As filed with the Securities and Exchange Commission on September 26, 1996.
1940 Act File No. 811-07833
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-2
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
11 Hanover Square
New York, New York 10005
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 1-212-785-0900
Thomas B. Winmill
Bull & Bear Advisers, Inc
11 Hanover Square
New York, New York 10005
(Name and Address of Agent for Service)
Copy to:
Richard T. Prins
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
CROSS REFERENCE SHEET
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
N-2 Item Number Prospectus Caption
Part A
Item 1 Outside Front Cover ............. Cover Page
Item 2 Inside Front and Outside Back
Cover Page . . . . . . . . . . Not Applicable
Item 3 Fee Table and Synopsis . . . . Expense Table
Item 4 Financial Highlights . . . . . . Not Applicable
Item 5 Plan of Distribution . . . . . . Not Applicable
Item 6 Selling Shareholders . . . . . . Not Applicable
Item 7 Use of Proceeds . . . . . . . . Not Applicable
Item 8 General Description of the
Registrant . . . . . . . . . . The Funds's Investment
Program; Distribution
Arrangements; Capital
Stock
Item 9 Management . . . . . . . . . . The Funds's Investment
Program; The
Investment Manager;
Capital Stock;
Custodian, Transfer
Agent and Dividend
Disbursing Agent
Item 10 Capital Stock, Long-Term Debt,
and Other Securities . . . . Dividend Reinvestment Plan;
Dividends, Distributions and
Taxes; Capital Stock
Item 11 Defaults and Arrears on Senior
Securities . . . . . . . . . . Not Applicable
Item 12 Legal Proceedings . . . . . . . Not Applicable
Item 13 Table of Contents of the
Statement of Additional
Information . . . . . . . . . Table of Contents of the
Statement of Additional
Information
Location in Statement of Additional Information (Caption)
Part B
Item 14 Cover Page . . . . . . . . . . Outside Front Cover Page
Item 15 Table of Contents . . . . . . Outside Front Cover Page
Item 16 General Information and History. Not Applicable
Item 17 Investment Objective and
Policies . . . . . . . . . . The Fund's Investment Program
Item 18 Management . . . . . . . . . . Officers and Directors; The
Investment Manager
Item 19 Control Persons and Principal
Holder of Securities . . . . Officers and Directors; The
Investment Manager
Item 20 Investment Advisory and Other
Services . . . . . . . . . . Officers and Directors; The
Investment Manager
Item 21 Brokerage Allocation and
Other Practices . . . . . . Allocation of Brokerage
Item 22 Tax Status . . . . . . . . . Dividends, Distributions and
Taxes
Item 23 Financial Statements. . . . Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
The investment objective of Bull & Bear U.S. Government Securities Fund,
Inc. (the "Fund"), a diversified, closed-end management investment company,
is to provide for its shareholders:
o A High Level of Current Income,
o Liquidity, and
o Safety of Principal
The Fund will commence operations as a diversified, closed-end
management investment company on the date hereof. Prior to the date hereof,
since 1986 the Fund was a diversified series of shares issued by Bull &
Bear Funds II, Inc., an open-end management investment company organized in
1974.
The Fund pursues its investment objective by investing primarily in a
diversified, managed portfolio of securities backed by the full faith and
credit of the United States. Fund shares are not guaranteed or insured by
the U.S. Government or its agencies and there can be no assurance that the
Fund will achieve its investment objective.
The Fund may also borrow money from banks from time to time to purchase
or carry securities. Such borrowing is speculative and increases both
investment opportunity and investment risk.
------------------------------------------------------------------------
Listings and Symbol. The Fund's shares are listed on the American Stock
Exchange under the symbol "BBG".
------------------------------------------------------------------------
This prospectus contains information you should know about the Fund
before you invest. Please keep it for future reference. The Fund's
Statement of Additional Information, dated October 4, 1996, has been filed
with the Securities and Exchange Commission and is incorporated by
reference in this prospectus. It is available at no charge by calling
toll-free 1-800-847-4200.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Expense Tables........................ Dividends, Distributions and Taxes....
Prospectus Summary.................... Repurchase of Shares..................
The Fund's Investment Program......... Capital Stock.........................
The Investment Manager................ Custodian, Transfer Agent and Dividend
Dividend Reinvestment Plan............ Agent ..............................
Expense Tables
The table below is designed to help you understand the costs and
expenses that you will bear directly or indirectly as an investor in the
Fund. The amounts are based on estimates. These expenses should not be
considered a representation of actual future expenses as such expenses may
be greater or less than those shown.
Shareholder Transaction Expenses
Sales Load (as a percentage of offering price). None
Dividend Reinvestment Plan Fees................ None
Annual Fund Operating Expenses
(as a percentage of net assets attributable to common shares)
Management Fees.............................................0.70%
Interest Payments on Borrowed Funds.........................0.00%
Other Expenses..............................................0.92%
Total Fund Operating Expenses...............................1.62%
<TABLE>
<S> <C> <C> <C> <C>
Example 1 year 3 years 5 years 10 years
------ ------- ------- --------
You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return .................................. $16 $51 $88 $192
</TABLE>
The example set forth above assumes a 5% annual rate of return as required
by the Securities and Exchange Commission (the "SEC").
The example is an illustration only and should not be considered an
indication of past or future returns and expenses. Actual returns and
expenses may be greater or less than those shown. "Other Expenses" includes
amounts paid to the Fund's custodian and transfer agent and reimbursed to
the Investment Manager.
The percentages given for annual Fund expenses are based on the Fund's
operating expenses restated using the current fees that would have been
applicable had they been in effect during the fiscal year ended June 30,
1996 and net assets of approximately $12 million as of September 20, 1996.
Based on the same restated expenses and average daily net assets of the
Fund during its fiscal year ended June 30, 1996, Other Expenses and Total
Fund Operating Expenses would have been .75% and 1.45%, respectively.
"Other Expenses" includes amounts paid to the Fund's custodian and Transfer
Agent and reimbursable to the Investment Manager for certain administrative
services. Until October 4, 1996, the Fund was a diversified series of
shares issued by Bull & Bear Funds II, an open-end management investment
company.
PROSPECTUS SUMMARY
Purposes of the Fund. The Fund, a diversified, closed-end management
investment company, is for long term investors who wish to invest in a
professionally managed portfolio consisting primarily of securities backed
by the full faith and credit of the United States. The Fund's yield will
vary. The net asset value of the Fund will change as interest rates
fluctuate. The Fund is not intended for investors who wish to speculate on
short term swings in interest rates or appropriate as a complete investment
program. There is no assurance the Fund will achieve its investment
objective.
Portfolio Management. The investment manager of the Fund is Bull & Bear
Advisers, Inc. The Fund's Portfolio Manager is Steven A. Landis. Mr. Landis
is also Senior Vice President and a member of the Investment Policy
Committee of the Investment Manager with overall responsibility for the
Bull & Bear fixed income funds. Mr. Landis was formerly Associate Director
- -- Proprietary Trading at Barclays De Zoete Wedd Securities Inc. and
Director, Bond Arbitrage at WG Trading Company. Mr. Landis received his MBA
in Finance from Columbia University.
Listing and Symbol. The Fund's shares are listed on the American Stock
Exchange under the symbol "BBG".
Repurchase of Shares. Although the Fund does not currently intend to
repurchase shares, no assurance can be given that the Fund will decide to
repurchase shares in the future, or, if undertaken, that such repurchases
will reduce any market discount that may develop. While the Fund does not
currently intend to repurchase its shares, its officers and directors, and
the Investment Manager and its affiliates may do so from time to time. See
"Repurchase of Shares."
Anti-takeover Provisions. Certain provisions of the Fund's Articles of
Incorporation and By-Laws may be regarded as "anti-takeover" provisions.
Pursuant to these provisions, only one of five classes of directors is
elected each year, the affirmative vote of the holders of 80% of the
outstanding shares of the Fund is necessary to amend the Articles of
Incorporation, to authorize the conversion of the Fund from a closed-end to
an open-end investment company and to authorize certain business
combinations (including any merger, consolidation, or share exchange with
any interested shareholder or any affiliate thereof), unless approved by
the vote of at least 50% of the Directors, in which case such amendment,
conversion or business combination requires the affirmative vote of the
holders of at least a majority of the votes entitled to be cast by holders
of voting stock. The overall effect of these provisions may be to render
more difficult the accomplishment of a merger with, or the assumption of
control by, a principal shareholder. These provisions may have the effect
of depriving Fund shareholders of an opportunity to sell their shares at a
premium to the prevailing market price. See "Capital Stock - Certain
Provisions of the Articles of Incorporation and By-Laws of the Fund."
Market Price of Shares. Shares of closed-end investment companies
frequently trade at a discount from net asset value. This characteristic of
shares of a closed-end investment company is a risk separate and distinct
from the risk that the value of the Fund's portfolio securities and the
Fund's Net Asset Value may decrease. The Fund cannot predict whether its
shares will trade at, below or above net asset value. See "The Fund's
Investment Program Market and Net Asset Value."
Dividend Reinvestment Plan. Under the Fund's Dividend Reinvestment Plan
(the "Plan"), all dividends and capital gain distributions will be
automatically reinvested in additional Fund shares instead of being paid in
cash, unless at any time prior to the record date for a particular dividend
or distribution a shareholder elects otherwise by notifying the Fund in
writing. There are no sales or other charges in connection with the
reinvestment of dividends or capital gain distributions. Shareholders who
intend to hold their Fund shares through a broker or nominee should contact
such broker or nominee to confirm that they may participate in the Plan.
The Fund has no fixed dividend rate, and there can be no assurance that the
Fund will pay any dividends or realize any capital gain. See "Dividend
Reinvestment Plan" and "Dividends, Distributions and Taxes."
THE FUND'S INVESTMENT PROGRAM
Prior to October 4, 1996 the Fund was a diversified series of shares issued
by Bull & Bear Funds II, Inc., an open-end management investment company
organized under Maryland law in 1974. On October 4, 1996, upon shareholder
approval, the Fund converted from open-end to closed-end status. The Fund's
investment objective is to provide a high level of current income,
liquidity, and safety of principal. The Fund pursues its investment
objective by investing at least 65% of its total assets in securities
backed by the full faith and credit of the United States ("U.S. Government
Securities"), including direct obligations of the United States (such as
U.S. Treasury bills, notes, and bonds) and certain agency securities, such
as those issued by the Government National Mortgage Association ("GNMA").
There can be no assurance that the Fund will achieve its investment
objective.
The Fund may also invest up to 35% of its total assets in securities
issued by agencies and instrumentalities of the U.S. Government that may
have different levels of government backing but that are not backed by the
full faith and credit of the U.S. Government. Such securities include, for
example, those that are supported by the agency's limited right to borrow
money from the U.S. Treasury under certain circumstances, such as
securities issued by the Federal National Mortgage Association ("FNMA"),
those that are supported only by the credit of the agency that issued them,
such as securities issued by the Federal Home Loan Bank, and those
supported primarily or solely by specific pools of assets and the
creditworthiness of a U.S. Government-related issuer, such as
mortgage-backed securities (including collateralized mortgage obligations
("CMOs") issued by FNMA, the Federal Home Loan Mortgage Corporation, or the
Resolution Trust Corporation. The Fund may also invest in certain zero
coupon securities that are U.S. Treasury notes and bonds that have been
stripped of their unmatured interest coupon receipts or interests in such
U.S. Treasury securities or coupons, including Certificates of Accrual
Treasury Securities and Treasury Income Growth Receipts. There is no
guarantee that the U.S. Government will support securities not backed by
its full faith and credit. Accordingly, these securities may involve
greater risk than U.S. Government Securities backed by the U.S.
Government's full faith and credit.
The securities purchased by the Fund may have long, intermediate, and
short maturities. Consistent with seeking to maximize current income, the
proportion invested in each category can be expected to vary depending upon
the Investment Manager's evaluation of the market outlook. All securities
in which the Fund invests are subject to variations in market value due to
interest rate fluctuations. If interest rates fall, the market value of
such securities tend to rise; if interest rates rise, the value of such
securities tend to fall. The longer the remaining maturity of such a
security, the greater the effect of interest rate changes on the market
value of the security.
Collateralized Mortgage Obligations. CMOs are debt obligations
collateralized by mortgage loans or mortgage pass-through securities. The
CMOs in which the Fund invests are collateralized by GNMA certificates or
other government mortgage-backed securities (such collateral are called
mortgage assets). Multi-class pass-through securities are interests in
trusts that are comprised of mortgage assets and that have multiple classes
similar to those in CMOs. Unless the context indicates otherwise,
references herein to CMOs include multi-class pass-through securities.
Payments of principal and interest on the mortgage assets, and any
reinvestment income thereon, provide the means to pay debt service on the
CMOs or to make scheduled distributions on the multi-class pass-through
securities. Principal prepayments on the mortgage assets may cause the CMOs
to be retired substantially earlier than their stated maturities or final
distribution dates. Rising interest rates may cause prepayments to occur at
a slower than expected rate, which is known as "extension risk". Extension
risk may effectively change a security which was considered short or
intermediate term at the time of purchase into a long term security. Long
term securities generally fluctuate more widely in response to changes in
interest rates than short or intermediate term securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
U.S. banks and dealers involving securities in which the Fund is authorized
to invest. A repurchase agreement is an instrument under which the Fund
purchases securities from a bank or dealer and simultaneously commits to
resell the securities to the bank or dealer at an agreed upon date and
price. The Fund's custodian maintains custody of the underlying securities
until their repurchase; thus the obligation of the bank or dealer to pay
the repurchase price is, in effect, secured by such securities. The Fund's
risk is limited to the ability of the seller to pay the agreed upon amount
on the repurchase date; if the seller defaults, the underlying securities
constitute collateral for the seller's obligation to pay. If, however, the
seller defaults and the value of the collateral declines, the Fund may
incur loss and expenses in selling the collateral. To attempt to limit the
risk in engaging in repurchase agreements, the Fund enters into repurchase
agreements only with banks and dealers believed by the Investment Manager
to present minimum credit risks in accordance with guidelines established
by the Directors. The Fund will not enter into a repurchase agreement with
a maturity of more than seven days if, as a result, more than 15% of the
value of its net assets would then be invested in illiquid securities
including such agreements.
When-Issued Securities. The Fund may purchase securities on a "when-issued"
basis. In such transactions delivery and payment occur after the date of
the commitment to make the purchase. Although the Fund will enter into
when-issued transactions with the intention of acquiring the securities,
the Fund may sell the securities prior thereto for investment reasons,
which may result in a gain or loss. Acquiring securities in this manner
involves a risk that yields available on the delivery date may be higher
than those received in such transactions, as well as the risk of price
fluctuation. When the Fund purchases securities on a when-issued basis, its
custodian will set aside in a segregated account cash or liquid securities
whose value is marked to the market daily with a market value at least
equal to the amount of the commitment. If necessary, assets will be added
to the account daily so that the value of the account will not be less than
the amount of the Fund's purchase commitment. Failure of the issuer to
deliver the security may result in the Fund incurring a loss or missing an
opportunity to make an alternative investment.
Lending. Pursuant to an arrangement with its custodian, the Fund may lend
portfolio securities or other assets of the Fund. If the Fund engages in
lending transactions, it will enter into lending agreements that require
that the loans be continuously secured by cash, securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, or
any combination of cash and such securities, as collateral equal at all
times to at least the market value of the assets lent. To the extent of
such activities, the custodian will apply credits against its custodial
charges. There are risks to the Fund of delay in receiving additional
collateral and risks of delay in recovery of, and failure to recover, the
assets lent should the borrower fail financially or otherwise violate the
terms of the lending agreement. Loans will be made only to borrowers deemed
by the Investment Manager to be of good standing and when, in the judgment
of the Investment Manager, the consideration which can be earned currently
from such lending transactions justifies the attendant risk. Any loan made
by the Fund will provide that it may be terminated by either party upon
reasonable notice to the other party.
Portfolio Turnover. The Fund does not intend to purchase securities for
short term trading. The Fund may sell any of its portfolio securities that
have been held for a short time, however, if the Investment Manager
believes the security's market value will decline or when the Investment
Manager believes there is a more attractive security to acquire or in order
to satisfy redemption requests. For the fiscal years ended June 30, 1996
and 1995, the Fund's portfolio turnover rate was 762% and 482%,
respectively. Higher portfolio turnover involves correspondingly greater
Fund transaction costs and increases the potential for short term capital
gain and taxes payable by shareholders. See "Dividends, Distributions and
Taxes".
Borrowing. The Fund may issue debt or preferred stock so long as the Fund's
total assets exceed 300% of the amount of the debt outstanding and exceed
200% of the amount of preferred stock outstanding. Such debt or preferred
stock may be convertible in accordance with SEC staff guidelines which may
permit the Fund to obtain leverage at attractive rates. Leverage entails
two primary risks. The first risk is that the use of leverage magnifies the
impact on the common shareholders of changes in net asset value. For
example, a fund that uses leverage of one third of its total assets will
show a 1.5% increase or decline in net asset value for each 1% increase or
decline in the value of its total assets. The second risk is that the cost
of leverage will exceed the return on the securities acquired with the
proceeds of leverage, thereby diminishing rather than enhancing the return
to common shareholders. These two risks would generally make the Fund's
total return to common shareholders more volatile.
Market Value and Net Asset Value. The Fund was recently converted from a
diversified series of shares of an open-end management investment company
to a diversified, closed-end management investment company. Shares of
closed-end investment companies are bought and sold in the open market and
may trade at either a premium to or discount from net asset value, although
they frequently trade at a discount. This is a risk separate and distinct
from the risk that the value of the Fund's portfolio securities, and as a
result its net asset value, will decrease. The Fund cannot predict whether
its shares will trade at, above or below net asset value. Shareholders will
incur brokerage and possibly other transaction costs to buy and sell shares
in the open market, provided, however, that the Investment Manager has
arranged with its affiliate, Bull & Bear Securities, Inc., that for two
years after October 4, 1996, any Fund shares held by the Fund's transfer
agent in book entry form may be sold at market value without commission if
sold through Bull & Bear Securities, Inc.
A decline in net asset value could affect the Fund's ability to pay
dividends, make capital gain distributions or effect any share repurchases
with respect to its common stock if the Fund has outstanding any preferred
stock or debt securities, because the Fund would be required by the 1940
Act to have asset coverage immediately after such dividend, distribution or
repurchase of two hundred percent for any preferred stock and three hundred
percent for any debt securities, in each case after giving effect to such
dividend, distribution or repurchase. In addition, if the Fund's current
investment income were not sufficient to meet dividend requirements on any
outstanding preferred stock, the Fund may be required to sell a portion of
its portfolio securities when it might be disadvantageous to do so, which
would reduce the net asset value attributable to the Fund's common stock.
Other Information. The Fund is not obligated to deal with any particular
broker, dealer or group thereof. Certain broker/dealers that the Investment
Manager and its affiliates do business with may, from time to time, own
more than 5% of the publicly traded Class A non-voting Common Stock of Bull
& Bear Group, Inc., the parent of the Investment Manager, and may provide
clearing services to Bull & Bear Securities, Inc. ("BBSI").
The Fund's investment objective is fundamental and may not be changed
without shareholder approval. The Fund is also subject to certain
investment restrictions, set forth in the Statement of Additional
Information, that are fundamental and cannot be changed without shareholder
approval. The Fund's other investment policies described herein, unless
otherwise stated, are not fundamental and may be changed by the Directors
without shareholder approval.
THE INVESTMENT MANAGER
Bull & Bear Advisers, Inc. (the "Investment Manager") acts as general
manager of the Fund, being responsible for the various functions assumed by
it, including the regular furnishing of advice with respect to portfolio
transactions. The Investment Manager manages the investment and
reinvestment of the assets of the Fund, subject to the control and
oversight of the Directors. The Investment Manager may also allocate
portfolio transactions to broker/dealers that remit a portion of their
commissions as a credit against the Fund's expenses. For its services, the
Investment Manager receives an investment management fee, payable monthly,
based on the average weekly net assets of the Fund, at the annual rate of
0.70% of the first $250 million, 0.625% from $250 million to $500 million,
and 0.50% over $500 million. From time to time, the Investment Manager may
reimburse all or part of this fee to improve the Fund's yield and total
return. The Investment Manager provides certain administrative services to
the Fund at cost. During the fiscal year ended June 30, 1996, the
investment management fees paid by the Fund represented 0.70% of its
average daily net assets. The Investment Manager is a wholly owned
subsidiary of Bull & Bear Group, Inc. ("Group"). Group, a publicly owned
company whose securities are listed on Nasdaq and traded in the
over-the-counter market, is a New York based manager of mutual funds and
discount brokerage services. Bassett S. Winmill may be deemed a controlling
person of Group and, therefore, may be deemed a controlling person of the
Investment Manager.
DIVIDEND REINVESTMENT PLAN
The Directors have adopted a Dividend Reinvestment Plan (the "Plan"). Under
the Plan, shareholders have the option of reinvesting distributions
automatically, unless such shareholders elect to receive cash. Each
dividend and capital gain distribution, if any, declared by the Fund on
outstanding shares will, unless elected otherwise by each shareholder by
notifying the Fund in writing at any time prior to the record date for a
particular dividend or distribution, be paid on the payment date fixed by
the Directors in that number of additional shares equal to (a) the amount
of such dividend divided by the Fund's net asset value per share if the
average closing market price on the five trading days prior to the date the
shares trade ex-dividend (the "Market Price") is at or above such net asset
value per share on the record date for such distribution and (b) the amount
of such dividend divided by the Market Price if the Market Price is less
than such net asset value per share on the record date for such
distribution. Upon a shareholder's request to receive a cer- tificate for
shares, a certificate will be issued for such shares in whole share amounts
and fractional share amounts will be paid in cash. There are no sales or
other charges in connection with the reinvestment of dividends and capital
gain distributions. There is no fixed dividend rate and there can be no
assurance that the Fund will pay any dividends or realize any capital gain.
DST Systems, Inc. (the "Transfer Agent") maintains all shareholder accounts
in the Plan and furnishes written confirmations of all transactions in the
account, including information needed by shareholders for personal and tax
records. Shares in the account of each Plan participant will be held by the
Transfer Agent in non-certificated form in the name of the participant, and
each shareholder's proxy will include those shares purchased pursuant to
the Plan, unless otherwise requested by a shareholder.
In the case of shareholders such as banks, brokers or nominees, which hold
shares for others who are the beneficial owners, the Transfer Agent will
administer the Plan on the basis of the number of shares certified from
time to time by the shareholder as representing the total amount registered
in the shareholder's name and held for the account of beneficial owners who
participate in the Plan.
There is no charge to participants for reinvesting dividends or capital
gain distributions payable in either stock or cash. The Transfer Agent's
fees for handing the reinvestment of such dividends and capital gain
distributions are paid by the Fund. There are no broker- age charges with
respect to shares issued directly by the Fund as a result of dividends or
capital gain distributions payable in stock or in cash. However, each
participant bears a pro rata share of brokerage commissions incurred with
respect to open market purchases in connection with the reinvestment of
dividends or capital gain distributions.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax which may be payable on such dividends or
distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan and
any dividend or distribution paid subsequent to written notice of the
change sent to the members of the Plan at least 30 days before the record
date for such dividend or distribution. The Plan also may be amended or
terminated by the Transfer Agent on at least 30 days' written notice to
participants in the Plan. All correspondence concerning the Plan should be
directed to the Transfer Agent at P.O. Box 419789, Kansas City, MO
64141-6789.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Fund's Dividend Reinvestment Plan, all dividends and capital gain
distributions will be automatically reinvested in additional Fund shares
instead of being paid in cash, unless at any time prior to the record date
for a particular dividend or distribution a shareholder elects otherwise by
notifying the Fund in writing. There are no sales or other charges in
connection with the reinvestment of dividends or capital gain
distributions. Shareholders who intend to hold their Fund shares through a
broker or nominee should contact such broker or nominee to confirm that
they may participate in the Plan. The Fund has no fixed dividend rate, and
there can be no assurance that the Fund will pay any dividends or realize
any capital gain.
The Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Code. If the Fund qualifies as a regu- lated investment
company and complies with certain distribution requirements, the Fund will
be relieved of Federal income tax on that part of its net investment income
and realized capital gain which it distributes to its shareholders.
To qualify as a regulated investment company, the Fund must meet certain
relatively complex tests. The loss of such status would result in the Fund
being subject to Federal income tax on its taxable income and gain without
regard to dividends and distributions paid to shareholders.
Dividends out of net investment income and distributions of net realized
short-term capital gain are taxable to the recipient shareholders as
ordinary income whether paid in cash or shares. In the case of corporate
shareholders, such distributions are unlikely to be eligible for the 70%
dividends received deduction, since the Fund does not anticipate investing
in stocks of domestic corporations. Distributions out of net capital gain
of which shareholders will be notified are taxable to the recipient as long
term capital gain, whether paid in cash or shares.
In any year, if the Fund has excess net realized long-term capital gain
over its net realized short-term capital losses, the Fund reserves the
authority not to distribute such excess in any year. If such excess is not
distributed, a shareholder must include in taxable income as long-term
capital gain his share of the excess. However, the Fund will pay the taxes
imposed on any such undistributed gain and such shareholder will receive a
credit or refund for taxes on his share of the excess. If, for any year,
the total distributions exceed accumulated undistributed net investment
income and net realized capital gain, the excess will generally be treated
as a tax-free return of capital (up to the amount of such shareholder's tax
basis in his shares). The amount treated as a tax-free return of capital
will reduce the shareholder's adjusted basis in his shares, thereby
increasing his potential gain (or decreasing his potential loss) on the
sale of his shares. In the event the Fund distributes amounts in excess of
its net investment income and net realized capital gain, such distributions
will decrease the Fund's total assets and, therefore, have the likely
effect of increasing the Fund's expense ratios.
The Fund will be required to back-up withhold an amount equal to 31% of a
shareholder's dividend or capital gain distribution or the proceeds of a
redemption unless such shareholder furnishes the Fund with his taxpayer
identification number (a social security number in the case of an
individual) and certifies that the number is correct and that he has not
been notified by the Internal Revenue Service that he is subject to back-up
withholding.
In order to make distributions, the Fund may have to sell a portion of its
investment portfolio at a time when independent investment judgment might
not dictate such action. Such sales, if they involve assets held for less
than three months, could also adversely affect the Fund's status as a
regulated investment company since, in order for the Fund to qualify as a
regulated investment company, for each taxable year, less than 30% of the
Fund's gross income must be derived from gain realized on the sale or other
disposition of stocks or securities held for less than three months.
The foregoing is a general and abbreviated summary of the provisions of the
Code applicable to a shareholder's investment in the Fund. Dividends and
distributions declared by the Fund may also be subject to state and local
taxes. Prior to investing in shares of the Fund, prospective shareholders
are urged to consult their tax advisors concerning the Federal, state and
local tax consequences of such investment.
REPURCHASE OF SHARES
The Fund is a closed-end, management investment company and as such its
shareholders do not have the right to redeem their shares. The Fund,
however, may repurchase its shares from time to time as and when it deems
such a repurchase advisable. The Fund may repurchase its shares on a
securities exchange, provided that the Fund has informed its shareholders
within the preceding six months of its intention to repurchase such shares.
The Fund may also repurchase its shares other than in the open market if
certain conditions are met regarding, among other things, distribution of
net income for the preceding fiscal year, identity of the seller, price
paid, brokerage commissions, prior notice to shareholders of the Fund's
intention to effect such a repurchase, and the manner in which such a
repurchase is effected so as not to discriminate unfairly against other
Fund shareholders. Shares repurchased by the Fund will constitute
authorized and unissued shares available for reissuance. No assurances can
be given that the Fund's Board of Directors will decide to undertake any
repurchases, or if undertaken, that repurchases would have the desired
effect on market price.
If the Fund repurchases its shares at a price representing a discount to
net asset value, the net asset value of the remaining outstanding shares
will be enhanced but the market price of the remaining outstanding shares
will not necessarily be affected. Furthermore, the Fund may incur debt to
finance share repurchases, and the interest on such borrowings would
increase the Fund's expenses and reduce its net income. See "The Fund's
Investment Program."
The Fund does not currently have an established tender offer program or an
established schedule for considering tender offers. No assurance can be
given that the Fund's Board of Directors will decide to undertake any
tender offers in the future, or if undertaken, that a tender offer would
affect the market price of the Fund's shares.
CAPITAL STOCK
On September 19, 1996, shareholders approved a proposal to change the
status of the Fund to a closed-end fund. The Fund's Articles of
Incorporation (the "Charter") were filed on August 30, 1996. The Fund's
stock is fully paid and non-assessable and is freely assignable by way of
pledge (as, for example, for collateral purposes), gift, settlement of an
estate, and also by an investor to another investor. In case of dissolution
or other liquidation of the Fund, shareholders will be entitled to receive
ratably per share the net assets of the Fund. Shareholders vote for
Directors with each share entitled to one vote. Each share entitles the
holder to one vote for all purposes. Shares have no preemptive or
conversion rights. The Fund is authorized to issue up to ten million
(10,000,000) shares ($.01 par value).
The Directors can reclassify unissued shares as preferred stock with such
terms and conditions as determined by the Directors.
Anti-Takeover Provisions. The Fund presently has provisions in its Charter
and By-Laws (collectively, the "Governing Documents") which could have the
effect of limiting (i) the ability of other entities or persons to acquire
control of the Fund, (ii) the Fund's freedom to engage in certain
transactions, or (iii) the ability of the Fund's directors or shareholders
to amend the Governing Documents or effectuate changes in the Fund's
management. These provisions of the Governing Documents of the Fund may be
regarded as "anti- takeover" provisions. The Directors are divided into
five classes, each having a term of five years (except, to ensure that the
term of a class of the Fund's directors expires each year, the first class
of the Fund's directors will serve an initial one-year term and five-year
terms thereafter, the second class of its directors will serve an initial
two-year term and five-year terms thereafter, the third class will serve an
initial three-year term and five-year terms thereafter, and the fourth
class will serve an initial four-year term and five-year terms thereafter).
Each year the term of one class of directors will expire. Accordingly, only
those directors in one class may be changed in any one year, and it would
require three years to change a majority of the Directors. Such system of
electing directors may have the effect of maintaining the continuity of
management and, thus, make it more difficult for the shareholders of the
Fund to change the majority of directors. A director of the Fund may be
removed only with cause by a vote of eighty percent (80%) of the shares
then entitled to be cast for the election of directors. In addition, the
affirmative vote of the holders of 80% of the outstanding shares of the
Fund is required to authorize its conversion from a closed-end to an
open-end investment company, to amend certain provisions of the Charter
involving conversion to an open-end fund, or to authorize any business
combination (including any merger, consolidation, or share exchange with
any interested shareholder or any affiliate thereof), unless approved by
the vote of at least 50% of the Directors, in which case the affirmative
vote of the holders of at least a majority of the votes entitled to be cast
by holders of voting stock is required. Reference is made to the Governing
Documents, on file with the SEC, for the full text of these provisions.
Except as otherwise provided in the Charter and notwithstanding any other
provision of the Maryland General Corporation Law to the contrary, any
action submitted to a vote by stockholders requires the affirmative vote of
at least 80% of the outstanding shares of all classes of voting stock,
voting together, in person or by proxy at a meeting at which a quorum is
present, unless such action is approved by the vote of a majority of the
Directors, in which case such action requires (A) if applicable, the
proportion of votes required by the 1940 Act, or (B) the lesser of (1) a
majority of all the votes cast at a meeting at which a quorum is present in
person or by proxy with the shares of all classes of voting stock voting
together, or (2) if such action may be taken or authorized by a lesser
proportion of votes under applicable law, such lesser proportion. In the
absence of action by the Directors to remove the foregoing 80% requirement,
such requirement would have the effect of making it very difficult for
stockholders to elect Directors or modify the composition of the Board.
The Fund elects not to be governed by any provision of Section 3-602 of
Subtitle 6 of the Maryland General Corporation Law.
The provisions of the Governing Documents described above could have the
effect of depriving owners of shares in the Fund of opportunities to sell
their shares at a premium over prevailing market prices, by discouraging a
third party from seeking to obtain control of the Fund in a tender offer or
similar transaction. The overall effect of these provisions is to render
more difficult the accomplishment of a merger or the assumption of control
by a third party, unless approved by the Directors.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111, acts as
custodian of the Fund's assets. The custodian also performs certain
accounting services for the Fund. The Fund's transfer and dividend
disbursing agent is DST Systems, Inc., P.O. Box 419789, Kansas City, MO
64141-6789. DST also provides shareholder services to the Fund and is
reimbursed its cost by the Fund.
[Left Side of Back Cover Page]
U.S. GOVERNMENT
SECURITIES
FUND, INC.
- -----------------------------------------------------
11 Hanover Square
New York, NY 10005
Toll-free 1-800-847-4200
E-Mail: [email protected]
- -----------------------------------------------------
[Right Side of Back Cover Page]
U.S. GOVERNMENT
SECURITIES
FUND, INC.
- ---------------------------------------------------------
Investing for a High Level of
Current Income, Liquidity and
Safety of Principal
- ---------------------------------------------------------
Prospectus
October 4, 1996
BULL & BEAR
Performance Driven(R)
Statement of Additional Information October 4, 1996
BULL & BEAR U.S. GOVERNMENT
SECURITIES FUND, INC.
11 Hanover Square
New York, NY 10005
Toll-free 1-800-847-4200
Bull & Bear U.S. Government Securities Fund, Inc. (the "Fund") is a
diversified, closed-end management investment company organized as a
Maryland corporation. Until October 4, 1996, the Fund was a diversified
series of shares of Bull & Bear Funds II, Inc. (the "Corporation"), an
open-end management investment company organized in 1974 as a Maryland
corporation. Prior to October 29, 1993, the Corporation operated under the
name Bull & Bear Incorporated. This Statement of Additional Information
regarding the Fund is not a prospectus and should be read in conjunction
with the Fund's prospectus dated October 4, 1996. The prospectus is
available without charge upon written request to the Fund at 11 Hanover
Square, New York, NY 10005,or by calling toll-free telephone
1-800-847-4200.
TABLE OF CONTENTS
THE FUND'S INVESTMENT PROGRAM...............................
INVESTMENT RESTRICTIONS.....................................
OFFICERS AND DIRECTORS......................................
THE INVESTMENT MANAGER......................................
INVESTMENT MANAGEMENT AGREEMENT.............................
DETERMINATION OF NET ASSET VALUE............................
ALLOCATION OF BROKERAGE.....................................
DIVIDENDS, DISTRIBUTIONS AND TAXES..........................
REPORTS TO SHAREHOLDERS.....................................
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT...........
AUDITORS....................................................
FINANCIAL STATEMENTS........................................
THE FUND'S INVESTMENT PROGRAM
The following information supplements the information concerning the
investment objective, policies and limitations of the Fund found in the
prospectus.
U.S. Government Securities. The Fund will normally invest at least 65%
of its total assets in securities backed by the full faith and credit
of the United States ("U.S. Government Securities"). U.S. Government
Securities include basically two types:
U.S. Treasury Securities. Obligations issued directly by the U.S.
Treasury are referred to as "bills," "notes," and "bonds," depending
on the length of the maturity when issued. Bills mature in less than
one year, notes in from one to nine years and bonds in from 10 to 30
years.
U.S. Treasury Guaranteed Securities. Obligations issued or guaranteed
by certain agencies and instrumentalities of the U.S. Government are
of varying maturities and include, but are not limited to, mortgage
participation certificates guaranteed by the Government National
Mortgage Association ("GNMA") and instruments of the Export-Import
Bank of the United States, Farmers' Home Administration, Federal
Housing Administration, General Services Administration, Maritime
Administration, Small Business Administration and Washington
Metropolitan Transit Authority which are unconditionally guaranteed as
to timely payment of principal and interest by the full faith and
credit of the United States.
The Fund may invest a substantial portion of its assets in GNMA
certificates, popularly known as "Ginnie Maes," which represent an interest
in a pool of mortgage loans individually insured by the Federal Housing
Administration (FHA) or the Farmers' Home Administration, or guaranteed by
the Veterans Administration (VA). The Fund will only invest in certificates
of the fully modified pass-through type, which are guaranteed by GNMA and
backed by the full faith and credit of the United States.
Ginnie Maes are created by an "issuer," which is an FHA approved
mortgagee that also meets criteria imposed by GNMA. The issuer assembles a
pool of FHA, Farmers' Home Administration or VA insured or guaranteed
mortgages which are homogeneous as to interest rate, maturity and type of
dwelling. Upon application by the issuer, and after approval by GNMA of the
pool, GNMA provides its commitment to guarantee timely payment of principal
and interest on the Ginnie Maes backed by the mortgages included in the
pool. The Ginnie Maes, endorsed by GNMA, are then sold by the issuer
through securities dealers. GNMA is authorized under the National Housing
Act to guarantee timely payment of principal and interest on Ginnie Maes.
This guarantee is backed by the full faith and credit of the United States.
GNMA may borrow U.S. Treasury funds to the extent needed to make payments
under its guarantee.
Payments to holders of Ginnie Maes consist of the monthly distributions
of interest and principal less the GNMA's and issuer's fees. The actual
yield to be earned by a holder of a Ginnie Mae is calculated by dividing
such payments by the purchase price paid for the Ginnie Mae (which may be
at a premium or a discount from the face value of the certificate). Monthly
distributions of interest, as contrasted to semi-annual distributions which
are common for other fixed interest investments, have the effect of
compounding and thereby raising the effective annual yield earned on Ginnie
Maes. Because of the variation in the life of the pools of mortgages which
back various Ginnie Maes, and because it is impossible to anticipate the
rate of interest at which future principal payments may be reinvested, the
actual yield earned from a portfolio of Ginnie Maes will differ
significantly from the yield estimated by using an assumption of a 12-year
life for each Ginnie Mae included in such a portfolio as described above.
Payments the Fund receives on Ginnie Maes include interest and partial
prepayments of principal, reflecting payments on the underlying mortgage
loans. Additional principal prepayments may also occur, reflecting
refinancing, prepayment or foreclosure of the underlying mortgages.
Accordingly, the life of the Ginnie Mae is likely to be substantially
shorter than the stated maturity of the mortgages in the underlying pool.
Because of such variation in prepayment rates, it is not possible to
predict the life of a particular Ginnie Mae. The majority of Ginnie Maes
are backed by mortgages of this type, and accordingly the generally
accepted practice treats Ginnie Maes as 30-year securities which prepay
fully in the 12th year. As a result, although Ginnie Maes currently offer
yields higher than those available from other types of U.S. Government
securities, they may be less effective than other types of securities as a
means of locking in attractive long term rates of interest due to the need
to reinvest prepayments of principal generally and the possibility of
significant unscheduled prepayments resulting from declines in mortgage
interest rates. Because of this, Ginnie Maes may have less potential for
capital appreciation during periods of declining interest rates than other
investments of comparable maturities, while having a risk of decline
comparable or greater, due to extension risks, to such investments during
periods of rising interest rates.
The Fund may also invest up to 35% of its total assets in securities
issued by agencies and instrumentalities of the U.S. Government that may
have different levels of government backing but which are not backed by the
full faith and credit of the U.S. Government, including securities that are
supported primarily or solely by specific pools of assets and the
creditworthiness of a U.S. Government- related issuer, such as
mortgage-backed securities (including collateralized mortgage obligations
("CMOs")).
Collateralized Mortgage Obligations. CMOs are debt obligations
collateralized either by mortgage loans or mortgage pass-through securities
(such collateral collectively being called "Mortgage Assets"). Multi-class
pass-through securities are interests in trusts that are comprised of
Mortgage Assets and that have multiple classes similar to those in CMOs.
Unless the context indicates otherwise, references herein to CMOs include
multi-class pass-through securities. Payments of principal and interest on
the Mortgage Assets (and, in the case of CMOs, any reinvestment income
thereon) provide the funds to pay debt service on the CMOs or to make
distributions on the multi-class pass-through securities. The CMOs in which
the Fund invests are those issued by U.S. Government agencies or
instrumentalities.
In a CMO, a series of bonds or certificates is issued in multiple
classes. Each class of CMOs, also referred to as a "tranche," is issued at
a specific fixed or floating coupon rate and has a stated maturity or final
distribution date. Principal prepayments on the Mortgage Assets may cause
the CMOs to be retired substantially earlier than their stated maturities
or final distribution dates. Interest is paid or accrues on all classes of
a CMO (other than any "principal-only" class) on a monthly, quarterly or
semiannual basis. The principal and interest on the Mortgage Assets may be
allocated among the several classes of a CMO in many ways. In one
structure, payments of principal, including any principal prepayments, on
the Mortgage Assets are applied to the classes of a CMO in the order of
their respective stated maturities or final distribution dates so that no
payment of principal will be made on any class of the CMO until all other
classes having an earlier stated maturity or final distribution date have
been paid in full. In some CMO structures, all or a portion of the interest
attributable to one or more of the CMO classes may be added to the
principal amounts attributable to such classes, rather than passed through
to certificate holders on a current basis, until other classes of the CMO
are paid in full.
Writing Options. To earn additional income on its portfolio, the Fund may
sell (write) covered call options on securities owned by the Fund having a
value of up to 25% of the Fund's total assets ("covered options" or
"options"), and may purchase call options to close option transactions, as
described below. The Fund has no current intention of writing call options
having aggregate exercise prices in excess of 5% of the Fund's total
assets.
A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security at the exercise price
at any time during the option period, regardless of the market price of the
security. The premium paid to the writer is the consideration for
undertaking the obligations under the option contract. When a covered call
option is written by the Fund, the Fund will make arrangements with the
Fund's Custodian to segregate the underlying securities until the option
either is exercised, expires or the Fund closes out the option as described
below. The value of the portfolio securities underlying covered call
options written by the Fund will be limited to an amount not in excess of
25% of the value of the Fund's net assets at the time such options are
written.
To close out a position, the Fund may make a "closing purchase
transaction" which involves purchasing a call option on the same security
with the same exercise price and expiration date as the option which it has
previously written on a particular security. The Fund will realize a profit
(or loss) from a closing purchase transaction if the amount paid to
purchase a call option is less (or more) than the amount received from the
sale thereof. However, because there is an inactive secondary market for
options on the securities in which the Fund may invest, the Fund as a
writer of an option may only be able to liquidate its obligation by
negotiating with the holder of the option.
Illiquid Assets. The Fund may not purchase or otherwise acquire any
security or invest in a repurchase agreement if, as a result, (a) more than
15% of the Fund's net assets (taken at current value) would be invested in
illiquid assets, including repurchase agreements not entitling the holder
to payment of principal within seven days, or (b) more than 10% of the
Fund's total assets would be invested in securities that are illiquid by
virtue of restrictions on the sale of such securities to the public without
registration under the Securities Act of 1933 ("1933 Act"), such as 144A
Securities, discussed below. The term "illiquid assets" for this purpose
includes securities that cannot be disposed of within seven days in the
ordinary course of business at approximately the amount at which the Fund
has valued the securities.
Illiquid restricted securities may be sold by the Fund only in
privately negotiated transactions or in a public offering with respect to
which a registration statement is in effect under the 1933 Act. Such
securities include those that are subject to restrictions contained in the
securities laws of other countries. Where registration is required, the
Fund may be obligated to pay all or part of the registration expenses and a
considerable period may elapse between the time of the decision to sell and
the time the Fund may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market conditions
were to develop, the Fund might obtain a less favorable price than
prevailed when it decided to sell.
In recent years a large institutional market has developed for certain
securities that are not registered under the 1933 Act, including certain
private placements, repurchase agreements, commercial paper, foreign
securities, municipal securities and corporate bonds and notes. These
instruments are often restricted securities because the securities
themselves are not exempt from registration and are sold in transactions
not requiring registration. Institutional investors generally will not seek
to sell these instruments to the general public, but instead will often
depend either on an efficient institutional market in which such
unregistered securities can be readily resold or on an issuer's ability to
honor a demand for repayment. Therefore, the fact that there are
contractual or legal restrictions on resale to the general public or
certain institutions is not dispositive of the liquidity of such
investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities
to qualified institutional buyers ("144A Securities"). Institutional
restricted securities markets may provide both readily ascertainable values
for restricted securities and the ability to liquidate an investment in
order to satisfy share redemption orders on a timely basis. Such markets
might include automated systems for the trading, clearance and settlement
of unregistered securities of domestic and foreign issuers, such as the
PORTAL System sponsored by the National Association of Securities Dealers,
Inc. ("NASD"). An insufficient number of qualified buyers interested in
purchasing certain restricted securities held by the Fund, however, could
affect adversely the marketability of such portfolio securities, and the
Fund might be unable to dispose of such securities promptly or at favorable
prices.
INVESTMENT RESTRICTIONS
The following fundamental investment restrictions may not be changed
without the approval of the lesser of (a) 67% or more of the voting
securities of the Fund present at a meeting if the holders of more than 50%
of the outstanding voting securities of the Fund are present or represented
by proxy, or (b) more than 50% of the outstanding voting securities of the
Fund. Any investment restriction which involves a maximum percentage of
securities or assets shall not be considered to be violated unless an
excess over the percentage occurs immediately after, and is caused by, an
acquisition of securities or assets of, or borrowing by, the Fund. The Fund
may not:
(1) Purchase the securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in the securities of
such issuer, or the Fund would own or hold 10% or more of the
outstanding voting securities of that issuer, except that up to 25% of
the Fund's total assets may be invested without regard to those
limitations and provided that those limitations do not apply to
securities issued or guaranteed by the U.S. government, its agencies
or instrumentalities;
(2) Issue senior securities as defined in the Investment Company Act of
1940, as amended (the "1940 Act") (including borrowing money) except
as permitted by applicable law;
(3) Lend its assets, except as permitted by applicable law;
(4) Underwrite the securities of other issuers, except to the extent that
the Fund may be deemed to be an underwriter under the Federal
securities laws in connection with the disposition of the Fund's
authorized investments;
(5) Purchase or sell commodities or commodity futures contracts, although
it may enter into (i) financial and foreign currency futures contracts
and options thereon, (ii) options on foreign currencies, and (iii)
forward contracts on foreign currencies;
(6) Purchase or sell real estate, provided that the Fund may invest in
securities (excluding limited partnership interests) secured by real
estate or interests therein or issued by companies which invest in
real estate or interests therein; or
(7) Purchase a security if, as a result, 25% or more of the value of the
Fund's total assets would be invested in the securities of issuers in
a single industry, provided that this limitation does not apply to
securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities.
The Fund, notwithstanding any other investment policy or restrictions
(whether or not fundamental), may invest all of its assets in the
securities or beneficial interests of a singled pooled investment fund
having substantially the same investment objectives, policies and
restrictions as the Fund.
The Fund's Board of Directors has established the following
non-fundamental investment limitations with respect to the Fund that may be
changed by the Board without shareholder approval:
(i) The Fund may not invest in interests in oil, gas or other mineral
exploration or development programs or leases, although it may invest
in the securities of issuers which invest in or sponsor such programs
or such leases;
(ii) The Fund may not purchase or otherwise acquire any security or invest
in a repurchase agreement if, as a result, (a) more than 15% of the
Fund's net assets (taken at current value) would be invested in
illiquid assets, including repurchase agreements not entitling the
holder to payment of principal within seven days, or (b) more than 10%
of the Fund's total assets would be invested in securities that are
illiquid by virtue of restrictions on the sale of such securities to
the public without registration under the Securities Act of 1933;
(iii)The Fund may not purchase the securities of any investment company
except (a) by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchase, provided
that immediately after such purchase no more than: 10% of the Fund's
total assets are invested in securities issued by investment
companies, 5% of the Fund's total assets are invested in securities
issued by any one investment company, or 3% of the voting securities
of any one such investment company are owned by the Fund, and (b) when
such purchase is part of a plan of merger, consolidation,
reorganization, or acquisition of assets; and
(iv) The Fund may not purchase securities on margin, except that the Fund
may obtain such short term credits as are necessary for the clearance
of transactions, and provided that margin payments and other deposits
made in connection with transactions in options, futures contracts,
forward currency contracts, and other derivative instruments shall not
be deemed to constitute purchasing securities on margin.
OFFICERS AND DIRECTORS
The Fund's officers, dates of birth and Directors, their respective
offices and principal occupations during the last five years are set forth
below. Unless otherwise noted, the address of each is 11 Hanover Square,
New York, NY 10005.
BASSETT S. WINMILL* -- Chairman of the Board. He is Chairman of the Board
of five other investment companies advised by Bull & Bear Advisers, Inc.
(the "Investment Manager") in the "Investment Company Complex" and of Bull
& Bear Group, Inc. ("Group"), the parent of the Investment Manager. He was
born February 10, 1930. He is a member of the New York Society of Security
Analysts, the Association for Investment Management and Research and the
International Society of Financial Analysts. He is the father of Mark C.
Winmill and Thomas B. Winmill.
ROBERT D. ANDERSON* -- Vice Chairman and Director. He is Vice Chairman and
a Director of six of the other investment companies in the Investment
Company Complex and of the Investment Manager and its affiliates. He was
born December 7, 1929. He is a member of the Board of Governors of the
Mutual Fund Education Alliance, and of its predecessor, the No-Load Mutual
Fund Association. He has also been a member of the District #12, District
Business Conduct and Investment Companies Committees of the NASD.
RUSSELL E. BURKE III -- Director. 9 East 74th Street, New York, NY 10021.
He was born August 23, 1946. He is President of Russell E. Burke III, Inc.
Fine Art, New York, New York. From 1988 to 1991, he was President of Altman
Burke Fine Arts, Inc. From 1983 to 1988, he was Senior Vice President of
Kennedy Galleries. He is also a Director of four of the other investment
companies in the Investment Company Complex.
BRUCE B. HUBER, CLU -- Director. 298 Broad Street, Red Bank, NJ 07701. He
is President of Huber Hogan Knotts Consulting, Inc. financial consultants
specializing in executive benefits, estate preservation, and asset
management. From 1990 to 1994, he was President of Huber Hogan Associates.
He was born February 7, 1930. He is also a Director of six other investment
companies in the Investment Company Complex.
JAMES E. HUNT -- Director. One Dag Hammarskjold Plaza, New York, NY 10017.
He is a principal of Kenny, Kindler, Hunt & Howe, Inc., executive
recruiting consultants. He was born December 14, 1930. From 1976 until 1983
he was Vice President of Russell Reynolds Associates, Inc., also executive
recruiting consultants. He is also a Director of six other investment
companies in the Investment Company Complex.
FREDERICK A. PARKER, JR. -- Director. 219 East 69th Street, New York, NY
10021. He is President and Chief Executive Officer of American Pure Water
Corporation, a manufacturer of water purifying equipment. He was born
November 14, 1926. He is also a Director of the six investment companies in
the Investment Company Complex.
JOHN B. RUSSELL -- Director. 334 Carolina Meadows Villa, Chapel Hill, NC
27514. He was Executive Vice President and a Director of Dan River, Inc., a
diversified textile company, from 1969 until he retired in 1981. He was
born February 9, 1923. He is a Director of Wheelock, Inc., a manufacturer
of signal products, and a consultant for the National Executive Service
Corps in the health care industry. He is also a Director of the other
investment companies in the Investment Company Complex.
MARK C. WINMILL* -- Director, Co-President, Co-Chief Executive Officer, and
Chief Financial Officer. He is Co-President, Co-Chief Executive Officer,
and Chief Financial Officer of the other investment companies in the
Investment Company Complex and of Group and certain of its affiliates,
Chairman of the Investment Manager and Investor Service Center, Inc.
("Investor Service"), and President of Bull & Bear Securities, Inc.
("BBSI"). He was born November 26, 1957. He received his M.B.A. from the
Fuqua School of Business at Duke University in 1987. From 1983 to 1985 he
was Assistant Vice President and Director of Marketing of E.P. Wilbur &
Co., Inc., a real estate development and syndication firm and Vice
President of E.P.W. Securities, its broker/dealer subsidiary. He is a son
of Bassett S. Winmill and brother of Thomas B. Winmill. He is also a
Director of three other investment company in the Investment Company
Complex.
THOMAS B. WINMILL* -- Director, Co-President, Co-Chief Executive Officer,
and General Counsel. He is Co-President, Co-Chief Executive Officer, and
General Counsel of the other investment companies in the Investment Company
Complex and of Group and certain of its affiliates, President of the
Investment Manager and Investor Service, and Chairman of BBSI. He was born
June 25, 1959. He was associated with the law firm of Harris, Mericle & Orr
from 1984 to 1987. He is a member of the New York State Bar and the SEC
Rules Committee of the Investment Company Institute. He is a son of Bassett
S. Winmill and brother of Mark C. Winmill. He is also a Director of four of
the other investment companies in the Investment Company Complex.
STEVEN A. LANDIS -- Senior Vice President. He is Senior Vice President of
the Investment Company Complex, the Investment Manager and certain of its
affiliates. He was born March 1, 1955. From 1993 to 1995, he was Associate
Director -- Proprietary Trading at Barclays De Zoete Wedd Securities Inc.,
from 1992 to 1993 he was Director, Bond Arbitrage at WG Trading Company,
and from 1989 to 1992 he was Vice President of Wilkinson Boyd Capital
Markets.
BRETT B. SNEED, CFA -- Senior Vice President. He is Senior Vice President
of the Investment Company Complex, the Investment Manager and certain of
its affiliates. He was born June 11, 1941. He is a Chartered Financial
Analyst, a member of the Association for Investment Management and
Research, and a member of the New York Society of Security Analysts. From
1986 to 1988, he managed private accounts, from 1981 to 1986, he was Vice
President of Morgan Stanley Asset Management, Inc. and prior thereto was a
portfolio manager and member of the Finance and Investment Committees of
American International Group, Inc., an insurance holding company.
JOSEPH LEUNG, CPA -- Treasurer and Chief Accounting Officer (since 1995).
He is Treasurer and Chief Accounting Officer of the Investment Manager and
its affiliates. From 1992 to 1995 he held various positions with Coopers &
Lybrand L.L.P., a public accounting firm. From 1991 to 1992, he was the
accounting supervisor at Retirement Systems Group, a mutual fund company.
From 1987 to 1991, he held various positions with Ernst & Young, a public
accounting firm. He is a member of the American Institute of Certified
Public Accountants. He was born September 15, 1965.
WILLIAM J. MAYNARD -- Vice President and Secretary. He is Vice President
and Secretary of the other investment companies in the Investment Company
Complex, the Investment Manager and its affiliates. He was born September
13, 1964. From 1991 to 1994 he was associated with the law firm of Skadden,
Arps, Slate, Meagher & Flom. He is a member of the New York State Bar.
* Bassett S. Winmill, Robert D. Anderson, Mark C. Winmill and Thomas B.
Winmill are "interested persons" of the Fund as defined by the 1940 Act,
because of their positions with the Investment Manager.
Information in the following table is based on fees paid during the
year ended June 30, 1996.
Compensation Table
<TABLE>
<CAPTION>
==============================================================================================================================
Total Compensation From
Pension or Retirement Benefits Estimated Annual Registrant and Investment
Name of Person, Aggregate Compensa- Accrued as Part of Fund Benefits Upon Company Complex Paid to
Position tion From Registrant Expenses Retirement Directors
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bassett S. Winmill None None None None
Chairman
- ------------------------------------------------------------------------------------------------------------------------------
Robert D. Anderson None None None None
Vice Chairman
- ------------------------------------------------------------------------------------------------------------------------------
Russell E. Burke III $1,500 None None $9,000 from
Director 4 Investment Companies
- ------------------------------------------------------------------------------------------------------------------------------
Bruce B. Huber $1,500 None None $12,500 from
Director 7 Investment Companies
- ------------------------------------------------------------------------------------------------------------------------------
James E. Hunt $1,500 None None $12,500 from
Director 7 Investment Companies
- ------------------------------------------------------------------------------------------------------------------------------
Frederick A. Parker $1,500 None None $12,500 from
Director 7 Investment Companies
- ------------------------------------------------------------------------------------------------------------------------------
John B. Russell $1,500 None None $12,500 from
Director 7 Investment Companies
- ------------------------------------------------------------------------------------------------------------------------------
Mark C. Winmill None None None None
Director, Co-President
- ------------------------------------------------------------------------------------------------------------------------------
Thomas B. Winmill None None None None
Director, Co-President
==============================================================================================================================
</TABLE>
No officer, Director or employee of the Investment Manager receives
any compensation from the Fund for acting as an officer, Director or
employee of the Fund. As of September 17, 1996, officers and Directors of
the Fund owned less than 1% of the outstanding shares of the Fund. As of
September 17, 1996, no owners of record owned more than 5% of the
outstanding shares of the Fund.
THE INVESTMENT MANAGER
The Investment Manager acts as general manager of the Fund, being
responsible for the various functions assumed by it, including the regular
furnishing of advice with respect to portfolio transactions. The other
principal subsidiaries of Group include Investor Service, a registered
broker/dealer, Midas Management Corporation and Rockw ood Advisers, Inc.,
registered investment advisers, and BBSI, a registered broker/dealer
providing discount brokerage services.
Group is a publicly owned company whose securities are listed on the
Nasdaq and traded in the over-the-counter market. Bassett S. Winmill may be
deemed a controlling person of Group on the basis of his ownership of 100%
of Group's voting stock and, therefore, of the Investment Manager. The Fund
and its affiliated investment companies had net assets in excess of $425
million as of September 12, 1996.
INVESTMENT MANAGEMENT AGREEMENT
Under the Investment Management Agreement, the Fund assumes and pays
all expenses required for the conduct of its business including, but not
limited to, custodian and transfer agency fees, accounting and legal fees,
investment management fees, fees of disinterested Directors, association
fees, printing, salaries of certain administrative and clerical personnel,
necessary office space, all expenses relating to the registration or
qualification of the shares of the Fund under Blue Sky laws and reasonable
fees and expenses of counsel in connection with such registration and
qualification, miscellaneous expenses and such non-recurring expenses as
may arise, including actions, suits or proceedings affecting the Fund and
the legal obligation which the Fund may have to indemnify its officers and
Directors with respect thereto.
The Investment Manager has agreed in the Investment Management
Agreement that it will waive all or part of its fee or reimburse the Fund
monthly if, and to the extent that, the Fund's aggregate operating expenses
exceed the most restrictive limit imposed by any state in which shares of
the Fund are qualified for sale. Currently, the most restrictive such limit
applicable to the Fund is 2.5% of the first $30 million of the Fund's
average daily net assets, 2.0% of the next $70 million of its average daily
net assets and 1.5% of its average daily net assets in excess of $100
million. Certain expenses, such as brokerage commissions, taxes, interest,
distribution fees, certain expenses attributable to investing outside the
United States and extraordinary items, are excluded from this limitation.
For the fiscal years ended June 30, 1994, 1995 and 1996, the Fund paid to
the Investment Manager investment management fees of $145,930, $116,437 and
$103,792, respectively.
If requested by the Directors, the Investment Manager may provide
other services to the Fund such as, without limitation, the functions of
billing, accounting, certain shareholder communications and services,
administering state and Federal registrations, filings and controls and
other administrative services. Any services so requested and performed will
be for the account of the Fund and the costs of the Investment Manager in
rendering such services shall be reimbursed by the Fund, subject to
examination by those directors of the Fund who are not interested persons
of the Investment Manager or any affiliate thereof. For the fiscal years
ended June 30, 1994, 1995 and 1996 the Fund reimbursed the Investment
Manager $12,812, $12,514 and $10,434, respectively, for such services.
The Investment Management Agreement provides that the Investment
Manager will not be liable to the Fund or any shareholder of the Fund for
any error of judgment or mistake of law or for any loss suffered by the
Fund in connection with the matters to which the agreement relates. Nothing
contained in the Investment Management Agreement, however, shall be
construed to protect the Investment Manager against any liability to the
Fund by reason of willful misfeasance, bad faith, or gross negligence in
the performance of its duties or by reason of its reckless disregard of
obligations and duties under the Investment Management Agreement.
The Investment Management Agreement will continue in effect, unless
sooner terminated as described below, for successive periods of twelve
months, provided such continuance is specifically approved at least
annually by (a) the Directors or by the holders of a majority of the
outstanding voting securities of the Fund as defined in the 1940 Act and
(b) a vote of a majority of the Directors of the Fund who are not parties
to the Investment Management Agreement, or interested persons of any such
party. The Investment Management Agreement may be terminated without
penalty at any time either by a vote of the Directors or the holders of a
majority of the outstanding voting securities of the Fund, as defined in
the 1940 Act, on 60 days' written notice to the Investment Manager, or by
the Investment Manager on 60 days' written notice to the Fund, and shall
immediately terminate in the event of its assignment.
Group has granted the Fund a non-exclusive license to use the service
marks "Bull & Bear," "Bull & Bear Performance Driven," and "Performance
Driven"and certain other marks under certain terms and conditions on a
royalty free basis. Such license will be withdrawn at any time at the sole
discretion of the Investment Manager or another subsidiary of Group. If the
license is terminated, the Fund will eliminate all reference to "Bull &
Bear" in its corporate name and cease to use any of such service marks or
any similar service marks in its business.
DETERMINATION OF NET ASSET VALUE
Net asset value will normally be calculated (a) no less frequently
than weekly, (b) on the last business day of each month and (c) at any
other times determined by the Directors. Net asset value is calculated by
dividing the value of the Fund's net assets (the value of its assets less
its liabilities) by the total number of shares of its common stock
outstanding. All securities for which market quotations are readily
available, which include the options and futures in which the Fund may
invest, are valued at the last sales price on the primary exchange on which
they are traded prior to the time of determination, or, if no sales price
is available at that time, at the closing price quoted for the securities
(but if bid and asked quotations are available, at the mean between the
last current bid and asked prices, rather than the quoted closing price).
Securities that are traded in the unregulated market are valued, if bid and
asked quotations are available, at the mean between the current bid and
asked prices. If bid and asked quotations are not available, then such
securities are valued as determined pursuant to procedures established in
good faith by the Directors.
ALLOCATION OF BROKERAGE
Under present investment policies the Fund is not expected to incur
substantial brokerage commission costs in the management of its portfolio.
For the fiscal years ended June 30, 1994, 1995 and 1996 the Fund did not
pay any brokerage commissions.
The Fund seeks to obtain prompt execution of orders at the most
favorable net prices. The Fund is not currently obligated to deal with any
particular broker, dealer or group thereof. Fund transactions in debt and
over-the-counter securities generally are with dealers acting as principals
at net prices with little or no brokerage costs. In certain circumstances,
however, the Fund may engage a broker as agent for a commission to effect
transactions for such securities. Purchases of securities from underwriters
include a commission or concession paid to the underwriter, and purchases
from dealers include a spread between the bid and asked price. While the
Investment Manager generally seeks reasonably competitive spreads or
commissions, payment of the lowest spread or commission is not necessarily
consistent with obtaining the best net results. Accordingly, the Fund will
not necessarily be paying the lowest spread or commission available.
The Investment Manager directs portfolio transactions to
broker/dealers for execution on terms and at rates which it believes, in
good faith, to be reasonable in view of the overall nature and quality of
services provided by a particular broker/dealer, including brokerage and
research services and sales of Fund shares and shares of other affiliated
investment companies. With respect to brokerage and research services,
consideration may be given in the selection of broker/dealers to brokerage
or research provided and payment may be made of a fee higher than that
charged by another broker/dealer which does not furnish brokerage or
research services or which furnishes brokerage or research services deemed
to be of lesser value, so long as the criteria of Section 28(e) of the
Securities Exchange Act of 1934, as amended (the "1934 Act") or other
applicable law are met. Section 28(e) of the 1934 Act was adopted in 1975
and specifies that a person with investment discretion shall not be "deemed
to have acted unlawfully or to have breached a fiduciary duty" solely
because such person has caused the account to pay a higher commission than
the lowest available under certain circumstances. To obtain the benefit of
Section 28(e), the person so exercising investment discretion must make a
good faith determination that the commissions paid are "reasonable in
relation to the value of the brokerage and research services provided ...
viewed in terms of either that particular transaction or his overall
responsibilities with respect to the accounts as to which he exercises
investment discretion." Thus, although the Investment Manager may direct
portfolio transactions without necessarily obtaining the lowest price at
which such broker/dealer, or another, may be willing to do business, the
Investment Manager seeks the best value to the Fund on each trade that
circumstances in the market place permit, including the value inherent in
on-going relationships with quality brokers.
Currently, it is not possible to determine the extent to which
commissions that reflect an element of value for brokerage or research
services might exceed commissions that would be payable for execution
alone, nor generally can the value of such services to the Fund be
measured, except to the extent such services have a readily ascertainable
market value. There is no certainty that services so purchased, or the sale
of Fund shares, if any, will be beneficial to the Fund, and it may be that
other affiliated investment companies will derive benefit therefrom. Such
services being largely intangible, no dollar amount can be attributed to
benefits realized by the Fund or to collateral benefits, if any, conferred
on affiliated entities. These services may include (1) furnishing advice as
to the value of securities, the advisability of investing in, purchasing or
selling securities and the availability of securities or purchasers or
sellers of securities, (2) furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio
strategy, and the performance of accounts, and (3) effecting securities
transactions and performing functions incidental thereto (such as
clearance, settlement, and custody). Pursuant to arrangements with certain
broker/dealers, such broker/dealers provide and pay for various computer
hardware, software and services, market pricing information, investment
subscriptions and memberships, and other third party and internal research
of assistance to the Investment Manager in the performance of its
investment decision-making responsibilities for transactions effected by
such broker/dealers for the Fund. Commission "soft dollars" may be used
only for "brokerage and research services" provided directly or indirectly
by the broker/dealer and under no circumstances will cash payments be made
by such broker/dealers to the Investment Manager. To the extent that
commission "soft dollars" do not result in the provision of any "brokerage
and research services" by a broker/dealer to whom such commissions are
paid, the commissions, nevertheless, are the property of such
broker/dealer. To the extent any such services are utilized by the
Investment Manager for other than the performance of its investment
decision-making responsibilities, the Investment Manager makes an
appropriate allocation of the cost of such services according to their use.
Investment decisions for the Fund and for the other Funds managed by
the Investment Manager or its affiliates are made independently based on
each Fund's investment objectives and policies. The same investment
decision, however, may occasionally be made for two or more Funds. In such
a case, the Investment Manager may combine orders for two or more Funds for
a particular security if it appears that a combined order would reduce
brokerage commissions and/or result in a more favorable transaction price.
Combined purchase or sale orders are then averaged as to price and
allocated as to amount according to a formula deemed equitable to each
Fund. While in some cases this practice could have a detrimental effect
upon the price or quantity available of the security with respect to the
Fund, the Investment Manager believes that the larger volume of combined
orders can generally result in better execution and prices.
The Fund is not obligated to deal with any particular broker, dealer
or group thereof. Certain broker/dealers that the Fund and its affiliates
do business with may, from time to time, own more than 5% of the publicly
traded Class A non-voting Common Stock of Group, the parent of the
Investment Manager, and may provide clearing services to BBSI.
The Fund's portfolio turnover rate may vary from year to year and will
not be a limiting factor when the Investment Manager deems portfolio
changes appropriate. The portfolio turnover rate is calculated by dividing
the lesser of the Fund's annual sales or purchases of portfolio securities
(exclusive of purchases or sales of securities whose maturities at the time
of acquisition were one year or less) by the monthly average value of
securities in the portfolio during the year.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
If it so qualifies, the Fund will not be subject to Federal income tax on
its net investment income and net short term capital gain, if any, realized
during any fiscal year to the extent that it distributes such income and
capital gain to its shareholders.
The Fund will determine either to distribute or to retain for
reinvestment all or part of its net long term capital gain. If any such
gain are retained, the Fund will be subject to a Federal income tax of 35%
of such amount. In that event, the Fund expects to designate the retained
amount as undistributed capital gain in a notice to its shareholders, each
of whom (1) will be required to include in income for tax purposes as
long-term capital gain its share of such undistributed amount, (2) will be
entitled to credit its proportionate share of the tax paid by the Fund
against its Federal income tax liability and to claim refunds to the extent
that the credit exceeds such liability, and (3) will increase its tax basis
in its shares of the Fund by an amount equal to 65% of the amount of
undistributed capital gain included in such shareholder's gross income.
Under the Code, amounts not distributed by a regulated investment
company on a timely basis in accordance with a calendar year distribution
requirement are subject to a 4% excise tax. To avoid the tax, the Fund must
distribute during each calendar year, an amount equal to, at the minimum,
the sum of (1) 98% of its ordinary income (not taking into account any
capital gain or losses) for the calendar year, (2) 98% of its net capital
gain for the twelve-month period ending on October 31 of the calendar year
(unless an election is made by a fund with a November or December year-end
to use the fund's fiscal year), and (3) all ordinary income and net capital
gain for previous years that were not previously distributed. A
distribution will be treated as paid during the calendar year if it is paid
during the calendar year or declared by the Fund in October, November or
December of the year, payable to shareholders of record on a date during
such month and paid by the Fund during January of the following year. Any
such distributions paid during January of the following year will be deemed
to be received on December 31 of the year the distributions are declared,
rather than when the distributions are received.
Gains or losses on the sales of securities by the Fund will be
long-term capital gain or losses if the securities have been held by the
Fund as capital assets for more than twelve months. Gains or losses on the
sale of securities held for twelve months or less will be short-term
capital gain or losses.
REPORTS TO SHAREHOLDERS
The Fund issues, at least semi-annually, reports to its shareholders
including a list of investments held and statements of assets and
liabilities, income and expense, and changes in net assets of the Fund. The
Fund's fiscal year ends on June 30.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Investors Bank & Trust Company, P.O. Box 2197, Boston, MA 02111 has
been retained by the Fund to act as Custodian of the Fund's investments and
may appoint one or more subcustodians. The Custodian also performs certain
accounting services for the Fund. As part of its agreement with the Fund,
the Custodian may apply credits or charges for its services to the Fund
for, respectively, positive or deficit cash balances maintained by the Fund
with the Custodian. DST Systems, Inc., Box 419789, Kansas City, Missouri
64141-6789, is the Fund's Transfer and Dividend Disbursing Agent.
AUDITORS
Tait, Weller & Baker, Two Penn Center, Suite 700, Philadelphia, PA
19102-1707, are the independent accountants for the Fund. Financial
statements of the Fund are audited annually.
FINANCIAL STATEMENTS
The Fund's Financial Statements for the fiscal year ended June 30,
1996, together with the Report of the Fund's independent accountants
thereon, appear in the Fund's Annual Report to Shareholders and are
incorporated herein by reference.
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
Part C. Other Information
Item 24. Financial Statements and Exhibits
1. Financial Statements.*
2. (a) Articles of Incorporation**
(b) By-Laws**
(c) Not applicable
(d) Specimen stock certificate**
(e) Automatic Dividend Reinvestment Plan**
(f) Not applicable
(g) Investment Management Agreement**
(h) Not applicable
(i) Not applicable
(j) Custodian Agreement***
(k) Transfer Agent Agreement***
(l) Not applicable
(m) Not applicable
(n) Not applicable
(o) Not applicable
(p) Not applicable
(q) Not applicable
* Incorporated by reference from Registrant's Annual Report for the
fiscal year ended June 30, 1996, accession number 00000
15260-96-000013.
** Filed herewith.
*** Incorporated by reference from Registrant's Statement on Form N-1A,
File Nos. 2-57953 and 811-2474, as filed with the Securities and
Exchange Commission on October 26, 1995.
Item 25. Marketing Arrangements
None
Item 26. Other Expenses of Issuance and Distribution
Not applicable.
Item 27. Persons Controlled by or under Common Control with Registrant
Insofar as the following have substantially identical boards of
directors or trustees, they may be deemed with the Registrant to be under
common control: Bull & Bear Dollar Reserves and Bull & Bear Global Income
Fund, each a series of shares issued by Bull & Bear Funds II, Inc.; Bull &
Bear Municipal Securities, Inc.; Bull & Bear Gold Investors Ltd.; Bull &
Bear U.S. and Overseas Fund, a series of Bull & Bear Funds I, Inc.; Bull &
Bear Special Equities Fund, Inc.; The Rockwood Growth Fund, Inc.; and Midas
Fund, Inc.
Item 28. Number of Holders of Securities
Number of Record Holders
Title of Class (as of September 13, 1996)
- -------------- ------------------------------
Shares of Common Stock 1364
$0.01 par value
Item 29. Indemnification
The Registrant is incorporated under Maryland law. Section 2-418 of
the Maryland General Corporation Law requires the Registrant to indemnify
its directors, officers and employees against expenses, including legal
fees, in a successful defense of a civil or criminal proceeding. The law
also permits indemnification of directors, officers, employees and agents
unless it is proved that (a) the act or omission of the person was material
and was committed in bad faith or was the result of active or deliberate
dishonesty, (b) the person received an improper personal benefit in money,
property or services or (c) in the case of a criminal action, the person
had reasonable cause to believe that the act or omission was unlawful.
The Registrant's Articles of Incorporation: (1) provide that, to
the maximum extent permitted by applicable law, a director or officer will
not be personally liable to the Registrant or its stockholders; (2) require
the Registrant to indemnify and advance expenses as provided in the By-laws
to its present and past directors, officers, employees, agents, and persons
who are serving or have served at the request of the Registrant in similar
capacities for other entities in advance of final disposition of any action
against that person to the extent permitted by Maryland law and the 1940
Act; (3) allow the corporation to purchase insurance for any present or
past director, officer, employee, or agent; and (4) require that any repeal
or modification of the Articles of Incorporation or By-laws or adoption or
modification of any provision of the Articles of Incorporation or By-laws
inconsistent with the indemnification provisions, be prospective only to
the extent such repeal or modification would, if applied retrospectively,
adversely affect any limitation on the liability of or indemnification and
advance of expenses available to any person covered by the indemnification
provisions of the Articles of Incorporation and By-laws.
Section 1 of Article 10 of the By-Laws sets forth the procedures by
which the Registrant will indemnify its directors, officers, employees and
agents. Section 2 of Article 10 of the By-Laws further provides that the
Registrant may purchase and maintain insurance or other sources of
reimbursement to the extent permitted by law on behalf of any person who is
or was a director or officer of the Registrant, or is or was serving at the
request of the Registrant as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in or arising out of
his or her position.
The Registrant's Investment Management Agreement between the
Registrant and Bull & Bear Advisers, Inc. (the "Investment Manager")
provides that the Investment Manager shall not be liable to the Registrant
or any shareholder of the Registrant for any error of judgment or mistake
of law or for any loss suffered by the Registrant in connection with the
matters to which the Investment Management Agreement relates. However, the
Investment Manager is not protected against any liability to the Registrant
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under the Investment Management Agreement.
The Registrant undertakes to carry out all indemnification
provisions of its Articles of Incorporation and By-Laws and the above-
described Investment Management Agreement in accordance with Investment
Company Act Release No. 11330 (September 4, 1980) and successor releases.
Item 30. Business and Other Connections of Investment Adviser
The directors and officers of Bull & Bear Advisers, Inc., the
Investment Manager, are also directors and officers of the other Funds
managed by the Investment Manager, a wholly-owned subsidiary of Bull & Bear
Group, Inc. (the "Bull & Bear Funds"). In addition, such officers are
officers and directors of Bull & Bear Group, Inc. and its other
subsidiaries: Investor Service Center, Inc., the distributor of the Bull &
Bear Funds and a registered broker/dealer; Midas Management Corporation and
Rockwood Advisers, Inc., registered investment advisers; and Bull & Bear
Securities, Inc., a discount brokerage firm. Bull & Bear Group, Inc.'s
predecessor was organized in 1976. In 1978, it acquired control of and
subsequently merged with Investors Counsel, Inc., a registered investment
adviser organized in 1959. The principal business of both companies since
their founding has been to serve as investment manager to registered
investment companies. The Investment Manager serves as investment manager
of Bull & Bear Dollar Reserves and Bull & Bear Global Income Fund, each a
series of shares issued by Bull & Bear Funds II, Inc.; Bull & Bear
Municipal Income Fund, a series of Bull & Bear Municipal Securities, Inc.;
Bull & Bear Gold Investors Ltd.; Bull & Bear U.S. and Overseas Fund, a
series of Bull & Bear Funds I, Inc.; and Bull & Bear Special Equities Fund,
Inc.
Item 31. Location of Accounts and Records
The minute books of Registrant and copies of its filings with the
Commission are located at 11 Hanover Square, New York, NY 10005 (the
offices of the Registrant and its Investment Manager). All other records
required by Section 31(a) of the Investment Company Act of 1940 are located
at Investors Bank & Trust Company, 89 South Street, Boston, MA 02111 (the
offices of Registrant's custodian) and DST Systems, Inc., 1055 Broadway,
Kansas City, MO 64105-1594 (the offices of the Registrant's Transfer and
Dividend Disbursing Agent). Copies of certain of the records located at
Investors Bank & Trust Company and DST Systems, Inc. are kept at 11 Hanover
Square, New York, NY 10005 (the offices of Registrant and the Investment
Manager).
Item 32. Management Services -- none
Item 33. Undertakings -- not applicable
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City,
County and State of New York on this 26th day of September, 1996.
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
By: /s/ Thomas B. Winmill
Thomas B. Winmill
SCHEDULE OF EXHIBITS TO FORM N-2
Exhibit Page
Number Exhibit Number
Exhibit A Articles of Incorporation**
Exhibit B By-Laws**
Exhibit C Not Applicable
Exhibit D Specimen Stock Certificate**
Exhibit E Automatic Dividend Reinvestment Plan**
Exhibit F Not Applicable
Exhibit G Investment Management Agreement**
Exhibit H Not Applicable
Exhibit I Not Applicable
Exhibit J Custodian Agreement***
Exhibit K Transfer Agent Agreement***
Exhibit L Not Applicable
Exhibit M Not Applicable
Exhibit N Not Applicable
Exhibit O Not Applicable
Exhibit P Not Applicable
Exhibit Q Not Applicable
Exhibit R Not Applicable
* Incorporated by reference from Registrant's Annual Report for the
fiscal year ended June 30, 1996, as filed with the Securities and
Exchange Commission, Accession number 00000 15260-96-000013.
** Filed herewith.
*** Incorporated by reference from Registrant's Statement on Form N-1A,
File Nos. 2-57953 and 811-2474, as filed with the Securities and
Exchange Commission on October 26, 1995.
ARTICLES OF INCORPORATION
OF
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
* * * * *
ARTICLE I
(1) The name and address of the sole incorporator is
Thomas B. Winmill, 11 Hanover Square, New York, New York 10005.
(2) The said sole incorporator is at least eighteen
years of age.
(3) The said sole incorporator is forming the
corporation named in these Articles of Incorporation under the
general laws of the State of Maryland.
ARTICLE II
NAME
The name of the corporation is Bull & Bear U.S.
Government Securities Fund, Inc. (the "Corporation").
ARTICLE III
PURPOSES AND POWERS
The purpose for which the Corporation is formed is to
exercise and enjoy all of the general powers, rights and
privileges granted to, or conferred upon, corporations by the
Maryland General Corporation Law now or hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the principal office of the Corporation
in the State of Maryland is 11 East Chase Street, Baltimore,
Maryland 21202. The name of the resident agent of the
Corporation in the State of Maryland is Prentice-Hall Corporation
System, a corporation of the State of Maryland, and the address
of the resident agent is 11 East Chase Street, Baltimore,
Maryland 21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital stock of all
classes which the Corporation shall have authority to issue is
ten million (10,000,000) shares, all of which shall have a par
value of ($.01) per share and an aggregate par value of One
Hundred Thousand Dollars ($100,000).
(2) (a) The Board of Directors of the Corporation is
authorized to classify or to reclassify, from time to time, any
unissued shares of stock of the Corporation, whether now or
hereafter authorized, by setting, changing or eliminating the
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or
terms and conditions or rights to require redemption of the
stock.
(b) Without limiting the generality of the
foregoing, the dividends and distributions or other payments with
respect to the stock of the Corporation, and with respect to each
class that hereafter may be created, shall be in such amount as
may be declared from time to time by the Board of Directors, and
such dividends and distributions may vary from class to class to
such extent and for such purposes as the Board of Directors may
deem appropriate, including, but not limited to, the purpose of
complying with requirements of regulatory or legislative
authorities.
(c) Until such time as the Board of Directors
shall provide otherwise pursuant to the authority granted in this
section (2), all the authorized shares of the Corporation are
designated as Common Stock. Shares of the Common Stock and the
holders thereof, and shares of any class and the holders thereof,
shall be subject to the following provisions, provided, however,
that if no shares of any class other than Common Stock are
outstanding, the shares of the Common Stock and the holders
thereof shall nevertheless be subject to the following provisions
except to the extent that such provisions are by their terms
applicable only when shares of two or more classes are
outstanding.
(3) The net asset value of each share of the
Corporation's capital stock issued, sold or purchased at net
asset value shall be the current net asset value per share as
determined in accordance with procedures adopted from time to
time by the Board of Directors which comply with the Investment
Company Act of 1940, as amended (the "1940 Act").
(4) Shares of each class of stock shall be entitled to
such dividends or distributions, in stock or in cash or both, as
may be declared from time to time by the Board of Directors,
acting in its sole discretion, with respect to such class.
(5) In the event of the liquidation or dissolution of
the Corporation, the holders of the Common Stock of the
Corporation's stock shall be entitled to receive all the assets
of the Corporation not attributable to other classes of stock
through any preference. The assets so distributable to the
stockholders shall be distributed among such stockholders in
proportion to the number of shares of that class held by them and
recorded on the books of the Corporation.
(6) Unless otherwise expressly provided in these
Articles of Incorporation, including any Articles Supplementary
creating any additional class of capital stock, on each matter
submitted to a vote of stockholders, each holder of a share of
capital stock of the Corporation shall be entitled to one vote
for each share outstanding in such holder's name on the books of
the Corporation, irrespective of the class thereof, and all
shares of all classes of capital stock shall vote together as a
single class; provided, however, that as to any matter with
respect to which a separate vote of any class or series is
required by applicable law, such requirement as to a separate
vote by that class or series shall apply in lieu of a vote of all
classes voting together as a single class as described above.
(7) All shares purchased by the Corporation shall
constitute authorized but unissued shares and the number of the
authorized shares of stock of the Corporation shall not be
reduced by the number of any shares purchased by it. Unless and
until their classification is changed in accordance with section
(2) of this Article V, all shares of capital stock so purchased
shall continue to belong to the same class to which they belonged
at the time of their purchase.
(8) The Corporation may issue shares of stock in
fractional denominations to the same extent as its whole shares,
and shares in fractional denominations shall be shares of capital
stock having proportionately to the respective fractions
represented thereby all the rights of whole shares of the same
class, including without limitation, the right to vote, the right
to receive dividends and distributions, and the right to
participate upon liquidation of the Corporation, but excluding
the right to receive a stock certificate representing fractional
shares.
(9) [Reserved.]
(10) All persons who shall acquire capital stock or
other securities of the Corporation shall acquire the same
subject to the provisions of these Articles of Incorporation and
the By-Laws of the Corporation, as each may be amended from time
to time.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING AND
REGULATING CERTAIN POWERS OF THE CORPORATION
AND OF THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation shall
initially be nine (9), which number may be increased or decreased
by or pursuant to the By-Laws of the Corporation but shall never
be less than three nor more than fifteen. The names of the
persons who shall act as directors until the initial annual
meeting and until their successors are duly elected and qualify
are:
Bassett S. Winmill
Robert D. Anderson
Russell E. Burke, III
Bruce B. Huber
James E. Hunt
Frederick A. Parker
John B. Russell
Thomas B. Winmill
Mark C. Winmill
Beginning with the initial annual meeting, the
directors shall be divided into five classes, designated Class I,
Class II, Class III, Class IV and Class V. Prior to any change
in the number of directors, Classes II-V shall consist of two
directors each and Class I shall consist of one director. At the
initial annual meeting of stockholders, the Class I director
shall be elected for an initial term of one year, Class II
directors for an initial term of two years, Class III directors
for an initial term of three years, Class IV directors for an
initial term of four years and Class V directors for an initial
term of five years. Upon the expiration of the initial term of
each class, such succeeding class of directors shall be elected
for a five-year term. A director elected at an annual meeting
shall hold office until the annual meeting for the year in which
his term expires and until his successor shall be elected and
shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office. If the
number of directors is changed, any increase or decrease shall be
apportioned among the classes, as of the annual meeting of
stockholders next succeeding any such change, so as to maintain a
number of directors in each class as nearly equal as possible.
In no case shall a decrease in the number of directors shorten
the term of any incumbent director. Any vacancy on the Board of
Directors that results from an increase in the number of
directors may be filled by a majority of the entire Board of
Directors, provided that a quorum is present, and any other
vacancy occurring in the Board of Directors may be filled by a
majority of the directors then in office, whether or not
sufficient to constitute a quorum, or by a sole remaining
director; provided, however, that if the stockholders of any
class of the Corporation's capital stock are entitled separately
to elect one or more directors, a majority of the remaining
directors elected by that class or the sole remaining director
elected by that class may fill any vacancy among the number of
directors elected by that class. A director elected by the Board
of Directors to fill any vacancy in the Board of Directors shall
serve until the next annual meeting of stockholders and until his
successor shall be elected and shall qualify, subject, however,
to prior death, resignation, retirement, disqualification or
removal from office. At any annual meeting of stockholders, any
director elected to fill any vacancy in the Board of Directors
that has arisen since the preceding annual meeting of
stockholders (whether or not any such vacancy has been filled by
election of a new director by the Board of Directors) shall hold
office for a term which coincides with the remaining term of the
class to which such directorship was previously assigned, if such
vacancy arose other than by an increase in the number of
directors, and until his successor shall be elected and shall
qualify. In the event such vacancy arose due to an increase in
the number of directors, any director so elected to fill such
vacancy at an annual meeting shall hold office for a term which
coincides with that of the class to which such directorship has
been apportioned as heretofore provided, and until his successor
shall be elected and shall qualify. A director may be removed
for cause only, and not without cause, and only by action taken
by the holders of at least eighty percent (80%) of the
outstanding shares of all classes of voting stock then entitled
to vote in an election of such director.
(2) The Board of Directors of the Corporation is
hereby empowered to authorize the issuance from time to time of
shares of capital stock, whether now or hereafter authorized, for
such consideration as the Board of Directors may deem advisable,
subject to such limitations as may be set forth in these Articles
of Incorporation or in the By-Laws of the Corporation or
applicable law.
(3) (a) To the maximum extent permitted by applicable
law, as currently in effect or as may hereafter be amended:
(i) no director or officer of the
Corporation shall be liable to the Corporation or its
shareholders for monetary damages; and
(ii) the Corporation shall indemnify and
advance expenses to its present and past directors, officers,
employees and agents, and persons who are serving or have served
at the request of the Corporation as a director, officer,
employee or agent in similar capacities for other entities.
(b) The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him or her and incurred by him or her in any such
capacity or arising out of his or her status as such, whether or
not the Corporation would have the power to indemnify him or her
against such liability.
(c) Any repeal or modification of this Section
(3) of this Article VI these Articles of Incorporation by the
shareholders of the Corporation, or adoption or modification of
any other provision of the Articles of Incorporation or By-Laws
inconsistent with this Section, shall be prospective only, to the
extent that such repeal or modification would, if applied
retrospectively, adversely affect any limitation on the liability
of any director or officer of the Corporation or indemnification
and advance of expenses available to any person covered by these
provisions with respect to any act or omission which occurred
prior to such repeal, modification or adoption.
(4) The Board of Directors of the Corporation shall
have the exclusive authority to make, alter or repeal from time
to time any of the By-Laws of the Corporation except any
particular By-Law which is specified as not subject to alteration
or repeal by the Board of Directors.
(5) [Reserved.]
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No stockholder of the Corporation shall by reason of
his holding shares of capital stock have any preemptive or
preferential right to purchase or subscribe to any shares of
capital stock of the Corporation, now or hereafter authorized, or
any notes, debentures, bonds or other securities convertible into
shares of capital stock, now or hereafter to be authorized,
whether or not the issuance of any such shares of capital stock,
or notes, debentures, bonds or other securities would adversely
affect the dividend or voting rights of such stockholder; and the
Board of Directors may issue shares of any class of capital stock
of the Corporation, or any notes, debentures, bonds, or other
securities convertible into shares of any class of capital stock
of the Corporation, either, whole or in part, to the existing
stockholders.
ARTICLE VIII
CERTAIN VOTES OF STOCKHOLDERS
(1) (a) Except as otherwise provided in these Articles
of Incorporation and notwithstanding any other provision of the
Maryland General Corporation Law to the contrary, any action
submitted to a vote by stockholders requires the affirmative vote
of at least eighty percent (80%) of the outstanding shares of all
classes of voting stock, voting together, in person or by proxy
at a meeting at which a quorum is present, unless such action is
approved by the vote of a majority of the Board of Directors, in
which case such action requires (A) if applicable, the proportion
of votes required by the 1940 Act, or (B) the lesser of (1) a
majority of all the votes cast at a meeting at which a quorum is
present in person or by proxy with the shares of all classes of
voting stock voting together, or (2) if such action may be taken
or authorized by a lesser proportion of votes under applicable
law, such lesser proportion.
(b) The Corporation elects not to be governed by
any provision of Section 3-602 of Subtitle 6 of the Maryland
General Corporation Law.
(2) (a) Except as otherwise provided in paragraph (b)
of this Section (2) of this Article VIII, the affirmative votes
of at least eighty percent (80%) of the outstanding shares of all
classes of voting stock, voting together, in person or by proxy
at a meeting at which a quorum is present, other than voting
stock held by any interested shareholder or any affiliate
thereof, shall be necessary to authorize any of the following
actions:
(i) The merger or consolidation or share
exchange of the Corporation with or into any other person or
company (including, without limitation, a partnership,
corporation, joint venture, business trust, common law trust
or any other business organization);
(ii) the issuance or transfer by the Corporation
(in one or a series of transactions in any 12-month period)
of any securities of the Corporation to any other person or
entity for cash, securities or other property (or
combination thereof) having an aggregate fair market value
of $1,000,000 or more, excluding (A) sales of any securities
of the Corporation in connection with a public offering
thereof, (B) the issuance or transfer of securities of the
Corporation to the shareholders of Bull & Bear U.S.
Government Securities Fund in exchange for such
shareholder's shares of Bull & Bear U.S. Government
Securities Fund, (C) issuance of securities of the
Corporation pursuant to a dividend reinvestment plan adopted
by the Corporation and (D) issuances of securities of the
Corporation upon the exercise of any stock subscription
rights distributed by the Corporation;
(iii) a sale, lease, exchange, mortgage, pledge,
transfer or other disposition by the Corporation (in one or
a series of transactions in any 12-month period) to or with
any person of any assets of the Corporation having an
aggregate fair market value of $1,000,000 or more, except
for transactions in securities effected by the Corporation
in the ordinary course of its business; or
(iv) any proposal as to the voluntary
liquidation or dissolution of the Corporation or any
amendment to the Corporation's Articles of Incorporation to
terminate its existence.
(b) Notwithstanding paragraph (a) of this Section
(2), the actions enumerated in such paragraph will be authorized
if approved by a vote of at least (i) fifty percent (50%) of the
members of the Board of Directors of the Corporation and (ii) a
majority of the number of votes entitled to be cast thereon.
ARTICLE IX
DETERMINATION BINDING
Any determination made in good faith, so far as
accounting matters are involved, in accordance with accepted
accounting practice by or pursuant to the authority of the
direction of the Board of Directors, as to the amount of assets,
obligations or liabilities of the Corporation, as to the amount
of net income of the Corporation from dividends and interest for
any period or amounts at any time legally available for the
payment of dividends, as to the amount of any reserves or charges
set up and the propriety thereof, as to the time of or purpose
for creating reserves or as to the use, alteration or
cancellation of any reserves or charges (whether or not any
obligation or liability for which such reserves or charges shall
have been created, shall have been paid or discharged or shall be
then or thereafter required to be paid or discharged), as to the
value of any security or other instrument or asset owned by the
Corporation or as to any matters relating to the issuance, sale,
redemption or other acquisition or disposition of securities or
shares of capital stock of the Corporation, and any reasonable
determination made in good faith by the Board of Directors shall
be final and conclusive, and shall be binding upon the
Corporation and all holders of its capital stock, past, present
and future, and shares of capital stock of the Corporation are
issued and sold on the condition and understanding, evidenced by
the purchase of shares of capital stock or acceptance of share
certificates or other evidence thereof, that any and all such
determinations shall be binding as aforesaid. No provision of
these Articles of Incorporation shall be effective to (a) require
a waiver of compliance with any provision of the Securities Act
of 1933, as amended, or the 1940 Act, or of any valid rule,
regulation or order of the Securities and Exchange Commission
thereunder or (b) protect or purport to protect any director or
officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office.
ARTICLE X
PRIVATE PROPERTY OF STOCKHOLDERS
The private property of stockholders shall not be
subject to the payment of corporate debts to any extent
whatsoever.
ARTICLE XI
UNLIMITED TERM OF EXISTENCE
The Corporation shall have an unlimited period of
existence.
ARTICLE XII
CONVERSION TO OPEN-END COMPANY
Notwithstanding any other provisions of these Articles
of Incorporation or the By-Laws of the Corporation, the approval,
adoption or authorization of any amendment to these Articles of
Incorporation that makes the Common Stock or any other class of
capital stock a "redeemable security" as that term is defined in
the 1940 Act shall require the affirmative vote of the holders of
at least eighty percent (80%) of the outstanding shares of all
classes of voting stock, voting together, in person or by proxy
at a meeting at which a quorum is present, unless approved by at
least fifty percent (50%) of the Directors, in which case such
amendment or repeal would require the affirmative vote of the
holders of a majority of the number of votes entitled to be cast
thereon.
The Corporation shall notify the holders of all capital
stock of the approval, in accordance with the preceding paragraph
of this Article XII, of any amendment to these Articles of
Incorporation that makes the Common Stock or any other class of
capital stock a "redeemable security" (as that term is defined in
the 1940 Act) no later than thirty (30) days prior to the date of
filing of such amendment with the Department of Assessments and
Taxation (or any successor agency) of the State of Maryland; such
amendment may not be so filed, however, until the later of (a)
ninety (90) days following the date of approval of such amendment
by the holders of capital stock in accordance with the preceding
paragraph of this Article XII and (b) the next January 1 or July
1, whichever is sooner, following the date of such approval by
holders of capital stock.
ARTICLE XIII
AMENDMENT
The Corporation reserves the right to amend, alter,
change or repeal any provision contained in these Articles of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation. Notwithstanding any other
provisions of these Articles of Incorporation or the By-Laws of
the Corporation (and notwithstanding the fact that a lesser
percentage may be specified by law, these Articles of
Incorporation or the By-Laws of the Corporation), the amendment
or repeal of Section (10) of Article V, Section (1), Section
(3), Section (4) or Section (5) of Article VI, Section (1) and
Section (2) of Article VIII, Article X, Article XI, Article XII
or this Article XIII of these Articles of Incorporation shall
require the affirmative vote of the holders of at least eighty
percent (80%) of the outstanding shares of all classes of voting
stock, voting together, in person or by proxy at a meeting at
which a quorum is present, unless approved by at least fifty
percent (50%) of the Directors, in which case such amendment or
repeal would require the affirmative vote of the holders of a
majority of the number of votes entitled to be cast thereon.
ARTICLE XIV
The name "Bull & Bear" included in the name of the
Corporation shall be used pursuant to a royalty-free nonexclusive
license from Bull & Bear Group, Inc. or a subsidiary of Bull &
Bear Group, Inc. The license may be withdrawn by Bull & Bear
Group, Inc. or its subsidiary at any time in their sole
discretion, in which case the Corporation shall have no further
right to use the name "Bull & Bear" in its corporate name or
otherwise and the Corporation, the holders of its capital stock
and its officers and directors, shall promptly take whatever
action may be necessary to change its name accordingly.
IN WITNESS WHEREOF, the undersigned hereby execute the
foregoing Articles of Incorporation and acknowledges the same to
be their acts and further acknowledge that, to the best of his
knowledge, the matters and facts set forth herein are true in all
material respects under the penalties of perjury.
Dated the day of August, 1996.
____________________________
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
ARTICLES OF AMENDMENT
Bull & Bear U.S. Government Securities Fund, Inc., a
Maryland corporation (the "Corporation"), hereby certifies as follows:
FIRST: The Charter of the Corporation is amended hereby by
deleting the provisions of Article (V)(3), Article (V)(6), Article VIII
(1)(a) and Article VIII (2)(b) thereof in their entirety and inserting in
lieu of such provisions the following:
ARTICLE V
(3) [Reserved.]
ARTICLE V
(6) Unless otherwise expressly provided in these Articles of
Incorporation, including any Articles Supplementary creating any additional
class of capital stock, on each matter submitted to a vote of stockhold-
ers, each holder of a share of capital stock of the Corporation entitled to
vote shall be entitled to one vote for each share outstanding in such
holder's name on the books of the Corporation and all shares of all class-
es of capital stock entitled to vote shall vote together as a single class;
provided, however, that as to any matter with respect to which a separate
vote of any class or series is required by applicable law, such requirement
as to a separate vote by that class or series shall apply in lieu of a vote
of all classes voting together as a single class as described above.
ARTICLE VIII
(1) (a) Except as otherwise provided in these Articles of
Incorporation and notwithstanding any other provision of the Maryland
General Corporation Law to the contrary, any action submitted to a vote by
stockholders requires the affirmative vote of at least eighty percent
(80%) of the outstanding shares of all classes of voting stock, voting
together, in person or by proxy at a meeting at which a quorum is present,
unless such action is approved by the vote of a majority of the Board of
Directors, in which case such action requires (A) if applicable, the
proportion of votes required by the Investment Company Act of 1940, as
amended (the "1940 Act"), or (B) the lesser of (1) a majority of all the
votes entitled to be cast on the matter with the shares of all classes of
voting stock voting together, or (2) if such action may be taken or
authorized by a lesser proportion of votes under applicable law, such
lesser proportion.
ARTICLE VIII
(2) (b) Notwithstanding paragraph (a) of this Section (2),
the actions enumerated in such paragraph will be authorized if approved
by a vote of at least (i) a majority of the members of the Board of
Directors of the Corporation and (ii) a majority of the number of votes
entitled to be cast thereon, including votes of voting stock held by any
interested shareholder or any affiliate thereof.
SECOND: The Board of Directors of the Corporation has
adopted resolutions which declared the foregoing amendment to the Charter
of the Corporation set forth in these Articles of Amendment to be advisable
and approved the same.
THIRD: No shares of the capital stock of the Corporation
entitled to be voted upon the foregoing amendment to the Charter of the
Corporation had been issued by the Corporation or were outstanding or sub-
scribed for at the time of the approval of the foregoing amendment to the
Charter of the Corporation by the Board of Directors.
FOURTH: The foregoing amendment to the Charter of the
Corporation does not change the authorized capital stock of the Corporation
or the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption thereof.
IN WITNESS WHEREOF, Bull & Bear U.S. Government Securities
Fund, Inc. has caused these Articles of Amendment to be executed in its
name and on its behalf by its Co-President and its corporate seal to be
affixed and attested to by its Secretary as of the 3rd day of October,
1996.
ATTEST: Bull & Bear U.S. Government
Securities Fund, Inc.
______________________________ By ____________________ (SEAL)
William J. Maynard Thomas B. Winmill
Secretary Co-President
The undersigned, being the duly elected and acting
Co-President of Bull & Bear U.S. Government Securities Fund, Inc. hereby
acknowledges that the foregoing Articles of Amendment, of which this
certificate is a part, is the act and deed of such corporation, and
certifies, under the penalties of perjury, to the best of his knowledge,
information and belief, that all matters and facts set forth therein are
true in all material respects.
By ____________________ (SEAL)
Thomas B. Winmill
Co-President
BY-LAWS
OF
BULL & BEAR U.S. GOVERNMENT
SECURITIES FUND, INC.9 9
A MARYLAND CORPORATION
BY-LAWS
OF
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.9
(A MARYLAND CORPORATION)9
ARTICLE I
NAME OF CORPORATION, LOCATION OF
OFFICES AND SEAL
Section 1.1. Name. The name of the Corporation is Bull & Bear
U.S. Government Securities Fund, Inc.
Section 1.2. Principal Offices. The principal office of the
Corporation in the State of Maryland shall be located in
Baltimore, Maryland. The Corporation may, in addition, establish
and maintain such other offices and places of business as the
board of directors may, from time to time, determine.
Section 1.3. Seal. The corporate seal of the Corporation shall
consist of two (2) concentric circles, between which shall be the
name of the Corporation, and in the center shall be inscribed the
year of its incorporation, and the words "Corporate Seal". The
form of the seal shall be subject to alteration by the board of
directors and the seal may be used by causing it or a facsimile
to be impressed or affixed or printed or otherwise reproduced.
Any officer or director of the Corporation shall have authority
to affix the corporate seal of the Corporation to any document
requiring the same.
ARTICLE II
STOCKHOLDERS
Section 2.1. Annual Meetings. There shall be no stockholders'
meetings for the election of directors and the transaction of
other proper business except as required by law, the listing
requirements of the stock exchange or market where the
Corporation's stock is listed, or as hereinafter provided, in
which case the annual meeting shall be held in September of each
year.
Section 2.2. Special Meetings. Special meetings of
stockholders may be called at any time by the chairman of the
board or the president or a co-president and shall be held at
such time and place as may be stated in the notice of the
meeting.
Section 2.3. Notice of Meetings. The secretary shall cause
notice of the place, date and hour and, in the case of a special
meeting or as otherwise required by law, the purpose or purposes
for which the meeting is called, to be served personally or to be
mailed, postage prepaid, not less than 10 nor more than 90 days
before the date of the meeting, to each stockholder entitled to
vote at such meeting at his address as it appears on the records
of the Corporation at the time of such mailing. Notice shall be
deemed to be given when deposited in the United States mail
addressed to the stockholders as aforesaid.
Notice of any stockholders meeting need not be given to any
stockholder who shall sign a written waiver of such notice
whether before or after the time of such meeting, which waiver
shall be filed with the records of such meeting, or to any
stockholder who is present at such meeting in person or by proxy.
Notice of adjournment of a stockholders meeting to another time
or place need not be given if such time and place are announced
at the meeting.
Irregularities in the notice of any meeting to, or the nonreceipt
of any such notice by, any of the stockholders shall not
invalidate any action otherwise properly taken by or at any such
meeting.
Section 2.4. Quorum and Adjournment of Meetings. The presence
at any stockholders meeting, in person or by proxy, of
stockholders entitled to cast one-third of all votes entitled to
be cast thereat shall be necessary and sufficient to constitute a
quorum for the transaction of business, provided that with
respect to any matter to be voted upon separately by any class of
shares, a quorum shall consist of the holders of one-third of the
shares of that class outstanding and entitled to vote on the
matter. In the absence of a quorum, the stockholders present in
person or by proxy or, if no stockholder entitled to vote is
present in person or by proxy, any officer present entitled to
preside or act as secretary of such meeting may adjourn the
meeting without determining the date of the new meeting or from
time to time without further notice to a date not more than 120
days after the original record date. Any business that might
have been transacted at the meeting originally called may be
transacted at any such adjourned meeting at which a quorum is
present.
Section 2.5. Voting and Inspectors. Unless statute or the
Articles of Incorporation (the "Charter") provide otherwise, at
every stockholders meeting, each stockholder shall be entitled to
one vote for each share and a fractional vote for each fraction
of a share of stock of the Corporation validly issued and
outstanding and standing in his name on the books of the
Corporation on the record date fixed in accordance with Section
7.4 hereof, either in person or by proxy appointed by instrument
in writing subscribed by such stockholder or his duly authorized
attorney, except that no shares held by the Corporation shall be
entitled to a vote.
If no record date has been fixed, the record date for the
determination of stockholders entitled to notice of or to vote at
a meeting of stockholders shall be the later of the close of
business on the day on which notice of the meeting is mailed or
the 30th day before the meeting, or, if notice is waived by all
stockholders, at the close of business on the 11th day preceding
the day on which the meeting is held.
Except as otherwise specifically provided in the Charter or these
By-laws or as required by applicable law, all matters shall be
decided by a vote of the majority of the votes validly cast at a
meeting at which a quorum is present. The vote upon any question
shall be by ballot whenever requested by any person entitled to
vote, but, unless such a request is made, voting may be conducted
in any way approved by the meeting.
At any meeting at which there is an election of directors, the
chairman of the meeting may appoint two inspectors of election
who shall first subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and
shall, after the election, make a certificate of the result of
the vote taken. No candidate for the office of director shall be
appointed as an inspector.
Section 2.6. Validity of Proxies. The right to vote by proxy
shall exist only if the instrument authorizing such proxy to act
shall have been signed by the stockholder or by his duly
authorized attorney. Unless a proxy provides otherwise, it shall
not be valid more than 11 months after its date. All proxies
shall be delivered to the secretary of the Corporation or to the
person acting as secretary of the meeting before being voted, who
shall decide all questions concerning qualification of voters,
the validity of proxies, and the acceptance or rejection of
votes. If inspectors of election have been appointed by the
chairman of the meeting, such inspectors shall decide all such
questions. A proxy with respect to stock held in the name of two
or more persons shall be valid if executed by one of them unless
at or prior to exercise of such proxy the Corporation receives
from any one of them a specific written notice to the contrary
and a copy of the instrument or order which so provides. A proxy
purporting to be executed by or on behalf of a stockholder shall
be deemed valid unless challenged at or prior to its exercise.
Section 2.7. Stock Ledger and List of Stockholders. It shall
be the duty of the secretary or assistant secretary of the
Corporation to cause an original or duplicate stock ledger
containing the names and addresses of all the stockholders and
the number of shares held by them, respectively, to be maintained
at the office of the Corporation's transfer agent. Such stock
ledger may be in written form or any other form capable of being
converted into written form within a reasonable time for visual
inspection.
Section 2.8. Action Without Meeting. Any action required or
permitted to be taken by stockholders at a meeting of
stockholders may be taken without a meeting if (a) all
stockholders entitled to vote on the matter consent to the action
in writing, (b) all stockholders entitled to notice of the
meeting but not entitled to vote at it sign a written waiver of
any right to dissent, and (c) the consents and waivers are filed
with the records of the meetings of stockholders. Such consent
shall be treated for all purposes as a vote at the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. General Powers. Except as otherwise provided by
operation of law, by the Charter, or by these By-laws, the
property, business and affairs of the Corporation shall be
managed under the direction of and all the powers of the
Corporation shall be exercised by or under authority of its board
of directors.
Section 3.2. Power to Issue and Sell Stock. The board of
directors may from time to time issue and sell or cause to be
issued and sold any of the Corporation's authorized shares to
such persons and for such consideration as the board of directors
shall deem advisable, subject to the provisions of the Charter.
Section 3.3. Power to Declare Dividends. The board of
directors, from time to time as they may deem advisable, may
declare and pay dividends in stock, cash or other property of the
Corporation, out of any source available for dividends, to the
stockholders according to their respective rights and interests
in accordance with the provisions of the Charter. The board of
directors may prescribe from time to time that dividends declared
may be payable at the election of any of the stockholders
(exercisable before or after the declaration of the dividend),
either in cash or in shares of the Corporation, provided that the
sum of the cash dividend actually paid to any stockholder and the
asset value of the shares received (determined as of such time as
the board of directors shall have prescribed, pursuant to the
Charter, with respect to shares sold on the date of such
election) shall not exceed the full amount of cash to which the
stockholder would be entitled if he elected to receive only cash.
Section 3.4. Number and Term of Directors. Except for the
initial board of directors, the board of directors shall consist
of not fewer than three nor more than fifteen directors, as
specified by a resolution of a majority of the entire board of
directors. Each director shall hold office until his successor
is elected and qualified or until his earlier death, resignation
or removal. Any vacancy created by an increase in directors may
be filled in accordance with Section 3.6 of this Article III.
All acts done at any meeting of the directors or by any person
acting as a director, so long as his successor shall not have
been duly elected or appointed, shall, notwithstanding that it be
afterwards discovered that there was some defect in the election
of the directors or of such person acting as a director or that
they or any of them were disqualified, be as valid as if the
directors or such other person, as the case may be, had been duly
elected and were or was qualified to be directors or a director
of the Corporation.
Directors need not be stockholders of the Corporation.
Section 3.5. Election. The initial director or directors shall
be that person or persons named as such in the Charter. At each
annual meeting, the stockholders shall elect directors to hold
office until the expiration of the term of his class or until the
annual election of directors next succeeding his election and
until his death, or until he shall have resigned, have been
removed as hereinafter provided in these By-laws, or as otherwise
provided by statute or the Charter.
Section 3.6. Vacancies and Newly Created Directorships. Any
vacancies in the board of directors, whether arising from death,
resignation, removal, an increase in the number of directors or
otherwise, shall be filled by a vote of the board of directors in
accordance with the Charter.
Section 3.7. [Reserved.]
Section 3.8. Regular Meetings. The meeting of the board of
directors for choosing officers and transacting other proper
business, and all other meetings, shall be held at such time and
place, within or outside the state of Maryland, as the board may
determine and as provided by resolution. Notice of such meetings
need not be given, following the annual meeting of stockholders,
provided that notice of any change in the time or place of such
meetings shall be sent promptly to each director not present at
the meeting at which such change was made, in the manner provided
for notice of special meetings. Members of the board of
directors or any committee designated thereby may participate in
a meeting of such board or committee by means of a conference
telephone or similar communications equipment that allows all
persons participating in the meeting to hear each other at the
same time; and participation by such means shall constitute
presence in person at a meeting.
Section 3.9. Special Meetings. Special meetings of the board
of directors shall be held whenever called by the chairman of the
board or the president or a co-president (or, in the absence or
disability of the chairman of the board or the president or a co-
president, by any officer or director, as they so designate) at
the time and place (within or outside of the State of Maryland)
specified in the respective notice or waivers of notice of such
meetings. At least three days before the day on which a special
meeting is to be held, notice of special meetings, stating the
time and place, shall be (a) mailed to each director at his
residence or regular place of business or (b) delivered to him
personally or transmitted to him by telegraph, telefax, telex,
cable or wireless.
Section 3.10. Waiver of Notice. No notice of any meeting need
be given to any director who is present at the meeting or who
waives notice of such meeting in writing (which waiver shall be
filed with the records of such meeting), either before or after
the time of the meeting.
Section 3.11. Quorum and Voting. At all meetings of the board
of directors, the presence of onehalf of the number of directors
then in office shall constitute a quorum for the transaction of
business, provided that there shall be present at least two
directors. In the absence of a quorum, a majority of the
directors present may adjourn the meeting, from time to time,
until a quorum shall be present. The action of a majority of the
directors present at a meeting at which a quorum is present shall
be the action of the board of directors, unless concurrence of a
greater proportion is required for such action by law, by the
Charter or by these By-laws.
Section 3.12. Action Without a Meeting. As amended, any action
required or permitted to be taken at any meeting of the board of
directors or of any committee thereof may be taken without a
meeting if a written consent to such action is signed by all
members of the board or of such committee, as the case may be,
and such written consent is filed with the minutes of proceedings
of the board or committee.
Section 3.13. Compensation of Directors. Directors may receive
such compensation for their services as may from time to time be
determined by resolution of the board of directors.
ARTICLE IV
COMMITTEES
Section 4.1. Organization. By resolution adopted by the board
of directors, the board may designate one or more committees of
the board of directors, including an Executive Committee, each
consisting of at least two directors. Each member of a committee
shall be a director and shall hold committee membership at the
pleasure of the board. The chairman of the board, if any, shall
be a member of the Executive Committee. The board of directors
shall have the power at any time to change the members of such
committees and to fill vacancies in the committees.
Section 4.2. Powers of the Executive Committee. Unless
otherwise provided by resolution of the board of directors, when
the board of directors is not in session the Executive Committee
shall have and may exercise all powers of the board of directors
in the management of the business and affairs of the Corporation
that may lawfully be exercised by an Executive Committee except
the power to declare a dividend or distribution on stock,
authorize the issuance of stock, recommend to stockholders any
action requiring stockholders approval, amend these By-laws,
approve any merger or share exchange which does not require
stockholder approval or approve or terminate any contract with an
"investment adviser" or "principal underwriter," as those terms
are defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). Notwithstanding the above, such Executive
Committee may make such dividend calculations and payments as are
consistent with applicable law, including the Maryland General
Corporation Law.
Section 4.3. Powers of Other Committees of the Board of
Directors. To the extent provided by resolution of the board,
other committees of the board of directors shall have and may
exercise any of the powers that may lawfully be granted to the
Executive Committee.
Section 4.4. Proceedings and Quorum. In the absence of an
appropriate resolution of the board of directors, each committee
may adopt such rules and regulations governing its proceedings,
quorum and manner of acting as it shall deem proper and
desirable, provided that a quorum shall not be less than two
directors. In the event any member of any committee is absent
from any meeting, the members thereof present at the meeting,
whether or not they constitute a quorum, may appoint a member of
the board of directors to act in the place of such absent member.
Section 4.5. Other Committees. The board of directors may
appoint other committees, each consisting of one or more persons,
who need not be directors. Each such committee shall have such
powers and perform such duties as may be assigned to it from time
to time by the board of directors, but shall not exercise any
power which may lawfully be exercised only by the board of
directors or a committee thereof.
ARTICLE V
OFFICERS
Section 5.1. Officers. The officers of the Corporation shall
be a president or co-presidents, a secretary, and a treasurer,
and may include one or more vice presidents (including executive
and senior vice presidents), assistant secretaries or assistant
treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 5.11 hereof. The board
of directors may, but shall not be required to, elect a chairman
and vice chairman of the board.
Section 5.2. Election, Tenure and Qualifications. The officers
of the Corporation (except those appointed pursuant to Section
5.11 hereof) shall be elected by the board of directors at its
first meeting or such subsequent meetings as shall be held prior
to its first annual meeting, and thereafter at regular board
meetings, as required by applicable law. If any officers are not
elected at any annual meeting, such officers may be elected at
any subsequent meetings of the board. Except as otherwise
provided in this Article V, each officer elected by the board of
directors shall hold office until his or her successor shall have
been elected and qualified. Any person may hold one or more
offices of the Corporation except that no one person may serve
concurrently as both the president or a co-president and vice
president. A person who holds more than one office in the
Corporation may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be
executed,. acknowledged, or verified by more than one officer.
The chairman of the board shall be chosen from among the
directors of the Corporation and may hold such office only so
long as he continues to be a director. No other officer need be
a director.
Section 5.3. Vacancies and Newly Created Offices. If any
vacancy shall occur in any office by reason of death,
resignation, removal, disqualification or other cause, or if any
new office shall be created, such vacancies or newly created
offices may be filled by the chairman of the board at any meeting
or, in the case of any office created pursuant to Section 5.11
hereof, by any officer upon whom such power shall have been
conferred by the board of directors.
Section 5.4. Removal and Resignation. At any meeting called
for such purpose, the Executive Committee may remove any officer
from office (either with or without cause) by the affirmative
vote, given at the meeting, of a majority of the members of the
Committee. Any officer may resign from office at any time by
delivering a written resignation to the board of directors, the
president or a co-president, the secretary, or any assistant
secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
Section 5.5. Chairman of the Board. The chairman of the board,
if there be such an officer, shall be the senior officer of the
Corporation, shall preside at all stockholders meetings and at
all meetings of the board of directors and shall be ex officio a
member of all committees of the board of directors. He shall
have such other powers and perform such other duties as may be
assigned to him from time to time by the board of directors.
Section 5.6. Vice Chairman of the Board. The board of
directors may from time to time elect a vice chairman who shall
have such powers and perform such duties as from time to time may
be assigned to him by the board of directors, chairman of the
board or the president or a co-president. At the request of, or
in the absence or in the event of the disability of the chairman
of the board, the vice chairman may perform all the duties of the
chairman of the board or the president or a copresident and, when
so acting, shall have all the powers of and be subject to all the
restrictions upon such respective officers.
Section 5.7. President, Co-President. The president or co-
presidents shall be the chief executive officer or co-chief
executive officers, as the case may be, of the Corporation and,
in the absence of the chairman of the board or vice chairman or
if no chairman of the board or vice chairman has been chosen,
shall preside at all stockholders meetings and at all meetings of
the board of directors and shall in general exercise the powers
and perform the duties of the chairman of the board. Subject to
the supervision of the board of directors, the president or the
co-presidents shall have general charge of the business, affairs
and property of the Corporation and general supervision over its
officers, employees and agents. Except as the board of directors
may otherwise order, the president or a co-president may sign in
the name and on behalf of the Corporation all deeds, bonds,
contracts, or agreements. The president or a co-president shall
exercise such other powers and perform such other duties as from
time to time may be assigned by the board of directors.
Section 5.8. Vice President. The board of directors may from
time to time elect one or more vice presidents (including
executive and senior vice presidents) who shall have such powers
and perform such duties as from time to time may be assigned to
them by the board of directors or the president or co-presidents.
At the request of, or in the absence or in the event of the
disability of, the president or both co-presidents, the vice
president (or, if there are two or more vice presidents, then the
senior of the vice presidents present and able to act) may
perform all the duties of the president or co-presidents and,
when so acting, shall have all the powers of and be subject to
all the restrictions upon the president or co-presidents.
Section 5.9. Treasurer and Assistant Treasurers. The treasurer
shall be the chief accounting officer of the Corporation and
shall have general charge of the finances and books of account of
the Corporation. The treasurer shall render to the board of
directors, whenever directed by the board, an account of the
financial condition of the Corporation and of all transactions as
treasurer; and as soon as possible after the close of each
financial year he shall make and submit to the board of directors
a like report for such financial year. The treasurer shall cause
to be prepared annually a full and complete statement of the
affairs of the Corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year,
which shall be submitted at the annual meeting of stockholders
and filed within 20 days thereafter at the principal office of
the Corporation in the state of Maryland. The treasurer shall
perform all acts incidental to the office of treasurer, subject
to the control of the board of directors.
Any assistant treasurer may perform such duties of the treasurer
as the treasurer or the board of directors may assign, and, in
the absence of the treasurer, may perform all the duties of the
treasurer.
Section 5.10. Secretary and Assistant Secretaries. The
secretary shall attend to the giving and serving of all notices
of the Corporation and shall record all proceedings of the
meetings of the stockholders and directors in books to be kept
for that purpose. The secretary shall keep in safe custody the
seal of the Corporation, and shall have responsibility for the
records of the Corporation, including the stock books and such
other books and papers as the board of directors may direct and
such books, reports, certificates and other documents required by
law to be kept, all of which shall at all reasonable times be
open to inspection by any director. The secretary shall perform
such other duties which appertain to this office or as may be
required by the board of directors.
Any assistant secretary may perform such duties of the secretary
as the secretary or the board of directors may assign, and, in
the absence of the secretary, may perform all the duties of the
secretary.
Section 5.11. Subordinate Officers. The chairman of the board
from time to time may appoint such other officers or agents as he
may deem advisable, each of whom shall have such title, hold
office for such period, have such authority and perform such
duties as the board of directors may determine. The chairman of
the board from time to time may delegate to one or more officers
or agents the power to appoint any such subordinate officers or
agents and to prescribe their respective rights, terms of office,
authorities and duties. Any officer or agent appointed in
accordance with the provisions of this Section 5.11 may be
removed, either with or without cause, by any officer upon whom
such power of removal shall have been conferred by the board of
directors.
Section 5.12. Remuneration. The salaries or other compensation
of the officers of the Corporation shall be fixed from time to
time by resolution of the board of directors, except that the
board of directors may by resolution delegate to any person or
group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in
accordance with the provisions of Section 5.11 hereof.
Section 5.13. Surety Bonds. The board of directors may require
any officer or agent of the Corporation to execute a bond
(including, without limitation, any bond required by applicable
law, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder) to the Corporation in such sum
and with such surety or sureties as the board of directors may
determine, conditioned upon the faithful performance of his or
her duties to the Corporation, including responsibility for
negligence and for the accounting of any of the Corporation's
property, funds or securities that may come into his hands.
ARTICLE VI
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
Section 6.1. Checks, Notes, Drafts, Etc. So long as the
Corporation shall employ a custodian to keep custody of the cash
and securities of the Corporation, all checks and drafts for the
payment of money by the Corporation may be signed in the name of
the Corporation by the custodian. Promissory notes, checks or
drafts payable to the Corporation may be endorsed only to the
order of the custodian or its nominee and only by any two of the
following: the treasurer, the president or a co-president, a
vice president (including executive and senior vice presidents)
or by such other person or persons as shall be authorized by the
board of directors, provided that no one person may sign in the
capacity of two such officers. Except as otherwise authorized by
the board of directors, all requisitions or orders for the
assignment of securities standing in the name of the custodian or
its nominee, or for the execution of powers to transfer the same,
shall be signed in the name of the Corporation by any two of the
following: the president or a co-president, vice president
(including executive and senior vice presidents), treasurer or an
assistant treasurer, provided that no one person may sign in the
capacity of two such officers.
Section 6.2. Voting of Securities. Unless otherwise ordered by
the board of directors, the president or a co-president, or any
vice president (including executive and senior vice presidents)
shall have full power and authority on behalf of the Corporation
to attend and to act and to vote, or in the name of the
Corporation to execute proxies to vote, at any meeting of
stockholders of any company in which the Corporation may hold
stock. At any such meeting such officer shall possess and may
exercise (in person or by proxy) any and all rights, powers and
privileges incident to the ownership of such stock. The board of
directors may by resolution from time to time confer like powers
upon any other person or persons in accordance with the laws of
the State of Maryland.
ARTICLE VII
CAPITAL STOCK
Section 7.1. Certificates of Stock. The interest of each
stockholder of the Corporation may be, but shall not be required
to be, evidenced by certificates for shares of stock in such form
not inconsistent with the Charter as the board of directors may
from time to time authorize. No certificate shall be valid
unless it is signed in the name of the Corporation by a president
or a co-president or a vice president and countersigned by the
secretary or an assistant secretary or the treasurer or an
assistant treasurer of the Corporation and sealed with the seal
of the Corporation, or bears the facsimile signatures of such
officers and a facsimile of such seal. In case any officer who
shall have signed any such certificate, or whose facsimile
signature has been placed thereon, shall cease to be such an
officer (because of death, resignation or otherwise) before such
certificate is issued, such certificate may be issued and
delivered by the Corporation with the same effect as if he were
such officer at the date of issue.
The number of each certificate issued, the name and address of
the person owning the shares represented thereby, the number of
such shares and the date of issuance shall be entered upon the
stock ledger of the Corporation at the time of issuance.
Every certificate exchanged, surrendered for redemption or
otherwise returned to the Corporation shall be marked "canceled"
with the date of cancellation.
Section 7.2. Transfer of Shares. Shares of the Corporation
shall be transferable on the books of the Corporation by the
holder of record thereof (in person or by his duly authorized
attorney or legal representative) (a) if a certificate or
certificates have been issued, upon surrender duly endorsed or
accompanied by proper instruments of assignment and transfer,
with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require, or (b) as
otherwise prescribed by the board of directors. Except as
otherwise provided in the Charter, the shares of stock of the
Corporation may be freely transferred, subject to the charging of
customary transfer fees, and the board of directors may, from
time to time, adopt rules and regulations with reference to the
method of transfer of the shares of stock of the Corporation.
The Corporation shall be entitled to treat the holder of record
of any share of stock as the absolute owner thereof for all
purposes, and accordingly shall not be bound to recognize any
legal, equitable or other claim or interest in such share on the
part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise expressly provided by
law or the statutes of the State of Maryland.
Section 7.3. Transfer Agents and Registrars. The board of
directors may from time to time appoint or remove transfer agents
or registrars of transfers for shares of stock of the
Corporation, and it may appoint the same person as both transfer
agent and registrar. Upon any such appointment being made all
certificates representing shares of capital stock thereafter
issued shall be countersigned by one of such transfer agents or
by one of such registrars of transfers or by both and shall not
be valid unless so countersigned. If the same person shall be
both transfer agent and registrar, only one countersignature by
such person shall be required.
Section 7.4. Fixing of Record Date. The board of directors may
fix in advance a date as a record date for the determination of
the stockholders entitled to notice of or to vote at any
stockholders meeting or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or to
receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose
of any other lawful action, provided that (a) such record date
shall be within 90 days prior to the date on which the particular
action requiring such determination will be taken, except that a
meeting of stockholders convened on the date for which it was
called may be adjourned from time to time without further notice
to a date not more than 120 days after the original record date;
(b) the transfer books shall not be closed for a period longer
than 20 days; and (c) in the case of a meeting of stockholders,
the record date shall be at least 10 days before the date of the
meeting.
Section 7.5. Lost, Stolen or Destroyed Certificates. Before
issuing a new certificate for stock of the Corporation alleged to
have been lost, stolen or destroyed, the board of directors or
any officer authorized by the board may, in its discretion,
require the owner of the lost, stolen or destroyed certificate
(or his legal representative) to give the Corporation a bond or
other indemnity, in such form and in such amount as the board or
any such officer may direct and with such surety or sureties as
may be satisfactory to the board or any such officer, sufficient
to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of such new certificate.
ARTICLE VIII
CONFLICT OF INTEREST TRANSACTIONS
Section 8.1. Validity of Contract or Transactions. In the
event that any officer or director of the Corporation shall have
any interest, direct or indirect, in any other firm, association
or corporation as officer, employee, director or stockholder, no
transaction or contract made by the Corporation with any such
other firm, association or corporation shall be valid unless such
interest shall have been disclosed or made known to all of the
directors or to a majority of the directors and such transaction
or contract shall have been approved by a majority of a quorum of
directors, which majority shall consist of directors not having
any such interest or a majority of the directors in office,
including directors having such an interest.
ARTICLE IX
FISCAL YEAR AND ACCOUNTANT
Section 9.1. Fiscal Year. The fiscal year of the Corporation
shall, unless otherwise ordered by the board of directors, be
twelve calendar months ending on the 30th day of June.
ARTICLE X
INDEMNIFICATION AND INSURANCE
Section 10.1. Indemnification of Officers, Directors, Employees
and Agents. In accordance with applicable law, including the
Maryland General Corporation Law, the Corporation shall indemnify
each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), by reason of the fact that he or
she is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, partner, trustee or
agent of another corporation, partnership, joint venture, trust,
or other enterprise, against all reasonable expenses (including
attorneys' fees) actually incurred, and judgments, fines,
penalties and amounts paid in settlement in connection with such
Proceeding to the maximum extent permitted by law, now existing
or hereafter adopted. Notwithstanding the foregoing, the
following provisions shall apply with respect to indemnification
of the Corporation's directors, officers, and investment manager
(as defined in the 1940 Act):
(a) Whether or not there is an adjudication of
liability in such Proceeding, the Corporation
shall not indemnify any such person for any
liability arising by reason of such person's
willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in
the conduct of his or her office or under any
contract or agreement with the Corporation
("disabling conduct").
(b) The Corporation shall not indemnify any such
person unless:
(1) the court or other body before which the
Proceeding was brought (a) dismisses the
Proceeding for insufficiency of evidence of any
disabling conduct, or (b) reaches a final decision
on the merits that such person was not liable by
reason of disabling conduct; or
(2) absent such a decision, a reasonable
determination is made, based upon a review of the
facts, by (a) the vote of a majority of a quorum
of the directors of the Corporation who are
neither interested persons of the Corporation as
defined in the 1940 Act, nor parties to the
Proceeding, or (b) if such quorum is not
obtainable, or even if obtainable, if a majority
of a quorum of directors described above so
directs, based upon a written opinion by
independent legal counsel, that such person was
not liable by reason of disabling conduct.
(c) Reasonable expenses (including attorneys' fees)
incurred in defending a Proceeding involving any
such person will be paid by the Corporation in
advance of the final disposition thereof upon an
undertaking by such person to repay such expenses
unless it is ultimately determined that he or she
is entitled to indemnification, if:
(1) such person shall provide adequate security
for his or her undertaking;
(2) the Corporation shall be insured against
losses arising by reason of such advance; or
(3) a majority of a quorum of the directors of
the Corporation who are neither interested
persons of the Corporation as defined in the
1940 Act, nor parties to the Proceeding, or
independent legal counsel in a written
opinion, shall determine, based on a review
of readily available facts, that there is
reason to believe that such person will be
found to be entitled to indemnification.
Section 10.2. Insurance of Officers, Directors, Employees and
Agents. The Corporation may purchase and maintain insurance or
other sources of reimbursement to the extent permitted by law on
behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee, partner,
trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him or her and incurred by him or her in or arising out
of his position.
Section 10.3. Non-exclusivity. The indemnification and
advancement of expenses provided by, or granted pursuant to, this
Article X shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses
may be entitled under the Charter, these By-laws, agreement, vote
of stockholders or directors, or otherwise, both as to action in
his or her official capacity and as to action in another capacity
while holding such office.
Section 10.4. Amendment. Notwithstanding anything to the
contrary herein, no amendment, alteration or repeal of this
Article or the adoption, alteration or amendment of any other
provisions to the Charter or these By-laws inconsistent with this
Article shall adversely affect any right or protection of any
person under this Article with respect to any act or failure to
act which occurred prior to such amendment, alteration, repeal or
adoption.
ARTICLE XI
AMENDMENTS
Section 11.1. General. Except as provided in Section 11.2 of
this Article XI, all By-laws of the Corporation, whether adopted
by the board of directors or the stockholders, shall be subject
to amendment, alteration or repeal, and new By-laws may be made
only by the affirmative vote of a majority of directors, at any
meeting the notice or waiver of notice of which shall have
specified or summarized the proposed amendment, alteration,
repeal or new By-law. No amendment of any Section of these By-
laws shall be made by the stockholders of the Corporation except
as set forth in Section 11.2 of this Article XI.
Section 11.2. By Stockholders Only. No amendment of any section
of these By-laws shall be made except by the stockholders of the
Corporation if the By-laws provide that such section may not be
amended, altered or repealed except by the stockholders. From
and after the issuance of any shares of the capital stock of the
Corporation no amendment, alteration or repeal of this Article XI
shall be made except by the stockholders of the Corporation.
BY-LAWS
TABLE OF CONTENTS
PAGE
ARTICLE I NAME OF CORPORATION, LOCATION OF OFFICES AND
SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Name . . . . . . . . . . . . . . . . . . 1
Section 1.2. Principal Offices . . . . . . . . . . . . 1
Section 1.3. Seal . . . . . . . . . . . . . . . . . . 1
ARTICLE II STOCKHOLDERS . . . . . . . . . . . . . . . . . . 1
Section 2.1. Annual Meetings . . . . . . . . . . . . . 1
Section 2.2. Special Meetings. . . . . . . . . . . . . 1
Section 2.3. Notice of Meetings . . . . . . . . . . . 1
Section 2.4. Quorum and Adjournment of Meetings . . . 2
Section 2.5. Voting and Inspectors. . . . . . . . . . 2
Section 2.6. Validity of Proxies . . . . . . . . . . . 3
Section 2.7. Stock Ledger and List of Stockholders . . 3
Section 2.8. Action Without Meeting . . . . . . . . . 3
ARTICLE III BOARD OF DIRECTORS . . . . . . . . . . . . . . 3
Section 3.1. General Powers . . . . . . . . . . . . . 3
Section 3.2. Power to Issue and Sell Stock . . . . . . 3
Section 3.3. Power to Declare Dividends. . . . . . . . 3
Section 3.4. Number and Term of Directors . . . . . . 4
Section 3.5. Election . . . . . . . . . . . . . . . . 4
Section 3.6. Vacancies and Newly Created
Directorships . . . . . . . . . . . . . . . . . . 4
Section 3.7. Removal . . . . . . . . . . . . . . . . . 4
Section 3.8. Regular Meetings . . . . . . . . . . . . 5
Section 3.9. Special Meetings . . . . . . . . . . . . 5
Section 3.10. Waiver of Notice . . . . . . . . . . . . 5
Section 3.11. Quorum and Voting . . . . . . . . . . . . 5
Section 3.12. Action Without a Meeting . . . . . . . . 5
Section 3.13. Compensation of Directors . . . . . . . . 5
ARTICLE IV COMMITTEES . . . . . . . . . . . . . . . . . . . 6
Section 4.1. Organization . . . . . . . . . . . . . . 6
Section 4.2. Powers of the Executive Committee . . . . 6
Section 4.3. Powers of Other Committees of the Board
of Directors . . . . . . . . . . . . . . . . . . 6
Section 4.4. Proceedings and Quorum . . . . . . . . . 6
Section 4.5. Other Committees . . . . . . . . . . . . 6
ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . 6
Section 5.1. Officers . . . . . . . . . . . . . . . . 6
Section 5.2. Election, Tenure and Qualifications . . . 7
Section 5.3. Vacancies and Newly Created Offices . . . 7
Section 5.4. Removal and Resignation. . . . . . . . . 7
Section 5.5. Chairman of the Board. . . . . . . . . . 7
Section 5.6. Vice Chairman of the Board . . . . . . . 7
Section 5.7. President, Co-President . . . . . . . . . 7
Section 5.8. Vice President . . . . . . . . . . . . . 8
Section 5.9. Treasurer and Assistant Treasurers . . . 8
Section 5.10. Secretary and Assistant Secretaries . . . 8
Section 5.11. Subordinate Officers . . . . . . . . . . 8
Section 5.12. Remuneration . . . . . . . . . . . . . . 9
Section 5.13. Surety Bonds . . . . . . . . . . . . . . 9
ARTICLE VI EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES . 9
Section 6.1. Checks, Notes, Drafts, Etc. . . . . . . . 9
Section 6.2. Voting of Securities. . . . . . . . . . . 9
ARTICLE VII CAPITAL STOCK . . . . . . . . . . . . . . . . 10
Section 7.1. Certificates of Stock. . . . . . . . . . 10
Section 7.2. Transfer of Shares . . . . . . . . . . . 10
Section 7.3. Transfer Agents and Registrars . . . . . 10
Section 7.4. Fixing of Record Date . . . . . . . . . . 10
Section 7.5. Lost, Stolen or Destroyed Certificates . 11
ARTICLE VIII CONFLICT OF INTEREST TRANSACTIONS . . . . . . 11
Section 8.1. Validity of Contract or Transactions . . 11
ARTICLE IX FISCAL YEAR AND ACCOUNTANT . . . . . . . . . . . 11
Section 9.1. Fiscal Year . . . . . . . . . . . . . . . 11
ARTICLE X INDEMNIFICATION AND INSURANCE . . . . . . . . . . 11
Section 10.1 Indemnification of Officers, Directors,
Employees and Agents . . . . . . . . . . . . . . 11
Section 10.2. Insurance of Officers, Directors,
Employees and Agents . . . . . . . . . . . . . . 12
Section 10.3. Non-exclusivity . . . . . . . . . . . . . 13
Section 10.4. Amendment . . . . . . . . . . . . . . . . 13
ARTICLE XI AMENDMENTS . . . . . . . . . . . . . . . . . . . 13
Section 11.1. General . . . . . . . . . . . . . . . . . 13
Section 11.2. By Stockholders Only. . . . . . . . . . . 13
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
The Corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences
and relative, participating, optional or other special rights of
each class of stock or series thereof of the Corporation, and the
qualifications, limitations, or restrictions of such preferences
and/or rights. The Corporation will also furnish without charge
to each stockholder who so requests a description of the
authority of the Corporation's board of directors to set the
relative rights and preferences of unissued series of the
Corporation's capital stock. Such requests may be made to the
Corporation or the transfer agent.
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -Custodian
TEN ENT - as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to
JT TEN - as joint tenants with Minors Act
right of survivorship
and not as tenants ______________________
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, ________________________________________ hereby sell,
assign and transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
_______________________
|_______________________|_________________________________________________
____________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL
ZIP CODE OF ASSIGNEE
____________________________________________________________________________
____________________________________________________________________________
_______________________________________________________________ Shares of the
Stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
____________________________________________________________________________
Attorney to transfer the said Stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated: ________________________
____________________________________
Signature
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
COMMON STOCK
PAR VALUE $.01 Shares
INCORPORATED UNDER THE LAWS
OF THE STATE OF MARYLAND
THIS CERTIFICATE
IS TRANSFERABLE IN
KANSAS CITY, MO OR IN
NEW YORK, NY
CUSIP 120 17 N 105
SEE REVERSE FOR
CERTAIN DEFINITIONS
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
THIS CERTIFIES THAT
IS THE OWNER OF
FULL PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF
Bull & Bear U.S. Government Securities Fund, Inc., transferable on the
books of the Corporation by the holder hereof in person or by duly
authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented hereby are issued
and shall be subject to all of the provisions of the Articles of
Incorporation and By-Laws of the Corporation, such as from time to time
amended, to all of which the holder by acceptance hereof assents. This
Certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar. Witness the facsimile seal of the
Corporation and the facsimile signatures of its duly authorized
officers.
DATED
SECRETARY CO-PRESIDENT
COUNTERSIGNED AND REGISTERED
TRANSFER AGENT
AND REGISTRAR
AUTHORIZED SIGNATURE
FORM OF TERMS AND CONDITIONS OF
THE DIVIDEND REINVESTMENT PLAN
OF
1. Each shareholder (the "Shareholder")
holding shares of common stock (the "Shares") of
(the "Fund") will
automatically be a participant in the Dividend
Reinvestment Plan (the "Plan"), unless the Shareholder
specifically elects to receive all dividends and capital
gains in cash paid by check mailed directly to the
Shareholder by as agent under
the Plan (the "Agent"). The Agent will open an account
for each Shareholder under the Plan in the same name in
which such Shareholder's shares of Common Stock are
registered.
2. Whenever the Fund declares a capital gain
distribution or an income dividend payable in Shares or
cash, participating Shareholders will take the
distribution or dividend entirely in Shares and the Agent
will automatically receive the Shares, including
fractions, for the Shareholder's account in accordance
with the following:
Whenever the Market Price (as defined in
Section 3 below) per Share is equal to or exceeds
the net asset value per Share at the time Shares are
valued for the purpose of determining the number of
Shares equivalent to the cash dividend or capital
gain distribution (the "Valuation Date"),
participants will be issued additional Shares equal
to the amount of such dividend divided by the Fund's
net asset value per Share. Whenever the Market
Price per Share is less than such net asset value on
the Valuation Date, participants will be issued
additional Shares equal to the amount of such
dividend divided by the Market Price. The Valuation
Date is the dividend or distribution payment date
or, if that date is not an American Stock Exchange
trading day, the next trading day. If the Fund
should declare a dividend or capital gain
distribution payable only in cash, the Agent will,
as purchasing agent for the participating
Shareholders, buy Shares in the open market, on the
American Stock Exchange (the "Exchange") or
elsewhere, for such Shareholders' accounts after the
payment date, except that the Agent will endeavor to
terminate purchases in the open market and cause the
Fund to issue the remaining Shares if, following the
commencement of the purchases, the market value of
the Shares exceeds the net asset value. These
remaining Shares will be issued by the Fund at a
price equal to the Market Price.
In a case where the Agent has terminated open
market purchases and caused the issuance of
remaining Shares by the Fund, the number of shares
received by the participant in respect of the cash
dividend or distribution will be based on the
weighted average of prices paid for Shares purchased
in the open market and the price at which the Fund
issues remaining Shares. To the extent that the
Agent is unable to terminate purchases in the open
market before the Agent has completed its purchases,
or remaining Shares cannot be issued by the Fund
because the Fund declared a dividend or distribution
payable only in cash, and the market price exceeds
the net asset value of the Shares, the average Share
purchase price paid by the Agent may exceed the net
asset value of the Shares, resulting in the
acquisition of fewer Shares than if the dividend or
capital gain distribution had been paid in Shares
issued by the Fund.
The Agent will apply all cash received as a
dividend or capital gain distribution to purchase
shares of common stock on the open market as soon as
practicable after the payment date of the dividend
or capital gain distribution, but in no event later
than 45 days after that date, except when necessary
to comply with applicable provisions of the federal
securities laws.
3. For all purposes of the Plan: (a) the
Market Price of the Shares on a particular date shall be
the average closing market price on the five trading days
the Shares traded ex-dividend on the Exchange prior to
such date or, if no sale occurred on the Exchange prior
to such date, then the mean between the closing bid and
asked quotations for the Shares on the Exchange on such
date, and (b) net asset value per share on a particular
date shall be as determined by or on behalf of the Fund.
4. The open-market purchases provided for
herein may be made on any securities exchange on which
the Shares are traded, in the over-the-counter market or
in negotiated transactions, and may be on such terms as
to price, delivery and otherwise as the Agent shall
determine. Funds held by the Agent uninvested will not
bear interest, and it is understood that, in any event,
the Agent shall have no liability in connection with any
inability to purchase Shares within 45 days after the
initial date of such purchase as herein provided, or with
the timing of any purchases effected. The Agent shall
have no responsibility as to the value of the Shares
acquired for the Shareholder's account.
5. The Agent will hold Shares acquired
pursuant to the Plan in noncertificated form in the
Agent's name or that of its nominee. At no additional
cost, a Shareholder participating in the Plan may send to
the Agent for deposit into its Plan account those
certificate shares of the Fund in its possession. These
shares will be combined with those unissued full and
fractional shares acquired under the Plan and held by the
Agent. Shortly thereafter, such Shareholder will receive
a statement showing its combined holdings. The Agent
will forward to the Shareholder any proxy solicitation
material and will vote any Shares so held for the
Shareholder only in accordance with the proxy returned by
him or her to the Fund. Upon the Shareholder's written
request, the Agent will deliver to him or her, without
charge, a certificate or certificates for the full
Shares.
6. The Agent will confirm to the Shareholder
each acquisition for his or her account as soon as
practicable but not later than 60 days after the date
thereof. Although the Shareholder may from time to time
have an individual fractional interest (computed to three
decimal places) in a Share, no certificates for
fractional Shares will be issued. However, dividends and
distributions on fractional Shares will be credited to
Shareholders' accounts. In the event of a termination of
a Shareholder's account under the Plan, the Agent will
adjust for any such undivided fractional interest in cash
at the opening market value of the Shares at the time of
termination.
7. Any stock dividends or split Shares
distributed by the Fund on Shares held by the Agent for
the Shareholder will be credited to the Shareholder's
account. In the event that the Fund makes available to
the Shareholder the right to purchase additional Shares
or other securities, the Shares held for a Shareholder
under the Plan will be added to other shares held by the
Shareholder in calculating the number of rights to be
issued by such Shareholder.
8. The Agent's service fee for handling
capital gain distributions or income dividends will be
paid by the Fund. The Shareholder will be charged a pro
rata share of brokerage commissions on all open market
purchases.
9. The Shareholder may terminate his or her
account under the Plan by notifying the Agent in writing.
A termination will be effective immediately if notice is
received by the Agent at any time prior to any dividend
or distribution record date; otherwise such termination
will be effective, with respect to any subsequent
dividend or distribution, on the first trading day after
a dividend paid for the record date has been credited to
the Shareholder's account. Upon any termination the
Agent will cause a certificate or certificates for the
full Shares held for the Shareholder under the Plan and
cash adjustment for any fraction to be delivered to him
or her.
10. These terms and conditions may be amended
or supplemented by the Agent or the Fund at any time or
times but, except when necessary or appropriate to comply
with applicable law or the rules or policies of the
Securities and Exchange Commission or any other
regulatory authority, only by mailing to the Shareholder
appropriate written notice at least 30 days prior to the
effective date thereof. The amendment or supplement
shall be deemed to be accepted by the Shareholder unless,
prior to the effective date thereof, the Agent receives
written notice of the termination of such Shareholder's
account under the Plan. Any such amendment may include
an appointment by the Fund of a successor agent in its
place and stead under these terms and conditions, with
full power and authority to perform all or any of the
acts to be performed by the Agent. Upon any such
appointment of an Agent for the purpose of receiving
dividends and distributions, the Fund will be authorized
to pay to such successor Agent all dividends and
distributions payable on Shares held in the Shareholder's
name or under the Plan for retention or application by
such successor Agent as provided in these terms and
conditions.
11. In the case of Shareholders, such as
banks, brokers or nominees, which hold Shares for others
who are the beneficial owners, the Agent will administer
the Plan on the basis of the number of Shares certified
from time to time by the Shareholders as representing the
total amount registered in the Shareholder's name and
held for the account of beneficial owners who are to
participate in the Plan.
12. The Agent shall at all times act in good
faith and agree to use its best efforts within reasonable
limits to insure the accuracy of all services performed
under this agreement and to comply with applicable law,
but assumes no responsibility and shall not be liable for
loss or damage due to errors unless the errors are caused
by its negligence, bad faith or willful misconduct or
that of its employees.
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made on September 12, 1996, by and
between BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC., a
Maryland corporation (the "Fund") and BULL & BEAR ADVISERS,
INC., a Delaware corporation (the "Investment Manager").
WHEREAS the Fund intends to register under the
Investment Company Act of 1940, as amended (the "1940 Act"),
as a closed-end management investment company; and
WHEREAS, the Fund desires to retain the Investment
Manager to furnish certain investment advisory and portfolio
management services to the Fund, and the Investment Manager
desires to furnish such services;
NOW THEREFORE, in consideration of the mutual
promises and agreements herein contained and other good and
valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed between the parties hereto
as follows:
1. The Fund hereby employs the Investment Manager
to manage the investment and reinvestment of its assets,
including the regular furnishing of advice with respect to
the Fund's portfolio transactions subject at all times to the
control and oversight of the Fund's Board of Directors, for
the period and on the terms set forth in this Agreement. The
Investment Manager hereby accepts such employment and agrees
during such period to render the services and to assume the
obligations herein set forth, for the compensation herein
provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way, or
otherwise be deemed an agent of the Fund.
2. The Fund assumes and shall pay all the expenses
required for the conduct of its business including, but not
limited to, salaries of administrative and clerical
personnel, brokerage commissions, taxes, insurance, fees of
the transfer agent, custodian, legal counsel and auditors,
association fees, costs of filing, printing and mailing
proxies, reports and notices to shareholders, preparing,
filing and printing the prospectus and statement of
additional information, payment of dividends, costs of stock
certificates, costs of shareholders meetings, fees of the
independent directors, necessary office space rental, all
expenses relating to the registration or qualification of
shares of the Fund under applicable Blue Sky laws and
reasonable fees and expenses of counsel in connection with
such registration and qualification and such non-recurring
expenses as may arise, including, without limitation,
actions, suits or proceedings affecting the Fund and the
legal obligation which the Fund may have to indemnify its
officers and directors with respect thereto.
3. If requested by the Fund's Board of Directors,
the Investment Manager may provide other services to the Fund
such as, without limitation, the functions of billing,
accounting, certain shareholder communications and services,
administering state and Federal registrations, filings and
controls and other administrative services. Any services so
requested and performed will be for the account of the Fund
and the costs of the Investment Manager in rendering such
services shall be reimbursed by the Fund, subject to
examination by those directors of the Fund who are not
interested persons of the Investment Manager or any affiliate
thereof.
4. The services of the Investment Manager are not
to be deemed exclusive, and the Investment Manager shall be
free to render similar services to others in addition to the
Fund so long as its services hereunder are not impaired
thereby.
5. The Investment Manager shall create and
maintain all necessary books and records in accordance with
all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the 1940 Act
and the rules thereunder, as the same may be amended from
time to time, pertaining to the investment management
services performed by it hereunder and not otherwise created
and maintained by another party pursuant to a written
contract with the Fund. Where applicable, such records shall
be maintained by the Investment Manager for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The
books and records pertaining to the Fund which are in the
possession of the Investment Manager shall be the property of
the Fund. The Fund, or the Fund's authorized
representatives, shall have access to such books and records
at all times during the Investment Manager's normal business
hours. Upon the reasonable request of the Fund, copies of
any such books and records shall be provided by the
Investment Manager to the Fund or the Fund's authorized
representatives.
6. As compensation for its services provided
pursuant to this Agreement, the Fund will pay to the
Investment Manager a fee from its assets, such fee to be
computed weekly and paid monthly in arrears at the annual
rate of 0.70% of the first $250 million, 0.625% from $250
million to $500 million, and 0.50% over $500 million of the
Fund's net assets. If this Agreement becomes effective or
terminates before the end of any month, the fee for the
period from the effective date to the end of the month or
from the beginning of such month to the date of termination,
as the case may be, shall be protected according to the
proportion which such period bears to the full month in which
such effectiveness or termination occurs.
7. The Investment Manager shall direct portfolio
transactions to broker/dealers for execution on terms and at
rates which it believes, in good faith, to be reasonable in
view of the overall nature and quality of services provided
by a particular broker/dealer, including brokerage and
research services and sales of shares of the Fund and shares
of the other funds in the Bull & Bear fund complex. The
Investment Manager may also allocate portfolio transactions
to broker/dealers that remit a portion of their commissions
as a credit against Fund expenses. With respect to brokerage
and research services, the Investment Manager may consider in
the selection of broker/dealers brokerage or research
provided and payment may be made of a fee higher than that
charged by another broker/dealer which does not furnish
brokerage or research services or which furnishes brokerage
or research services deemed to be of lesser value, so long as
the criteria of Section 28(e) of the Securities Exchange Act
of 1934, as amended, or other applicable laws are met.
Although the Investment Manager may direct portfolio
transactions without necessarily obtaining the lowest price
at which such broker/dealer, or another, may be willing to do
business, the Investment Manager shall seek the best value
for the Fund on each trade that circumstances in the market
place permit, including the value inherent in on-going
relationships with quality brokers. To the extent any such
brokerage or research services may be deemed to be additional
compensation to the Investment Manager from the Fund, it is
authorized by this Agreement. The Investment Manager may
place brokerage for the Fund through an affiliate of the
Investment Manager, provided that: the Fund not deal with
such affiliate in any transaction in which such affiliate
acts as principal; the commissions, fees or other
remuneration received by such affiliate be reasonable and
fair compared to the commissions, fees or other remuneration
paid to other brokers in connection with comparable
transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of
time; and such brokerage be undertaken in compliance with
applicable law. The Investment Manager's fees under this
Agreement shall not be reduced by reason of any commissions,
fees or other remuneration received by such affiliate from
the Fund.
8. The Investment Manager shall 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. In calculating the limit of
operating expenses, all expenses excludable under state
regulation or otherwise shall be excluded. If this Agreement
is in effect for less than all of a fiscal year, any such
limit will be applied proportionately.
9. Subject to and in accordance with the Articles
of Incorporation and By-laws of the Fund and of the
Investment Manager, it is understood that directors,
officers, agents and shareholders of the Fund are or may be
interested in the Fund as directors, officers, shareholders
and otherwise, that the Investment Manager is or may be
interested in the Fund as a shareholder or otherwise and that
the effect and nature of any such interests shall be governed
by law and by the provisions, if any, of said Articles of
Incorporation or By-laws.
10. A. This Agreement shall become effective upon
the date hereinabove written provided that this Agreement
shall not take effect unless it has first been approved (i)
by a vote of a majority of the Directors of the Fund who are
not parties to this Agreement, or interested persons of any
such party and (ii) by vote of the holders of a majority of
the Fund's outstanding voting securities.
B. Unless sooner terminated as provided herein,
this Agreement shall continue in effect for two years from
the above written date. Thereafter, if not terminated, this
Agreement shall continue automatically for successive periods
of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a
majority of the Directors of the Fund who are not parties to
this Agreement, or interested persons of any such party and
(ii) by the Board of Directors of the Fund by the vote of the
holders of a majority of the outstanding voting securities of
the Fund.
C. This Agreement may be terminated without
penalty at any time either by vote of the Board of Directors
of the Fund or by vote of the holders of a majority of the
Fund's outstanding voting securities on 60 days' written
notice to the Investment Manager, or by the Investment
Manager on 60 days' written notice to the Fund. This
Agreement shall immediately terminate in the event of its
assignment.
11. The Investment Manager shall not be liable to
the Fund or any shareholder of the Fund for any error of
judgment or mistake of law or for any loss suffered by the
Fund or the Fund's shareholders in connection with the
matters to which this Agreement relates, but nothing herein
contained shall be construed to protect the Investment
Manager against any liability to the Fund or the Fund's
shareholders by reason of willful misfeasance, bad faith, or
gross negligence in the performance of its duties or by
reason of its reckless disregard of obligations and duties
under this Agreement.
12. As used in this Agreement, the terms
"interested person," "assignment," and "majority of the
outstanding voting securities" shall have the meanings
provided therefor in the 1940 Act, and the rules and
regulations thereunder.
13. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement, with respect to the subject hereof whether oral or
written. If any provision of this Agreement shall be held or
made invalid by a court or regulatory agency, decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
14. This Agreement shall be construed in
accordance with and governed by the laws of the State of New
York, provided, however, that nothing herein shall be
construed in a manner inconsistent with the 1940 Act or any
rule or regulation promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the day and year first above
written.
ATTEST: BULL & BEAR U.S.
GOVERNMENT SECURITIES FUND, INC.
________________________
By:_________________________
ATTEST: BULL & BEAR ADVISERS, INC.
_________________________
By:_________________________