BULL & BEAR-------------------------------------------------------------------
Performance Driven
December 24, 1996
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of Bull & Bear Global Income Fund (the "Fund") at 10:30 a.m. on January 22, 1997
at the Fund's offices at 11 Hanover Square, New York, New York 10005.
At the Special Meeting, Fund shareholders will consider a proposal to
convert the Fund from a diversified series of a registered open-end management
investment company to a registered closed-end diversified management investment
company. The Fund's investment objectives will remain unchanged. As a closed-end
fund, its shares are expected to be traded on the American Stock Exchange or the
Nasdaq Stock Market and no longer redeemable at net asset value. The enclosed
Proxy Statement provides detailed information concerning the proposal and should
be read carefully and retained for future reference.
The Board of Directors has unanimously approved the proposal and
recommends that shareholders vote in favor of it. The proposal is intended to
provide the Fund with greater flexibility to seek its primary investment
objective of a high level of income and secondary objective of capital
appreciation. The Fund will have greater capacity as a closed-end fund to employ
leverage, invest in illiquid securities, and lend portfolio securities, which
could offer the potential to enhance the Fund's yield and total return. The
Board further anticipates that conversion to closed-end status may permit the
Fund to reduce its operating expenses.
Approval of the proposal requires the lesser of (a) the majority of the
Fund's outstanding shares or (b) at least 66 2/3% of the shares present and
voting on the proposal, provided that at least a majority of the shares
outstanding on the record date are present at the Special Meeting. You are
requested to give this matter your prompt attention and to sign, date and mail
the accompanying proxy as soon as possible in the return envelope provided for
your convenience to ensure its receipt before the Special Meeting.
Very truly yours,
The Board of Directors
PLEASE VOTE NOW BY SIGNING AND RETURNING THE ENCLOSED
PROXY CARD. Otherwise, your Fund may incur needless expense to
solicit sufficient votes for the meeting.
<PAGE>
BULL & BEAR FUNDS II, INC.
BULL & BEAR GLOBAL INCOME FUND
P.O. Box 9043
Smithtown, New York 11787-9840
Toll-Free 1-800-847-4200
--------------------------------------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on January 22, 1997
--------------------------------------------
To the Shareholders of
BULL & BEAR GLOBAL INCOME FUND
Notice is hereby given that a Special Meeting of Shareholders of Bull &
Bear Global Income Fund (the "Fund") will be held at the Fund's offices at 11
Hanover Square, New York, New York 10005 on January 22, 1997 at 10:30 a.m., to
consider and vote upon the following proposal:
To convert the Fund from a diversified series of a registered
open-end manage ment investment company to a registered
closed-end diversified management investment company.
No other business may come before said meeting or any adjournment
thereof. The proposal is discussed in greater detail in the attached Proxy
Statement. The close of business on December 12, 1996 has been fixed as the
record date for the determination of shareholders entitled to notice of and to
vote at the meeting and any adjournments thereof.
By Order of the Board of Directors
--------------------------
William J. Maynard
Secretary
December 24, 1996
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
In order to avoid the additional expense of further solicitations, we ask your
cooperation in mailing in your proxy card promptly if you do not expect to
attend the meeting. No postage is necessary.
<PAGE>
BULL & BEAR GLOBAL INCOME FUND
--------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
January 22, 1997
--------------------------------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Directors of Bull & Bear Funds II, Inc. (the "Company") for use
at a Special Meeting of Shareholders of Bull & Bear Global Income Fund (the
"Fund") to be held on January 22, 1997, at 10:30 a.m. at the Fund's offices at
11 Hanover Square, New York, New York, and at any adjournments thereof (the
"Meeting"). A notice of Special Meeting of Shareholders and a proxy card
accompany this Proxy Statement.
The business to be presented at the Meeting is to consider and vote upon
the following proposal:
To convert the Fund from a diversified series of a registered open-end
management investment company to a registered closed-end diversified
management investment company.
The Fund is currently a diversified series of an open-end, management
investment company. The Fund's primary investment objective is a high level of
income and its secondary investment objective is capital appreciation. The Fund
seeks to achieve its investment objectives by investing primarily in a global
portfolio of investment grade fixed income securities. No assurance can be given
that the Fund's objective will be achieved. Skadden, Arps, Slate, Meagher &
Flom, counsel to the Fund, believes that the conversion will not be a taxable
event to the Fund or its shareholders.
If the proposal is approved, the Directors will determine the date of
conversion. In connection with the conversion to closed-end status, application
will be made to list the Fund's shares on the American Stock Exchange (the
"AMEX") under the symbol "BBZ," or if such listing is not available, to trade
over-the-counter on the Nasdaq Stock Market ("Nasdaq") with the symbol "BBZZ."
Shares of closed-end investment companies frequently trade at a discount to net
asset value. The Fund cannot predict whether its shares will trade at, below or
above net asset value after converting to closed-end status.
The business address of the Fund is 11 Hanover Square, New York, New York
10005, its mailing address is P.O. Box 9043, Smithtown, New York 11787-9840, and
its toll-free telephone number is 1-800- 847-4200. Approval of the proposal
requires the affirmative vote of the lesser of (a) a majority of the outstanding
shares of the Fund or (b) at least 66 2/3% of the shares present and voting on
the proposal, provided that at least a majority of the shares outstanding on the
record date are present at the meeting.
This Proxy Statement sets forth concisely certain information about the Fund and
the proposal that shareholders should know before giving a proxy and it should
be read and retained for future reference.
GENERAL VOTING INFORMATION
In addition to the solicitation of proxies by mail, officers and regular
employees of the Fund, Bull & Bear Advisers, Inc. (the "Investment Manager"),
affiliates of the Investment Manager, and other representatives of the Fund may
also solicit proxies by telephone, telegraph or in person. In addition, the Fund
has retained Shareholder Communications Corporation to assist in the
solicitation of proxies for a fee estimated at $____________. The costs of
solicitation and the expenses incurred in connection with preparing this Proxy
Statement and its enclosures will be paid by the Fund. The Fund will reimburse
- 1 -
<PAGE>
brokerage firms and others for its expenses in forwarding solicitation materials
to the beneficial owners of shares.
If the enclosed proxy is properly executed and returned in time to be voted
at the Meeting, the shares represented thereby will be voted in accordance with
the instructions marked thereon. Unless instructions to the contrary are marked
thereon, the proxy will be voted FOR the proposal. Any shareholder who has given
a proxy has the right to revoke it at any time prior to its exercise either by
attending the Meeting and voting his or her shares in person or by submitting a
letter of revocation or a proxy to the Fund at the above address prior to the
date of the Meeting.
In the event a quorum is present at the Meeting but sufficient votes to
approve the proposed transaction are not received, the persons named as proxies
may propose one or more adjournments of such Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those shares present at the Meeting in person or by proxy. If a
quorum is present, the persons named as proxies will vote those proxies which
they are entitled to vote FOR such proposal in favor of such an adjournment and
will vote those proxies required to be voted for rejection of such proposal
against any such adjournment.
The close of business on December 12, 1996 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the Meeting and all adjournments thereof. Each shareholder is entitled to one
vote for each full share and an appropriate fraction of a vote for each
fractional share held on each matter to be voted upon. On December 12, 1996,
there were _______________ shares of the Fund outstanding. To the knowledge of
the management of the Fund as of December 12, 1996, no person owns of record or
beneficially 5% or more of the shares of the Fund. This Proxy Statement is first
being mailed to shareholders on or about December 24, 1996.
PROPOSAL: TO CONVERT THE FUND FROM A DIVERSIFIED SERIES OF A REGISTERED
OPEN-END MANAGEMENT INVESTMENT COMPANY TO A REGISTERED
CLOSED-END DIVERSIFIED MANAGEMENT INVESTMENT COMPANY.
The Conversion
The Board of Directors of the Company, of which the Fund is a series,
unanimously recommends that Fund shareholders vote to approve converting the
Fund from open-end status, i.e. a mutual fund that continuously redeems its
shares at net asset value, to closed-end status, i.e. an investment company
whose shares trade at market price and whose shareholders do not have the right
to require the repurchase or redemption of their shares by the Fund (the
"Conversion").
In order to implement the Conversion, the Company, on behalf of the Fund,
will enter into an Asset Transfer Agreement (the "Agreement") with Bull & Bear
Global Income Fund, Inc., a newly-formed Maryland corporation (the "New Fund").
The Agreement will provide for the transfer of all the assets and liabilities of
the Fund (the "Assets") at net asset value to the New Fund and, in exchange
therefor, the Fund will simultaneously receive from the New Fund the same number
and aggregate net asset value of voting common stock in the New Fund (the
"Shares") as the number and aggregate net asset value of the shares held by the
Fund's shareholders. The Fund will cease operating, and the Shares will be
distributed pro rata to the Fund's shareholders, who will become shareholders in
the New Fund (the "Shareholders"). Upon approval by shareholders of the
proposal, the Conversion will occur as soon as practicable thereafter (the
"Closing Date"), which is currently contemplated to be February 7, 1997.
The New Fund presently has no assets and was created solely as a vehicle
for implementing the Conversion. Prior to the Closing Date, the New Fund will
file a Form N-2 registering under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a closed-end, diversified management investment
- 2 -
<PAGE>
company. The New Fund's investment objectives are identical to the Fund's, i.e.,
a high level of income with a secondary objective of capital appreciation. The
Conversion will not result in a change in investment objective. No assurance can
be given that such investment objective will be achieved.
The number of Shares that Shareholders will own and the fair market value
of the net assets of the New Fund will be the same as for the Fund. The New Fund
is expected to be registered under the 1940 Act, and will elect to be taxed as a
"regulated investment company" as defined in the Internal Revenue Code of 1986,
as amended (the "Code").
The affirmative vote by the lesser of (a) a majority of the outstanding
shares of the Fund or (b) at least 66 2/3% of the shares present and voting on
the proposal, provided that at least a majority of the shares outstanding on the
record date are present at the Meeting, is necessary to implement the
Conversion.
Reasons for the Conversion
The Directors believe that the Conversion will provide the Fund with
greater flexibility to seek its investment objective with lower operating
expenses.
Investment Flexibility. As an open-end fund, the Fund is not permitted to
issue senior securities (as defined in the 1940 Act), except insofar as it may
be deemed to have issued a senior security by reason of (i) bank borrowings and
then only if such borrowings do not exceed 33 1/3% of the Fund's total assets,
(ii) the issuance of additional series or classes of securities which may be
established, (iii) futures, options, and forward currency transactions, and (iv)
to the extent consistent with the 1940 Act and applicable rules and policies
adopted by the Securities and Exchange Commission ("SEC"), (A) the establishment
or use of a margin account with a broker for the purpose of effecting securities
transactions on margin and (B) short sales. Closed-end funds, however, have
greater flexibility in issuing senior securities, including debt or preferred
stock, so long as such preferred securities do not exceed 1/2, and such debt
does not exceed 1/3, of such fund's total assets (including such amount borrowed
or such senior securities issued). In accordance with SEC staff guidelines, such
debt or preferred stock may be convertible, which may permit the New Fund to
obtain leverage at more attractive rates. Use of leverage by the New Fund would
increase the New Fund's total return to Shareholders if the New Fund's returns
on its investments out of the proceeds of such leverage exceed the cost of such
leverage. Although in the past the Fund has not used leverage and there can be
no assurance that if employed by the New Fund it will be successful, the
Directors and the Investment Manager believe that increased capacity to employ
leverage may potentially increase yield and total return to Shareholders.
Open-end funds may not hold in excess of 15% of their net assets in
securities that are not readily marketable, including restricted securities. In
order to maintain a highly liquid portfolio that is readily priced on a daily
basis, the Fund has avoided investing in various securities that the Investment
Manager otherwise found attractive. A closed-end fund, however, may invest up to
100% of its assets in such securities and generally values its assets only once
per week. Although the Fund would not expect to invest 100% of its assets in
restricted and illiquid securities, the ability to invest a higher proportion
than 15% without the overriding need for daily liquidity experienced in an
open-end fund, in the view of the Board of Directors and the Investment Manager,
may increase the potential for higher yield and total return and therefore be
beneficial to Shareholders. Operating in the closed-end format would give the
Fund greater flexibility in pursuing these kinds of investments.
The Fund currently is prohibited from lending its portfolio securities,
except to the extent such lending involves the making of time or demand deposits
with banks, the purchase of debt securities such as bonds, debentures,
commercial paper, repurchase agreements and short term obligations in accordance
with the Fund's investment objective and policies, and engaging in securities
and other asset loan transactions limited to one third of the Fund's total
assets. Closed-end funds, however, are not restricted as to the type and
percentage of assets they are permitted to lend. Inasmuch as interest is earned
on the portfolio securities lent,
- 3 -
<PAGE>
the Directors and the Investment Manager believe that although under current
market conditions portfolio securities lending income, if any, will not be
material, removal of this investment restriction may potentially enhance yield
and total return to Shareholders should market conditions change favorably in
the future. If the New Fund engages in such transactions, it will enter into
lending agreements that require that the loans be secured continuously 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 at least to the market value of the assets lent. The New Fund
typically will receive the dividends and interest, if any, paid on the assets
lent, while simultaneously earning interest on the collateral comprised of cash
and fees to the extent of non-cash collateral. The New Fund, in turn, may pay
lending fees to broker/dealers to effect such transactions. Any loan made by the
New Fund will provide that it may be terminated by either party upon reasonable
notice to the other party.
Moreover, the Fund has generally maintained a certain percentage of its
assets in highly liquid but lower-yielding securities to assist the Fund in
meeting redemption requests. This investment strategy is considered important by
the Fund in managing redemption risk in the open-end format but would be
unnecessary if the Fund were to become closed-end. As a closed-end fund, the New
Fund would be able to invest substantially all of its assets in accordance with
its investment objective, thereby potentially increasing yield and total return,
as well as potential losses, to Shareholders.
Using leverage, investing in illiquid securities, and lending portfolio
securities entail certain risks.
Leverage, as a speculative investment technique, entails two primary risks.
The first risk is that the use of leverage magnifies the impact on the common
shareholders of changes in net asset value. For example, a fund that uses
leverage of one third of its total assets (including such amount borrowed or
such senior securities issued) will show a 1.5% increase or decline in net asset
value for each 1% increase or decline in the value of its total assets. The
second risk is that if the cost of leverage exceeds the return on the securities
acquired with the proceeds of that leverage, it will diminish rather than
enhance the return to common shareholders. These two risks would generally make
the New Fund's total return to Shareholders more volatile. If the New Fund is
able to provide total returns on its assets exceeding the costs of leverage, the
use of leverage may over the longer term enhance the New Fund's yield and total
return, although there can be no assurance that this can be achieved.
With respect to illiquid securities, the Fund may not be able to dispose of
a security at the desired price at the time it wishes to make such disposition.
In addition, such securities often sell at a discount from liquid and freely
tradeable securities of the same class or type, although they are also usually
purchased at an equivalent discount which enhances yield while the securities
are held by the Fund. Such securities may also be more difficult to price
accurately, although this is less significant in a closed-end fund where shares
are not purchased or sold solely on the basis of net asset value.
Risks involved in lending portfolio securities include the risk of default
by the borrower. The New Fund will be protected, to a large degree, from such
default risk as a result of such loans being fully collateralized with liquid
high-grade securities whose value is marked-to-market daily, as required by the
SEC. There are also risks of delay in receiving 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. However,
loans will be made only to borrowers deemed to be of good standing. Although
under current market conditions portfolio securities lending income will not
have a material effect on yields or total returns, the New Fund would have a
greater capacity to utilize this strategy to seek enhanced yield and total
returns should market conditions change in the future.
Consistent with both the Fund's and the New Fund's investment objectives,
the New Fund intends to utilize the additional investment flexibility afforded
by operating in a closed-end format, depending on the Investment Manager's
evaluation of current and anticipated market conditions, but there can be no
assurance that such additional flexibility will be utilized or, if utilized,
enhance the New Fund's performance in relation
- 4 -
<PAGE>
to that of the Fund or materially affect its yields or total returns. Although
to some extent these changes could have been adopted by the Fund, the capacity
of the New Fund as a closed-end fund to employ leverage, invest in illiquid
securities, and lend portfolio securities is greater.
Reduced Fund Expenses. The Conversion may enable the New Fund to reduce
certain operating expenses.
As a closed-end fund, the New Fund will save money by not having to
maintain registrations in each state for sales of its shares, by terminating its
shareholder administration agreement and by terminating its plan of distribution
adopted pursuant to Rule 12b-1 under the 1940 Act. However, these cost savings
will be partially offset by fees associated with the requirement of annual
shareholder meetings and listing of the New Fund's shares on the AMEX or Nasdaq.
The impact of the elimination or reduction of those expenses of the Fund
which are not assessed as a percentage of net assets, including the shareholder
administration and state registration fees described above, and other such costs
such as registration under the Securities Act of 1933, as amended, transfer
agency and net asset value calculation accounting, depends upon the total net
assets of the New Fund. Accordingly, since it is impossible to predict whether
and to what extent net redemptions of Fund shares may occur prior to the
Conversion, the expense ratio after the Conversion cannot be stated with
certainty. If net assets decrease, the operating expense ratios will increase.
Moreover, although to the extent the New Fund employs leverage its expenses will
increase, leverage would only be employed with the intention to at least
commensurately increase the New Fund's gross income and net income and thereby
increase the New Fund's yield and total return, although no assurance can be
given that this would be the case.
At a meeting on December 12, 1996, the Directors considered the Fund's
investment objective and policies in view of its recent operating results, total
net assets, prospects, market conditions, and other factors and alternatives to
the proposed Conversion and, in connection therewith, the difference in
investment restrictions between the Fund and the New Fund, together with
features and characteristics of closed-end funds generally and pro forma and
other information pertaining to the Fund and the New Fund, including an
assessment of risks, costs, and expenses pertaining to the Conversion. After
consideration of these and other relevant matters, the Directors unanimously
approved the proposal and have recommended that shareholders of the Fund vote in
favor of the proposal. The Directors believe that the Conversion is in the best
interest of the shareholders and that the benefits thereof outweigh its costs
and risks. For a description of the costs and expenses relating to the
Conversion, see "The Conversion Expenses," below.
Manner of Effecting the Conversion
On the Closing Date, pursuant to the Agreement, the Fund will transfer all
of its Assets to the New Fund, and the New Fund will transfer to the Fund Shares
having an aggregate net asset value equivalent to the aggregate net asset value
of the Assets transferred. The Company, on behalf of the Fund, will then endorse
a Share cross-receipt to the New Fund's transfer agent. The transfer agent will
enter on its records the names of the Fund's shareholders and each shareholder's
pro rata interest in the Shares, as such shareholder's portion of the Fund's
dissolution distribution. Only those persons who are shareholders of record of
the Fund, as reported by the Fund's transfer agent, as of the Closing Date will
be eligible to receive Shares from the New Fund. No Fund shares will be sold or
redeemed on the Closing Date.
Immediately thereafter, the Fund will cease operating and the Fund's
shareholders will become Shareholders of the New Fund.
Unless waived in accordance with the Agreement, the obligations of the
parties thereto are subject to, among other things: (a) approval of the
Conversion by the Fund's shareholders; and (b) the right of either party to
abandon and terminate the Agreement if any legal, administrative or other
proceedings seeking to
- 5 -
<PAGE>
restrain or otherwise prohibit the transactions contemplated by the Agreement
are instituted or pending between the date of the Agreement and the Closing
Date.
The Agreement may be amended or supplemented by the mutual consent of the
parties thereto either before or after approval thereof by the shareholders of
the Fund, provided that no such amendment or supplement after such approval
shall affect the rights of such shareholders in a materially adverse manner. The
Agreement may also be terminated if there has been a misrepresentation, breach
of warranty or failure of any condition to closing.
Shareholders will be able to redeem shares of the Fund up to and including
one day prior to the Closing Date.
The Conversion Expenses
The costs related to the Conversion, including the costs of this Proxy
Statement, the fees and expenses of counsel, and printing and listing fees are
estimated to be approximately $_________. These costs will be borne by the Fund.
See also "The Reasons for the Conversion - Reduced Fund Expenses" herein.
Market Trading; Discount to Net Asset Value
Open-end funds are redeemable at any time at net asset value and cannot be
sold at a premium or dis count in the marketplace. Closed-end funds, on the
other hand, are bought and sold in the securities markets and may trade at
either a premium to or discount from net asset value. Shares of closed-end funds
frequently trade at a discount from net asset value, which is a risk separate
and distinct from the risk that the net asset value of a fund's shares may
decrease. Prior to the Conversion, there will have been no market for the Shares
and no history of the New Fund's investment performance as a closed-end fund,
increasing the likelihood of the risk that the Shares will trade at a discount
from net asset value. The shares of two other investment companies managed by
the Investment Manager that converted from open end to closed end status in the
fourth quarter of 1996 currently trade at a discount to net asset value. In
addition, compared to other closed-end funds with similar investment objective
and policies, the New Fund's relatively smaller amount of total net assets and
shares outstanding also increases the risk of trading at a discount.
Shareholders should also bear in mind that they will incur brokerage or other
transaction costs if they sell shares of closed-end funds in the securities
markets, whereas the transaction costs of redemptions of open-end funds are
generally absorbed by the fund. The Investment Manager, however, has arranged
with its affiliate, Bull & Bear Securities, Inc., that for two years after the
Conversion, New Fund Shares may be bought or sold at the market price without
commission through Bull & Bear Securities, Inc.
INVESTMENT MANAGEMENT SERVICES
Investment Manager
The Fund's Investment Manager is Bull & Bear Advisers, Inc., 11 Hanover
Square, New York, New York 10005. The Investment Manager, a registered
investment adviser, is a wholly-owned subsidiary of Bull & Bear Group, Inc.
("Group"). Group is a publicly-owned company whose shares are traded on Nasdaq.
Bassett S. Winmill may be deemed a controlling person, as that term is defined
by the rules and regulations of the 1940 Act, of Group and the Investment
Manager on the basis of his ownership of 100% of Group's voting stock. The
investment companies (which includes the Fund) managed by the Investment Manager
and its affiliates had net assets in excess of $__________ million as of
December 12, 1996.
- 6 -
<PAGE>
Investment Management Agreement
The New Fund will enter into an Investment Management Agreement prior to
the Conversion, which will be approved by the initial shareholder of the New
Fund pursuant to the 1940 Act. Under the terms of the Fund's Investment
Management Agreement, the management fee is calculated based upon the average
daily net assets of the Fund; subsequent to the Conversion, net assets will be
calculated weekly. The New Fund's Investment Management Agreement therefore
provides that the management fee will be calculated based upon the average
weekly net assets of the New Fund. In all other material respects, the terms of
the Investment Management Agreements of the Fund and the New Fund are the same.
DESCRIPTION OF COMMON STOCK OF THE NEW FUND
Common Stock
Bull & Bear Global Income Fund, Inc. was incorporated under the laws of the
State of Maryland on December _____, 1996. The New Fund is authorized to issue
twenty million shares of stock, par value $.01 per share (the "Common Stock").
Each Share represents an equal proportionate interest with each other Share in
the assets of the New Fund. Shares entitle their holders to one vote per Share.
Unlike shares in the Fund, the Shares will not be redeemable at net asset value.
Except as described herein, the Shares have no cumulative voting rights or
preemptive rights, and otherwise carry the same rights as the shares of the
Fund.
Listing of Shares
Application will be made to list the Shares on the AMEX upon notice of
issuance thereof with the symbol "BBZ," or if such listing is not available, to
trade over-the-counter on Nasdaq with the symbol "BBZZ."
Repurchase of Shares
Shareholders will not have the right to have the New Fund redeem their
Shares as they presently do with the Fund. As a closed-end fund, however, the
New Fund would be permitted to repurchase Shares from time to time if and when
the Board of Directors of the New Fund (the "New Fund Directors") deems such a
repurchase advisable. Pursuant to the 1940 Act, the New Fund may repurchase
Shares on a securities exchange (provided that the New Fund has informed the
Shareholders within the preceding six months of its intention to repurchase such
Shares) or as otherwise permitted in accordance with Rule 23c-1 under the 1940
Act. Under that Rule, certain conditions must be met regarding, among other
things, distribution of net income from the preceding fiscal year, identity of
the seller, price paid, brokerage commissions, prior notice to the Shareholders
of an intention to purchase Shares and purchasing in a manner and on a basis
which does not discriminate unfairly against the other Shareholders through
their interest in the New Fund.
Shares repurchased by the New Fund will constitute authorized and unissued
shares of the New Fund available for reissuance. The New Fund may incur debt to
finance share repurchase transactions. Any gain in the value of the investments
of the New Fund during the term of the borrowing that exceeds the interest paid
on the amount borrowed would cause the net asset value of its shares to increase
more rapidly than in the absence of borrowing. Conversely, any decline in the
value of the investments of the New Fund would cause the net asset value of the
Shares to decrease more rapidly than in the absence of borrowing. Borrowing
money thus creates an opportunity for greater capital gain at the risk of
greater exposure to capital loss.
When the New Fund repurchases its Shares for a price below their net asset
value, the net asset value of those Shares that remain outstanding will be
enhanced, but this does not necessarily mean that the market price of those
outstanding Shares will be affected, either positively or negatively. Further,
interest on
- 7 -
<PAGE>
borrowings to finance share repurchase transactions will reduce the net income
of the New Fund except to the extent the gross income attribute to such Shares
exceeds the costs of such borrowings.
The New Fund does not currently intend to repurchase Shares and no
assurance can be given that the New Fund will decide to repurchase Shares in the
future, or, if undertaken, that such repurchases will reduce any market discount
that may develop. While the New Fund does not currently intend to repurchase
Shares, its officers and directors and the Investment Manager and its affiliates
may do so from time to time.
Dividend Reinvestment Plan
The New Fund Directors have adopted a Dividend Reinvestment Plan (the
"Plan"). Under the Plan, dividends and other distributions will be reinvested in
additional Shares automatically, unless Shareholders elect to receive cash. Each
dividend and other distribution, if any, declared by the New Fund on outstanding
Shares, unless elected otherwise by each Shareholder by notifying the New Fund
in writing at any time prior to the record date for a particular dividend or
distribution, will be paid on the payment date fixed by the New Fund Directors
in that number of additional Shares equal to (a) the amount of such dividend or
other distribution divided by the New Fund's net asset value per Share if the
average closing market price on the five trading days prior to the date the
Shares trade ex-dividend (the "Market Price") is at or above such net asset
value per Share on the record date for such dividend or other distribution and
(b) the amount of such dividend or other distribution divided by the Market
Price if the Market Price is less than such net asset value per Share on the
record date for such dividend or other distribution. Upon a Shareholder's
request to receive a certificate for Shares, a certificate will be issued for
such Shares in whole share amounts, and fractional Share amounts will be paid in
cash. There are no sales or other charges in connection with the reinvestment of
dividends and distributions. There is no fixed dividend rate and there can be no
assurance that the New Fund will pay any dividends or other distributions.
CERTAIN PROVISIONS OF THE CHARTER OF THE NEW FUND
Under the New Fund's Articles of Incorporation (the "New Fund Articles"),
Shareholders would not have the right to acquire or redeem shares at net asset
value directly from the New Fund; instead, Shares would be traded on the AMEX or
Nasdaq.
In the event of the liquidation or dissolution of the New Fund, the holders
of the Common Stock would be entitled to receive all the net assets of the New
Fund not attributable to other classes of stock through any preference. The
private property of Shareholders would not be subject to the payment of
corporate debts to any extent whatsoever.
Unless otherwise expressly provided in the New Fund Articles, or any
articles supplementary creating any additional class of capital stock, on each
matter submitted to a vote of Shareholders, each holder of a share of capital
stock of the New Fund entitled to vote shall be entitled to one vote for each
share outstanding in such holder's name on the books of the New Fund. The New
Fund Articles provides that the New Fund Directors may classify or reclassify
any unissued capital stock from time to time by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption of the stock.
Under the New Fund Articles, the New Fund would be entitled to purchase
shares of its capital stock, to the extent that it may lawfully effect such
purchase under the 1940 Act and the Maryland General Corporation Law, upon such
terms and conditions and for such consideration as the New Fund Directors shall
deem advisable. Currently, the Company, on behalf of the Fund, is obligated to
repurchase the Fund's shares at net asset value upon request.
- 8 -
<PAGE>
Each person who at any time is or was a director or an officer of the New
Fund shall be indemnified by the New Fund to the fullest extent permitted by the
Maryland General Corporation Law as it may be amended or interpreted from time
to time, including the advancing of expenses, subject to any limitations imposed
by the 1940 Act and the rules and regulations promulgated thereunder.
Furthermore, to the fullest extent permitted by the Maryland General Corporation
Law, as it may be amended or interpreted from time to time, subject to the
limitations imposed by the 1940 Act and the rules and regulations promulgated
thereunder, no director or officer of the New Fund would be personally liable to
the New Fund or the Shareholders. No amendment of the New Fund Articles or
repeal of any of its provisions would be permitted to limit or eliminate any of
the benefits provided to any person who at any time is or was a director or
officer of the New Fund in respect of any act or omission that occurred prior to
such amendment or repeal.
The New Fund Directors would have the exclusive authority to make, alter or
repeal from time to time any of the By-Laws of the New Fund (the "New Fund
By-Laws") except any particular by-law which is specified as not subject to
alteration or repeal by the New Fund Directors, subject to the requirements of
the 1940 Act and the rules and regulations promulgated thereunder.
As described in the following paragraphs, certain provisions of the New
Fund Articles could have the effect of limiting (i) the ability of other
entities or persons to acquire control of the New Fund, (ii) the New Fund's
freedom to engage in certain transactions, or (iii) the ability of the New Fund
Board of Directors or the Shareholders to amend the New Fund Articles or New
Fund By-Laws or effectuate changes in the New Fund's management.
Except as otherwise provided in the New Fund Articles and notwithstanding
any other provision of the Maryland General Corporation Law to the contrary, any
action submitted to a vote by Shareholders requires the affirmative vote of at
least 80% of the outstanding shares of all classes of voting stock, voting
together, in person or by proxy at a meeting at which a quorum is present,
unless such action is previously approved by the vote of a majority of the New
Fund's Continuing Directors (defined as those Directors who either (A) acted as
directors until the first annual meeting of the New Fund Board of Directors
after effectiveness of the New Fund Articles or (B) subsequently became
Directors and whose election is approved by a majority of the Continuing
Directors then on the Board), in which case such action requires (A) if
applicable, the proportion of votes required by the 1940 Act, or (B) the lesser
of (1) a majority of all the votes entitled to be cast on the matter with the
shares of all classes of voting stock voting together, or (2) if such action may
be taken or authorized by a lesser proportion of votes under applicable law,
such lesser proportion. In the absence of action by the Continuing Directors to
remove the foregoing 80% requirement, such requirement would have the effect of
making it very difficult for Shareholders to elect directors or modify the
composition of the New Fund Board of Directors.
The New Fund elects not to be governed by any provision of Section 3-602 of
Subtitle 6 of the Maryland General Corporation Law.
The New Fund Articles provides that any business combination (including any
merger, consolidation, or share exchange with any interested shareholder or any
affiliate thereof) requires the affirmative vote of the holders of at least 80%
of the votes entitled to be cast by holders of voting stock, unless previously
approved by the vote of at least a majority of the Continuing Directors, in
which case such business combination requires the affirmative vote of the
holders of at least a majority of the votes entitled to be cast by such holders.
Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practice by or pursuant to the
authority of the direction of the New Fund Directors, as to the amount of
assets, obligations or liabilities of the New Fund, as to the amount of net
income of the New Fund from dividends and interest for any period or amounts at
any time legally available for the payment of dividends, as to the amount of any
reserves or charges set up and the propriety thereof, as to
- 9 -
<PAGE>
the time of or purpose for creating reserves or as to the use, alteration or
cancellation of any reserves or charges (whether or not any obligation or
liability for which such reserves or charges shall have been created, shall have
been paid or discharged or shall be then or thereafter required to be paid or
discharged), as to the price of any security owned by the New Fund or as to any
other matters relating to the issuance, sale, redemption or other acquisition or
disposition of securities or shares of capital stock of the New Fund, and any
reasonable determination made in good faith by the New Fund Directors would be
final and conclusive, and would be binding upon the New Fund and all holders of
its capital stock past, present and future, and shares of capital stock of the
New Fund are issued and sold on the condition and understanding, evidenced by
the purchase of shares of capital stock or acceptance of share certificates,
that any and all such determinations shall be binding. No provision of the New
Fund Articles would be effective to (a) require a waiver of compliance with any
provision of the 1940 Act, or of any valid rule, regulation or order of the SEC
thereunder or (b) protect or purport to protect any director or officer of the
New Fund against any liability to the New Fund or its security holders to which
he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
The affirmative vote of holders of at least 80% of the votes entitled to be
cast by holders of voting stock is necessary to authorize the conversion of the
New Fund from a closed-end to an open-end investment company, unless previously
approved by the vote of at least a majority of the Continuing Directors, in
which case such conversion requires the affirmative vote of the holders of at
least a majority of the votes entitled to be cast by such holders.
The provisions of the New Fund Articles would provide for the New Fund
Board of Directors to be divided into five classes, each having a term of five
years (except, to ensure that the term of a class of directors expires each
year, the first class of directors will serve an initial one-year term and
five-year terms thereafter, the second class of directors will serve an initial
two-year term and five-year terms thereafter, the third class of directors will
serve an initial three-year term and five-year terms thereafter, and the fourth
class of directors will serve an initial four-year term and five-year terms
thereafter). Each year the term of one class of directors will expire.
Accordingly, only those directors in one class may be changed in any one year,
and it would require approximately three years to change a majority of the New
Fund Board of Directors. Such system of electing directors may have the effect
of maintaining continuity of management and, thus, make it more difficult for
the Shareholders to change the majority of directors.
The New Fund would reserve the right to amend, alter, change or repeal any
provision contained in the New Fund Articles, in the manner now or hereafter
prescribed by statute, and all rights conferred upon Shareholders in the New
Fund Articles would be granted subject to this reservation. Notwithstanding any
other provisions of the New Fund Articles or New Fund By-Laws (and
notwithstanding the fact that a lesser percentage may be specified by law or by
the New Fund Articles or New Fund By-Laws), the amendment or repeal of Section
(8) of Article V, Section (1), Section (2), Section (3) or Section (4) of
Article IX, Section (1), Section (2), and Section (3) of Article X, Article XI,
Article XII, and Article XIII of the New Fund Articles would require the
affirmative vote of the holders of at least eighty percent (80%) of the
outstanding shares of all classes of voting stock, voting together, in person or
by proxy at a meeting at which a quorum is present, unless previously approved
by at least a majority of the Continuing Directors, in which case such amendment
or repeal would require the affirmative vote of the holders of a majority of the
number of votes entitled to be cast thereon. These sections involve the
applicability of the New Fund Articles and New Fund By-Laws to Shareholders,
number and classification of directors, indemnification of officers and
directors, authority of the directors with respect to the New Fund By-Laws,
actions taken by vote of Shareholders, limited liability of Shareholders,
unlimited existence, conversion to open-end status and amending the foregoing
provisions.
The provisions of the governing documents described above could have the
effect of depriving New Fund Shareholders of opportunities to sell their shares
at a premium over prevailing market prices, by discouraging
- 10 -
<PAGE>
a third party from seeking to obtain control of the New Fund in a tender offer
or similar transaction. The overall effect of these provisions is to render more
difficult the accomplishment of a merger or the assumption of control by a third
party unless approved by the New Fund's Continuing Directors.
TAX MATTERS
Subchapter M and Other Tax Matters
Skadden, Arps, Slate, Meagher & Flom, legal counsel for both the Fund and
the New Fund, is of the opinion, for U.S. Federal income tax purposes, that the
Conversion will be treated as a reorganization under Section 368(a) of the Code
and, therefore, will not be a taxable event to the Fund, the New Fund, the
shareholders of the Fund or the Shareholders of the New Fund.
The New Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Code. If the New Fund qualifies as a regulated investment
company and complies with certain distribution require ments, the New Fund will
not be subject to Federal income tax on that part of its net investment income
and realized capital gains which it distributes to its Shareholders.
To qualify as a regulated investment company, the New Fund must meet
certain relatively complex tests. The loss of status as a regulated investment
company would result in the New Fund being subject to Federal income tax on all
its taxable income and gains without regard to dividends and distributions paid
to Shareholders.
The New Fund will determine either to distribute or to retain for
reinvestment all or part of its net long-term capital gain. If any such gains
are retained, the New Fund will be subject to a Federal income tax of 35% of
such amount. In that event, the New Fund expects to designate the retained
amount as undistributed capital gains in a notice to Shareholders, each of whom
(a) will be required to include in income for tax purposes as long-term capital
gains its share of such undistributed amount, (b) will be entitled to credit its
proportionate share of the tax paid by the New Fund against its Federal income
tax liability and to claim refunds to the extent that the credit exceeds such
liability, and (c) will increase its tax basis in its Shares by an amount equal
to 65% of the amount of undistributed capital gains included in such
Shareholder's gross income.
Under the Code, amounts not distributed by a regulated investment company
on a timely basis in accordance with a calendar year distribution requirement
are subject to a 4% excise tax. To avoid the tax, the New Fund must distribute
during each calendar year, an amount equal to, at the minimum, the sum of (1)
98% of its ordinary income (not taking into account any capital gains or losses)
for the calendar year, (2) 98% of its net capital gains for the twelve-month
period ending on October 31 of the Calendar year (unless an election is made by
a fund with a November or December year-end to use the fund's fiscal year), and
(3) all ordinary income and net capital gain for previous years that were not
previously distributed. A distribution will be treated as paid during the
calendar year if it is paid during the calendar year or declared by the New Fund
in October, November or December of the year, payable to Shareholders of record
on a date during such month and paid by the New Fund during January of the
following year. Any such distributions paid during January of the following year
will be deemed to be received on December 31 of the year the distributions are
declared, rather than when the distributions are received.
Gains or losses on the sales of securities by the New Fund will be
long-term capital gains or losses if the securities have been held by the New
Fund as capital assets for more than twelve months. Gains or losses on the sale
of securities held for twelve months or less will be short-term capital gains or
losses. In determining whether the New Fund held a particular capital asset for
more or less than twelve months, the holding period of the Fund will be taken
into account.
- 11 -
<PAGE>
The New Fund will be required to make back-up withholding in an amount
equal to 31% of a Shareholder's dividend or capital gain distribution or the
proceeds of a redemption unless such Shareholder has furnished the New Fund with
a taxpayer identification number (a social security number in the case of an
individual) and certifies that the number is correct and that the shareholder
has not been notified by the
- 12 -
<PAGE>
Internal Revenue Services of being subject to back-up withholding.
The foregoing is a general and abbreviated summary of the provisions of the
Code applicable to an investment in the New Fund. Dividends and distributions
declared by the New Fund may also be subject to state and local taxes.
Shareholders are urged to consult their tax advisers concerning the Federal,
state and local tax consequences of a particular investment in the New Fund.
THE DIRECTORS, INCLUDING THE "NON-INTERESTED" DIRECTORS, HAVE UNANIMOUSLY
APPROVED THE PROPOSAL AND RECOMMEND THAT SHAREHOLDERS VOTE "FOR" APPROV
AL OF THE PROPOSAL.
COMPARATIVE EXPENSE TABLE
Annual Fund Operating Expenses (as a percentage of average net assets)
Existing Expenses Pro Forma Expenses
Management Fee 0.70% 0.70%
12b-1 Fees 0.50% 0.00%
Other Expenses 0.99% 0.68%
Total Fund Operating Expenses 2.19% 1.38%
EXAMPLE
The following illustrates the expenses on a $1,000 investment under the
existing and proposed fees and the expenses stated above, assuming (1) a 5%
annual return and (2) redemption at the end of each time period:
1 year 3 years 5 years 10 years
Existing $22 $69 $117 $252
Pro Forma $14 $44 $76 $166
The tables above are designed to help you understand the costs and expenses
that you will bear directly or indirectly as an investor in the New Fund. The
example set forth above assumes reinvestment of all dividends and other
distributions and assumes a 5% annual rate of return as required by the SEC. The
New Fund's actual returns and expenses may be greater or less than those shown.
The percentages given for Annual Fund Operating Expenses are based on the
Current Fund's operating expenses and average daily net assets during its fiscal
year ended June 30, 1996, when average net assets were approximately $36
million. Pro Forma information is based on current net assets of approximately
$31 million. To the extent net assets decrease from current levels, "Other
Expenses" and "Total Fund Operating Expenses" percentages will increase. "Other
Expenses" includes amounts paid to the Fund's custodian and transfer agent and
reimbursed to the Investment Manager and the Distributor, and includes interest
expense from the Fund's bank borrowing.
- 13 -
<PAGE>
REPORTS TO SHAREHOLDERS
The Fund sends unaudited semi-annual and audited annual reports to its
shareholders, including a list of investments held.
The Fund will furnish, without charge, a copy of the Annual Report and the
most recent semi-annual report succeeding the Annual Report to shareholders upon
written request to the Fund at 11 Hanover Square, New York, New York 10005, or
by calling toll-free at 1-800-847-4200.
- 14 -
<PAGE>
ADDITIONAL INFORMATION
Broker Non-Votes and Abstentions
If a proxy which is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote" (that
is, a proxy from a broker or nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
shares on a particular matter with respect to which the broker or nominee does
not have discretionary power), is unmarked or marked with an abstention
(collectively, "abstentions"), the shares represented thereby will be considered
to be present at the meeting for purposes of determining the existence of a
quorum for the transaction of business. Under Maryland law, abstentions do not
constitute a vote "for" or "against" a matter and will be disregarded in
determining the "votes cast" on an issue.
Shareholder Proposals
Proposals by shareholders intended to be presented at the next annual
meeting (to be held in 1997) must be received by the Company on or before
September 30, 1997 (or 30 days before the annual meeting if such meeting is held
after October 31, 1997) in order to be included in the proxy statement and proxy
for that meeting.
Annual Meeting Requirements
Upon conversion and the Shares' listing on the AMEX or Nasdaq National
Market System, the New Fund will be required to hold annual shareholder
meetings.
OTHER BUSINESS
No other business may come before this Special Meeting or any adjournment
thereof.
It is important that proxies be returned promptly.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE THEREFORE
URGED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
- 15 -
<PAGE>
Bull & Bear Global Income Fund
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS
The undersigned hereby appoints Robert D. Anderson and Thomas B. Winmill,
and each of them, attorneys and proxies of the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of Bull & Bear Global Income Fund (the "Fund")
which the undersigned is entitled to vote at the Special Meeting of Shareholders
(the "Meeting") of the Fund to be held at the offices of the Fund, 11 Hanover
Square, New York, New York 10005 on January 22, 1997 at 10:30 a.m., and at any
adjournments thereof. The undersigned hereby acknowledges receipt of the Notice
of Special Meeting of Shareholders and Proxy Statement dated December 24, 1996
and hereby instructs said attorneys and proxies to vote said shares as indicated
herein. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
A majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
Please sign exactly as your name appears hereon.
If shares are registered in more than one name,
all should sign but if one signs, it binds the others.
When signing as attorney, executor, administrator,
agent, trustee, or guardian, please give full title
as such. If a corporation, please sign in full corporate
name by an authorized officer. If a partnership, please
sign in partnership name by an authorized person.
__________________________________(L.S.)
Signature
__________________________________(L.S.)
Signature
Dated ___________________________, 1996
To avoid the
delay of
adjourning the
meeting,
please return
this proxy
promptly in
the enclosed
postage paid
envelope.
<PAGE>
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the proposal. Please refer to the Proxy Statement for a discussion of the
proposal.
TO CONVERT THE FUND FROM A DIVERSIFIED SERIES OF A REGISTERED
OPEN-END, MANAGEMENT INVESTMENT COMPANY TO A REGISTERED
CLOSED-END, DIVERSIFIED MANAGEMENT INVESTMENT COMPANY.
|_| FOR |_| AGAINST |_| ABSTAIN
<PAGE>
