U.S. AND OVERSEAS FUND
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 Semi-Annual Report to shareholders and to
welcome the many new shareholders who have joined the Fund over the first six
months of the year. We are also pleased 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 the Fund seek its investment objective of
growth and income from U.S. and overseas issuers.
For the six months ending June 30, 1998, the Fund's total return was 12.52%.
This attractive return reflects the disciplined approach that the Fund takes to
investing. Generally, the Fund attempts to identify steadily growing companies
with reasonable valuations, and to hold their equity securities for long term
appreciation and/or income. We avoid companies that lack solid rates of growth
in revenues, net income, earnings per share, and shareholders' equity. Yet, even
if a company does meet our growth criteria, it must also have a reasonable
valuation in terms of price/earnings, price/sales, price/cash flow, and similar
ratios. When our analysis is correct, we see these companies increasing their
overall profitability as measured by net margins, return on equity, and return
on assets, reducing their debt as a percentage of its total capitalization and
increasing and enhancing their recognition by the marketplace with commensurate
increases in the prices of their securities.
Review and Outlook
During the first half of 1998, volatility in the U.S. stock market and foreign
stock markets, as well as in currency prices, reflected investor uncertainty
over numerous and diverging global trends and economic influences. During this
period when European markets provided good returns, with some making new
all-time highs, the Japanese market continued to slump with little respite.
Meanwhile, 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, including deflationary pressures and weakened
prospects for global growth. Further, even as the U.S. economy becomes
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,
foreigners are buying less of U.S. Treasury securities and more of U.S. stocks.
According to the Wall Street Journal, in the first quarter of this year,
foreigners bought a net $116 billion of U.S. stocks, at an annual rate, compared
to minimal amounts in 1995, and a net $11.8 billion of Treasuries, as compared
to $92.7 billion in the fourth quarter of 1996.
Given the uncertainty in international economic trends, the Fund currently has
invested approximately 40% of its total assets in U.S. companies and 60% in
foreign companies, including many Canadian ones. While the Fund has investments
among large and medium capitalization companies, we are increasingly finding
that the most attractive opportunities for growth are now within the smaller
capitalization area. The median market capitalization of the Fund's portfolio
companies currently is about $3.8 billion. With regard to market sectors, the
Fund has a relatively greater weighting in financial and industrial companies
which are believed to continue to benefit from the boom in financial services
and the growth in many economies worldwide.
Looking ahead, we believe that over the balance of the year and into 1999,
inflation generally will remain in check globally and most non-emerging market
economies will experience generally moderate levels of growth. With the
combination of this favorable economic background and our disciplined approach
to selecting investments, we expect
<PAGE>
the Fund will continue to provide improving results for its shareholders. To
take advantage of this, we recommend 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/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.
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 U.S. and
Overseas Fund total return for one year was +15.07%, average annual total return
for the past five years was +9.04%, and for the past ten years was +8.31%. 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 - June 30, 1998 (Unaudited)
Shares Market Value
COMMON STOCKS (93.2%)
Brazil (1.1%)
870 Telecomunicacoes Brasileiras S.A. ADR $ 94,993
Canada (19.6%)
2,100 Bank of Montreal 116,813
8,400 Computalog Ltd.* 94,500
15,000 Counsel Corporation* 170,625
2,900 IPL Energy, Inc. 131,225
4,650 IPSCO, Inc. 124,969
5,200 Petro-Canada 84,175
12,000 Royal Bank of Canada 724,500
2,700 Toronto-Dominion Bank 122,344
1,713,439
Columbia (1.1%)
2,900 Banco Ganadero S.A. ADR 94,250
France (9.8%)
4,500 AXA-UAP ADR 255,656
7,000 Rhone-Poulenc S.A. ADR 393,313
3,200 Total S.A. ADR 209,200
858,169
HONG KONG (1.0%)
5,760 Nam Tai Electronics, Inc. 87,300
Ireland (3.9%)
2,000 Allied Irish Banks plc ADR 171,625
2,400 CRH plc ADR 173,400
<PAGE>
345,025
Italy (3.7%)
3,120 Benetton Group S.p.A. ADR 129,870
1,700 ENI S.P.A. ADR 110,500
3,900 Fiat SpA ADR 85,800
326,170
Japan (2.9%)
3,350 Canon, Inc. ADR 76,631
1,190 Honda Motor Co., Ltd. ADR 85,011
1,040 Sony Corp. ADR 89,505
251,147
Netherlands (5.6%)
1,040 Akzo Nobel N.V. ADR 115,310
6,500 Koninklijke Ahold N.V. ADR 208,000
1,200 Velcro Industries N.V. 167,100
490,410
Market Value
Portugal (.8%)
2,600 Banco Comercial Portugues, S.A. ADR $ 72,475
United Kingdom (6.9%)
2,600 Cadbury Schweppes plc ADR 160,225
14,200 Cronos Group* 85,200
5,000 Tomkins plc ADR 114,375
3,600 WPP Group plc ADR 242,100
601,900
United States (36.8%)
3,260 Benchmark Electronics, Inc.*. 65,200
1,860 Bergen Brunswig Corp. Class A 86,257
5,700 Chase Corp. 77,662
<PAGE>
2,600 CTS Corp. 76,700
4,650 Engineered Support Systems, Inc. 86,025
5,300 Expeditors International of Washington, Inc. 233,200
1,280 Express Scripts, Inc.* 103,200
12,600 Gencor Industries, Inc. 253,575
7,700 Goody's Family Clothing, Inc.* 422,538
12,220 Interface, Inc. 246,691
3,200 Jabil Circuit, Inc.* 105,800
8,400 Mail-Well, Inc.* 182,175
3,190 Rio Hotel & Casino, Inc.* 60,211
2,100 Teleflex Inc. 79,800
2,200 Tower Automotive, Inc.* 94,325
6,400 Trans World Entertainment Corp.* 276,000
2,500 United Technologies Corp. 231,250
1,740 Universal Health Services, Inc. Class B* 101,572
6,830 Virco Manufacturing Corp. 163,493
1,910 Wal-Mart Stores, Inc. 116,033
4,500 Western Staff Services, Inc.* 83,250
3,750 Wynn's International, Inc. 72,187
3,217,144
Total Common Stocks (cost: $6,713,267) 8,152,422
CLOSED-END FUNDS (5.1%)
10,000 European Warrant Fund Inc.* 232,500
10,800 INVESCO Global Health Sciences Fund 212,625
Total Closed-End funds (cost: $339,836) 445,125
SHORT TERM INVESTMENTS (1.7%)
$149,397 State Street Bank and Trust Company Repurchase Agreement,
June 30, 1998, due July 1, 1998 (collateralized by $130,000 U.S. Treasury
Bond 7.25%, due 5/15/16 proceeds $149,414) (cost: $149,397) 149,397
<PAGE>
Total Investments (cost: $7,202,500) (100.0%) $8,746,944
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (Unaudited)
ASSETS:
Investments at market value
(cost: $7,202,500) (note 1) $8,746,944
Collateral for securities loaned,
at market value (note 6) 526,990
Dividend receivable 12,489
Other assets 1,992
Total assets 9,288,415
LIABILITIES:
Collateral for securities loaned (note 6) 526,990
Accrued expenses 23,544
Accrued management and
distribution fees 18,997
Total liabilities 569,531
NET ASSETS: (applicable to 1,053,873
outstanding shares: 250,000,000 shares
of $.01 par value authorized) $8,718,884
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($8,718,884 ÷ 1,053,873) $8.27
At June 30, 1998, net assets consisted of:
Paid-in capital $6,924,093
Accumulated net realized gain on
<PAGE>
investments 340,118
Accumulated deficit in net investment
income (89,771)
Net unrealized appreciation on investments
and foreign currencies 1,544,444
$8,718,884
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1998 (Unaudited)
INVESTMENT INCOME:
Dividends (net of foreign taxes of $10,117) $38,206
Interest 3,897
Miscellaneous 5,914
48,017
EXPENSES:
Distribution (note 3) 43,254
Investment management (note 3) 43,254
Transfer agent 12,892
Registration (note 3) 10,563
Professional 9,952
Shareholder administration (note 3) 5,712
Printing 5,374
Custodian 3,732
Directors 1,131
Interest (note 5) 1,025
Other 899
Net expenses 137,788
Net investment loss (89,771)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS,
<PAGE>
FOREIGN CURRENCIES AND FUTURES:
Net realized gain from security
transactions 206,734
Net realized gain from futures transactions 133,384
Unrealized appreciation of
investments during the period 781,291
Net realized and unrealized gain on investments,
foreign currencies and futures
1,121,409
Net increase in net assets resulting from operations
$1,031,638
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1998 (Unaudited) and the Year Ended
December 31, 1997
JUNE 30,1998 DECEMBER 31, 1997
OPERATIONS:
Net investment loss $ (89,771) $ (55,218)
<S> <C> <C>
Net realized gain from futures transactions 133,384 16
Net realized gain from security transactions 206,734 953,347
Unrealized appreciation (depreciation) of investments and foreign 781,291 (414,081)
currencies during the period
Net increase in net assets resulting from 1,031,638 484,064
operations
DISTRIBUTIONS TO SHAREHOLDERS:
Distribution from net realized gains ($.97 per share, respectively) _ (1,011,463)
CAPITAL SHARE TRANSACTIONS:
Decrease in net assets resulting from capital share transactions (758,399) (863,088)
(a)
Total increase (decrease) in net assets 273,239 (1,390,487)
NET ASSETS:
Beginning of period 8,445,645 9,836,132
End of period $8,718,884 $8,445,645
</TABLE>
(a) Transactions in capital shares were as follows:
<PAGE>
June 30, 1998 December 31, 1997
Shares Value Shares Value
Shares sold 20,063 $163,039 60,250 $499,924
Shares issued in
reinvestment of distributions _ _ 123,585 885,948
Shares redeemed (115,381) (921,438) (277,795) (2,248,960)
Net decrease (95,318) $(758,399) (93,960) $(863,088)
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(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. 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.
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 $7,202,500, gross unrealized appreciation and gross unrealized
depreciation were $1,807,441 and $262,997 at June 30, 1998. Distributions paid
to shareholders during the year ended December 31, 1997 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
<PAGE>
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 six
months ended June 30, 1998, the Fund paid $6,707 to Bull & Bear Securities,
Inc., an affiliate of the Investment Manager, as commissions for brokerage
services. The Fund reimbursed the Investment Manager $1,880 for providing
certain administrative and accounting services at cost during the six months
ended June 30, 1998.
The Fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plan"). Pursuant to the Plan, the Fund 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 $5,712 for shareholder administration services supplied to
the Fund at cost for the six months ended June 30, 1998.
(4) Purchases and sales of securities other than short term notes aggregated
$4,101,100 and $4,905,526 respectively, for the six months ended June 30, 1998.
(5) The Fund has a committed bank line of credit. At June 30, 1998, there was no
balance outstanding and the interest rate was equal to the Federal Reserve Funds
Rate plus 1.00 percentage point. For the six months ended June 30, 1998, the
weighted average interest rate was 6.34% based on the balances outstanding
during the period and the weighted average amount outstanding was $17,751.
(6) As of June 30, 1998, the Fund loaned common stocks having a value of
$518,596 and received cash collateral of $526,990 for the loan.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended December 31,
Six Months 1997 1996 1995 1994 1993
Ended June
30, 1998
PER SHARE DATA* (Unaudited)
Net asset value at beginning of period
<S> <C> <C> <C> <C> <C> <C>
Income from investment operations: $7.35 $7.91 $8.36 $7.08 $8.71 $7.59
Net investment loss
Net realized and unrealized gain (loss) on (.08) (.05) (.24) (.23) (.13) (.20)
investments
Total from investment operations 1 0.46 0.68 2 (1.01) 2.22
Less distributions: 0.92 0.41 0.44 1.77 (1.14) 2.02
Distributions from net realized gains on
investments
Net asset value at end of period _ (.97) (.89) (.49) (.49) (.90)
TOTAL RETURN $8.27 $7.35 $7.91 $8.36 $7.08 $8.71
RATIOS/SUPPLEMENTAL DATA 12.52% 5.64% 5.34% 25.11% (13.12)% 26.71%
Net assets at end of period (000's omitted)
Ratio of expenses to average net assets (a) (b) $8,719 $8,446 $9,836 $9,808 $8,454 $12,250
Ratio of net investment loss to average net 3.18%** 3.28% 3.20% 3.55% 3.53% 3.55%
assets (c)
Portfolio turnover rate (2.07)%** (0.63)% (2.74)% (2.85)% (1.65)% (2.36)%
Average commission per share 48% 205% 255% 214% 212% 182%
</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.
** Annualized.
(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 1998 and 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.
U.S. AND OVERSEAS FUND
For Fund prospectuses and other
investment information, call toll-free
1-888-503-FUND
<PAGE>
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
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.
Investing Worldwide
for the Highest Possible
Total Return
Semi-Annual Report
June 30, 1998
UO-121-6/8
