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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. 16)
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 16, 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 8 Pages)
(Continued on following pages)
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SCHEDULE 13D
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CUSIP No. 12017N105 Page 2 of 8 Pages
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1 NAMES 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)
/ /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
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NUMBER OF 7 SOLE VOTING POWER
SHARES 96,550 Shares
BENEFICIALLY
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OWNED BY EACH 8 SHARED VOTING POWER
REPORTING
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PERSON WITH 9 SOLE DISPOSITIVE POWER
96,550 Shares
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10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
96,550 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)
12.78%
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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.
NEW ACTION
The previously reported petition submitted by KIM on March 31, 1999 to
the Securities and Exchange Commission for issuance of a "Cessation of existence
as an investment company" under Section 8(f) of the Investment Company Act of
1940 is not being viewed by the S.E.C. an application under Section 8(f).
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With expense ratios being one of the highest of any Fund in its
category, the absence of an elected auditor, and the desire of the Board of
Directors to achieve its own goals with disregard for the votes of the
shareholders (i.e. name change of the Fund), KIM believes that management of the
Fund must be stopped from further squandering of shareholder assets. It is the
belief of KIM, that the shareholders have refused the previous auditors of Tait
Weller & Baker due to uncontrolled expenses within the Fund.
On April 9, 1999, the Fund filed with the Securities and Exchange
Commission a preliminary proxy statement seeking stockholders to (1) consider
and vote upon approval of the Fund's independent auditors for the fiscal year
ending June 30, 1999, (2) to consider and vote upon amendment of the Fund's
charter to change the Fund's name to Bexil U.S. Government Securities Fund,
Inc., (3) to act upon if presented, a stockholder proposal submitted by Karpus
Management Inc., d/b/a Karpus Investment Management proposing: The Investment
Management Agreement dated September 12, 1996, as the same may have been
amended, extended, or restated, between Bull & Bear Advisers, Inc and Bull &
Bear U.S. Government Securities Fund, Inc. shall be terminated promptly
following the meeting of stockholders of the Fund at which this proposal is
approved.
KIM will be soliciting the support of the Fund's stockholders to vote
against the election of the auditor selected by the Board of Directors, to vote
against the name change to Bexil U.S. Government Securities Fund, Inc. and to
vote for the KIM proposal to terminate the Investment Management Agreement
between the Adviser and the Fund.
KIM believes that the stockholders deserve compensation for the sale of
the name "Bull & Bear" to RBC Holdings Inc., a subsidiary of Royal Bank of
Canada. The Fund has offered no compensation to the stockholders in terms of the
associated goodwill and name recognition that has been paid for at shareholder
expense. However, the Winmill Family has received 6 million dollars for the sale
of Bull & Bear Discount Brokerage and all rights to the name "Bull & Bear". KIM
believes shareholders should receive $500,000. for giving up the name "Bull &
Bear" as compensation.
KIM also believes that the stockholders should refuse to accept any
auditor that is presented to the stockholders for acceptance. The outrageous
expenses experienced within the Fund must stop. Stockholders should refuse any
and all suggested auditors presented to the stockholders for acceptance. By
refusing to accept an auditor, KIM believes that the Fund would be in violation
of the Securities Exchange Act of 1934 and the Investment Company Act of 1940.
Therefore the S.E.C. may take actions for the protection of shareholders that
may cause the Fund to be liquidated at net asset value which is about 6% higher
than the market price.
KIM is seeking the termination of the Investment Management Agreement
in hopes of liquidating the Fund or possibly merging the Fund into a larger fund
with a superior investment performance. KIM believes that it is working for the
financial benefit of all stockholders.
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 96,550 shares which represents 12.78%
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.
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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
4/6/99 -1,000 12.875
4/7/99 -600 12.875
4/8/99 -2,000 12.937
4/8/99 -100 13.00
4/9/99 -400 13.00
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.
April 16, 1999 Karpus Management, Inc.
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Date
By: /s/ George W. Karpus
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George W. Karpus
President
