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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under (Rule 13d-101) of the Securities Exchange Act of 1934
(Amendment No. 10)
BULL & BEAR U. S. GOVERNMENT SECURITIES FUND, INC.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
12017N105
(CUSIP Number)
George W. Karpus, President
Karpus Management, Inc. d/b/a
Karpus Investment Management
14 Tobey Village Office Park
Pittsford, New York 14534
(716) 586-4680
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
September 11, 1998
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of the Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g),
check the following box. [ ]
(page 1 of 16 Pages)
(continued on following pages)
( 1 Exhibit Attached)
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SCHEDULE 13D
CUSIP No. 12017N105 Page 2 of 6 Pages
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Karpus Management Inc d/b/a Karpus Investment Management
I.D.# 16-1290558
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
AF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7. SOLE VOTING POWER
119,250 shares
NUMBER OF ------------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH ------------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH 119,250 shares
------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
119,250 shares
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.28%
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14. TYPE OF REPORTING PERSON*
I.A.
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
2 of 7
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ITEM 1 Security and Issuer
Common Stock
Bull & Bear U.S. Government Securities Fund, Inc. ("BBG")
11 Hanover Square
New York, New York 10005
ITEM 2 Identity and Background
a) Karpus Management, Inc. d/b/a Karpus Investment
Management ("KIM")
George W. Karpus, President, Director, & controlling
stockholder JoAnn VanDegriff, Vice President and Director
Sophie Karpus, Director
b) 14 Tobey Village Office Park
Pittsford, New York 14534
c) Principal business and occupation - Investment
Management for individuals, pension and profit sharing
plans, corporations, endowments, trusts and others,
specializing in conservative asset management (i.e.,
fixed income investments).
d) None of George W. Karpus, JoAnn VanDegriff or Sophie
Karpus ( the "Principals") or KIM has been convicted in
the past 5 years of any criminal proceeding (excluding
traffic violations).
e) During the last five years none of the principals or
KIM has been a party to a civil proceeding as a result of
which any of them is subject to a judgment, decree or
final order enjoining future violations of or prohibiting
or mandating activities subject to, federal or state
securities laws or finding any violation with respect to
such laws.
f) Each of the Principals is a United States citizen. KIM
is a New York State corporation.
ITEM 3 Source and Amount of Funds or Other Considerations.
KIM, an independent investment advisor, has accumulated
shares of BBG on behalf of accounts that are managed by
KIM (the "Accounts") under limited powers of attorney. All
funds that have been utilized in making such purchases are
from such Accounts.
ITEM 4 Purpose of Transaction
KIM purchased shares of the Fund for investment purposes only.
The profile of the Fund , being a conservative, high credit quality fixed
income fund, met the investment criteria necessary for the Accounts to become
shareholders.
On July 2, 1998 the Fund filed with the SEC a preliminary
prospectus which was essentially the same change in investment composition
that was proposed in September of 1997. The Fund is fully aware that the
Accounts managed by KIM are not permitted by their investment guidelines to
invest in a "balanced type fund," nor may own securities of companies which
are currently in bankruptcy. The Management of the Fund has been duly apprised
and was in complete knowledge that this radical change in investment
philosophy within the Fund would force "the Accounts" managed by KIM's to sell
shares in the open market, since they would become non-
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permissible investment vehicles. The proposed changes by management have been
abandoned once again. It is the opinion of KIM that management has spent the
shareholders money friverously by filing preliminary prospectus's with the
Securitity and Exchange proposing changes that its largest shareholder
violently objects to.
However, on August 17, 1998 the Fund announced that commencing on October
19, 1998 the Fund intends to invest up to 35% of its total assets in equity
and other securities. It is KIM's opinion that a change of this magnitude
should be voted upon by the shareholders before being enacted. .
The poor performance of the Fund, coupled with uncontrolled expenses, and
the apparent desire of the Fund to achieve its own agenda has forced KIM to
take steps which may possibly lead to the termination of the Manager of the
Fund. On September 9, 1998 KIM filed with the S.E.C. a Preliminary C 14-A in
anticipation of either the annual meeting or the possibility of the Fund
calling a special meeting of shareholders. The filing is attached to this
Schedule 13D. KIM will continue to take the necessary steps to represent what
it believes to be in the best interest of the shareholders of the Fund.
ITEM 5 Interest in Securities of the Issuer
a) As of the date of this Report, KIM owns 119,250
Shares which represents 16.28% of the
outstanding Shares. None of the Principals owns
any other Shares.
b) KIM has the sole power to dispose of and to
vote all of such Shares under limited powers of
attorney.
c) Open market purchases and sales for the Accounts.
Price Per
Date Shares Share
4/1/98 1,300 13.3125
5/13/98 700 12.75
5/14/98 1,100 12.75
5/14/98 1,000 12.6875
5/18/98 400 12.6875
5/26/98 200 12.6875
The open market purchase of 4/1/98 was entered on December
16, 1 1997 and executed at a price of $13.3125.
1.)There have been no dispositions and no acquisitions,
other than by such open market purchases, during such
period.
2.)The Accounts have the right to receive all dividends
from, and any proceeds from the sale of the Shares. None
of the Accounts has an interest in Shares constituting
more than 5% of the Shares outstanding.
ITEM 6 Contracts, Arrangements, Understandings, or Relationships
with Respect to Securities of the Issuer.
Except as described above, there are no contracts,
arrangements
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understandings or relationships of any kind among the
Principals and KIM and between any of them and any other
person with respect to any of BBG securities.
ITEM 7 Materials to be Filed as Exhibits
---------------------------------
Yes, 1 exhibit attached
Signature
After reasonable inquiry and to the best of my knowledge and
belief, Icertify that the information set forth in this statement is true,
complete and correct.
Karpus Management, Inc.
September 10, 1998 By: /s/George W. Karpus, President
- ------------------ ------------------------------
Date Signature
George W. Karpus, President
---------------------------
Name / Title
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EXHIBIT
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
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PROXY STATEMENT FOR MEETING
OF KARPUS MANAGEMENT, INC. d/b/a
KARPUS INVESTMENT MANAGEMENT
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This Proxy Statement is furnished in connection with a solicitation of
proxies by Karpus Management, Inc. doing business as Karpus Investment
Management ("KIM"), to be used at a Meeting of Shareholders of Bull & Bear
U.S. Government Securities Fund, Inc. After reviewing the proxy statement,
PLEASE TAKE THIS OPPORTUNITY TO SIGN AND RETURN THE BLUE PROXY CARD TO
GEORGESON & COMPANY, WALL STREET PLAZA, NEW YORK, NEW YORK 10005. YOUR VOTE IS
CRITICAL. KIM RECOMMENDS THAT YOU VOTE AGAINST THE PROPOSALS RECOMMENDED BY
THE BOARD OF DIRECTORS (PROPOSALS A & B) AND VOTE FOR THE KIM PROPOSALS
(PROPOSAL C & D).
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A special or annual Meeting of Stockholders of Bull & Bear U.S.
Government Securities Fund, Inc. (the "Fund") will be held at the offices
, on at a.m. (the "Meeting").
KIM is soliciting proxies for the following purposes:
MANAGEMENT'S PROPOSAL
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The Fund's Current Management has announced that it will:
- ---------------------------------------------------------
A. Include investments up to 35% of the Fund's assets in equity investments.
This will mean that the Fund will become a "balanced type" fund.
By implementing this change, Management must seek approval from the
Shareholders to:
B. Change the name of the Fund to reflect the new investment composition of
the Fund by elimination of "U.S. Government Securities Fund" presently
contained in the Fund's title.
KARPUS MANAGEMENT, INC. PROPOSES:
C. Karpus Investment Management (KIM) nominates Donald R. Chambers, Ph.D. in
Finance, as its candidate elect to the Board of Directors. Should the number
of members of the Board of Directors be expanded beyond the current number of
five (5), KIM reserves the option to make further nominations for election of
candidates to the Board.
D. The investment advisory and management contract between Bull & Bear
Advisers, Inc. and Bull & Bear U.S. Government Securities Fund, Inc. be
terminated at the next meeting of shareholders due to sub-par performance
along with uncontrolled expenses and Karpus Management Inc., d/b/a Karpus
Investment Management, Inc. be hired as the replacement investment advisor and
manager of the Fund. KIM will reduce investment management fees by 5% from the
Fund's current schedule
This Proxy Statement is furnished in connection with a solicitation of
proxies by KIM to be used at the Meeting. Stockholders of record at the close
of business on ("Record Date") are entitled to be present and to
vote on matters at the Meeting. Stockholders are entitled to one vote for each
Fund share held and fractional votes for
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each fractional Fund share held. Stockholders of the Fund will vote as a
single class and will vote separately on each proposal. Shares represented by
executed and unrevoked proxies will be voted in accordance with the
specifications made thereon. If no instructions are given, such shares will be
voted AGAINST Proposals A and B and FOR Proposals C. and D., and on any other
matter that may properly come before the Meeting. If the enclosed form or
proxy is executed and returned, it nevertheless may be revoked by another
proxy, or by letter, or telegram directed to the Fund, which must indicate the
stockholder's name. To be effective, such revocation must be received prior to
the Meeting. In addition, any stockholder who attends the Meeting in person
may vote by ballot at the Meeting, thereby canceling any proxy previously
given. As of the Record Date, the Fund had shares of common
stock issued and outstanding.
It is estimated that this proxy statement and proxy voting card will be
mailed to stockholders of record on or about , 1998. The
Fund's principal executive offices are located at 11 Hanover Square, New York,
New York 10005. Copies of the Fund's most recent Annual and Semi-Annual
Reports are available without charge upon written request to the Fund at 11
Hanover Square, New York, New York 10005 or by calling toll-free
1-888-847-4200. Bull & Bear Advisers, Inc. (the "Investment Manger"), located
at 11 Hanover Square, New York, New York 10005 is the Fund's investment
manager.
Management's Proposal A.
- ------------------------
KIM opposes the addition of equity and other securities. Management of the
Fund should not be allowed to invest up to 35% of the Fund's assets in Equity
Securities. Shareholders should not allow Management to make this radical
change without their approval.
Management of the Fund, in the opinion of KIM, should not be permitted by
the shareholders to invest up to 35% of the assets of the Fund in equity and
other securities. It is the opinion of KIM that Management has consistently
recommended changes to the Fund that have been to the detriment of the
Shareholders. This is the same Management that recommended converting the Fund
to closed-end format which resulted in the shares selling at a discount to the
net asset value. Without changing the Fund's fundamental policy of investing
in securities backed by full faith credit of the United States, direct
obligations of the United States, Treasury Bills, Notes, Bonds, and certain
agencies such as the Government National Mortgage Association, the Fund's
Management can invest up to 35% of the assets of the Fund in a equity
securities without approval of the shareholders. THE FUND'S MANAGEMENT SHOULD
NOT BE ALLOWED TO MAKE THIS CHANGE WITHOUT THE CONSENT OF THE SHAREHOLDERS.
Management of the Fund, in the opinion of KIM, has previously made
decisions that were not in the best interests of the Shareholders, for
example, the change in format of the Fund from open-end to closed-end in
October of 1996. This decision caused
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shareholders who owned the Fund on October 31, 1996 to lose slightly over 10%
of the market value of the shares by November 20, 1996. It is also the opinion
of KIM that the 8% distribution policy adopted by the Fund could possibly
erode the net asset value of the Fund in the future. The 8% distribution
policy is to pay dividends to the shareholders equaling 2% of the net asset
value of the fund on a quarterly basis. This dividend is to be comprised of
any interest earned, dividends received, and if this is not sufficient to
equal 2%, then the balance is to be return of principal.
Shareholders should not entrust management of the Fund to implement the
addition of equity and other securities to the Fund, as the Fund's advisor has
achieved dismal investment results in other areas also. Every fund that owns
stocks and other investments listed in the Wall Street Journal under Bull &
Bear Group, the Adviser, has generated negative returns year- to-date, for the
latest four weeks and latest twelve months. According to the Lipper Analytical
Services, Inc. published in the Wall Street Journal of August 28, 1998 all
five of the open-end mutual funds managed by Bull & Bear Group that contain
stocks and other investments performed in the bottom 20% for 1 year, 3 years,
and 5 year periods of time.
ADDITIONAL PORTFOLIO SECURITIES
Currently the Fund's portfolio is invested in U.S. Treasury Notes and
Bonds, obligations of other U.S. Government agencies or instrumentailities,
including inflation- index instruments, and money market instruments. This
conservative portfolio maintains the highest possible credit quality. Pursuant
to the announcement of changes anticipated to commence on October 19, 1998,
only 65% of the value of the total assets would be invested in U.S. Government
Securities, obligations of other U.S. Government agencies or
instrumentalities, including inflation-indexed instruments, and money market
instruments. The Fund intends to invest up to 35% of the total assets of the
Fund in equity and other securities. Previously the Fund has only invested in
securities that are U.S. Government Securities, obligations of other U.S.
Government agencies or instrumentalitites, including inflation-indexed
instruments, and money market instruments.
KIM RECOMMENDS THAT SHAREHOLDERS OPPOSE THIS CHANGE THAT WILL BE
IMPLEMENTED BY MANAGEMENT.
Upon the addition of equity and other securities, it is the opinion of KIM
that the name "Bull & Bear U.S. Government Securities Fund, Inc." would be
deceptive and misleading. Because of this Management must seek approval from
the Shareholders to:
B. Change the name of the Fund to reflect the new investment composition of
the Fund by elimination of "U.S. Government Securities Fund" presently
contained in the Fund's title.
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KIM WANTS TO RETAIN THE CURRENT NAME OF THE FUND AND TO HAVE THE FUND
CONTINUE TO INVEST ONLY FIXED INCOME SECURITIES .
KIM proposes to continue the current name of the Fund. The name "Bull &
Bear U.S. Government Securities Fund, Inc." ensures investors that 65% of the
assets of the Fund must be invested in U.S. Government Securities. This
current name provides investors with the high quality securities in which they
have originally chosen to invest.
KIM believes under Section 35 of the Investment Company Act of 1940
investing up to 35% of the assets of the Fund in equity and other securities
(other than fixed income securities) would tend to make the current name of
the Fund deceptive and misleading. KIM believes the remaining 35% of the Fund
should be invested in fixed income securities.
KIM RECOMMENDS THAT YOU VOTE AGAINST MANAGEMENT'S PROPOSAL B.
KIM'S PROPOSAL C.
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C. Karpus Investment Management (KIM) nominates Donald R. Chambers, Ph.D.
in Finance, as its candidate-elect to the Board of Directors. Should the
number of members of the Board of Directors be expanded beyond five (5) , KIM
reserves the right to make further nominations for election to the Board.
KIM is proposing the election of Donald R. Chambers, Ph.D. because
shareholders of Fund are entitled to an independent Director who will be
dedicated to increasing shareholder value.
Poor performance and outrageous expenses can not longer be tolerated. The
questions many are asking:
a. Why are they receiving such sub-par investment results?
b Why, for the year ending June 30, 1998, were the expenses $641,257 as
compared to $239,566 for the FULL fiscal year ending June 30, 1997?
The expense ratio for the Fund for the year ending June 30,1998 equaled
5.77%. It is the belief of KIM that no other closed-end bond fund possesses
this exorbitant expense ratio. High expenses are depriving the shareholders of
additional returns. Someone must put a stop to "open-pocket" spending of the
shareholder's money.
Dr. Chambers, as a member of the Board, will effectively monitor the
expenses within the Fund and initiate the necessary steps to reduce operating
costs. Dr. Chambers, as a member of the Audit Committee, will cease to approve
the unnecessary expenses which KIM believes the Fund has absorbed.
<PAGE>
According to Dow Jones News Service, Lipper Analytic Services, Inc. has
identified BBG as one of the worst performing bond funds in its investment
category in 1997. Since BBG was converted to a closed end investment company
effective October 4, 1996, its price has fallen form $14 3/4 to $13 on August
31, 1998. This price decline of 8.43% during a strong bull market supports our
belief that converting BBG to a closed end investment company has hurt the
stockholders of BBG. The annualized return for this time period was -0.1508%.
If a shareholder had reinvested dividends in the Fund they would have received
a annualized return of -0.0029% for the time period.
In further analyzing the Fund, the net asset value has continued to erode
during in the seven months of 1998 (ending July 31, 1998) with a total return
time period of 1.46%. The Lehman Aggregate Index (an appropriate benchmark to
measure performance), meanwhile, had a total return of 4.15%. This comparison
is a clear indication of the Fund's poor performance. KIM believes that this
inferior return should no longer be acceptable to shareholders.
KIM BELIEVES THAT A CHANGE WITHIN THE BOARD IS NECESSARY TO SET THE
FUND BACK ON A PROFITABLE INVESTMENT COURSE.
KIM believes that Donald R. Chambers, Ph.D. will provide the insight and
unbiased professionalism that will benefit shareholders by taking viable steps
to manage the discount at which the Fund has historically traded. These steps
could include proposing open-ending the Fund, or share buy backs or tender
offers. The nomination of Donald R. Chambers will assure independent and
knowledgeable representation with the best interests of the shareholders as
his primary concern.
A vote for Donald R. Chambers, Ph.D., the KIM candidate, will be a vote for
representing shareholder interest.
Donald R. Chambers, Ph.D., Finance
DONALD R. CHAMBERS, Ph.D. in Finance, 42, has been the Walter E.
Hanson/KPMG Peat Marwick Professor of Finance, Department of Economics and
Business at Lafayette College, Easton, Pennsylvania, for the past five years.
His Ph.D. is from the University of North Carolina at Chapel Hill, North
Carolina.
A senior portfolio strategist and consultant, Dr. Chambers serves as a
consultant to the industry and government, having advised the Consumers
Advocate's Office of the Commonwealth of Pennsylvania, AT&T, Allstate, Bank of
New York, Chase Manhattan Bank and other major corporations.
Among his publishing credits are The Journal of Financial Economics, The
Journal of Cash Management, The Journal of Finance, The Journal of Futures
Markets, The Journal of Financial and Quantitative Analysis and Financial
Management. He is the author of the corporate finance textbook with Harper
Collins entitled Modern Corporate Finance, Theory and Practice.
Dr. Chambers' address is 3325 Abbey Court, Bethlehem, Pennsylvania 18017
KIM'S PROPOSAL D.
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D. The investment advisory and management contract between Bull & Bear
Advisers, Inc. and Bull & Bear U.S. Government Securities Fund, Inc. be
terminated at the next meeting of shareholders due to sub-par performance and
uncontrolled expenses and Karpus Management Inc., d/b/a Karpus Investment
Management, Inc. be hired as the replacement investment advisor and manager of
the Fund. KIM will reduce investment management fees by 5% from the Fund's
current schedule.
KIM is proposing the termination of the management contract and the
advisory contract of Bull & Bear Advisers, Inc. with the Fund due to inferior
investment performance and uncontrolled expenses. KIM believes that the Fund
has generated inadequate investment returns for shareholders. On October 4,
1996, Fund management recommended the conversion of the Fund from an open-end
format to closed-end format. This was subsequently approved by the
shareholders. From October 4, 1996 through and including June 30, 1998 shares
of the Fund have experienced a -11.7647% price decline. The market price on
October 4, 1996 was $14.75 per share, whereas the June 30, 1998 market price
was $13.125 per share. (Based on closing prices.) The total return of the Fund
including dividends being reinvested in shares equaled an annual equivalent of
0.0462% (10/4/96 through 6/30/98). During this same time period the Merrill
Lynch 1-10 Year U.S. Government Index generated an annualized return of 7.33%.
The net asset value of the Fund has also seriously underperformed
appropriate market indices. As computed on Bloomberg Analytics, the simple
price appreciation or depreciation (net change in price) of the NAV of the
Fund, which does not include dividends being reinvested, from February 7, 1997
(this is the first reported NAV to Bloomberg) to June 30, 1998 equaled a
- -1.8573% annual equivalent. ( Annual equivalent is the annual representation
of a securities yield which pays interest more than once a year.) With
dividends being reinvested in the security the Fund returned 5.3707% for the
same time period.
As reported in The Wall Street Journal on June 30, 1998 according to
Lipper Analytical Services, Inc., Bull & Bear U.S. Government Securities Fund.
Inc. ranked in the BOTTOM 10 PERFORMERS IN THE CLOSED-END BOND CATEGORY.
Bull & Bear U.S. Government Securities Fund, Inc.'s net asset value
return from June 30, 1997 to June 30, 1998 was reported to be 5.40% which was
the last place performance out of 118 closed-end bond funds in the Wall Street
Journal Quarterly Closed-End Funds Review, published on July 6, 1998. (This
included categories of U.S. Gov't Bond Funds, U.S. Mortgage Bond Funds,
Investment Grade Bond Funds, Loan Participation Funds, High Yield Bond Funds,
and Other Domestic Taxable Bond Funds.)
WHY SHAREHOLDERS SHOULD WANT KARPUS TO MANAGE THE FUND.
<PAGE>
Karpus Management, Inc. d/b/a Karpus Investment Management, Inc. ("KIM")
is located at 14 A Tobey Village Office Park in Pittsford, New York 14534 (a
suburb of Rochester). Formed in May of 1986 by George W. Karpus, President,
KIM specializes in conservative fixed income investment management. As of July
31, 1998 KIM currently has approximately $340,000,000 under management
comprised of 176 client relationships, with an average account size of
$1,700,000. KIM currently employs 16 staff members, nine of which are
professionals.
The officers of KIM include George W. Karpus, President and CEO and JoAnn
Van Degriff, Senior Vice President . KIM is a privately owned investment
advisor, with no affiliations with any bank or brokerage firm. The largest
shareholder of KIM is George W. Karpus. None of the officers or employees of
KIM presently own shares in the Fund, nor have they owned shares in the past.
KIM is well regarded for it's expertise in the fixed income market. KIM
is ranked among the "Worlds Best Money Managers", published by Nelson's
Information, Inc., in eight fixed income categories for the period ended
December 31, 1997. KIM is also ranked by Mobius Group in the top quartile of
all fixed income managers for the quarter, year, 3 year, 5 year, and ten year
period ended December 31, 1997.
KIM proposes if selected as the replacing investment manager for the
Fund, that there will be a reduction in management fees by 5 % from the
current level presently charged by Bull & Bear Advisers, Inc. This reduction
in fees may slightly increase returns for shareholders.
KIM presently represents beneficial ownership, on behalf of its clients,
of 119,250 shares of the Fund or approximately 16.12% of the outstanding
shares. As the largest shareholder of the Fund. KIM will dedicate its efforts
to reducing expenses, improving investment returns, lowering management fees,
and being responsive to shareholders of the Fund. KIM will initiate activities
to attempt to close the discount to net asset value of the Fund, which may
increase shareholder value. These activities may include instituting share
repurchase programs, tender offers, and open ending the Fund. KIM has no
previous experience in managing a mutual fund, however KIM currently manages
five accounts that are larger than the Fund.
THE FUND HAS ANNOUNCED THAT IT WILL INVEST UP TO 35% OF THE FUND'S ASSETS
IN EQUITY AND OTHER SECURITIES COMMENCING OCTOBER 19, 1998. THE FUND IS FULLY
AWARE THAT THIS CHANGE IN INVESTMENT COMPOSITION MAY FORCE KIM TO SELL SHARES
HELD BY THE "ACCOUNTS".
The accounts managed by KIM have investment restrictions which would
preclude owning any type of balanced (equity and fixed income) investment
vehicle. The majority of the accounts managed by KIM that hold shares of the
Fund are prohibited in their investment guidelines from owning funds that
contain equity and other
<PAGE>
securities. Upon implementation of the change in investment composition
announced by the Fund, KIM may be forced by the Accounts investment
restriction to sell shares which could result in a reduced market price and
further widening of the discount to NAV at which the Fund currently trades.
This may cause investors to see the market value of their shares to decline
substantially. Management of the Fund is fully aware of this fact, which was
disclosed to the Fund in September of 1997 and again in July of 1998, when the
Fund previously proposed to become a "Balanced Fund." If the addition of
equity and other securities is not implemented, the Accounts would not be
forced by investment restrictions to sell Fund shares in the open market.
It is the opinion of KIM that the market discount to net asset value may
have been wider if it was not for the market participation of KIM. The total
volume traded for the Fund from December 3, 1996 through June 30, 1998 equaled
754,500 shares. The current holding of the Accounts at 119,250 shares that
were purchased from December 3, 1996 through June 30, 1998, represented 15.80%
of this total volume. KIM believes that the activity generated by KIM helped
support the price of the Fund and allowed liquidity for shareholders who
wanted to sell their shares.
KIM would directly benefit from managing the Funds by increased revenues
from management fees derived by the Fund.
KIM RECOMMENDS THAT YOU VOTE FOR KIM'S PROPOSAL D.
OTHER MATTERS
KIM and the following advisory clients for whom it acts as investment
adviser will bear the cost of soliciting proxies: Acra-Local 725 Pension Trust
of Dade, Amalgamated Transit Union Local #1342, Cardinal American Corporation,
Jeffrey I Cooper, Elderwood Affiliates, Inc. Retirement Plan, Seymour Fisher
Marital Tr., Fish Furniture Profit Sharing Tr., The William and Estelle Golub
Foundation, Inc., Hammer Lithograph Corp. Deferred Profit Sharing, Peter
Russo, Trustee U/W William Henderson FBO F. Elizabeth, City of Hialeah Police
Pension Fd., InterMetro Ind. Corp. Salaried Employees Pension Trust, James E.
Morris IRA Rollover, Monro Muffler Brake, Inc. Retirement Plan, Painters Local
150 Annuity Fund, Plumbers & Pipefitters Local 138 Pension Fund, Roman
Catholic Diocese of Syracuse, Inc., Sheet Metal Workers Local 46 Annuity
Fund., Sheet Metal Workers Local 46 Pension Fund, YWCA of Rochester and Monroe
County- Board Designated Fd., YWCA of Rochester & Monroe County- Endowment
Fund, R. M. Blumenberg MD, M.L. Gelfand MD, P.A. Skudder MD Retirement Plan,
John W. Brown Jr. IRA Rollover, Gateway-Longview Inc. Asset Management, Golub
Corporation Employees Retirement Plan, Bull Bros. Inc. Employees Profit
Sharing Plan, James Vazzanna, Patircia Vazanna & Michael Ray as Trustees for
Andrew J. Kirch Charitable Remainder Trust U/Paragraph 7th of Will R. Edward
Lodico IRA Rollover, Ronald and Judith Newman, and Siewert Equipment Co. Inc.
Deferred Profit Sharing Plan. In addition to the use of the mails, proxies may
be solicited personally, by telephone or by other means and such clients may
pay persons holding
<PAGE>
Fund shares in their names or those of their nominees for their expenses in
sending soliciting materials to their principals. Solicitations will be made
by regular employees of KIM. In addition, KIM will retain Georgeson & Company
Inc., Wall Street Plaza, New York, New York 10005 to solicit proxies on behalf
of KIM for a fee estimated at $20,000 plus expenses. Additional costs and
expenditures, including fees for attorneys, printing, and mailing are
anticipated to be approximately $50,000. KIM intends to seek reimbursement
from the Fund to itself and its advisory clients for some or all of their
costs of solicitation.
KIM has been advised by The Fund, which advice is applicable to proxies,
as follows:
If a proxy is properly executed and returned accompanied by
instructions to withhold authority to vote, represents a broker
"non-vote" ( that is, a proxy from a broker or nominee indicating that
such person has not received instructions from the beneficial owner or
other person entitled to vote shares of the Fund on a particular matter
with respect to which the broker or nominee does not have discretionary
power) or is marked with an abstention ( collectively "abstentions") the
Fund's shares represented thereby will be considered to be present at the
Meeting for purposes of determining the existence of a quorum for the
transaction of business. Under Maryland law, abstentions do not
constitute a vote "for" or "against" a matter and will be disregarded in
determining "votes cast" on an issue.
In the event that a quorum is not present at the Meeting, or if a
quorum is present but sufficient votes to approve any of the proposals
are not received, the persons names as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. In
determining whether to adjourn the meeting the following factors may be
considered: the nature of the proposals that are the subject of the
Meeting, the percentage of votes actually cast, the percentage of
negative votes cast, the nature of any further solicitation, and the
information to be provided to stockholders with respect to the reasons
for the solicitation. Any adjournment will require the affirmative vote
of a majority of those shares affected by the adjournment that are
represented at the meeting in person or by proxy. A stockholder vote may
be taken for one or more of the proposals in this Proxy Statement prior
to any adjournment if sufficient votes have been received for approval.
If a quorum is present, the persons named as management proxies will vote
those proxies which they are entitled to vote "for" a Proposal in favor
of adjournment, and will vote those proxies required to be voted
"against" a Proposal against any adjournment. A quorum is constituted
with respect to the Fund by the presence in person or by proxy of the
holders of a majority of the outstanding shares of the Fund entitled to
vote at the Meeting.
The Fund's Management has alleged that KIM has engaged in improper
actions. They have alleged that KIM has damaged the Fund's trading market and
violated Section 16 (b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder. KIM has repeatedly and vigorously denied these allegations, which
are now pending before the
<PAGE>
United States District Court, Southern District, New York. KIM believes that the
Fund's Management is using this action to deny KIM access to the shareholder
list and records of the Fund and to force KIM to incur additional expenses. KIM
has fully funded the legal fees needed to promote a proxy contest, obtain a list
of holders of the Fund, along with defending itself against pending legal action
by the Fund. The Board of Directors of the Fund has continuously approved the
Fund's outrageous legal expenses, express mail costs, and other related expenses
through their Audit Committee.
KIM RECOMMENDS THAT YOU VOTE AGAINST ALL PROPOSALS BY THE BOARD OF
DIRECTORS AND THAT YOU VOTE FOR KIM's PROPOSALS.
PLEASE VOTE THE BLUE PROXY CARD. IF YOU HAVE ANY QUESTIONS, WE URGE YOU TO
CONTACT KIM TO DISCUSS ANY ISSUES WHICH MAY BE OF CONCERN. PLEASE CALL
800-646-4005 ANYTIME BETWEEN 8:30 A.M. AND 5:00 P.M.
YOUR VOTE IS IMPORTANT, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED ENVELOPE.
IF YOU NEED ASSISTANCE VOTING YOUR SHARES, PLEASE CONTACT OUR PROXY SOLICITOR,
GEORGESON & CO. AT 800-223-2064
KARPUS MANAGEMENT, INC. d/b/a
KARPUS INVESTMENT MANAGEMENT .
14 A Tobey Village Office Park
Pittsford, New York 14534
THIS PROXY IS SOLICITED ON BEHALF OF KARPUS INVESTMENT MANAGEMENT
The undersigned hereby appoints George W. Karpus and Joel Negrin as Proxies,
each with the power to appoint his substitute, and hereby authorizes each of
them to represent and to vote, as designated below, all the shares of common
stock of Bull & Bear U.S. Government Securities Fund, Inc. outstanding in the
name of the undersigned on
<PAGE>
1998, at the meeting of shareholders to be held on 1998 or any
adjournment(s) thereof. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE
"AGAINST" PROPOSALS A AND B AND "FOR" PROPOSALS C AND D AND IN THEIR
DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY/VOTING INSTRUCTIONS CARD
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
KIM RECOMMENDS A VOTE "AGAINST" PROPOSALS A, AND B.
The Fund's Current Management has announced that it will:
A. Include investments up to 35% of the Fund's assets in equity investments.
This will mean that the Fund will become a "balanced type" Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
By implementing this change, Management must seek approval from the
Shareholders to:
B. Change the name of the Fund to reflect the new investment composition of
the Fund by elimination of "U.S. Government Securities Fund" presently
contained in the Fund's title.
[_] FOR [_] AGAINST [_] ABSTAIN
Karpus Management, Inc. Proposes:
C. Karpus Investment Management (KIM) nominates Donald R. Chambers, Ph.D. in
Finance, as its candidate elect to the Board of Directors. Should the number
of members of the Board of Directors be expanded beyond the current number of
5, KIM reserves the option to make further nominations for election to the
Board.
[_] FOR [_] AGAINST [_] ABSTAIN
D. The investment advisory and management contract between Bull & Bear
Advisers, Inc. and Bull & Bear U.S. Government Securities Fund, Inc. be
terminated at the next meeting of shareholders due to sub-par performance and
uncontrolled expenses and Karpus Management Inc., d/b/a Karpus Investment
<PAGE>
Management, Inc. be hired as the replacement investment advisor and manager of
the Fund. KIM will reduce investment management fees by 5% from the Fund's
current schedule
[_] FOR [_] AGAINST [_] ABSTAIN
KIM RECOMMENDS THAT YOU VOTE "FOR" PROPOSALS C AND D.
Remember - The last proxy you sign and date will be the proxy that counts for
your vote. Make sure that you are voting the proposals the way you
wish.
---------------------------
Signature
---------------------------
Signature, if held jointly
Dated: , 1998
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
