The investment objective of Bull & Bear U.S. Government Securities Fund, a
no load mutual fund, is to provide for its shareholders:
o A High Level of Current Income,
o Liquidity, and
o Safety of Principal.
The Fund pursues its investment objective by investing primarily in a
diversified, managed portfolio of securities backed by the full faith and credit
of the United States. Fund shares are not guaranteed or insured by the U.S.
government or its agencies and there can be no assurance its investment
objective will be achieved. Monthly dividends are paid to shareholders from the
income the Fund earns on its investments.
- --------------------------------------------------------------------------------
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 should know before investing in the Fund and should be
retained for future reference. A careful reading of this 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, telephone 1-800-847-4200. Shares of the Fund
are not bank deposits or obligations of, or guaranteed or endorsed by any bank
or any affiliate of any bank.
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
1
<PAGE>
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
2
<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 to accounts with average monthly
balances of 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............................................................ 0.25%
Other Expenses........................................................ 0.81%
------
Total Fund Operating Expenses......................................... 1.76%
<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:..................................................................... $18 $55 $95 $207
</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, except that 12b-1 fees have been restated to reflect the Fund's
current fees. 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 the 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 the reimbursable to the
Investment 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.
<TABLE>
<CAPTION>
Years Ended June 30,
1994 1993 1992 1901 1990 1989 1988 1987 1986(3)
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period $15.53 $14.80 $13.82 $13.69 $13.90 $14.36 $14.68 $14.84 $15.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income .78 .78 .90 .98 1.07 1.22 1.44 1.47 .58
Net realized and unrealized gain
(loss) on investments (1.03) .75 1.00 .13 (.21) (.43) (.27) (.21) (.27)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations (.25) 1.53 1.90 1.11 .86 .79 1.17 1.26 .31
Less distributions:
Distributions from net investment income (.65) (.80) (.92) (.98) (1.07) (1.25) (1.49) (1.42) (.47)
------ ------ ------ ------ ------ ------ ------ ------ ------
Increase (decrease) in net asset value (.90) .73 .98 .13 (.21) (.46) (.32) (.16) (.16).
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value at end of period $14.63 $15.53 $14.80 $13.82 $13.69 $13.90 $14.36 $14.68 $14.84
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (1.76)% 10.75% 14.10% 8.48% 6.42% 5.87% 8.45% 8.74% 6.80%
- ------------ ====== ====== ====== ====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(000's omitted) $17,777 $22,636 $26,187 $31,496 $33,001 $38,266 $63,451 $46,768 $8,794
======= ======= ======= ======= ======= ======= ======= ======= ======
Ratio of expenses to average net
assets(1) 1.85% 1.91% 1.86% 1.86% 1.99% 1.74% 1.96% 2.06% 1.21%(4)
====== ====== ====== ====== ====== ====== ====== ====== ======
Ratio of net investment income to
average net assets(2) 4.16% 5.38% 6.40% 7.14% 7.86% 8.87% 9.95% 9.40% 10.40%(4)
====== ====== ====== ====== ====== ====== ====== ====== ======
Portfolio turnover rate 261% 176% 140% 407% 279% 217% 174% 185% 31%
====== ====== ====== ====== ====== ====== ====== ====== ======
- -----------------
<FN>
1. Ratio prior to reimbursement by the Investment Manager was 2.18%, 2.36% and
1.99%, in 1986, 1987 and 1988, respectively.
2. Ratio prior to reimbursement by the Investment Manager was 9.43%, 9.10% and
9.92% in 1986, 1987 and 1988, respectively.
3. From commencement of operations. March 7, 1986.
4. Annualized.
</FN>
</TABLE>
Information relating to outstanding debt during the fiscal year shown below:
3
<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 Period
------- --------- ----------------- ----------------- -------------
<S> <C> <C> <C> <C>
1992 $0 $96,885 1,851,772 $0.05
</TABLE>
4
<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
Purposes of the Fund. The Fund, a no load mutual fund, is for long term
investors who wish to invest in a professionally managed portfolio consisting
primarily of securities backed by the full faith and credit of the United
States. Although the Fund's yield will vary, the Fund is not intended for
investors who wish to speculate on short term swings in interest rates or
appropriate as a complete investment program. There is no assurance the Fund
will achieve its investment objective. The net asset value of the Fund will
change as interest rates fluctuate.
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.
Dividends and Other Distributions. The Fund declares dividends from net
investment income daily and distributes such dividends to shareholders monthly,
together with any net short term capital gains. The Fund may also realize net
long term capital gains from the sale of securities and it distributes
substantially all of such gains, if any, to shareholders annually. Dividends and
other 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. Mr. McCarthy is Senior Vice President and a member of
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 Bond Club of New
York.
THE FUND'S INVESTMENT PROGRAM
The Fund's investment objective is to provide a high level of current
income, liquidity, and safety of principal. The Fund pursues its investment
objective by investing at least 65% of its total assets in securities backed by
the full faith and credit of the United States ("U.S. Government Securities"),
including direct obligations of the United States (such as Treasury bills,
notes, and bonds) and certain agency securities, such as those issued by the
Government National Mortgage Association ("GNMA"). There can be no assurance
that the Fund will achieve its investment objective. U.S. Government Securities.
5
<PAGE>
The Fund may also invest up to 35% of its total assets in securities issued
by agencies and instrumentalities of the U.S. Government that may have different
levels of government backing but which are not backed by the full faith and
credit of the U.S. Government. Such securities include, for example, those
issued by the Federal National Mortgage Association ("FNMA") that are supported
by the agency's limited right to borrow money from the U.S. Treasury under
certain circumstances, those issued by the Federal Home Loan Bank that are
supported only by the credit of the agency that issued them, and those supported
primarily or solely by specific pools of assets and the creditworthiness of a
U.S. Government- related issuer, such as mortgage-backed securities (including
collateralized-mortgage obligations ("CMOs")) issued by FNMA, the Federal Home
Loan Mortgage Corporation ("FHLMC"), or the Resolution Trust Corporation. The
Fund may also invest in certain zero coupon securities that are U.S. Treasury
notes and bonds that have been stripped of their unmatured interest coupon
receipts or interests in such U.S. Treasury securities or coupons, including
Certificates of Accrual Treasury Securities and Treasury Income Growth Receipts.
There is no guarantee that the U.S. Government will support securities not
backed by its full faith and credit. Accordingly, these securities may involve
greater risk than U.S. Government Securities backed by the U.S. Government's
full faith and credit.
The securities purchased by the Fund may have long, intermediate, and short
maturities. Consistent with seeking to maximize current income, the proportion
invested in each category can be expected to vary depending upon the Investment
Manager's evaluation of the market outlook. All securities in which the Fund
invests are subject to variations in market value due to interest rate
fluctuations. If interest rates fall, the market value of such securities tend
to rise; if interest rates rise, the value of such securities tend to fall.
Moreover, the longer the remaining maturity of such a security, the greater the
effect of interest rate changes on the market value of the security.
Collateralized Mortgage Obligations. CMOs are debt obligations collateralized by
mortgage loans or mortgage pass-through securities. The CMOs in which the Fund
invests are collateralized by GNMA certificates or other government
mortgage-backed securities (such collateral are called mortgage assets).
Multi-class pass-through securities are interests in trusts that are comprised
of mortgage assets and that have multiple classes similar to those in CMOs.
Unless the context indicates otherwise, references herein to CMOs include
multi-class pass-through securities. Payments of principal and interest on the
mortgage assets, and any reinvestment income thereon, provide the means to pay
debt service on the CMOs or to make scheduled distributions on the multi-class
pass-through securities. Principal prepayments on the mortgage assets may cause
the CMOs to be retired substantially earlier than their stated maturities or
final distribution dates.
Repurchase Agreements. The Fund may enter into repurchase agreements with U.S.
banks and dealers involving securities in which the Fund is authorized to
invest. A repurchase agreement is an instrument under which the Fund purchases
securities from a bank or dealer and simultaneously commits to resell the
securities to the bank or dealer at an agreed upon date and price. The Fund's
custodian maintains custody of the underlying securities until their repurchase;
thus the obligation of the bank or dealer to pay the repurchase price is, in
effect, secured by such securities. The Fund's risk is limited to the ability of
the seller to pay the agreed upon amount on the repurchase date; if the seller
defaults, the underlying securities constitute collateral for the seller's
obligation to pay. If, however, the seller defaults and the value of the
collateral declines, the Fund may incur loss and expenses in selling the
collateral. To attempt to limit the risk in engaging in repurchase agreements,
the Fund enters into repurchase agreements only with banks and dealers believed
by the Investment Manager to present minimum credit risks in accordance with
guidelines established by the 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 the value of its net assets would then be invested in illiquid
securities including such agreements.
When-Issued Securities. The Fund may purchase securities on a "when-issued"
basis. In such transactions delivery and payment occur after the date of the
commitment to make the purchase. Although the Fund will enter into when-issued
6
<PAGE>
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
issued or guaranteed by 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.
Portfolio Turnover. The Fund does not intend to purchase securities for short
term trading. The Fund may sell any of its portfolio securities that have been
held for a short time, however, if the Investment Manager believes the
security's market value will fall or when the Investment Manager believes there
is a more attractive security to acquire or in order to satisfy redemption
requests. For the fiscal years ended June 30, 1994 and 1993, the Fund's
portfolio turnover rate was 261% and 76%, respectively. Higher portfolio
turnover involves correspondingly greater Fund transaction costs and increases
the potential for short term capital gains and taxes payable by shareholders.
Other Information. The Fund's investment objective is fundamental and may not be
changed without shareholder approval. The Fund is also subject to certain
investment restrictions, set forth in the Statement of Additional Information,
that are fundamental and cannot be changed without shareholder approval. The
Fund's other investment policies described herein, unless otherwise stated, are
not fundamental and may be changed by the Board of Directors without shareholder
approval. The Fund may borrow money from banks for temporary or emergency
purposes (not for leveraging or investment) and engage in reverse repurchase
agreements, but not in excess of an amount equal to one third of the Fund's
total assets. The Fund may not purchase securities for investment while any bank
borrowing equaling more than .5% of its total assets is outstanding.
HOW TO PURCHASE SHARES
The Fund's shares are sold on a continuing basis without a sales charge, 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.
7
<PAGE>
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 Fund
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 U.S. Government Securities 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 U.S. Government Securities 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).
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 U.S. Government
Securities 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; U.S. Government Securities Fund, 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
8
<PAGE>
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. Dividends on shares
purchased will commence on the day following the effective date of the purchase.
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 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
9
<PAGE>
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, telephone
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 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 Global Income Fund seeks a high level of income from a global
portfolio of primarily investment grade fixed income securities. 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 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
10
<PAGE>
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 need be paid on a lump-sum distribution which an
individual may receive as a payment from a qualified pension or profit
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<PAGE>
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.
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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
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.
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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
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 dividends daily from net investment income and
distributes such dividends monthly to its shareholders. The Fund also makes an
annual distribution to its shareholders out of net long term and net short term
capital gain (after offsetting any capital loss carryover), if any. 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 consisting generally
of net investment income, net short term capital gains and net capital gain (the
excess of net long term capital gain over net short term capital loss and any
capital loss carryover) 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
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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. 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 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 distribution and
service activities. The fee is intended to cover personal services provided to
shareholders in the Fund and the maintenance of shareholder accounts and 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
15
<PAGE>
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
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 $1,000 invested in the Fund at the beginning of each of the
specified periods, assuming the reinvestment of any dividends and distributions
paid by the Fund during such periods. The Fund does not impose any sales charge
or redemption fee on the purchase or redemption of its shares. The investment
returns and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The Fund's yield and total return is based upon historical performance
information and is not predictive of future performance. The Fund's annual
report to shareholders contains further information about the Fund's
performance. The annual report is available to investors upon request and free
of charge.
CAPITAL STOCK
The Fund is a series of Bull & Bear Funds II, Inc. (the "Corporation"), a
Maryland corporation incorporated in 1974. Prior to October 29, 1993, the
Corporation operated under the name Bull & Bear Incorporated. The Corporation is
a series investment company, and is authorized to issue up to 1,000,000,000
shares ($.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.
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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. 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 U.S. Government
Securities Fund
Supplement to Prospectus
Dated November 1, 1994
The paragraph entitled "Portfolio Management" on page 4 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
<PAGE>
