Bull & Bear Global Income Fund seeks to provide shareholders a high level of
income. Capital appreciation is a secondary objective. The Fund seeks to achieve
its objectives by investing primarily in a global portfolio of investment grade
fixed income securities. Dividends are paid monthly.
By investing in both domestic and international fixed income markets, the
Fund can expand investment horizons while providing an effective means of
reducing volatility associated with concentration in a single country or region.
Because the economies, interest rates, and currency exchange rates of foreign
countries often follow different cycles, the resulting variation of performance
by the world's fixed income markets may provide an effective means of balancing
an investor's portfolio. The Fund cannot guarantee it will achieve its
investment objectives.
- --------------------------------------------------------------------------------
NEWSPAPER LISTING. Shares of the Fund are sold at the net asset
value per share which is shown daily in the mutual fund section of
newspapers under the "Bull & Bear Group" heading.
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about the Fund which
prospective investors ought to know before investing in the Fund and should be
retained for future reference. A careful reading of the Prospectus is
recommended prior to any investment. A Statement of Additional Information about
the Fund dated November 1, 1994, as amended or supplemented from time to time,
has been filed with the Securities and Exchange Commission, is incorporated
herein by reference, and is available to prospective investors without charge
upon request to the Fund's Distributor, Bull & Bear Service Center, Inc., 11
Hanover Square, New York, NY 10005, 1-800-847-4200/1-212-363-1100. Shares of the
Fund are not bank deposits or obligations of, or guaranteed or endorsed by any
bank or any affiliate of any bank, and are not Federally insured by, obligations
of or otherwise supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency.
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.
1
<PAGE>
Expense Table. The tables below are intended to assist investors in
understanding the costs and expenses Fund shareholders bear directly or
indirectly. A $2 monthly fee is charged where average monthly balances are less
than $500, except for accounts in the Bull & Bear Automatic Investment Program
where shareholders invest $100 or more each month (see "How to Purchase
Shares").
Shareholder Transaction Expenses
Sales Load Imposed on Purchases.......................................... NONE
Sales Load Imposed on Reinvested Dividends............................... NONE
Deferred Sales Load...................................................... NONE
Redemption Fees.......................................................... NONE
Exchange Fees............................................................ NONE
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees......................................................... 0.70%
12b-1 Fees.............................................................. 0.50%
Other Expenses.......................................................... 0.78%
----
Total Fund Operating Expenses........................................... 1.98%
<TABLE>
<CAPTION>
Example 1 year 3 years 5 years 10
years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and a redemption at the end of each time period: $20 $62
$107 $231
</TABLE>
The example should not be considered a representation of past or future expenses
and actual performance and expenses may be greater or lesser than shown. The
percentages given for "Annual Fund Operating Expenses" are based on the Fund's
operating expenses and average daily net assets during its fiscal year ended
June 30, 1994. Long term shareholders may pay more than the economic equivalent
of the maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc.'s ("NASD") rules regarding investment companies. "Other
Expenses" include amounts paid to the Fund's Custodian (net of brokerage
commission credits pursuant to an arrangement not anticipated to materially
increase brokerage commissions paid by the Fund -- see "The Investment Manager")
and Transfer and Dividend Disbursing Agent and reimbursements to the Manager and
the Distributor for certain administrative and shareholder services. The
assumption in the Example of a 5% annual return is required by regulations of
the Securities and Exchange Commission ("SEC") and is not a prediction of, and
does not represent the Fund's projected or actual performance.
Financial Highlights for a share of capital stock outstanding throughout each
period. The following information is supplemental to the Fund's financial
statements and report thereon of Tait, Weller & Baker, independent accountants,
appearing in the June 30, 1994 Annual Report to Shareholders and incorporated by
reference in the Statement of Additional Information. Until October 29, 1992,
the Fund's investment objective was to obtain for its shareholders the highest
income over the long term and the Fund followed a policy of investing primarily
in lower rated debt securities of U.S. companies.
<TABLE>
<CAPTION>
Years Ended June 30
- ---------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988
1987 1986 1985
------- ------- ------- ------- ------- ------- -------- -------- --------
- -------
<S> <C> <C> <C> <C> <C> <C> <C>
<C> <C> <C>
Net asset value at beginning of period $9.39 $8.56 $7.97 $8.67 $9.73
$10.83 $13.04 $14.96 $14.42 $13.25
------- ------- ------- ------- ------- ------- -------- -------- --------
- -------
Income from investment operations:
Net investment income .60 .66 .77 .81 .99 1.27 1.41
1.76 1.89 1.94
Net realized and unrealized gain
(loss) on investments (1.02) .92 .54 (.64) (.97) (1.13) (2.19)
(1.92) .54 1.17
------- ------- ------- ------- ------- ------- -------- -------- --------
- -------
Total from investment operations (.42) 1.58 1.31 .17 .02 .14
(.78) (.16) 2.43 3.11
------- ------- ------- ------- ------- ------- -------- -------- --------
- -------
Less distributions:
Distributions from net investment income (.60) (.66) (.72) (.82) (.98) (1.24)
(1.43) (1.74) (1.89) (1.94)
Distributions in excess of net
investment income (.12) (.09) -- -- -- -- -- --
- -- --
Distributions from net realized gains -- -- -- -- -- -- --
(.02) -- --
Distributions from paid-in-capital -- -- -- (.05) (.10) -- -- --
-- --
------- ------- ------- ------- ------- ------- -------- -------- --------
- -------
Total distributions (.72) (.75) (.72) (.87) (1.08) (1.24) (1.43)
(1.76) (1.89) (1.94)
------- ------- ------- ------- ------- ------- -------- -------- --------
- -------
Net asset value at end of period $8.25 $9.39 $8.56 $7.97 $8.67 $9.73
$10.83 $13.04 $14.96 $14.42
======= ======= ======= ======= =======
======= ======== ======== ======== =======
TOTAL RETURN (5.12)% 19.39% 17.09% 2.45% .54%
1.34% (5.99)% (1.01)% 17.99% 25.02%
- ------------ ======= ======= ======= ======= =======
======= ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(000's omitted) $44,355 $51,768 $44,323 $42,515 $51,318
$82,520 $124,095 $206,251 $113,026 $33,489
======= ======= ======= ======= =======
======= ======== ======== ======== =======
Ratio of expenses to average net assets(a) 1.98% 1.95% 1.93% 1.95%
1.72% 1.68% 1.71% 1.50% 1.37% 1.16%
======= ======= ======= ======= =======
======= ======== ======== ======== =======
Ratio of net investment income to average
net assets(b) 6.58% 7.44% 9.25% 10.08% 10.99% 12.08%
11.96% 12.40% 13.45% 13.86%
======= ======= ======= ======= =======
======= ======== ======== ======== =======
Portfolio turnover rate 223% 172% 206% 555% 134%
122% 124% 85% 77% 127%
======= ======= ======= ======= =======
======= ======== ======== ======== =======
- ----------
<FN>
(a) Ratio prior to reimbursement by the Investment Manager was 1.74% in 1989.
(b) Ratio prior to reimbursement by the Investment Manager was 12.02% in 1989.
</FN>
</TABLE>
Information relating to outstanding debt during the fiscal periods shown below.
2
<PAGE>
<TABLE>
<CAPTION>
Amount of Debt Average Amount of Average Number of
Average Amount of
Fiscal Year Ended Outstanding at End Debt Outstanding Shares
Outstanding Debt Per Share
June 30 of Period During the Period During the Period
During the Period
------- --------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
1994 $ 0 $204,441 5,715,428 $0.04
1993 886,000 45,252 5,158,922 0.01
1992 0 189,119 5,256,156 0.04
</TABLE>
3
<PAGE>
TABLE OF CONTENTS
Transaction and Operating Expenses.. 2 Distributions and Taxes............. 11
Financial Highlights................ 2 Determination of Net Asset Value.... 12
General............................. 3 The Investment Manager.............. 12
The Fund's Investment Program....... 3 Distribution of Shares.............. 13
How to Purchase Shares.............. 5 Performance Information............. 13
Shareholder Services................ 7 Capital Stock....................... 14
How to Redeem Shares................ 10 Custodian and Transfer Agent........ 14
GENERAL
Global Income Investing. For more than three decades, the growth rate of many
foreign economies has exceeded that of the United States. At times, a number of
foreign fixed income markets have outperformed their U.S. counterparts. Although
there can be no assurances, foreign fixed income markets could continue to offer
attractive investment opportunities from time to time relative to the U.S.
market. For the individual investor, buying foreign debt securities can be
difficult: access to international markets is complicated, few individuals have
the time or resources to evaluate foreign economies, markets and securities, and
transaction costs are generally high.
Purposes of the Fund. The Fund is for long term investors seeking the yields
offered worldwide by a portfolio consisting primarily of investment grade fixed
income securities, together with the advantages of professional management,
diversification, and liquidity. The net asset value of the Fund will change as
interest rates and currency prices fluctuate and the Fund is subject to risks
unique to global investing. The Fund should not be considered a complete
investment program, and there is no assurance it will achieve its objectives.
Check Writing Privilege for Easy Access. Shareholders have the convenience of
making redemptions without charge simply by writing a check for $250 or more.
There is no limit on the number of checks a shareholder may write.
Monthly Income. The Fund pays monthly dividends to its shareholders from the
income it earns on its investments and from any net foreign currency gains. The
Fund also distributes to shareholders annually substantially all net realized
gains from the sale of securities and foreign currencies, if any, after
offsetting any capital loss carryforward. Distributions may be reinvested in
shares of the Fund or any other Bull & Bear Fund (see "Dividend Sweep
Privilege"), or at the shareholder's option, paid in cash.
Yield Information. Please call 1-800-847-4200 or 1-212-363-1100 to obtain the
Fund's yield.
Portfolio Management. The Fund's Portfolio Manager for the past four years has
been G. Clifford McCarthy, Jr. Mr. McCarthy is Senior Vice President and a
member of the Investment Policy Committee of Bull & Bear Advisers, Inc. (the
"Investment Manager") with overall responsibility for the Bull & Bear fixed
income funds. Mr. McCarthy was formerly a partner of Salomon Brothers and a Vice
President of Citicorp Investment Management, directing its fixed income
portfolios. More recently, he was an officer of Printon, Kane & Co. and Balfour,
MacLaine Inc. A graduate of Wagner College, Mr. McCarthy is a member of the New
York Bond Club.
THE FUND'S INVESTMENT PROGRAM
The Fund's primary investment objective, which may not be changed without
shareholder approval, is to seek to provide shareholders a high level of income.
The Fund's secondary objective, which may be changed by the Board of Directors
without shareholder approval, is capital appreciation. An investor's return will
consist of monthly dividends, capital appreciation or depreciation, and foreign
currency gains or losses.
4
<PAGE>
The Fund will normally invest at least 65% of its net assets in investment
grade fixed income securities which are rated, at the time of purchase, BBB or
better by Standard & Poor's Ratings Group ("Standard & Poor's"), Baa or better
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, are determined by
the Investment Manager to be of comparable quality. The Fund may also invest up
to 35% of its assets in fixed income securities rated BB, B, or CCC by Standard
& Poor's or Ba, B, or Caa by Moody's and in other securities (including common
stocks, warrants, options and securities convertible into common stock), when
such investments are consistent with its investment objectives or are acquired
as part of a unit consisting of a combination of fixed income securities and
other securities. The Fund currently expects to invest predominately in the
United States, Western Europe, Latin America, the Pacific Rim, South Africa, and
Canada. The Fund will normally invest in at least three different countries, but
may invest in fixed income securities of only one country for temporary
defensive purposes. When the Investment Manager believes unusual circumstances
warrant a defensive posture, the Fund may commit all or any portion of its
assets to cash (U.S. dollars and/or foreign currencies) or money market
instruments of U.S. and foreign issuers, including repurchase agreements. In
seeking to identify the world's best performing bonds and other fixed income
securities, the Investment Manager bases its investment decisions on fundamental
market attractiveness, interest rates and trends, currency trends, and credit
quality.
The Investment Manager undertakes several measures in seeking to achieve the
Fund's objectives:
o First, the fixed income securities purchased by the Fund will be primarily
rated at the time of purchase in the top four categories by Standard &
Poor's or Moody's. Ratings are not a guarantee of quality and ratings can
change after a security is purchased by the Fund. Moreover, securities
rated Baa by Moody's are deemed by that rating agency to have speculative
characteristics.
o Second, the Investment Manager actively manages the average maturity of the
Fund's portfolio in response to expected interest rate movements in pursuit
of capital appreciation or to protect against depreciation. Debt securities
generally change in value inversely to changes in market interest rates.
Increases in market rates generally cause the market values of debt
securities to decrease, and vice versa. Movements in interest rates
typically have a greater effect on the prices of longer term bonds than on
those with shorter maturities. When anticipating a decline in interest
rates, the Investment Manager will attempt to lengthen the portfolio's
maturity to capitalize on the appreciation potential of such securities.
Conversely, when anticipating rising rates, the Investment Manager will
seek to shorten the Fund's maturity to protect against capital
depreciation. The Fund's portfolio may consist of 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.
o Third, the Investment Manager may employ certain investment techniques to
seek to reduce the Fund's exposure to risks involving foreign currency
exchange rates. An increase in value of a foreign currency relative to the
U.S. dollar (the dollar weakens) will increase the U.S. dollar value of
securities denominated in that foreign currency. Conversely, a decline in
the value of a foreign currency relative to the U.S. dollar (the dollar
strengthens) causes a decline in the U.S. dollar value of these securities.
The percentage of the Fund's investments in foreign securities that will be
hedged back to the U.S. dollar will vary depending on anticipated trends in
currency prices and the relative attractiveness of such techniques and
other strategies.
There is, of course, no guarantee that these investment strategies will
accomplish their objectives.
Foreign Investments. Investors should understand and consider carefully the
substantial risks involved in foreign investing. Foreign securities, which are
generally denominated in foreign currencies, and utilization of forward
contracts on foreign currencies involve certain considerations comprising both
risk and opportunity not typically associated with investing in U.S. securities.
These considerations include: fluctuations in currency exchange rates;
restrictions on foreign investment and repatriation of capital; costs of
converting foreign currency into U.S. dollars; greater price volatility and
trading illiquidity; less public information on issuers of securities;
difficulty in enforcing legal rights outside of the United States; lack of
uniform accounting, auditing, and financial reporting standards; the possible
imposition of foreign taxes, exchange controls, and currency restrictions; and,
the possible greater political, economic, and social instability of developing
as well as developed countries including without limitation nationalization,
5
<PAGE>
expropriation of assets, and war. Furthermore, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in such respects as growth
of gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency, and balance of payments position. Securities of many foreign
companies may be less liquid and their prices more volatile than securities
issued by comparable U.S. issuers. Transactions in foreign securities may be
subject to less efficient settlement practices. These risks are often heightened
when the Fund's investments are concentrated in a small number of countries. In
addition, because transactional and custodial expenses for foreign securities
are generally higher than for domestic securities, the expense ratio of the Fund
can be expected to be higher than investment companies investing exclusively in
domestic securities.
Since investments in foreign securities usually involve foreign currencies
and since the Fund may temporarily hold funds in bank deposits in foreign
currencies in order to facilitate portfolio transactions, the value of the
assets of the Fund as measured in U.S. dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations. For example, if the value of the U.S. dollar decreases relative to
a foreign currency in which a Fund investment is denominated or which is
temporarily held by the Fund to facilitate portfolio transactions, the value of
such Fund assets and the Fund's net asset value per share will increase, all
else being equal. Conversely, an increase in the value of the U.S. dollar
relative to such a foreign currency will result in a decline in the value of
such Fund assets and its net asset value per share. The Fund may incur
additional costs in connection with conversions of currencies and securities
into U.S. dollars. The Fund will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis, or through entering into
forward contracts. The Fund generally will not enter into a forward contract
with a term of greater than one year.
The Fund may invest in securities of issuers located in emerging market
countries. The risks of investing in foreign securities may be greater with
respect to securities of issuers in, or denominated in the currencies of,
emerging market countries. The economies of emerging market countries generally
are heavily dependent upon international trade and accordingly, have been and
may continue to be adversely affected by trade barriers, exchange controls,
managed adjustments in relative currency values and other protectionist measures
imposed or negotiated by the countries with which they trade. These economies
also have been and may continue to be adversely affected by economic conditions
in the countries with which they trade. The securities markets of emerging
market countries are substantially smaller, less developed, less liquid and more
volatile than the securities markets of the U.S. and other developed countries.
Disclosure and regulatory standards in many respects are less stringent in
emerging market countries than in the U.S. and other major markets. There also
may be a lower level of monitoring and regulation of emerging markets and the
activities of investors in such markets, and enforcement of existing regulations
may be extremely limited. Investing in local markets, particularly in emerging
market countries, may require the Fund to adopt special procedures, seek local
government approvals or take other actions, each of which may involve additional
costs to the Fund. Certain emerging markets countries may also restrict
investment opportunities in issuers in industries deemed important to national
interests.
U.S. and Foreign Government Securities. The U.S. Government securities in which
the Fund may invest include direct obligations of the U.S. Government (such as
Treasury bills, notes and bonds) and obligations issued by U.S. Government
agencies and instrumentalities. Agencies and instrumentalities include executive
departments of the U.S. Government or independent Federal organizations
supervised by Congress. Although all obligations of agencies and
instrumentalities are not direct obligations of the U.S. Treasury, payment of
the interest and principal on these obligations is generally backed directly or
indirectly by the U.S. Government. This support can range from securities
supported by the full faith and credit of the United States (for example, U.S.
Treasury securities), to securities that are supported solely or primarily by
the creditworthiness of the issuer (for example, securities of the Federal
National Mortgage Association, Federal Home Loan Mortgage Corporation and the
Tennessee Valley Authority). In the case of obligations not backed by the full
faith and credit of the United States, the Fund must look principally to the
agency or instrumentality issuing or guaranteeing the obligation for ultimate
repayment and may not be able to assert a claim against the United States itself
in the event the agency or instrumentality does not meet its commitments.
Accordingly, these securities may involve more risk than securities backed by
the U.S. Government's full faith and credit.
6
<PAGE>
The foreign government securities in which the Fund invests generally
consist of obligations supported by national, state or provincial governments or
similar political subdivisions. The foreign government securities in which the
Fund may also invest include the obligations of supranational agencies, such as
the International Bank for Reconstruction and Development (the World Bank).
Supranational agencies rely on funds from participating countries, often
including the United States, from which they must request funds. Such requests
may not always be honored. The obligations of supranational agencies, depending
on where and how are issued, may be subject to some of the risks discussed above
with respect to foreign securities.
Investments in foreign government debt securities involve special risks. The
issuer of the debt or the governmental authorities that control the repayment of
the debt may be unable or unwilling to pay interest or repay interest or repay
principal when due in accordance with the terms of such debt, and the Fund may
have limited legal recourse in the event of default. Political conditions,
especially a sovereign entity's willingness to meet the terms of its debt
obligations, are of considerable significance.
Securities of Private Issuers. The securities of U.S. and foreign private
issuers in which the Fund invests may be denominated in U.S. dollars or other
currencies, including obligations of U.S. and foreign issuers payable in U.S.
dollars outside the United States ("Euros") and obligations of foreign issuers
payable in U.S. dollars and issued in the United States ("Yankees"). The
securities of private issuers may include corporate bonds, notes and commercial
paper, as well as certificates of deposit, time deposits, bankers' acceptances
and other obligations of U.S. banks and their branches located outside the
United States, U.S. branches of foreign banks, foreign branches of foreign banks
and U.S. agencies of foreign banks and wholly owned banking subsidiaries of
foreign banks located in the United States. The securities of private issuers
also may include common stocks and other equity securities such as warrants,
options and securities convertible into common stock, when such investments are
consistent with the Fund's investment objectives or are acquired as part of a
unit consisting of fixed income and equity securities.
Fixed Income Securities. The Fund is permitted to purchase investment grade
fixed income securities. Securities rated BBB or better by Standard & Poor's or
Baa or better by Moody's are investment grade but Moody's considers securities
rated Baa to have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity for such
securities to make principal and income payments than is the case for
higher-rated securities. The Fund also may invest up to 35% of its assets in
fixed income securities rated below investment grade but not lower than CCC by
Standard & Poor's or Caa by Moody's. These securities are deemed by those
agencies to be in poor standing and predominantly speculative; the issuers may
be in default on such securities or deemed without capacity to make scheduled
payments of income or repay principal, involving major risk exposure to adverse
conditions. The Fund is also permitted to purchase fixed income securities that
are not rated by Standard & Poor's or Moody's but that the Investment Manager
determines to be of comparable quality to that of rated securities in which the
Fund may invest. Such securities are included in percentage limitations
applicable to the comparable rated securities.
Ratings of fixed income securities represent the rating agencies' opinions
regarding their quality, are not a guarantee of quality, and may be lowered
after a fund has acquired the security. The Investment Manager will consider
such an event in determining whether the Fund should continue to hold the
security but is not required to dispose of it. Credit ratings attempt to
evaluate the safety of principal and income payments and do not evaluate the
risk of fluctuations in market value. Also, rating agencies may fail to make
timely changes in credit ratings in response to subsequent events, so that an
issuer's financial condition may be better or worse than the rating indicates.
See the Appendix to the Statement of Additional Information for a further
description of Standard & Poor's and Moody's ratings.
Lower rated fixed income securities generally offer a higher current yield
than that available on higher grade issues. However, lower rated securities
involve higher risks, in that they are especially subject to adverse changes in
general economic conditions and in the industries in which the issuers are
engaged, to changes in the financial condition of the issuers, and to price
fluctuations in response to changes in interest rates. During periods of
economic downturn or rising interest rates, highly leveraged issuers may
experience financial stress which could adversely affect their ability to make
payments of principal and income and increase the possibility of default.
7
<PAGE>
In addition, such issuers may not have more traditional methods of financing
available to them, and may be unable to repay debt at maturity by refinancing.
The risk of loss due to default by such issuers is significantly greater because
such securities frequently are unsecured and subordinated to the prior payment
of senior indebtedness. The market for lower rated securities has expanded
rapidly in recent years, and its growth paralleled a long economic expansion.
The prices of many lower rated securities have declined substantially in the
past, reflecting an expectation that many issuers of such securities might
experience financial difficulties. As a result, the yields on lower rated
securities rose dramatically, but such higher yields did not reflect the value
of the income stream that holders of such securities expected, but rather the
risk that holders of such securities could lose a substantial portion of their
value as a result of the issuers' financial restructuring or default. There can
be no assurance that such price declines will not recur. The market for lower
rated issues generally is thinner and less active than that for higher quality
securities, which may limit the Fund's ability to sell such securities at fair
value in response to changes in the economy or financial markets. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may also decrease the value and liquidity of lower rated securities,
especially in a thinly traded market.
During its 1994 fiscal year, the Fund invested 64% of its average annual net
assets in debt securities that had received a rating from Standard & Poor's. The
remaining 36% can be classified as non-rated debt securities, other fixed income
securities, equities and other net assets. The Fund had the following
percentages of its average net assets invested in rated securities: AAA -- 8%,
AA-- 9%, A -- 5%, BBB -- 24%, BB -- 8%, B -- 8%; CCC -- 2%. It should be noted
that this information reflects the average composition of the Fund's assets
during the fiscal year ended June 30, 1994 and is not necessarily representative
of the Fund's assets as of the end of that fiscal year, the current year or at
any time in the future.
Preferred Securities. The fixed income securities in which the Fund may invest
includes preferred share issues of U.S. and foreign companies. Such securities
involve greater risk of loss of income than debt securities because issuers are
not obligated to pay dividends. In addition, preferred securities are
subordinate to debt securities, and are more subject to changes in economic and
industry conditions and in the financial conditions of the issuers of such
securities.
Convertible Securities. The Fund may invest in convertible securities which are
bonds, debentures, notes, preferred stocks or other fixed income securities that
may be converted into or exchanged for a specified amount of common stock of the
same or a different issuer within a particular period of time at a specified
price or formula. A convertible security entitles the holder to receive interest
generally paid or accrued on debt or the dividend paid on preferred stock until
the convertible security matures or is redeemed, converted or exchanged.
Convertible securities have unique investment characteristics in that they
generally (i) have higher yields than common stocks, but lower yields than
comparable non-convertible securities, (ii) are less subject to fluctuation in
value than the underlying stock since they have fixed income characteristics and
(iii) provide the potential for capital appreciation if the market price of the
underlying common stock increases.
The value of a convertible security is a function of its "investment value"
(determined by its yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may have an effect on the
convertible security's investment value. The conversion value of a convertible
security is determined by the market price of the underlying common stock. If
the conversion value is low relative to the investment value, the price of the
convertible security is governed principally by its investment value and
generally the conversion value decreases as the convertible security approaches
maturity. To the extent the market price of the underlying common stock
approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. In addition, a
convertible security will sell at a premium over its conversion value determined
by the extent to which investors place value on the right to acquire the
underlying common stock while holding a fixed income security. The Fund will
exchange or convert the convertible securities held in its portfolio into shares
of the underlying common stock when, in the Investment Manager's opinion, the
investment characteristics of the underlying common shares will assist the Fund
in achieving its investment objectives.
8
<PAGE>
Otherwise, the Fund may hold or trade convertible securities. In selecting
convertible securities for the Fund, the Investment Manager evaluates the
investment characteristics of the convertible security as a fixed income
instrument and the investment potential of the underlying equity security for
capital appreciation. In evaluating these matters with respect to a particular
convertible security, the Investment Manager considers numerous factors,
including the economic and political outlook, the value of the security relative
to other investment alternatives, trends in the determinants of the issuer's
profits, and the issuer's management capability and practices.
Hedging and Income Strategies. The Fund may purchase call options on securities
that the Investment Manager intends to include in the Fund's portfolio in order
to fix the cost of a future purchase or to attempt to enhance return by, for
example, participating in an anticipated price increase of a security. The Fund
may purchase put options to hedge against a decline in the market value of
securities held in the Fund's portfolio or to attempt to enhance return. The
Fund may write (sell) covered put and call options on securities in which it is
authorized to invest. The Fund may purchase and write straddles, purchase and
write put and call options on bond indexes, and take positions in options on
foreign currencies to hedge against the risk of foreign exchange rate
fluctuations on foreign securities the Fund holds in its portfolio or that it
intends to purchase. The Fund may purchase and sell interest rate futures
contracts, bond index futures contracts and foreign currency futures contracts,
and may purchase put and call options and write covered put and call options on
such futures contracts.
The Fund may enter into forward currency contracts to set the rate at which
currency exchanges will be made for contemplated or completed transactions. The
Fund might also enter into forward currency contracts in amounts approximating
the value of one or more portfolio positions to fix the U.S. dollar value of
those positions. For example, when the Investment Manager believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, the Fund may enter into a forward contract to sell, for
a fixed amount of dollars, the amount of foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in such
foreign currency. The Fund has no specific limitation on the percentage of
assets it may commit to foreign currency exchange contracts, except that it will
not enter into a forward contract if the amount of assets set aside to cover the
contract would impede portfolio management or the Fund's ability to meet
redemption requests.
Strategies with options, financial futures, and forward currency contracts
may be limited by market conditions, regulatory limits and tax considerations,
and the Fund might not employ any of the strategies described above. There can
be no assurance that any strategy used will be successful. The loss from
investing in futures transactions is potentially unlimited. Options and futures
may fail as hedging techniques in cases where price movements of the securities
underlying the options and futures do not follow the price movements of the
portfolio securities subject to the hedge. Gains and losses on investments in
options and futures depend on the Investment Manager's ability to predict
correctly the direction of stock prices, interest rates, and other economic
factors. In addition, the Fund will likely be unable to control losses by
closing its position where a liquid secondary market does not exist and there is
no assurance that a liquid secondary market for hedging instruments will always
exist. It also may be necessary to defer closing out hedged positions to avoid
adverse tax consequences. The percentage of the Fund's assets segregated to
cover its obligations under options, futures, or forward currency contracts
could impede effective portfolio management or the ability to meet redemption or
other current obligations.
Repurchase Agreements. The Fund may enter into repurchase agreements with U.S.
banks or 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 security constitutes 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
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Investment Manager to present minimum credit risks in accordance with guidelines
established by the Board of 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 its net assets would then be invested in such agreements and other illiquid
securities.
Reverse Repurchase Agreements. The Fund may enter into reverse repurchase
agreements. In such agreements, the Fund sells the underlying security to a
creditworthy securities dealer or bank and the Fund agrees to repurchase it at
an agreed-upon date and price reflecting a market rate of interest. Such
agreements are considered to be borrowings and involve leveraging which is
speculative and increases both investment opportunity and investment risk. The
Fund will limit its investments in reverse repurchase agreement transactions and
other borrowings to one third of the total value of the Fund's assets taken at
market value, less liabilities other than borrowings. When the Fund enters into
reverse repurchase agreements, its custodian will set aside in a segregated
account cash or securities of the U.S. Government, its agencies or
instrumentalities with a market value at least equal to the repurchase price. 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. Such
agreements are subject to the risk that the benefit of purchasing a security
with the proceeds of the sale by the Fund will be less than the cost to the Fund
of transacting the reverse repurchase agreement. Such agreements will be entered
into when, in the judgment of the Investment Manager, the risk is justified by
the potential advantage to the Fund's total return.
Private Placements and Rule 144A Securities. The Fund may purchase securities in
private placements or pursuant to the Rule 144A exemption from Federal
registration requirements. Because an active trading market may not exist for
such securities, the sale of such securities may be subject to delay and greater
discounts than the sale of registered securities. Investing in such securities
could have the effect of increasing the level of Fund illiquidity to the extent
that qualified institutional buyers become less interested in buying these
securities. The Fund will not invest more than 15% of its net assets in illiquid
assets and will not invest more than 10% of its total assets in assets that are
illiquid due to restrictions on the sale of such securities to the public
without registration under the Securities Act of 1933.
When-Issued Securities. The Fund may purchase securities on a "when-issued"
basis. In such transactions delivery and payment occur at a date subsequent to
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. When the Fund agrees to purchase securities on a when-issued
basis, its custodian will set aside in a segregated account cash or securities
of the U.S. Government, its agencies or instrumentalities 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 to other parties limited to one
third of the Fund's total assets. 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.
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Portfolio Turnover. Given the investment objectives of the Fund, the rate of
portfolio turnover will not be a limiting factor when the Investment Manager
deems changes in the composition of the portfolio appropriate, and the
investment strategy pursued by the Fund therefore includes the possibility of
short term transactions. The Fund's portfolio turnover rate will vary from year
to year depending on world market conditions. For the fiscal years ended June
30, 1994 and 1993, the portfolio's turnover rate was 223% and 172%,
respectively. Higher portfolio turnover involves correspondingly greater
transaction costs and increases the potential for short term capital gains and
taxes.
Other Information. In addition to the Fund's primary investment objective, the
Fund has adopted certain investment restrictions, set forth in the Statement of
Additional Information, that are fundamental and cannot be changed without
shareholder approval. The Fund's secondary investment objective and all other
investment policies are nonfundamental and may be changed by the Board of
Directors without shareholder approval. The Fund may borrow money from banks for
temporary or emergency purposes (not for leveraging or investment) but not in
excess of an amount to one third of the Funds total assets. The Fund may not
purchase securities for investment while any bank borrowing equaling 5% or more
of its total assets is outstanding.
HOW TO PURCHASE SHARES
The Fund's shares are sold on a continuing basis at the net asset value per
share next determined after receipt and acceptance of the order by Bull & Bear
Service Center (see "Determination of Net Asset Value"). The minimum initial
investment is $1,000 for regular accounts and $500 for Individual Retirement
Accounts ("IRAs") and profit sharing plans. The minimum subsequent investment is
$100. The initial investment minimums are waived for investors electing to
invest $100 or more each month in the Fund through the Bull & Bear Automatic
Investment Program.
Bull & Bear Automatic Investment Program. By participating in the Bull & Bear
Automatic Investment Program, a shareholder can establish a convenient and
affordable long term investment program. The Program is designed to facilitate
the automatic monthly investment of $100 or more into the shareholder's account.
o The Bull & Bear Bank Transfer Plan lets shareholders electronically purchase
Fund shares on a certain day each month by transferring a specified dollar
amount from the shareholder's regular checking account, NOW account, or bank
money market deposit account.
o Through the Bull & Bear Salary Investing Plan, part or all of a
shareholder's salary may be invested electronically in shares of the Fund at
each pay period, depending upon the direct deposit program of the
shareholder's employer.
o The Bull & Bear Government Direct Deposit Plan allows the shareholder to
deposit automatically part or all of certain U.S. Government checks in the
shareholder's Fund account. Eligible U.S. Government checks include payments
for Social Security, pension benefits, military or retirement benefits,
salary, veteran's benefits and most other recurring payments.
For more information concerning this Program, or to request the necessary
authorization form(s), please call Bull & Bear Service Center, 1-800-847-4200.
Shareholders may terminate participation in the Program at any time by written
notice received at least 10 days prior to the scheduled investment date. The
Fund reserves the right to redeem any account if participation in the Program is
terminated and the account's value is less than $500. The Plans do not assure a
profit or protect against loss in a declining market.
Initial Investment. The Account Application that accompanies this Prospectus
should be completed, signed and, with a check or other negotiable bank draft
payable to Global Income Fund mailed to Bull & Bear Service Center, P.O. Box
419789, Kansas City, MO 64141-6789. Initial investments also may be made by
having your bank wire money, as set forth below, in order to avoid mail delays.
Subsequent Investments. Subsequent investments may be made at any time by wiring
money as set forth below, or by mailing a check or other negotiable bank draft
($100 minimum), made payable to Global Income Fund together with a Bull & Bear
FastDeposit form to Bull & Bear Service Center, P.O. Box 419789, Kansas City, MO
64141-6789. If that form is not used, a letter should indicate the Fund and
account number to which the subsequent investment is to be credited, and name(s)
of the registered owner(s).
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Investment by Telephone. Shareholders may purchase additional shares of the Fund
by telephone through the Automated Clearing House (ACH) system as long as the
shareholder's bank is a member of the ACH system and the shareholder has a
completed, approved authorization on file. The funding for the purchase will be
automatically deducted from the bank account designated on the shareholder's
authorization. For requests received by 3:00 p.m., eastern time, the investment
normally will be credited to the Fund account on the next business day of the
Fund. There is a minimum of $100 for each investment by telephone. Any
subsequent changes in bank account information must be submitted in writing,
signature guaranteed, and with a voided check or deposit slip. To initiate an
investment by telephone, please call 1-800-847-4200.
Investment by Wire. When making an initial investment by wire, investors must
first telephone Bull & Bear Service Center, 1-800-847-4200, to give the name(s)
under which the account is to be registered, tax identification number, the name
of the bank sending the wire, and to be assigned a Bull & Bear Global Income
Fund account number. Investors may then purchase shares by requesting their bank
to transmit immediately available funds ("Federal funds") by wire to the
Transfer Agent at: United Missouri Bank NA, ABA #10-10- 00695; for Account
Number 98-7052-724-3; Global Income, investor's name(s) and account number. The
account number and the investor's name(s) must be specified in the wire as they
are to appear on the account registration. In addition, the account number the
investor(s) has been assigned should be entered on the completed Account
Application and promptly forwarded to Bull & Bear Service Center, P.O. Box
419789, Kansas City, MO 64141-6789. This service is not available on days when
the Federal Reserve wire system is closed. Subsequent investments may be made at
any time through the wire procedure described above, which must include the
shareholder name(s) and account number, after notifying Bull & Bear Service
Center by telephone.
Shareholder Accounts. By investing in the Fund, a shareholder has an account
established to which all full and fractional shares (to three decimal places)
will be credited, together with any dividends that are paid in additional shares
(see "Distributions and Taxes"). Stock certificates will be issued only for full
shares when requested in writing. In order to facilitate redemptions and
exchanges, it is recommended that shareholders not request certificates.
Shareholders receive quarterly statements showing monthly dividends and
confirmation statements for any other purchase or sale of Fund shares.
When Orders are Effective. The purchase price for shares of the Fund is the net
asset value of such shares next determined after receipt and acceptance by Bull
& Bear Service Center of a purchase order in proper form. All checks are
accepted subject to collection at full face value in Federal funds and must be
drawn in U.S. dollars on a U.S. bank. The Fund reserves the right to reject any
order. Accounts are charged $30 by the Transfer Agent for investment checks
which are not honored by the investor's bank. The Fund may waive or lower the
investment minimums with respect to any person or class of persons.
SHAREHOLDER SERVICES
An investor participating in any of the Fund's special plans or services may
terminate or modify such participation at any time. Shares or cash should not be
withdrawn from any Tax-Advantaged Retirement Plan described below, however,
without consulting a tax adviser concerning possible adverse tax consequences.
Additional information regarding any of the following services is available from
the Fund's Distributor, Bull & Bear Service Center, 1-800-847-4200.
Check Writing Privilege for Easy Access. The Transfer Agent will, upon request,
provide shareholders with free, unlimited checks that may be made payable to the
order of anyone in any amount of not less than $250. The Fund will arrange for
the checks to be honored by United Missouri Bank ("UMB") for this purpose. This
Check Writing Privilege enables the shareholder to continue receiving dividends
on shares redeemed by check until such time as the check is presented to UMB for
payment. UMB has the right to refuse any checks which do not conform with its
requirements. The shareholder will be subject to UMB's rules and regulations
governing checking accounts, including a $20 charge for refused checks, which
may change without notice. When such a check is presented to UMB for payment,
the Transfer Agent, as the shareholder's agent, will cause the Fund to redeem a
sufficient number of full and fractional shares in the shareholder's account to
cover the amount of the check. The Fund generally will not honor for up to 10
days a check written by a shareholder that requires the redemption of shares
recently purchased by check or until it is reasonably assured of payment
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of the check representing the purchase. Since the value of Fund shares and of a
shareholder's account changes daily, shareholders should not attempt to close an
account by writing a check.
Dividend Sweep Privilege. Shareholders may elect to have invested automatically
either all dividends or all dividends and capital gain distributions paid by the
Fund in any other Bull & Bear Fund. Shares of the other Bull & Bear Fund will be
purchased at the current net asset value calculated on the payment date. For
more information concerning this privilege and the other Bull & Bear Funds, or
to request a Dividend Sweep Authorization Form, please call Bull & Bear Service
Center, 1-800-847-4200. Shareholders may cancel this privilege by mailing
written notification to Bull & Bear Service Center, P.O. Box 419789, Kansas
City, MO 64141-6789. To select a new Fund after cancellation, shareholders must
submit a new Authorization Form. Enrollment in or cancellation of this privilege
is generally effective three business days following receipt. This privilege is
available only for existing accounts and may not be used to open new accounts.
The Fund may modify or terminate this privilege at any time or charge a service
fee. No such fee currently is contemplated.
Systematic Withdrawal Plan. Shareholders who own Fund shares with a value of at
least $20,000 may elect an automatic withdrawal of cash in fixed or variable
amounts from their Fund accounts at monthly or quarterly intervals in the
minimum amount of $100. Under the Systematic Withdrawal Plan, all dividends and
other distributions, if any, are reinvested in the Fund.
Assignment. Shares of the Fund may be transferred to another owner. Instructions
are available from Bull & Bear Service Center, 1-800-847-4200.
Exchange Privileges. Shareholders may exchange at least $500 worth of shares of
the Fund for shares of any other Bull & Bear Fund (provided the registration is
exactly the same, the shares may be sold in the shareholder's state of
residence, and the exchange may otherwise legally be made). Information,
including a free prospectus, on any of the Funds listed below is available from
Bull & Bear Service Center, 11 Hanover Square, New York, NY 10005,
1-800-847-4200. The other Fund's prospectus should be read in advance.
To implement an exchange, shareholders should call Bull & Bear Service
Center toll-free at 1-800-847-4200 between 9 a.m. and 5 p.m. eastern time, on
any business day of the Fund and provide the following information: account
registration including address and number; taxpayer identification number;
percentage, number, or dollar value of shares to be redeemed; name and, if
different, the account number of the Bull & Bear Fund to be purchased; and, the
identity and telephone number of the caller. A "business day of the Fund" is any
day on which the New York Stock Exchange is open for business. The following are
not business days of the Fund: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
The other Bull & Bear Funds are:
o Bull & Bear Dollar Reserves is a high quality money market fund investing in
U.S. Government securities. Income is free from state income taxes. Free
unlimited check writing ($250 minimum per check). Pays monthly dividends.
o Bull & Bear U.S. Government Securities Fund invests for a high level of
current income, liquidity, and safety of principal. Free unlimited check
writing ($250 minimum per check). Pays monthly dividends.
o Bull & Bear Municipal Income Fund invests for the highest possible income
exempt from Federal income tax consistent with preservation of principal.
Free unlimited check writing ($250 minimum per check). Pays monthly
dividends.
o Bull & Bear Quality Growth Fund seeks growth of capital and income from a
portfolio of common stocks of large, quality companies with potential for
significant growth of earnings and dividends.
o Bull & Bear U.S. and Overseas Fund invests worldwide for the highest
possible total return.
o Bull & Bear Special Equities Fund invests aggressively for maximum capital
appreciation.
o Bull & Bear Gold Investors seeks long term capital appreciation in
investments with the potential to provide a hedge against inflation and
preserve the purchasing power of the dollar.
Exchange requests received between 9 a.m. and 4 p.m. eastern time, on any
business day of the Fund, will be effected at the net asset values of the Fund
and the other Bull & Bear Fund as determined at the close
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of regular trading on that business day. Exchange requests received between 4
p.m. and 5 p.m. eastern time, on any business day of the Fund, will be effected
at the close of regular trading on the next business day of the Fund.
Shareholders unable to reach Bull & Bear Service Center at the above telephone
number may, in emergencies, call 1-212-363-1100 or communicate by fax
1-212-363-1103 or cable to the address BULLNBEAR NEWYORK. Exchanges may
be
difficult or impossible to implement during periods of rapid changes in economic
or market conditions. Exchange privileges may be terminated or modified by the
Fund upon 60 days' notice. For tax purposes, exchanges are treated as a
redemption and purchase of shares. Shareholders may give exchange instructions
to Bull & Bear Service Center by telephone without further documentation. If
certificates have been issued to the shareholder, this procedure may be utilized
only if, prior to giving telephone instructions, the shareholder delivers the
certificates to the Transfer Agent for deposit into the shareholder's account.
o Bull & Bear Securities (Discount Brokerage Account) Transfers. Shareholders
with an account at Bull & Bear Securities, Inc., an affiliate of the
Investment Manager and a wholly owned subsidiary of Bull & Bear Group, Inc.
offering discount brokerage services, may access their investment in any of
the Bull & Bear Funds to pay for securities purchased in their brokerage
account and purchase Bull & Bear Funds in their brokerage account.
Shareholders may request a Discount Brokerage Account Application from Bull
& Bear Securities, Inc., 1-800-262-5800.
Tax-Advantaged Retirement Plans. These plans provide an opportunity for
individuals to set aside money for retirement in a tax-advantaged account in
which earnings can be compounded without incurring a tax liability until the
money and earnings are withdrawn. Contributions may be fully or partially
deductible for Federal income tax purposes as noted below. Information on any of
the plans described below is available from Bull & Bear Service Center,
1-800-847-4200.
The minimum investment to establish a Bull & Bear IRA or other retirement
plan is $500. Minimum subsequent investments are $100. The initial investment
minimums are waived for investors electing to invest $100 or more each month in
the Fund through the Bull & Bear Automatic Investment Program. There are no
set-up fees for any Bull & Bear Retirement Plans. Subject to change on 30 days'
notice, the plan custodian charges Bull & Bear IRAs a $10 annual fiduciary fee
and $10 for each distribution prior to age 59 1/2; however, the annual fiduciary
fee is waived for IRAs with assets of $10,000 or more and for shareholders
investing regularly through the Bull & Bear Automatic Investment Program.
o Individual Retirement Accounts. Anyone with earned income who is less than
age 70 1/2at the end of the tax year, even if also participating in another
type of retirement plan, may establish an IRA and contribute each year up to
$2,000 or 100% of earned income, whichever is less, and an aggregate of up
to $2,250 when a non-working spouse is also covered in a separate spousal
account. If each spouse has at least $2,000 of earned income each year, they
may contribute up to $4,000 annually. Also, employers may make contributions
to an IRA on behalf of an individual under a Simplified Employee Pension
Plan ("SEP") in an amount up to 15% of up to $150,000 of compensation.
Generally, taxpayers may contribute to an IRA during the tax year and
through the next year until the income tax return for that year is due,
without regard to extensions. For example, most individuals may contribute
for the 1994 tax year from January 1, 1994 through April 15, 1995.
Deductibility. Contributions to IRAs are fully deductible for most
taxpayers. For a taxpayer who is an active participant in an
employer-maintained retirement plan (or whose spouse is), a portion of IRA
contributions is deductible if adjusted gross income (before the IRA
deductions) is $40,000-$50,000 (if married) and $25,000-$35,000 (if single).
Only IRA contributions by a taxpayer who is an active participant in an
employer-maintained retirement plan (or whose spouse is) and has adjusted
gross income of more than $50,000 (if married) and $35,000 (if single) will
not be deductible. An eligible individual may establish a Bull & Bear IRA
under the prototype plan available through the Fund, even though such
individual or spouse actively participates in an employer-maintained
retirement plan.
o IRA Transfer and Rollover Accounts. Special forms are available from Bull &
Bear Service Center, 1-800- 847-4200, which make it easy to transfer or roll
over IRA assets to a Bull & Bear IRA. An IRA may be transferred from one
financial institution to another without adverse tax consequences.
Similarly, no taxes
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need be paid on a lump-sum distribution which an individual may receive as a
payment from a qualified pension or profit sharing plan due to retirement,
job termination or termination of the plan, so long as the assets are put
into an IRA Rollover account within 60 days of the receipt of the payment.
Withholding for Federal income tax purposes is required at the rate of 20%
for "eligible rollover distributions" made from any retirement plan (other
than an IRA) that are not directly transferred to an "eligible retirement
plan," such as a Bull & Bear Rollover Account.
o Profit Sharing and Money Purchase Plans provide an opportunity to accumulate
earnings on a tax-deferred basis by permitting corporations, self-employed
individuals (including partners) and their employees generally to contribute
(and deduct) up to $30,000 annually or, if less, 25% (15% for profit sharing
plans) of compensation or self-employment earnings up to a maximum of
$150,000. Corporations and partnerships, as well as all self-employed
persons, are eligible to establish these Plans. In addition, a person who is
both salaried and self-employed, such as a college professor who serves as a
consultant, may adopt these retirement plans based on self-employment
earnings.
o Section 403(b)(7) Accounts. Section 403(b)(7) of the Internal Revenue Code
of 1986, as amended ("Code"), permits the establishment of custodial
accounts on behalf of employees of public school systems and certain
tax-exempt organizations. A participant in such a plan does not pay taxes on
any contributions made by the participant's employer to the participant's
account pursuant to a salary reduction agreement, up to a maximum amount, or
"exclusion allowance." The exclusion allowance is generally computed by
multiplying the participant's years of service times 20% of the
participant's compensation included in gross income received from the
employer (reduced by any amount previously contributed by the employer to
any 403(b)(7) account for the benefit of the participant and excluded from
the participant's gross income). However, the exclusion allowance may not
exceed the lesser of 25% of the participant's compensation (limited as
above) or $30,000. Contributions and subsequent earnings thereon are not
taxable until withdrawn, when they are received as ordinary income.
HOW TO REDEEM SHARES
Liquidity. Generally, shareholders may require the Fund to redeem their shares
by submitting a written request to Bull & Bear Service Center, P.O. Box 419789,
Kansas City, MO 64141-6789, signed by the record owner(s). If a written
redemption request is sent to the Fund, it will be forwarded to the above
address. If stock certificates have been issued for shares being redeemed, they
must accompany the written request. In addition, shareholders may redeem shares
by writing checks against their Fund account and also expedite redemption
requests by telephoning as described below.
Check Writing Privilege. See "Shareholder Services" above for redemption of
shares by writing free, unlimited, personalized checks, provided by the Fund, in
amounts of $250 or more.
Redemption by Telephone. You may redeem shares by telephone and receive the
proceeds through the Automated Clearing House (ACH) system as long as your bank
is a member of the ACH system and you have a completed, approved authorization
on file. The funding for your redemption will be automatically deducted from the
Fund account. The proceeds will normally be credited to your bank account within
two business days following the telephone request. The request must be received
no later than 3:00 p.m., eastern time. There is a minimum of $250 for each
redemption by telephone. Any subsequent changes in bank account information must
be submitted in writing, signature guaranteed, and accompanied by a sample
voided check or deposit slip. To initiate a redemption by telephone, please call
1-800-847-4200.
Expedited Redemption. Shareholders redeeming at least $1,000 worth of shares
(for which certificates have not been issued) may obtain expedited redemption by
calling Bull & Bear Service Center, 1-800-847-4200. If this automatic benefit
has been declined by the shareholder on the Account Application, a separate
Authorization Form must be completed and returned to the Transfer Agent before
the request can be accepted. Shareholders may request that payment be sent to
the shareholder's bank designated on the authorization by Federal funds wire or
the shareholder's address of record by regular mail.
To implement an expedited redemption, shareholders should call Bull & Bear
Service Center toll-free at 1- 800-847-4200 between 9 a.m. and 5 p.m. eastern
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time, on any business day of the Fund, and provide the following information:
Fund account registration including address, account number, and taxpayer
identification number; number, percentage, or dollar value of shares to be
redeemed; whether the proceeds are to be mailed to the shareholder's address of
record or wired to the shareholder's bank; the bank's name, address, ABA routing
number, bank account registration and account number, and a contact person's
name and telephone number; and the identity and telephone number of the caller.
Shareholders unable to reach Bull & Bear Service Center at the above telephone
number may, in emergencies, call 1-212-363-1100 or communicate by fax 1-
212-363-1103 or cable to the address BULLNBEAR NEWYORK. Expedited
redemptions
may be difficult or impossible to implement during periods of rapid changes in
economic or market conditions. Expedited redemption privileges may be terminated
or modified by the Fund upon 60 days' notice. Expedited redemption requests
received between 9 a.m. and 4 p.m., eastern time, on any business day of the
Fund, will be effected at the net asset values of the Fund and the other Bull &
Bear Fund as determined at the close of business that day. Exchange requests
received between 4 p.m. and 5 p.m., eastern time, on any business day of the
Fund, will be effected at the close of business on the next day the New York
Stock Exchange is open for trading. Shareholders unable to reach Bull & Bear
Service Center at the above telephone number may, in emergencies, call
1-212-363-1100 or communicate by fax 1-212-363-1103 or cable to the address
BULLNBEAR NEWYORK.
Redemption Price. The redemption price is the net asset value per share next
determined after receipt of the redemption request in proper form. Registered
broker/dealers, investment advisers, banks, and insurance companies may open
accounts and redeem shares by telephone or wire and may impose a charge for
handling purchases and redemptions when acting on behalf of others. Payment for
shares redeemed will be made as soon as possible, ordinarily within 7 days after
receipt of the redemption request in proper form. The right of redemption may
not be suspended, or date of payment delayed more than 7 days, except for any
period (i) when the New York Stock Exchange is closed or trading thereon is
restricted as determined by the SEC; (ii) under emergency circumstances as
determined by the SEC that make it not reasonably practicable for the Fund to
dispose of securities owned by it or fairly to determine the value of its
assets; or (iii) as the SEC may otherwise permit. The mailing of proceeds on
redemption requests involving any shares purchased by personal, corporate, or
government check or ACH transfer is generally subject to a 10 day delay to allow
the check or transfer to clear. The 10 day clearing period does not affect the
trade date on which a purchase or redemption order is priced, or any dividends
and capital gain distributions to which a shareholder may be entitled through
the date of redemption. Fund check writing redemption checks received during the
10 day clearing period will be rejected and marked uncollected. The clearing
period does not apply to purchases made by wire, or cashier's, treasurer's, or
certified checks. Due to the relatively higher cost of maintaining small
accounts, the Fund reserves the right, upon 60 days' notice, to redeem any
account, other than IRA and other Bull & Bear prototype retirement plan
accounts, worth less than $500 except if solely from market action, unless an
investment is made to restore the minimum value.
Telephone Privileges. Shareholders automatically have all telephone privileges
to, among other things, authorize an expedited redemption or exchange, unless
declined on the Account Application or otherwise in writing. Neither the Fund
nor Bull & Bear Service Center shall be liable for any loss or damage for acting
in good faith upon instructions received by telephone and believed to be
genuine. The Fund employs reasonable procedures to confirm that instructions
communicated by telephone are genuine and if it does not, it may be liable for
any losses due to unauthorized or fraudulent transactions. These procedures
include requiring some form of personal identification prior to acting upon
instructions received by telephone, providing written confirmation of such
transactions, or tape recording of telephone instructions. The Fund may modify
or terminate any telephone privileges or shareholder services (except as noted)
at any time without notice.
Signature Guarantees. No signature guarantees are required when payment is to be
made to the shareholder of record at the shareholder's address of record. If the
proceeds of the redemption are to be paid to a non- shareholder of record, or to
an address other than the address of record, or the shares are to be assigned,
the Transfer Agent may require that the owner's signature be guaranteed by an
entity acceptable to the Transfer Agent, such as a commercial bank or trust
company or member firm of a national securities exchange or of the NASD. A
notary public may not guarantee signatures. The Transfer Agent may require
further documentation. The Transfer Agent may restrict the mailing of redemption
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proceeds to a shareholder's address of record within 30 days of such address
being changed unless the shareholder provides a signature guarantee, as
described above.
DISTRIBUTIONS AND TAXES
Distributions. The Fund declares and pays monthly dividends to its shareholders
from its net investment income, if any. In any month in which the Fund fails to
earn net investment income equal to the average of the two lowest monthly
distributions in the preceding three months, the Fund will make an additional
distribution equal to such deficiency, payable initially from any undistributed
net investment income, secondly from any net realized gains from foreign
currency transactions, thirdly from any net realized short term capital gains
including gains from writing call options (after off setting any capital loss
carryover), and lastly from paid-in capital. The Fund also makes an annual
distribution to its shareholders of net long term and undistributed net short
term capital gain (after offsetting any capital loss carryover), if any, and any
undistributed net realized gains from foreign currency transactions. Such
distributions, if any, are declared and payable to shareholders of record on a
date in December of each year. Such amounts may be paid in January of the
following year (in which event they will be deemed received by the shareholders
on the preceding December 31 for tax purposes). The Fund may also make an
additional distribution following the end of its fiscal year out of any
undistributed income and capital gain. Dividends and other distributions are
made in additional shares of the Fund, unless the shareholder elects to receive
cash on the Account Application or so elects subsequently by calling Bull & Bear
Service Center, 1-800-847-4200. For Federal income tax purposes, such dividends
and other distributions are treated in the same manner whether received in
shares or cash. Any election will remain in effect until Bull & Bear Service
Center is notified by the shareholder to the contrary.
Taxes. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of Federal income
tax on that part of its investment company taxable income (generally consisting
of net investment income, net short term capital gains, and net gains from
certain foreign currency transactions) and net capital gain (the excess of net
long term capital gain over net short term capital loss) that is distributed to
its shareholders. Dividends paid by the Fund from its investment company taxable
income (whether paid in cash or in additional Fund shares) generally are taxable
to shareholders, other than shareholders that are not subject to tax on their
income, as ordinary income to the extent of the Fund's earnings and profits; a
portion of those dividends may be eligible for the corporate dividends-received
deduction. Distributions by the Fund of its net capital gain (whether paid in
cash or in additional Fund shares) when designated as such by the Fund, are
taxable to the shareholders as long term capital gains, regardless of how long
they have held their Fund shares. The Fund notifies its shareholders following
the end of each calendar year of the amounts of dividends and capital gain
distributions paid (or deemed paid) that year and of any portion of those
dividends that qualifies for the corporate dividends-received deduction. Any
dividend or other distribution paid by the Fund will reduce the net asset value
of Fund shares by the amount of the distribution. Furthermore, such
distribution, although similar in effect to a return of capital, will be subject
to taxes. The Fund is required to withhold 31% of all dividends, capital gain
distributions, and redemption proceeds payable to any individuals and certain
other noncorporate shareholders who do not provide the Fund with a correct
taxpayer identification number. Withholding at that rate from dividends and
capital gain distributions also is required for such shareholders who otherwise
are subject to backup withholding. The foregoing is only a summary of some of
the important Federal income tax considerations generally affecting the Fund and
its shareholders; see the Statement of Additional Information for a further
discussion. Because other Federal, state and local tax considerations may apply,
investors are urged to consult their tax advisers.
DETERMINATION OF NET ASSET VALUE
The value of a share of the Fund is based on the value of its net assets.
The Fund's net assets are the total of the Fund's investments and all other
assets minus any liabilities. The value of one share is determined by dividing
the net assets by the total number of shares outstanding. This is referred to as
"net asset value per share," and is determined as of the close of regular
trading on the New York Stock Exchange (currently, 4 p.m. eastern time, unless
weather, equipment failure or other factors contribute to an earlier closing)
each business day of the Fund. Portfolio securities and other assets of the Fund
are valued primarily on the basis of market quotations, if readily available.
Foreign securities, if any, are valued on the basis of quotations from a primary
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market in which they are traded and are translated from the local currency into
U.S. dollars using current exchange rates. Securities, and other assets for
which quotations are not readily available will be valued at fair value as
determined in good faith by or under the direction of the Board of Directors.
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 final direction of the Board
of Directors. The Investment Manager is authorized to place portfolio
transactions with Bull & Bear Securities, Inc., an affiliate of the Investment
Manager, and may allocate brokerage transactions by taking into account the
sales of shares of the Fund and the other Bull & Bear Funds. 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 daily 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, 1994, the investment management fees
paid by the Fund represented approximately 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.
DISTRIBUTION OF SHARES
Pursuant to a Distribution Agreement, between the Fund and Bull & Bear
Service Center, Inc. (the "Distributor") the Distributor acts as the Fund's
exclusive agent for the sale of its shares. The Fund has also adopted a plan of
distribution (the "Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "1940 Act"). Pursuant to the Plan, the Fund pays the
Distributor monthly a fee in the amount of one-quarter of one percent per annum
of the Fund's average daily net assets as compensation for service activities
and a fee in an amount of up to one-quarter of one percent per annum of the
Fund's average daily net assets as compensation for distribution activities. The
fee for service activities is intended to cover personal services provided to
shareholders in the Fund and the maintenance of shareholder accounts. The fee
for distribution activities is intended to cover all other activities and
expenses primarily intended to result in the sale of the Fund's shares. The fee
may be retained or passed through by the Distributor to brokers, banks and
others who provide services to Fund shareholders. The Fund will pay the fees to
the Distributor until either the Plan is terminated or not renewed. In that
event, the Distributor's expenses in excess of fees received or accrued through
the termination day will be the Distributor's sole responsibility and not
obligations of the Fund. During the period they are in effect, the Distribution
Agreement and Plan obligate the Fund to pay fees to the Distributor as
compensation for its service and distribution activities. If the Distributor's
expenses exceed the fees, the Fund will not be obligated to pay any additional
amount to the Distributor and, if the Distributor's expenses are less than such
fees, it may realize a profit. Certain other advertising and sales materials may
be prepared which relate to the promotion of the sale of shares of the Fund and
one or more other Bull & Bear Funds. In such cases, the expenses will be
allocated among the Funds involved based on the inquiries resulting from the
materials or other factors deemed appropriate by the Board of Directors. The
costs of personnel and facilities of the Distributor to respond to inquiries by
shareholders and prospective shareholders will also be allocated based on such
relative inquiries or other factors. There is no certainty that the allocation
of any of the foregoing expenses will precisely allocate to the Fund costs
commensurate with the benefits it receives, and it may be that the other Bull &
Bear Funds and Bull & Bear Securities, Inc. will benefit therefrom.
PERFORMANCE INFORMATION
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[THE FOLLOWING TABLE IS REPRESENTED BY A LINE GRAPH IN THE PRINTED
MATERIAL]
[***** INSERT TABLE OF PLOT POINTS *****]
From time to time the Fund advertises its current and compound yield.
Current yield is computed by dividing the Fund's net investment income per share
for the most recent month, determined in accordance with SEC rules and
regulations, by the net asset value per share on the last day of such month and
annualizing the result. Compounded yield is the annualized current yield which
is compounded by assuming the current income to be reinvested. The Fund may also
publish a dividend distribution rate in sales material from time to time. The
dividend distribution rate of the Fund is the current rate of distribution paid
per share by the Fund during a specified period divided by the net asset value
per share at the end of such period and annualizing the result. When considering
the Fund's performance, fluctuations in share value must be considered together
with any published dividend distribution rate. Whenever the Fund advertises its
current yield and its dividend distribution rate, it will also advertise its
average annual total return over specified periods. For these purposes, the
Fund's average annual total return is based on an increase (or decrease) in a
hypothetical $1,000 invested in the Fund at the beginning of each of the
specified periods, assuming the reinvestment of any dividends and distributions
paid by the Fund during such periods. The Fund does not impose any sales charge
or redemption fee on the purchase or redemption of its shares. The investment
returns and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Until October 29, 1992, the Fund's investment objective was to obtain for
its shareholders the highest income over the long term and the Fund followed a
policy of investing primarily in lower rated debt securities of U.S. companies.
The Fund's yield and total return is based upon historical performance
information and is not predictive of future performance.
Average Annual Total Return for
Periods Ended June 30, 1994
One Year: - 5.12%
Five Years: 6.44%
Ten Years: 6.63%
The Fund's performance for the past year was materially affected by the
Investment Manager's strategy of investing the Fund's assets in a global
portfolio of investment grade fixed income securities. At the June 30, 1994 year
end, the Fund's investments were diversified among 14 different countries:
Argentina, Brazil, and Mexico in Central and South America; Denmark, France,
Germany Ireland, Italy, and Spain in the European Economic Community; Australia
and the Philippines in the Pacific Rim; Canada and the United States in North
America; plus South Africa. The Fund's recent strategy in the face of
significant volatility, rising interest rates, and a weak dollar was to improve
overall credit quality and shorten maturities. While these steps are designed to
reduce longer term risk, they also reduce current yield, as has been the case.
Investment opportunities in Latin America have increased substantially over the
past several years, which have contributed importantly to the Fund's total
return. At the June 30, 1994 fiscal year end, the Fund had investments in
securities of issuers based in Argentina, Brazil, and Mexico representing 12.9%
of the portfolio. U.S. fixed income markets also continued to react favorably
during the past year to the restrained growth in economic activity and moderate
levels of inflation. The Fund was more heavily weighted in dollar denominated
investments during the past year. The Fund engaged in forward currency selling
to lessen the impact of foreign currency fluctuations in the Fund. The Fund did
not utilize options or futures in hedging strategies.
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CAPITAL STOCK
The Fund is a series of Bull & Bear Funds II, Inc. (the "Corporation"),
a Maryland corporation incorporated in 1974. Prior to October 29, 1993, the
Corporation operated under the name Bull & Bear Incorporated. The Corporation is
a series investment company, and is authorized to issue up to 1,000,000,000
shares ($.01 par value). The Board of Directors has designated 500,000,000
shares as Bull & Bear Dollar Reserves, 250,000,000 shares as Bull & Bear Global
Income Fund, and 250,000,000 shares as Bull & Bear U.S. Government Securities
Fund. The Board of Directors of the Corporation may establish one or more new
series, although it has no current intention to do so. 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 or the Corporation, shareholders will be entitled to receive ratably per
share the net assets of the Fund. Shareholders of all series of the Corporation
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. Except to the extent that the Board of Directors might provide by
resolution that the holders of shares of a particular series are entitled to
vote as a class on specified matters, and except for approval of investment
management agreements, plans of distribution, and changes in fundamental
investment objectives and limitations which are voted upon by each series,
separately as a class, there will be no right for any series to vote as a class
unless such right exists under Maryland law. The Corporation's Articles of
Incorporation contain no provision entitling the holders of the present classes
of capital stock to a vote as a class on any matter other than the foregoing.
Where a matter is to be voted upon separately by series, the matter is
effectively acted upon for such series if a majority of the outstanding voting
securities of that series approves the matter, notwithstanding that: (1) the
matter has not been approved by a majority of the outstanding voting securities
of any other series, or (2) the matter has not been approved by a majority of
the outstanding voting securities of the Corporation.
In accordance with the General Corporation Law of the State of Maryland
applicable to open-end investment companies incorporated in Maryland and
registered under the 1940 Act, as is the Corporation, the Corporation's By-Laws
provide that there will be no annual meeting of shareholders in any year except
as required by law. In practical effect, this means that the Fund will not hold
an annual meeting of shareholders in years in which the only matters which would
be submitted to shareholders for their approval are the election of Directors
and ratification of the Directors' selection of accountants, although holders of
10% of the Corporation's shares may call a meeting at any time. There will
normally be no meetings of shareholders for the purpose of electing Directors
unless fewer than a majority of the Directors holding office have been elected
by shareholders. Shareholder meetings will be held in years in which shareholder
approval of the Fund's investment management agreement, plan of distribution, or
changes in its fundamental investment objective, policies or restrictions is
required by the 1940 Act.
CUSTODIAN AND TRANSFER AGENT
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111, acts
as custodian of the Fund's assets and may appoint one or more subcustodians
provided such subcustodianship is in compliance with the rules and regulations
promulgated under the 1940 Act. The Fund may maintain a portion of its assets in
foreign countries pursuant to an agreement with Citibank, N.A. and through the
custodian with Euro-clear. Utilization by the Fund of such foreign custodial
arrangements will increase the Fund's expenses. The custodian also performs
certain accounting services for the Fund. The Fund's transfer and dividend
disbursing agent is Supervised Service Company, Inc., P.O. Box 419789, Kansas
City, MO 64141-6789. The Distributor provides certain transfer agency services
to the Fund and is reimbursed its cost by the Fund. The costs of facilities,
personnel and other related expenses are allocated among the Bull & Bear Funds
based on the relative number of inquiries and other factors deemed appropriate
by the Board of Directors.
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BULL
&
BEAR ---------------------------------------------------------------------------
Performance Driven(R)
April 12, 1995
BULL & BEAR Global
Income Fund
Supplement to Prospectus
Dated November 1, 1994
The paragraph entitled "Portfolio Management" on page 3 is revised as follows:
The Fund's Portfolio Manager is Steven A. Landis. Mr. Landis is Senior Vice
President and a member of the Investment Policy Committee of Bull & Bear
Advisers, Inc. (the "Investment Manager") with overall responsibility for the
Bull and Bear fixed income funds. Mr. Landis was formerly Associated Director
- -- Proprietary Trading at Barclay De Zoete Wedd Securities Inc. and Director,
Bond Arbitrage at WG Trading Company. Mr. Landis received his MBA in Finance
from Columbia University.
USG-9504-Sup
