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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. 14)
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)
April 7, 1999
(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 7 Pages)
(Continued on following pages)
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SCHEDULE 13D
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CUSIP No. 12017N105 Page 2 of 7 Pages
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1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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)
/ /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
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NUMBER OF 7 SOLE VOTING POWER
SHARES 100,650 Shares
BENEFICIALLY
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OWNED BY EACH 8 SHARED VOTING POWER
REPORTING
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PERSON WITH 9 SOLE DISPOSITIVE POWER
100,650 Shares
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10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
100,650 Shares
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.32%
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14 TYPE OF REPORTING PERSON*
IA
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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.
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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 offence (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 the
common stock 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
Initially, Karpus Investment Management ("KIM") purchased Shares for
investment purposes only. The profile of the Fund, being a
conservative, high credit quality fixed income fund, met the
investment criteria of the Accounts.
The poor performance of the Fund (verified by Lipper Analytical
Services citing BBG to be in the bottom 10 performers in the Closed-End Bond
Category, Wall Street Journal June 30,1998 issue) coupled with uncontrolled
expenses, forced KIM to take steps to seek the termination of the Investment
Manager of the Fund. On November 20, 1998 KIM issued a definitive proxy
statement which asked shareholders to terminate the Investment Management
Agreement dated September 12, 1996, as the same may have been amended,
extended or restated, between Bull & Bear Advisers, Inc. and the Fund at the
Fund's 1998 annual meeting. KIM also enlisted shareholder support to withhold
their
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vote for the Fund's Director, Frederick Parker, to vote to reject Fund's
auditor, Tait Weller & Baker, and to vote against the name change of the Fund
to Bexil Corporation. The Fund's auditor was rejected, which consequently
means that the Fund is presently acting without a ratified independent
auditor. On December 22, 1998 the Fund announced that Frederick Parker had
been elected as Director.
Even thought the name change of the Fund was defeated by the
shareholders, the Fund announced on December 22, 1998, that on Monday,
December 21, 1998 Bull & Bear U.S. Government Securities Fund, Inc. would
commence doing business under the trade name of Bexil Corporation. KIM
believes that this is an attempt at circumventing the wishes of the
shareholders to achieve the desired agenda of the Fund and the Fund's Board of
Directors.
KIM believed that voting irregularities may have occurred at the
Annual Meeting of stockholders and requested review of the votes at the time
of the meeting. KIM and KIM representatives were told by Mr. Thomas Windmill
the scheduled meeting and at the adjourned meeting later in the day, that he
would take this under advisement, with no direct answer being given. In an
effort to avoid the expense of litigation to enable KIM to review the voting
records of the meeting, on December 21, 1998 KIM's attorney delivered a letter
via facsimile to the counsel for BBG, again requesting such review. Neither
KIM nor KIM's attorneys' received an answer regarding this request. KIM
asserted its rights to review and on December 22, 1998 KIM initiated an action
seeking to compel the Fund to make its voting records available for
inspection. KIM prevailed in this action. On February 25, 1999 a review of the
voting record of the Annual Meeting was conducted by a neutral party, CT
Corporation, Inc. ("CT"), pursuant to a confidentiality agreement. Shortly
thereafter, CT provided a report of its review of the election results,
stating that 141,000 shareholders who voted by proxy card submitted to KIM
were erroneously excluded for the vote on Karpus' proposal to terminate Bull &
Bear Advisers, Inc. as the Fund's investment manager.
KIM believes that the Management of the Fund disseminated false and
misleading proxy materials to the shareholders in soliciting votes at the
annual meeting. The Fund reported misleading Morningstar rankings in which
return of capital was reported as part of the Fund's yield. Return of capital
is not part of yield. Even thought the Fund made an attempted correction, KIM
believes that this was too late for shareholders to receive, having already
cast votes based on misleading information, and that this correction was not
prominently displayed so as to attract the attention of shareholders receiving
the corrected letter.
KIM also believes that the Fund did not report the actual reason
for proposing the name change of the Fund to Bexil Corporation. The Fund
purported the reason "to enhance the acceptance of the Fund's shares in the
marketplace" and that the Fund's Directors has approved the name change of
July 16, 1998. Bull & Bear Group had negotiated a sale of its discount
brokerage subsidiary, Bull & Bear Securities, Inc., inclusive of all
intellectual property rights in the name "BULL & BEAR" name to RBC Holdings
(USA) Inc, an affiliate of Royal Bank of Canada, for $6 million in cash. There
was no disclosure to the shareholders in any proxy materials of this
possibility, or the financial benefit to the Windmill Family, three of which
serve as Directors of the Fund.
It is the belief of KIM, had the Fund provided complete and accurate
disclosure to
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its shareholders, KIM would have prevailed in terminating the investment
management contract of the Fund.
It is the belief of KIM the Board has consistently approved actions,
which are not in the best interest of the stockholders. Fund's Management
recommended changing the Fund's format from open end to closed end in 1996.
This has resulted in the Fund trading at a substantial discount to net asset
value. (The average price discount to net asset value has been - 9.89% for the
time period of November 14, 1997 through April 2, 1999). The Board has
recommended in September of 1997 and in July of 1998 in a preliminary proxy
filing to change the Fund to a 50/50 "balanced" approach. This change would
have required a vote of the stockholders since it would have changed the
fundamental investment policy of the Fund. These proposals appear to have been
abandoned by the Fund. Instead the Board has approved the intention to invest
up to 35% of the Funds' assets in equity and other securities without
shareholder approval.
KIM has repeatedly voiced its opinion to Fund's Management that these
changes are not in the best interest of the stockholders of the Fund. It is
the opinion of KIM that this "balanced" approach could lead to further
widening of the discount to net asset value at which the Fund currently
trades.
The "Accounts" for which KIM is the Investment Manager are each
managed by individual investment guidelines, which may restrict or prohibit
the Account from investing in equity and other types of securities. KIM
believes that if the Accounts were forced to sell a considerable amount of
shares, this would be devastating to the market price of BBG, and may create
further losses for stockholders. KIM has confirmed from the Fund's annual
report that there is very low equity exposure, 2.62%, as of December 31,1998,
which is acceptable to the majority of the Accounts that hold the Fund. This
equity exposure presently represents less than 1/10th of 1% of the assets of
each Account. Each Account has been given the option of holding or disposing
of Shares.
KIM also believes that the Fund attempted to mislead shareholders
into believing that the returns have been stellar. According to tax
information generated by the Fund, there was no return of capital. Many
shareholders have already filed their taxes and paid more tax than necessary.
KIM believes that 19.74% of the dividends reported by the Fund has been return
of capital and not ordinary income. This information means that each
"individual" investor (those who would file taxes based on income), if they
had used the information originally provided by the Fund, paid too much in
taxes and have not reduced the cost basis of their investment in the Fund. It
is the opinion of KIM that this creates an inappropriate tax cost when and if
shares are sold for "individuals". To the knowledge of KIM, the Fund has not
made this information readily available to all shareholders and has not issued
corrected 1099's to shareholders.
Litigation
On February 19, 1998, KIM filed a suit against the Fund in the
Circuit Court for Baltimore City, Maryland (Case No. 9805505) for the purpose
of inspecting the books and obtaining a listing of stockholders of the Fund.
The Fund had denied KIM. access to such records, alleging improper purposes,
which consequently forced litigation to secure the stockholder rights KIM was
entitled to under the State Law of Maryland. The
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estimated cost of litigation was $5,000-$10,000. When legal fees exceeded
$45,000, because of various discovery efforts and motions by the Fund to
prevent access to records KIM made the conscious decision that the costs
associated with asserting its rights, as representing ownership of over 5% of
the outstanding shares, became not economically prudent to pursue. KIM
presented to the Fund a Stipulation of Voluntary Dismissal in September of
1998, pursuant to Maryland Rule 2-506(a)(2), for the voluntary dismissal of
this action with prejudice with each party bearing its own costs and legal
fees. Both parties agreed upon this Voluntary Dismissal with prejudice.
On February 19, 1998, about two hours after KIM filed its' Maryland
suit, the Fund filed suit against KIM, Inc. in the United States District
Court, Southern District of New York (Civil Action No 98 Civ. 1190) alleging
that KIM had violated Section 16(b) of the Securities Exchange Act of 1934 and
Rule 10b-5 under such Act.
KIM has repeatedly and vigorously denied these allegations, which it
believes to be lacking merit. The Fund has requested the Court's consent to
file a First Amended Complaint on October 28,1998. In this proposed amended
complaint BBG demands that "KIM will immediately divest its client's holdings
in BBG, in excess of 3%, on a schedule to be determined by the Court, not to
exceed six months, to protect BBG and its investors from any negative
financial impact on BBG caused by KIM's breaches of the anti-pyramiding rule:"
(Anti-pyramiding rule refers to the Investment Company Act Section 12 (d) (1)
(A), 15 U.S. C. 80a-12(d) (1)(A), which provides in relevant part: "It shall
be unlawful for any .... investment company .... to purchase or otherwise
acquire any security issued by any registered investment company ("the
acquired company"), if the acquiring company and any company or companies
controlled by it immediately after such purchase or acquisition own in the
aggregate: (i) More than three per centum of the total outstanding voting
stock of the acquired company...). KIM believes that this claim is completely
without merit, as KIM is a registered investment adviser and is not an
Investment Company. KIM believes this divestiture could cause more harm to
stockholders than any claim that is alleged in the original complaint. The
outcome of this matter can not be predicted with certainty.
On December 22, 1998 KIM initiated action in the United States
District Court for the District of Maryland (Northern Division) in the form of
a one-count complaint seeking to compel BBG to make its voting records
available for inspection. After preliminary proceedings, BBG was ordered to
produce the voting records and production was made on February 25, 1999. The
Fund has asserted counter-claims against KIM claiming misleading proxy
statement in connection with the 1998 proxy contest and is seeking to
invalidate votes cast by KIM supporters. The Fund is also claiming defamation
damages. KIM is vigorously defending these claims. The outcome of this matter
can not be predicted with certainty.
ITEM 5 Interest in Securities of the Issuer
a) As of the date of this Report, KIM owns beneficially 100,650
shares which represents 13.32% of the outstanding Shares. None
of the Principals owns any other Shares.
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b) KIM has the sole power to dispose of and to vote all of such
Shares under limited powers of attorney.
c) Open market sales for the Accounts' for the past 90 days.
d) As of December 24, 1998, KIM's voting power and dispositive power
with respect to 7,500 shares was withdrawn and, according the
shares were not beneficially owned by KIM.
PRICE PER
DATE SHARES SHARE
3/11/99 -500 12.562
3/11/99 -500 12.625
3/16/99 -1,100 12.562
3/19/99 -200 12.75
3/19/99 -2,900 12.875
4/5/99 -2,000 12.812
4/5/99 -800 12.75
KIM reserves all rights to purchase or dispose of shares. e.) 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
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
None
Signature
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Karpus Management, Inc.
April 7, 1999 By: /s/ George W. Karpus
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Date George W. Karpus
President
