,800
5,200 Petro-Canada............................................ 95,550
6,000 Royal Bank of Canada.................................... 318,000
2,700 Toronto-Dominion Bank................................... 101,756
4,700 TransCanada PipeLines Ltd............................... 105,162
................................................. 2,048,187
Columbia (1.5%)
2,900 Banco Ganadero S.A. ADR................................. 127,056
France (2.7%)
2,600 Rhone-Poulenc S.A. ADR.................................. 115,375
1,900 Total S.A. ADR.......................................... 105,450
................................................. 220,825
Ireland (1.4%)
2,000 Allied Irish Banks PLC ADR.............................. 116,000
Israel (1.9%)
2,100 American Israeli Paper Mills Ltd........................ 88,725
5,000 Tadiran Telecommunications Ltd.......................... 69,375
158,100
Italy (2.4%)
3,120 Benetton Group S.P.A. ADR............................... 101,790
1,700 ENI S.P.A. ADR.......................................... 97,006
198,796
Japan (3.1%)
670 Canon, Inc. ADR......................................... 78,222
1,040 Sony Corp. ADR.......................................... 94,380
1,200 TDK Corporation ADR..................................... 88,200
................................................. 260,802
<PAGE>
Netherlands (3.6%)
1,040 Akzo Nobel N.V. ADR..................................... 90,350
3,636 Koninklijke Ahold N.V. ADR.............................. 94,991
1,200 Velcro Industries N.V................................... 115,200
................................................. 300,541
New Zealand (.8%)
3,200 Fletcher Challenge Building ADR........................ 66,400
128 Fletcher Challenge Forests.............................. 1,072
................................................. 67,472
Spain (1.5%)
3,900 Banco Bilbao Vizcaya, S.A. ADR.......................... 126,019
United Kingdom (7.3%)
5,200 B.A.T. Industries PLC ADR............................... 97,500
2,600 Cadbury Schweppes PLC ADR............................... 107,575
1,890 Stolt Comex Seaway, S.A.*............................... 94,500
5,000 Tomkins PLC ADR......................................... 95,625
3,300 Unilever PLC ADR........................................ 113,850
2,200 WPPGroup PLC ADR........................................ 99,275
608,325
United States (38.5%)
400 Badger Meter, Inc....................................... 16,300
1,500 Chevron Corporation..................................... 115,500
8,400 Computalog Ltd.*........................................ 134,400
7,500 Dental Care Alliance, Inc.*............................. 78,750
5,300 Expeditors International of Washington, Inc............. 204,050
1,900 Exxon Corp.............................................. 116,256
3,400 General Motors Corporation.............................. 206,125
7,900 GENICOMCorp.*........................................... 90,850
7,700 Goody's Family Clothing, Inc.*.......................... 209,344
3,300 Ingram Micro Inc.*...................................... 96,112
3,700 Interface, Inc.......................................... 107,300
3,200 Jabil Circuit, Inc.*.................................... 127,200
5,300 Key Energy Group, Inc.*................................. 114,944
3,400 Lone Star Technologies, Inc.*........................... 96,475
2,000 MacDermid, Inc.......................................... 169,750
4,200 Mail-Well, Inc.*........................................ 170,100
6,600 MPWIndustrial Services Group, Inc.*..................... 59,400
4,800 NSGroup, Inc.*.......................................... 82,200
5,400 Paul Harris Stores, Inc.*............................... 54,337
4,500 Philip Morris Companies Inc............................. 203,906
5,400 Priority Healthcare Corp.B*............................. 81,675
4,800 Quorum Health Group, Inc.*.............................. 125,400
216 Raytheon Co. Class A.................................... 10,692
4,000 Rock of Ages Corp.*..................................... 62,000
2,200 Tower Automotive, Inc.*................................. 92,538
6,400 Trans World Entertainment Corp.*........................ 124,000
2,500 United Technologies Corp................................ 182,031
1,700 Volt Information Sciences, Inc.*........................ 91,588
........................................................... 3,223,223
Total Stocks(cost:$6,938,495)........................ 7,747,009
<PAGE>
Closed-End Funds (6.7%)
8,600 Emerging Mexico Fund, Inc*............................... 91,375
7,000 European Warrant Fund, Inc............................... 99,313
10,800 INVESCOGlobal Health Sciences Fund....................... 177,525
4,400 Mexico Fund.............................................. 90,475
14,000 The Turkish Investment Fund, Inc......................... 103,250
Total Closed-End Funds (cost: $607,299) ........... 561,938
Par
Value U.S. Government Obligations (.6%)
$50,000 U. S. Treasury Bills, due 1/22/98 (cost: $49,848)........ 49,848
Total Investments (cost: $7,595,642) (100.0%) $8,358,795
* Indicates non-income producing security.
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
ASSETS:
Investments at market value
(cost: $7,595,642) (note 1).................................. 8,358,795
Collateral for securities loaned,at market value (note 7)........ 2,129,983
Receivable for securities sold................................... 105,000
Dividend receivable.............................................. 91,826
Receivable for fund shares sold.................................. 1,000
Other assets..................................................... 1,043
Total assets................................................ 647
LIABILITIES:
Due to bank...................................................... 34,087
Payables:
Demand note payable to bank
(note 5)................................................. 19,594
Fund shares purchased........................................ 1,120
Collateral for securities loaned (note 7)........................ 2,129,983
Accrued expenses................................................. 38,126
Accrued management and
distribution fees............................................ 19,092
Total liabilities................................... 2,242,002
NET ASSETS: (applicable to 1,149,191
outstanding shares: 250,000,000 shares
of $.01 par value authorized).................................... $8,445,645
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($8,445,645 / 1,149,191)........................................ $7.35
At December 31, 1997, net assets consisted of:
Paid-in capital................................................. $7,682,492
Net unrealized appreciation on investments
and foreign currencies........................... 763,153
.................................................. $8,445,645
STATEMENT OF OPERATIONS
Year ended December 31, 1997
INVESTMENT INCOME:
Dividends (net of foreign taxes of $1,986)..................... $215,437
Interest .................................................. 23,595
.................................................. 239,032
EXPENSES:
Distribution (note 3).......................................... 91,549
Investment management (note 3)................................. 91,519
Professional (note 3).......................................... 24,814
Registration (note 3).......................................... 21,143
Printing .................................................. 19,184
Custodian...................................................... 17,625
Transfer agent................................................. 14,706
Shareholder administration (note 3)............................ 11,055
Interest (note 5).............................................. 4,711
Directors .................................................. 2,151
Other .................................................. 598
Total expenses............................................. 299,055
Fee reductions (note 4).................................... (4,805)
Net expenses............................................... 294,250
Net investment loss........................................ (55,218)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS,
FOREIGN CURRENCIES AND FUTURES:
Net realized gain from security
transactions................................................. 953,347
Net realized gain from foreign
currency and futures transactions............................ 16
Unrealized depreciation of investments and foreign
currencies during the period.................................... (414,081)
Net realized and unrealized gain on investments, foreign
currencies and futures................................... 539,282
Net increase in net assets resulting from operations......... $484,064
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31,
OPERATIONS: 1997 1996
Net investment loss $ (55,218) $ (283,125)
Net realized gain (loss) from foreign
currency and futures transactions 16 (825)
Net realized gain from security transactions 953,347 1,218,205
Unrealized depreciation of investments and
foreign currencies during the period (414,081) (397,162)
Net increase in net assets resulting
from operations 484,064 537,093
DISTRIBUTIONS TO SHAREHOLDERS:
Distribution from net realized gains ($.97 and
$.89 per share, respectively) (1,011,463) (1,009,699)
CAPITAL SHARE TRANSACTIONS:
Increase (decrease) in net assets resulting
from capital share transactions (a) (863,088) 500,959
Total increase (decrease) in net assets (1,390,487) 28,353
NET ASSETS:
Beginning of period 9,836,132 9,807,779
End of period $8,445,645 $9,836,132
- --------------
(a) Transactions in capital shares were as follows:
1997 1996
---- ----
Shares Value Shares Value
Shares sold 60,250 $ 499,924 321,372 $2,801,257
Shares issued in
acquisition of Fund (note 6) - - 230,512 1,924,477
Shares issued in
reinvestment of distributions 123,585 885,948 113,076 887,646
Shares redeemed (277,795) (2,248,960) (595,238) (5,112,421)
Net increase (decrease) (93,960) $(863,088) 69,722 $ 500,959
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) The Fund is a non-diversified series of common stock of Bull & Bear Funds I,
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 seek to obtain the highest possible total
return on its assets from long term growth of capital and from income
principally through a portfolio of securities of U.S. and overseas issuers. 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, unless over-the-counter quotations for such securities are believed to
more closely reflect their fair value, 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, securities traded in the over-the-counter market that are not on
NMS, and foreign securities are valued at the mean between the current bid and
asked prices. Securities of foreign issuers denominated in foreign currencies
are translated into U.S. dollars at prevailing exchange rates. Forward contracts
are marked to market daily and the change in market value is recorded by the
Fund as an unrealized gain or loss. When a contract is closed, the Fund records
a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed. The
Fund could be exposed to risk if the counterparties are unable to meet the terms
of the contracts. Debt obligations with remaining maturities of 60 days or less
are valued at cost adjusted for amortization of premiums and accretion of
discounts. 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.
(2) 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 $7,595,642, gross unrealized appreciation and gross unrealized
depreciation were $1,016,387 and $253,234 at December 31, 1997. Distributions
paid to shareholders during the years ended December 31, 1997 and 1996 differ
from net realized gains from security transactions as determined for financial
reporting purposes principally as a result of the utilization of net operating
losses to offset short-term capital gains.
(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 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, 1997, the Fund paid $23,672
to Bull & Bear Securities, Inc., an affiliate of the Investment Manager, as
commissions for brokerage services. The Fund reimbursed the Investment Manager
$3,856 for providing certain administrative and accounting services at cost
during the year ended December 31, 1997.
The Fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plan"). Pursuant to the Plan, the Fund 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
<PAGE>
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 $11,055 for shareholder administration
services supplied to the Fund at cost for the year ended December 31, 1997.
(4) Purchases and sales of securities other than short term notes aggregated
$17,742,546 and $20,014,270 respectively, for the year ended December 31, 1997.
The Fund has entered into an arrangement with its custodian whereby interest
earned on uninvested cash balances is used to offset a portion of the Fund's
expenses. During the year, the Fund's custodian fees were reduced by $4,805
under such arrangements.
(5) The Fund has a committed bank line of credit. At December 31, 1997, there
was a balance outstanding of $19,594 and the interest rate was equal to the
Federal Reserve Funds Rate plus 1.00 percentage point. For the year ended
December 31, 1997, the weighted average interest rate was 6.81% based on the
balances outstanding during the period and the weighted average amount
outstanding was $77,931.
(6) On April 26, 1996, the Fund acquired all of the assets and liabilities of
Bull & Bear Quality Growth Fund, in exchange for 230,512 shares (valued at
$2,136,916) of the Fund that were subsequently distributed to shareholders of
Bull & Bear Quality Growth Fund. The exchange had no effect on the net asset
value per share of the Fund. The net assets of Bull & Bear Quality Growth Fund
as of April 26, 1996, were $2,136,916 consisting of paid-in-capital of
$1,924,477, net unrealized appreciation of investments of $260,306, and
accumulated net realized loss on investments of $47,867.
(7) As of December 31, 1997, the Fund loaned common stocks having a value of
$2,064,869 and received cash collateral of $2,129,983 for the loan.
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
PER SHARE DATA*
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $7.91 $8.36 $7.08 $8.71 $7.59
Income from investment operations:
Net investment loss (.05) (.24) (.23) (.13) (.20)
Net realized and unrealized gain (loss) on
investments .46 .68 2.00 (1.01) 2.22
Total from investment operations .41 .44 1.77 (1.14) 2.02
Less distributions:
Distributions from net realized gains on investments (.97) (.89) (.49) (.49) (.90)
Net asset value at end of period $7.35 $7.91 $8.36 $7.08 $8.71
TOTAL RETURN 5.64% 5.34% 25.11% (13.12)% 26.71%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $8,446 $9,836 $9,808 $8,454 $12,250
Ratio of expenses to average net assets (a) (b) 3.28% 3.20% 3.55% 3.53% 3.55%
Ratio of net investment loss to average net
assets (c) (0.63)% (2.74)% (2.85)% (1.65)% (2.36)%
Portfolio turnover rate 205% 255% 214% 212% 182%
Average commission per share $.0418 $.0536
</TABLE>
* Per share net investment loss and net realized and unrealized gain (loss) on
investments have been computed using the average number of shares
outstanding. These computations had no effect on net asset value per share.
(a) Ratio prior to reimbursement by the Investment Manager was 3.84%, 3.59%, and
3.69% for the years ended December 31, 1995, 1994, and 1993, respectively.
(b) Ratio after the custodian fee credits was 3.22% and 3.49% for 1997 and 1995,
respectively. Prior to 1995, such reductions were reflected in the expense
ratios. There were no custodian fee credits for 1996.
(c) Ratio prior to reimbursement by the Investment Manager was (3.14)%, (1.71)%,
and (2.50)% for the years ended December 31, 1995, 1994, and 1993,
respectively.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders of
Bull & Bear U.S. and Overseas Fund:
We have audited the accompanying statement of assets and liabilities of Bull
& Bear U.S. and Overseas Fund, including the schedule of portfolio investments
as of December 31, 1997, 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
December 31, 1997, 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 U.S. and Overseas Fund as of December 31, 1997, 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 23, 1998
<PAGE>
Total Return Performance Graphs
Bull & Bear U.S. and Overseas Fund ("Fund")
Morgan Stanley Capital International World Index ("MSCI")
Morningstar's World Stock Fund Average ("MSFA")
MSCI is unmanaged and fully invested in common stocks. MSFA is an equally
weighted average of 198 world equity mutual funds. The Fund may invest in any
type of U.S. or foreign securities, including Eurodollar securities, and engage
in options, futures and forward currency transactions. The Performance Graphs
cover January 1, 1988 to December 31, 1997, and reflect reinvestment of
dividends and distributions. Past performance is not predictive of future
performance.
Growth of $10,000 invested 1/1/88 through 12/31/97
Fund MSCI MSFA
1/1/88 10000 10000 10000
12/31/88 10375 12329 11495
12/31/89 11989 14376 14180
12/31/90 10956 11930 12610
12/31/91 13443 14111 15294
12/31/92 13082 13374 15447
12/31/93 16576 16383 20194
12/31/94 14401 17215 19856
12/31/95 18017 20781 23053
12/31/96 18980 23583 26946
12/31/97 20242 27300 29962
Plot Points:
Final Total Average
Value Return Annual Return
----- ------ -------------
Fund $20,066 100.67% 7.21%
MSCI 27,300 173.00 10.56
MSFA 29,962 199.62 11.60
1 Year 5 Years 10 Years
U.S. and Overseas Fund
Average Annual Return 5.64% 8.92% 7.21%
U.S. AND OVERSEAS FUND
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
