As filed with the Securities and Exchange Commission on November 8, 1996.
1940 Act File No. 811-3934
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-2
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
BULL & BEAR MUNICIPAL INCOME FUND, INC.
(Exact Name of Registrant as Specified in Charter)
11 Hanover Square
New York, New York 10005
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 1-212-785-0900
Thomas B. Winmill
Bull & Bear Advisers, Inc
11 Hanover Square
New York, New York 10005
(Name and Address of Agent for Service)
Copy to:
Richard T. Prins
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
CROSS REFERENCE SHEET
BULL & BEAR U.S. MUNICIPAL INCOME FUND, INC.
N-2 Item Number Prospectus Caption
Part A
Item 1 Outside Front Cover Cover Page
Item 2 Inside Front and Outside Back
Cover Page Not Applicable
Item 3 Fee Table and Synopsis Expense Table
Item 4 Financial Highlights Not Applicable
Item 5 Plan of Distribution Not Applicable
Item 6 Selling Shareholders Not Applicable
Item 7 Use of Proceeds Not Applicable
Item 8 General Description of the
Registrant The Fund's Inves
tment Program;
Dividend Reinv
estment Plan; Repur
chase of Shares;
Capital Stock
Item 9 Management The Funds's
Investment Program;
The Investment
Manager; Capital
Stock; Custodian,
Transfer Agent and
Dividend Disbursing
Agent
Item 10 Capital Stock, Long-Term Debt,
and Other Securities Dividend
Reinvestment Plan;
Dividends,
Distributions and
Taxes; Capital Stock
Item 11 Defaults and Arrears on
Senior Securities Not Applicable
Item 12 Legal Proceedings Not Applicable
Item 13 Table of Contents of the
Statement of Additional
Information Table of Contents of
the Statement of
Additional
Information
Location in Statement of Additional Information (Caption)
Part B
Item 14 Cover Page Outside Front Cover Page
Item 15 Table of Contents Outside Front Cover Page
Item 16 General Information and History Not Applicable
Item 17 Investment Objective and Policies The Fund's Investment
Program
Item 18 Management Officers and Directors;
The Investment Manager
Item 19 Control Persons and Principal
Holder of Securities Officers and Directors;
The Investment Manager
Item 20 Investment Advisory and
Other Services Officers and Directors;
The Investment Manager
Item 21 Brokerage Allocation and
Other Practices Allocation of Brokerage
Item 22 Tax Status Dividends, Distributions
and Taxes
Item 23 Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C to this Registration
Statement.
The investment objective of Bull & Bear Municipal Income Fund,
Inc. (the "Fund"), a diversified closed-end management investment
company, is to obtain for its shareholders the highest possible
income exempt from Federal income tax that is consistent with the
preservation of principal. The Fund invests principally in a
diversified portfolio of municipal securities of varying
maturities, depending on the Investment Manager's evaluation of
current and anticipated market conditions. There is no assurance
that the Fund will achieve its objective.
The Fund commenced operations as a diversified, closed-end
management investment company on the date hereof. Prior to the
date hereof, the Fund was since 1983 a diversified series of
shares issued by Bull & Bear Municipal Securities, Inc., an open-
end management investment company.
LISTING AND SYMBOL. The Fund's
shares are listed on the American
Stock Exchange under the symbol
"BBM".
This prospectus contains information you should know about the
Fund before you invest. PLEASE KEEP IT FOR FUTURE REFERENCE.
The Fund's Statement of Additional Information, dated November 8,
1996, has been filed with the Securities and Exchange Commission
and is incorporated by reference in this prospectus. It is
available at no charge by calling toll-free 1-888-847-4200.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Prospectus Summary Dividend Reinvestment Plan
Expense Tables Dividends, Distributions & Taxes
The Fund's Investment Program Repurchase of Shares
Investment Manager Capital Stock
Custodian, Transfer Agent and Dividend
Disbursing Agent
EXPENSE TABLES
The table below is designed to help you understand the costs and
expenses that you will bear directly or indirectly as an investor in
the Fund. The amounts are based on estimates. These expenses should
not be considered a representation of actual future expenses as such
expenses may be greater or less than those shown.
Shareholder Transaction Expenses
Sales Load (as a percentage of offering price) None
Dividend Reinvestment Plan Fees None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets
attributable to common shares)
Management Fees . . 0.60%
Interest payments on Borrowed
Funds . . . . . . . 0.03%
Other Expenses . . 0.84%
Total Fund Operating Expenses 1.47%
Example
You would pay the following
expenses on a $1,000
investment,assuming a
5% annual return 1 year 3 years 5 years 10 years
$15 $46 $80 $176
The example set forth above assumes a 5% annual rate of return as
required by the Securities and Exchange Commission (the "SEC").
THE EXAMPLE IS AN ILLUSTRATION ONLY AND SHOULD NOT BE CONSIDERED AN
INDICATION OF PAST OR FUTURE RETURNS AND EXPENSES. Actual returns and
expenses may be greater or less than those shown. "Other Expenses"
includes amounts paid to the Fund's custodian and transfer agent and
reimbursed to the Investment Manager.
The percentages given for annual Fund expenses are based on the
Fund's operating expenses restated using the current fees that would
have been applicable had they been in effect during the fiscal year
ended December 31, 1995 and net assets of approximately $12 million as
of October 30, 1996. Based on the same restated expenses and average
daily net assets of the Fund during its fiscal year ended December 31,
1995, "Other Expenses" and "Total Fund Operating Expenses" would have
been 0.64% and 1.24%, respectively. "Other Expenses" includes amounts
paid to the Fund's custodian and Transfer Agent and reimbursable to
the Investment Manager for certain administrative services. Until
November 8, 1996, the Fund was a diversified series of shares issued
by Bull & Bear Municipal Securities, Inc., an open-end management
investment company organized as a Maryland corporation in 1983.
PROSPECTUS SUMMARY
PURPOSES OF THE FUND. The Fund is for investors seeking the highest
possible income exempt from Federal income tax, but who are concerned
with preservation of principal. The Fund is not intended for investors
who wish to speculate on short term swings in the municipal bond
market, or for tax-advantaged retirement plans or tax-exempt entities.
The Fund's yield and net asset value will fluctuate with interest
rates and the market value of its portfolio securities.
TAXATION OF DIVIDENDS. Income dividends you receive from the Fund are
generally derived from interest on municipal securities, the income
from which is exempt from Federal income tax, though possibly an item
of tax preference ("ITP") for purposes of the Federal alternative
minimum tax ("AMT"). The Fund's income is thus Federally tax-free to
you if you are not subject to AMT. The Fund's dividends may be subject
to state and local taxes. Dividends paid from taxable investments and
capital gain distributions, if any, will be subject to Federal income
tax and may also be subject to state and local taxes.
PORTFOLIO MANAGER. 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 & Bear fixed income
funds. Prior to joining the Investment Manager in 1995, Mr. Landis was
Associate Director -- Proprietary Trading at Barclays De Zoete Wedd
Securities Inc. and Director, Bond Arbitrage at WG Trading Company.
Mr. Landis received his MBA in Finance from Columbia University.
LISTING AND SYMBOL. The Fund's shares are listed on the American Stock
Exchange under the symbol "BBM". REPURCHASE OF SHARES. Although the
Fund does not currently intend to repurchase shares, no assurance can
be given that the 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 Fund does not currently intend to
repurchase its shares, its officers and directors, and the Investment
Manager and its affiliates may do so from time to time. See
"Repurchase of Shares."
ANTI-TAKEOVER PROVISIONS. Certain provisions of the Fund's Amended and
Restated Articles of Incorporation (the "Charter") and Amended and
Restated By-Laws (the "By-Laws") may be regarded as "anti- takeover"
provisions. Pursuant to these provisions, only one of five classes of
directors is elected each year, the affirmative vote of the holders of
80% of the outstanding shares of the Fund is necessary to amend the
Charter, to authorize the conversion of the Fund from a closed-end to
an open-end investment company and to authorize certain business
combinations (including any merger, consolidation, or share exchange
with any interested shareholder or any affiliate thereof), unless
approved by the vote of at least 50% of the Directors, in which case
such amendment, conversion or business combination requires the
affirmative vote of the holders of at least a majority of the votes
entitled to be cast by holders of voting stock. The overall effect of
these provisions may be to render more difficult the accomplishment of
a merger with, or the assumption of control by, a principal
shareholder. These provisions may have the effect of depriving Fund
shareholders of an opportunity to sell their shares at a premium above
the prevailing market price. See "Capital Stock - Certain Provisions
of the Amended and Restated Articles of Incorporation and Amended and
Restated By-Laws of the Fund."
MARKET PRICE OF SHARES. Shares of closed-end investment companies
frequently trade at a discount from net asset value. This
characteristic of shares of a closed-end investment company is a risk
separate and distinct from the risk that the value of the Fund's
portfolio securities and the Fund's Net Asset Value may decrease. The
Fund cannot predict whether its shares will trade at, below or above
net asset value. See "The Fund's Investment Program - Market Price and
Net Asset Value."
DIVIDEND REINVESTMENT PLAN. Under the Fund's Dividend Reinvestment
Plan (the "Plan"), all dividends and capital gain distributions will
be automatically reinvested in additional Fund shares instead of being
paid in cash, unless at any time prior to the record date for a
particular dividend or distribution a shareholder elects otherwise by
notifying the Fund in writing. There are no sales or other charges in
connection with the reinvestment of dividends or capital gain
distributions. Shareholders who intend to hold their Fund shares
through a broker or nominee should contact such broker or nominee to
confirm that they may participate in the Plan. The Fund has no fixed
dividend rate, and there can be no assurance that the Fund will pay
any dividends or realize any capital gain. See "Dividend Reinvestment
Plan" and "Dividends, Distributions and Taxes."
THE FUND'S INVESTMENT PROGRAM
Prior to November 8, 1996 the Fund was a diversified series of
shares issued by Bull & Bear Municipal Securities, Inc., an open- end
management investment company organized under Maryland law in 1983. On
November 8, 1996, upon shareholder approval, the Fund converted from
open-end to closed-end status. The Fund seeks to obtain for its
shareholders the highest possible income exempt from Federal income
tax that is consistent with preservation of principal. The Fund seeks
to achieve this objective by investing principally in a diversified
portfolio of municipal securities. Municipal securities include
obligations issued by or on behalf of states, territories, and
possessions of the United States and the District of Columbia, and
their political subdivisions, agencies, and instrumentalities, the
interest on which is generally exempt from Federal income tax, though
possibly an ITP for purposes of the AMT. Such securities include
municipal bonds, municipal notes and tax-free commercial paper.
The Fund may invest in municipal bonds rated at the time of
purchase within the four highest grades assigned by Fitch Investors
Service, L.P. ("Fitch") (AAA, AA, A and BBB), Moody's Investors
Service, Inc. ("Moody's") (Aaa, Aa, A, and Baa), or Standard & Poor's
Ratings Services ("Standard & Poor's") (AAA, AA, A and BBB), or, if
unrated, determined by the Investment Manager to be of comparable
quality. Municipal bonds rated Baa or BBB are medium grade securities
and Moody's considers securities rated Baa to have speculative
characteristics. Changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity for such securities to
make principal and interest payments than is the case for higher grade
municipal securities. The Fund may also invest in municipal notes
rated at the time of purchase within the three highest grades assigned
by Moody's (MIG1/VMIG1, MIG2/VMIG2, and MIG3/VMIG3), Fitch (F-1+, F-1,
and F-2) or Standard & Poor's (SP-1+, SP-1, and SP-2), tax-free
commercial paper rated at the time of purchase within the two highest
grades assigned by Moody's (P-1 and P-2) or the top three grades
assigned by Fitch (F-1+, F-1, and F-2) or Standard & Poor's (A-1+,
A-1, and A-2) and unrated municipal notes and tax-free commercial
paper determined by the Investment Manager to be of comparable
quality. Descriptions of Fitch's, Moody's and Standard & Poor's
ratings appear in the Appendix to the Statement of Additional
Information. The Fund may not invest more than 20% of its total assets
in unrated securities unless such securities are secured by the full
faith and credit of the U.S. Government.
The Fund's portfolio will consist of long, short, and
intermediate term municipal securities. The proportion invested in
each category varies depending upon the Investment Manager's
evaluation of current and anticipated market conditions. The
dollar-weighted average maturity of the Fund's portfolio is expected
to normally range from five to more than 25 years. As a matter of
fundamental investment policy, which may not be changed without
shareholder approval, at least 80% of the Fund's income during any
fiscal year will be exempt from Federal income tax. Also, as a matter
of fundamental policy, the Fund will not purchase any security if, as
a result, less than 80% of the Fund's total assets (exclusive of cash)
would be invested in securities the income from which is exempt from
Federal income tax, except that the Fund may temporarily invest more
than 20% of its total assets in taxable obligations during periods of
abnormal market conditions. While at least 80% of the income from the
Fund's investments will normally be exempt from Federal income tax,
such income may nevertheless be an ITP for purposes of the AMT.
Because the objective of the Fund is to provide income exempt from
Federal income tax, the Fund will invest in taxable obligations only
when the Investment Manager believes it would be in the best interest
of shareholders.
Municipal Bonds. Municipal bonds are debt obligations issued to
obtain funds for various public purposes that pay interest which is
exempt from federal income tax in the opinion of the bond issuer's
counsel. Municipal bonds include general obligation bonds and revenue
bonds. General obligation bonds are secured by the issuer's pledge of
its full faith, credit, and taxing power for the payment of principal
and interest. Revenue bonds are payable only from the revenues derived
from a particular facility or class of facilities financed by the
bonds to meet its financial obligations and secured by the pledge, if
any, of real and personal property so financed.
Municipal bonds also include industrial development bonds
("IDBs") and private activity bonds ("PABs"). IDBs and PABs are issued
by or on behalf of public authorities to finance various privately
operated facilities, such as airport or pollution control facilities.
PABs generally are such bonds issued after August 15, 1986 if the
interest paid thereon is exempt from Federal income tax in the opinion
of the bond issuer's counsel. IDBs and PABs are in most cases revenue
bonds and thus are not payable from the unrestricted revenues of the
issuer. The credit quality of IDBs and PABs is usually directly
related to the credit standing of the user of the facilities being
financed. The percentage of such bonds in the Fund's portfolio will
vary. The Fund will not, however, invest more than 25% of its total
assets in municipal securities issued by agencies of the same state or
issued to finance a particular project. While the Fund may invest up
to 50% of its assets in IDBs, the Fund will not invest more than 25%
of its assets in IDBs whose nongovernmental users are in any one
industry.
Municipal Notes and Tax-Free Commercial Paper. Municipal notes and
tax-exempt commercial paper include tax anticipation notes, bond
anticipation notes, revenue anticipation notes, and other forms of
short term loans. Such notes are issued with a short term maturity in
anticipation of the receipt of tax funds, the proceeds of bond
placements and other revenues.
Risk Considerations. The Fund may not be suitable or appropriate for
all investors. While the Fund seeks to reduce risk by investing in a
diversified portfolio, such diversification does not eliminate risk.
There is no assurance that the Fund will achieve its investment
objective. Yields on municipal securities are dependent on a variety
of factors, including the general conditions of the municipal and
fixed income security markets, the financial condition of the issuer,
the size of a particular offering, the maturity of the obligation, the
credit quality and rating of the issue, and expectations regarding
changes in tax rates. Municipal securities with longer maturities tend
to produce higher rates of interest paid and are generally subject to
potentially greater capital appreciation and depreciation than
obligations with shorter maturities and lower interest rates. An
increase in interest rates will generally reduce the value of
portfolio investments, and a decline in interest rates will generally
increase the value of portfolio investments. The Fund's ability to
achieve its investment objective depends also on the continuing
ability of the issuers of municipal securities in which the Fund
invests to meet their obligations to pay interest and principal when
due. Municipal securities have also traditionally not been subject to
regulation by or registration with the SEC.
Obligations of issuers of municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the
rights and remedies of creditors, such as the U.S. Bankruptcy Code. In
addition, the obligations of such issuers may become subject to laws
enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or
imposing other constraints upon enforcement of such obligations or
upon municipalities to levy taxes. Litigation, if any, or other
conditions may also materially affect an issuer's ability to pay when
due the principal of and interest on its municipal securities.
Market Price and Net Asset Value. The Fund was recently converted from
a diversified series of shares of an open-end management investment
company to a diversified, closed-end management investment company.
Shares of closed-end investment companies are bought and sold in the
open market and may trade at either a premium to or discount from net
asset value, although they frequently trade at a discount. This is a
risk separate and distinct from the risk that the value of the Fund's
portfolio securities, and as a result its net asset value, will
decrease. The Fund cannot predict whether its shares will trade at,
above or below net asset value. Shareholders will incur brokerage and
possibly other transaction costs to buy and sell shares in the open
market, provided, however, that the Investment Manager has arranged
with its affiliate, Bull & Bear Securities, Inc., that for two years
after November 8, 1996, any Fund shares held by the Fund's transfer
agent in book entry form may be sold at market value without
commission if sold through Bull & Bear Securities, Inc.
A decline in net asset value could affect the Fund's ability to
pay dividends, make capital gain distributions or effect any share
repurchases with respect to its common stock if the Fund has
outstanding any preferred stock or debt securities, because the Fund
would be required by the 1940 Act to have asset coverage immediately
after such dividend, distribution or repurchase of two hundred percent
for any preferred stock and three hundred percent for any debt
securities, in each case after giving effect to such dividend,
distribution or repurchase. In addition, if the Fund's current
investment income were not sufficient to meet dividend requirements on
any outstanding preferred stock, the Fund may be required to sell a
portion of its portfolio securities when it might be disadvantageous
to do so, which would reduce the net asset value attributable to the
Fund's common stock.
LEVERAGE. The Fund may borrow money from banks (including its
custodian bank) and may issue senior securities, including debt and
preferred stock, to purchase and carry securities and will pay
interest thereon. These practices are referred to as leverage are
speculative, and increase both investment opportunity and investment
risk. If the investment income on securities purchased with leverage
exceeds the interest paid on the leverage, the Fund's income will be
correspondingly higher. If the investment income fails to cover the
Fund's costs, including interest on leverage, or if there are losses,
the net asset value of the Fund's shares will decrease faster than
would otherwise be the case. The 1940 Act requires the Fund to
maintain asset coverage of at least 200% for preferred securities,
300% for debt, and 300% (including the amount borrowed) for all such
borrowings, and should such asset coverage at any time fall below 300%
the Fund will be required to reduce its borrowing within three days to
the extent necessary to meet the requirements of the 1940 Act. To
reduce its borrowing the Fund might be required to sell securities at
a disadvantageous time. Interest on money borrowed is an expense the
Fund would not otherwise incur, and it may therefore have little or no
investment income during periods of substantial borrowings.
Use of leverage by the Fund would increase the Fund's total
return to shareholders if the 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, it will be successful, the Board of
Directors and Investment Manager believe that increased capacity to
employ leverage may potentially increase yields and total returns.
Leverage is a speculative investment technique and, as such,
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 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 Fund's total
return to common shareholders more volatile. However, if the Fund is
able to provide total returns on its assets exceeding the costs of
leverage, the use of leverage would over the longer term enhance the
Fund's yields and total returns, although there can be no assurance
that this can be achieved.
The Fund may invest without limit in illiquid securities,
including securities with legal or contractual conditions on resale.
Investing in such securities entails certain risks. The primary risk
is that 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 tradable 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.
Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements on up to 25% of its assets. In a reverse
repurchase agreement, the Fund sells a security (known as the
"underlying security") to a well-established securities dealer or a
bank that is a member of the Federal Reserve System and agrees to
repurchase it at an agreed-upon date and price reflecting a market
rate of interest. When the Fund enters into a reverse repurchase
agreement, its custodian will set aside in a segregated account cash
or liquid securities whose value is marked to the market daily value
at least equal to the repurchase commitment. Reverse repurchase
agreements are considered borrowings. Such borrowing is referred to as
leverage, is speculative, and increases both investment opportunity
and investment risk. Such agreements are subject to the risk that the
value of the security purchased with the proceeds of the sale by the
Fund will be less than the Fund's obligation to repurchase the
underlying security. The Investment Company Act of 1940 (the "1940
Act") currently permits a mutual fund to borrow from a bank, provided
that the fund maintain asset coverage for all borrowings of at least
300%, and should such asset coverage at any time fall below 300%, the
fund reduce its borrowings within three days (excluding Sundays and
holidays) to the extent necessary so such asset coverage be at least
300%. To reduce its borrowings the Fund might be required to sell
securities at a disadvantageous time. Interest on money borrowed is an
expense of the Fund which it would not otherwise incur, and it may
have little or no investment income during periods when its borrowings
are substantial.
When-Issued Securities. The Fund may purchase securities on a
"when-issued" basis. In such transactions the commitment to make
delivery or payment is contingent upon the issuance of the purchased
securities at a future date. Although the Fund will enter into
when-issued transactions with the intention of accepting delivery of
and paying for the securities, the Fund may terminate the commitment
prior thereto for investment reasons, which may result in a gain or
loss. When-issued transactions involve a risk that yields available on
the delivery date may be higher than those received on the commitment
date. When the Fund agrees to purchase securities on a when-issued
basis, its custodian will set aside in a segregated account cash or
liquid securities whose value 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 commitment. If the issuer fails to
deliver the securities, the Fund may incur a loss or miss an
opportunity to make an alternative investment.
Other Information. Although the Fund's policy is to invest for the
long term, its portfolio turnover rate will vary from year to year
depending on market conditions. For the fiscal years ended December
31, 1995 and December 31, 1994, the Fund's portfolio turnover rate was
172% and 275%, respectively. Higher turnover may result in increased
transaction costs and an increase in taxable income from realized
gain. When the Investment Manager deems it advisable, the Fund may for
temporary defensive or emergency purposes, such as when interest rates
are rising sharply, hold cash or invest all or a portion of its assets
in taxable money market instruments, including obligations of the U.S.
Government, its agencies or instrumentalities; certificates of
deposit, bankers' acceptances, and other short term debt obligations
of U.S. banks with total domestic assets of at least $1 billion; and
commercial paper rated F-2 or better by Fitch, P-2 or better by
Moody's or A-2 or better by Standard & Poor's.
The Fund is not obligated to deal with any particular broker,
dealer or group thereof. Certain broker/dealers that the Investment
Manager and its affiliates do business with may, from time to time,
own more than 5% of the publicly traded Class A non-voting Common
Stock of Bull & Bear Group, Inc., the parent of the Investment
Manager, and may provide clearing services to Bull & Bear Securities,
Inc. (" BBSI").
The Fund's investment objective is fundamental and may not be
changed without shareholder approval. The Fund is also subject to
fundamental investment policies and investment restrictions, set forth
in the Statement of Additional Information, that may not be changed
without shareholder approval. These investment restrictions, among
other things, permit the Fund in addition to the reverse repurchase
agreements described above to issue senior securities to the extent
permitted under applicable law. Unless otherwise noted, all other
investment policies may be changed by the Board of Directors without
shareholder approval.
INVESTMENT MANAGER
Bull & Bear Advisers, Inc. (the "Investment Manager") acts as
general manager of the Fund and is responsible for various functions
assumed by it including regularly furnishing 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
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 a management
fee, payable monthly, based on the average daily net assets of the
Fund, at the annual rate of .60% on the first $500 million and .50%
over $500 million. From time to time, the Investment Manager may waive
all or part of this fee or reimburse the Fund monthly to improve the
Fund's yield and total return. The Investment Manager provides certain
administrative services at cost to the Fund. During the fiscal year
ended December 31, 1995, the management fees paid by the Fund were
.43% of 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.
DIVIDEND REINVESTMENT PLAN
Under the Plan, shareholders have the option of reinvesting
distributions automatically, unless such shareholders elect to receive
cash. Each dividend and capital gain distribution, if any, declared by
the Fund on outstanding shares will, unless elected otherwise by each
shareholder by notifying the Fund in writing at any time prior to the
record date for a particular dividend or distribution, be paid on the
payment date fixed by the Directors in that number of additional
shares equal to (a) the amount of such dividend divided by the Fund's
net asset value per share if the Market Price is at or above such net
asset value per share on the record date for such distribution and (b)
the amount of such dividend divided by the Market Price if the Market
Price is less than such net asset value per share on the record date
for such 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 capital gain distributions. There is no
fixed dividend rate and there can be no assurance that the Fund will
pay any dividends or realize any capital gain.
Investors Fiduciary Trust Company (the "Transfer Agent")
maintains all shareholder accounts in the Plan and furnishes written
confirmations of all transactions in the account, including
information needed by shareholders for personal and tax records.
Shares in the account of each Plan participant will be held by the
Transfer Agent in non-certificated form in the name of the
participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan, unless otherwise requested by a
shareholder.
In the case of shareholders such as banks, brokers or nominees,
which hold shares for others who are the beneficial owners, the
Transfer Agent will administer the Plan on the basis of the number of
shares certified from time to time by the shareholder as representing
the total amount registered in the shareholder's name and held for the
account of beneficial owners who participate in the Plan.
There is no charge to participants for reinvesting dividends or
capital gain distributions payable in either stock or cash. The
Transfer Agent's fees for handling the reinvestment of such dividends
and capital gain distributions are paid by the Fund. There are no
brokerage charges with respect to shares issued directly by the Fund
as a result of dividends or capital gain distributions payable in
stock or in cash. However, each participant bears a pro rata share of
brokerage commissions incurred with respect to open market purchases
in connection with the reinvestment of dividends or capital gain
distributions.
The automatic reinvestment of dividends and distributions will
not relieve participants of any income tax which may be payable on
such dividends or distributions.
Experience under the Plan may indicate that changes are
desirable. Accordingly, the Fund reserves the right to amend or
terminate the Plan and any dividend or distribution paid subsequent to
written notice of the change sent to the members of the Plan at least
30 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by the Transfer Agent on at
least 30 days' written notice to participants in the Plan. All
correspondence concerning the Plan should be directed to the Transfer
Agent at P.O. Box 419789, Kansas City, MO 64141-6789.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Plan, all dividends and capital gain distributions will
be automatically reinvested in additional Fund shares instead of being
paid in cash, unless at any time prior to the record date for a
particular dividend or distribution a shareholder elects otherwise by
notifying the Fund in writing, There are no sales or other charges in
connection with the reinvestment of dividends or capital gain
distributions. Shareholders who intend to hold their Fund shares
through a broker or nominee should contact such broker or nominee to
confirm that they may participate in the Plan. The Fund has no fixed
dividend rate, and there can be no assurance that the Fund will pay
any dividends or realize any capital gain. The Fund presently
qualifies, and intends to continue to qualify, as a regulated
investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). If it so qualifies, the Fund will not
be subject to Federal income tax on its net investment income and net
short-term capital gain, if any, realized during any fiscal year to
the extent that it distributes such income and capital gain to its
shareholders.
The Fund will determine either to distribute or to retain for
reinvestment all or part of its net long-term capital gain. If any
such gain are retained, the Fund will be subject to a Federal income
tax of 35% of such amount. In that event, the Fund expects to
designate the retained amount as undistributed capital gain in a
notice to its shareholders, each of whom (1) will be required to
include in income for tax purposes as long-term capital gain its share
of such undistributed amount, (2) will be entitled to credit its
proportionate share of the tax paid by the Fund against its Federal
income tax liability and to claim refunds to the extent that the
credit exceeds such liability, and (3) will increase its tax basis in
its shares of the Fund by an amount equal to 65% of the amount of
undistributed capital gain 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 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 gain or losses) for the calendar
year, (2) 98% of its net capital gain 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 Fund in October, November or
December of the year, payable to shareholders of record on a date
during such month and paid by the 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 Fund will be
long-term capital gain or losses if the securities have been held by
the 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 gain or losses. The foregoing is a general and
abbreviated summary of the provisions of the Code applicable to a
shareholder's investment in the Fund. Dividends and distributions
declared by the Fund may also be subject to state and local taxes.
Prior to investing in shares of the Fund, prospective shareholders are
urged to consult their tax advisors concerning the Federal, state and
local tax consequences of such investment.
REPURCHASE OF SHARES
The Fund is a closed-end, management investment company and as
such its shareholders do not have the right to redeem their shares.
The Fund may repurchase its shares on a securities exchange, provided
that the Fund has informed its shareholders within the preceding six
months of its intention to repurchase such shares.
The Fund may also repurchase its shares other than in the open
market if certain conditions are met regarding, among other things,
distribution of net income for the preceding fiscal year, identity of
the seller, price paid, brokerage commissions, prior notice to
shareholders of the Fund's intention to effect such a repurchase, and
the manner in which such a repurchase is effected so as not to
discriminate unfairly against other Fund shareholders. Shares
repurchased by the Fund will constitute authorized and unissued shares
available for reissuance. No assurances can be given that the Fund's
Board of Directors will decide to undertake any repurchases, or if
undertaken, that repurchases would have the desired effect on market
price.
If the Fund repurchases its shares at a price representing a
discount to net asset value, the net asset value of the remaining
outstanding shares will be enhanced but the market price of the
remaining outstanding shares will not necessarily be affected.
Furthermore, the Fund may incur debt to finance share repurchases, and
the interest on such borrowings would increase the Fund's expenses and
reduce its net income. See "The Fund's Investment Program."
The Fund does not currently have an established tender offer
program or an established schedule for considering tender offers. No
assurance can be given that the Fund's Board of Directors will decide
to undertake any tender offers in the future, or if undertaken, that a
tender offer would affect the market price of the Fund's shares.
CAPITAL STOCK
On October 23, 1996, shareholders approved the Fund's Amended and
Restated Articles of Incorporation changing the status of the Fund to
a closed-end fund. The Fund's Amended and Restated Articles of
Incorporation were filed on November 8, 1996, the date of the Fund's
conversion from a open-end to a closed-end investment company. 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, shareholders
will be entitled to receive ratably per share the net assets of the
Fund. Shareholders 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. The Fund is authorized
to issue up to ten million (10,000,000) shares ($.01 par value).
The Directors can reclassify unissued shares as preferred stock
with such terms andconditions as determined by the Directors.
Anti-takeover Provisions. The Fund presently has provisions in
its Amended and Restated Articles of Incorporation and Amended and
Restated By-laws (collectively, the "Governing Documents") which could
have the effect of limiting (i) the ability of other entities or
persons to acquire control of the Fund, (ii) the Fund's freedom to
engage in certain transactions, or (iii) the ability of the Fund's
directors or shareholders to amend the Governing Documents or
effectuate changes in the Fund's management. These provisions of the
Governing Documents of the Fund may be regarded as "anti-takeover"
provisions. The Directors are divided into five classes, each having a
term of five years (except, to ensure that the term of a class of the
Fund's directors expires each year, the first class of the Fund's
directors will serve an initial one- year term and five-year terms
thereafter, the second class of its directors will serve an initial
two-year term and five-year terms thereafter, the third class will
serve an initial three-year term and five-year terms thereafter, and
the fourth class 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 three years to change a majority
of the Directors. Such system of electing directors may have the
effect of maintaining the continuity of management and, thus, make it
more difficult for the shareholders of the Fund to change the majority
of directors. A director of the Fund may be removed only with cause by
a vote of eighty percent (80%) of the shares then entitled to be cast
for the election of directors. In addition, the affirmative vote of
the holders of 80% of the outstanding shares of the Fund is required
to authorize its conversion from a closed-end to an open-end
investment company, to amend certain provisions of the Charter
involving conversion to an open-end fund, or to authorize any business
combination (including any merger, consolidation, or share exchange
with any interested shareholder or any affiliate thereof), unless
approved by the vote of at least 50% of the Directors, in which case
the affirmative vote of the holders of at least a majority of the
votes entitled to be cast by holders of voting stock is required.
Reference is made to the Governing Documents, on file with the SEC,
for the full text of these provisions.
Except as otherwise provided in the Charter and notwithstanding
any other provision of the Maryland General Corporation law to the
contrary, any action submitted to a vote by stockholders 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 approved
by the vote of a majority of the Directors, 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 Directors to remove
the foregoing 80% requirement, such requirement would have the effect
of making it very difficult for stockholders to elect Directors or
modify the composition of the Board.
The Fund elects not to be governed by any provision of Section
3-602 of Subtitle 6 of the Maryland General Corporation Law.
The provisions of the Governing Documents described above could
have the effect of depriving owners of shares in the Fund of
opportunities to sell their shares at a premium over prevailing market
prices, by discouraging a third party from seeking to obtain control
of the 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 Directors.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING 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 Investors Fiduciary Trust Company,
P.O. Box 419789, Kansas City, MO 64141-6789.
[Left Side of Back Cover Page] [Right Side of Back Cover Page]
BULL & BEAR BULL & BEAR
MUNICIPAL MUNICIPAL
INCOME INCOME
FUND, INC. FUND, INC.
11 HANOVER SQUARE
NEW YORK, NY 10005
TOLL-FREE 1-888-847-4200
Prospectus
November 8, 1996
BULL & BEAR
PERFORMANCE DRIVEN
Statement of Additional Information November 8, 1996
BULL & BEAR MUNICIPAL INCOME FUND, INC.
11 Hanover Square
New York, NY 10005
1-212-363-1100
1-888-847-4200
Bull & Bear Municipal Income Fund, Inc. (the "Fund") is a
diversified, closed-end management investment company organized as a
Maryland corporation. Prior to November 8, 1996, the Fund was a
diversified series of shares of Bull & Bear Municipal Securities,
Inc., an open-end management investment company organized in 1983 as a
Maryland corporation. This Statement of Additional Information
regarding the Fund is not a prospectus and should be read in
conjunction with the Fund's prospectus dated November 8, 1996. The
prospectus is available without charge by written request to the Fund
at 11 Hanover Square, New York, NY 10005, or by calling toll- free
1-888-847-4200.
TABLE OF CONTENTS
THE FUND'S INVESTMENT PROGRAM . . . . . . . . . . . . . 2
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . 3
OFFICERS AND DIRECTORS . . . . . . . . . . . . . . . . . 4
THE INVESTMENT MANAGER . . . . . . . . . . . . . . . . . 7
INVESTMENT MANAGEMENT AGREEMENT . . . . . . . . . . . . 8
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . 17
ALLOCATION OF BROKERAGE . . . . . . . . . . . . . . . . 18
DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . 20
REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . 22
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT . . . 22
AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . 22
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . 22
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . 23
THE FUND'S INVESTMENT PROGRAM
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements
with U.S. banks or dealers involving securities in which the Fund is
authorized to invest. A repurchase agreement is an instrument under
which the Fund purchases securities from a bank or dealer and
simultaneously commits to resell the securities to the bank or dealer
at an agreed upon date and price. The Fund's custodian maintains
custody of the underlying securities until their repurchase; thus the
obligation of the bank or dealer to pay the repurchase price is, in
effect, secured by such securities. The Fund's risk is limited to the
ability of the seller to pay the agreed upon amount on the repurchase
date; if the seller defaults, the security constitutes collateral for
the seller's obligation to pay. If, however, the seller defaults and
the value of the collateral declines, the Fund may incur loss and
expenses in selling the collateral. To attempt to limit the risk in
engaging in repurchase agreements, the Fund enters into repurchase
agreements only with banks and dealers believed by the Investment
Manager to present minimum credit risks in accordance with guidelines
established by the Board of Directors. The Fund currently intends to
limit repurchase agreements to less than 5% of its total net assets.
CREDIT RATINGS. Fitch Investors Service, L.P. ("Fitch"), Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings
Services ("S&P") are private services that provide ratings of the
credit quality of debt obligations, including issues of municipal
securities. A description of ratings assigned to municipal bonds,
municipal notes and commercial paper by Fitch, Moody's and S&P is
included in the Appendix to this Statement of Additional Information.
The Investment Manager may use these ratings in determining whether to
purchase, sell or hold a security. It should be emphasized, however,
that ratings are general and are not absolute standards of quality.
Consequently, securities with the same maturity, interest rate and
rating may have different market prices. Credit ratings attempt to
evaluate the safety of principal and interest payments and do not
evaluate the risks of fluctuations in market value. Also, rating
agencies may fail to make timely changes in credit ratings in response
to subsequent events, so that an issuer's current financial condition
may be better or worse than the rating indicates. Subsequent to its
purchase by the Fund, an issue of municipal securities may cease to be
rated or its rating may be reduced below the minimum rating required
for purchase by the Fund. The Investment Manager will consider such an
event in determining whether the Fund should continue to hold the
obligation.
INVESTMENT RESTRICTIONS
The following restrictions have been adopted by the Fund and may
not be changed without the approval of the lesser of (a) 67% or more
of the voting securities of the Fund present at a meeting if the
holders of more than 50% of the outstanding voting securities of the
Fund are present or represented by proxy or (b) more than 50% of the
outstanding voting securities of the Fund. Any investment restriction
which involves a maximum percentage of securities or assets shall not
be considered to be violated unless an excess over the percentage
occurs immediately after, and is caused by, an acquisition of
securities or assets of, or borrowing by, the Fund. The Fund may not:
1. Purchase any security if, as a result, more than 5% of the value
of the Fund's total assets would be invested in the securities of
a single issuer, except securities issued or guaranteed by the
U.S. Government or any of its agencies or instrumentalities. For
purposes of this limitation and that set forth in (2) below, the
Fund will regard the entity which has the ultimate responsibility
for the payment of interest and principal as the issuer.
2. Purchase any security if, as a result, more than 10% of the
outstanding securities of any issuer would be held by the Fund,
except securities issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities.
3. Purchase any security if, as a result, 25% or more of the value
of the Fund's total assets would be invested in the securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to
securities issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities, or to municipal securities,
certificates of deposit, or banker's acceptances.
4. Purchase any security if, as a result, more than 5% or more of
the value of the Fund's total assets would be invested in the
securities of issuers which at the time of purchase had been in
operation for less than three years, except obligations issued or
guaranteed by the U.S. Government, or its agencies, and municipal
securities (for this purpose, the period of operation of any
issuer shall include the period of operation of any predecessor
or unconditional guarantor of such issuer).
5. Purchase equity securities, or securities convertible into equity
securities.
6. Purchase or sell real estate (although it may purchase municipal
and other debt securities secured by real estate or interest
therein).
7. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition, or
reorganization.
8. Purchase or sell commodities or commodity contracts.
9. Purchase participations or other direct interest in oil, gas, or
other mineral exploration or development programs.
10. Make short sales of securities or purchase securities on margin,
except for such short term credit as may be necessary for the
clearance of purchases of portfolio securities.
11. Make loans, although it may purchase issues of debt securities.
12. Underwrite any issue of securities, except to the extent that the
purchase of municipal securities, or other permitted investments,
directly from the issuer thereof and the later disposition of
such securities in accordance with the Fund's investment program
may be deemed to be an underwriting.
13. Invest in the securities of any issuer for the purpose of
exercising management or control.
14. Purchase or retain the securities of any issuer if, to the
knowledge of the Fund's management, any of the officers or
directors of the Fund, or its Investment Manager, owns
beneficially more than 1/2 of 1% of such issuer's securities,
together own beneficially more than 5% of such securities.
15. Invest in puts, calls, straddles, spreads, or any combination
thereof.
16. Issue senior securities (including borrowing money), except to
the extent permitted by applicable law.
OFFICERS AND DIRECTORS
The officers and Directors of the Corporation, their respective
offices, dates of birth and principal occupations during the last five
years are set forth below. Unless otherwise noted, the address of each
is 11 Hanover Square, New York, NY 10005.
BASSETT S. WINMILL* -- Chairman of the Board. He is Chairman of the
Board of five other investment companies advised by the Investment
Manager and its affiliates (the "Funds Complex") and of the parent of
the Investment Manager, Bull & Bear Group, Inc. ("Group"). He was born
February 10, 1930. He is a member of the New York Society of Security
Analysts, the Association for Investment Management and Research and
the International Society of Financial Analysts. He is the father of
Mark C. Winmill and Thomas B. Winmill.
ROBERT D. ANDERSON* -- Vice Chairman and Director. He is Vice Chairman
and a Director of six other investment companies in the Funds Complex
and of the Investment Manager and its affiliates. He was born December
7, 1929. He is a member of the Board of Governors of the Mutual Fund
Education Alliance, and of its predecessor, the No-Load Mutual Fund
Association. He has also been a member of the District #12, District
Business Conduct and Investment Companies Committees of the NASD.
BRUCE B. HUBER, CLU, ChFC, MSFS -- Director. 3443 Highway 66, Neptune,
NJ 07753. He is Senior Consultant with The Berger Financial Group, LLC
specializing in financial, estate and insurance matters. From March
1995 to December 1995, he was President of Huber Hogan Knotts
Consulting, Inc. financial consultants and insurance planners. He was
born February 7, 1930. From 1988 to 1990, he was Chairman of Bruce
Huber Associates. He is also a Director of six other investment
companies in the Funds Complex.
JAMES E. HUNT -- Director. One Dag Hammarskjold Plaza, New York, NY
10017. He is a principal of Kenny, Kindler, Hunt & Howe, Inc.,
executive recruiting consultants. He was born December 14, 1930. From
1976 until 1983 he was Vice President of Russell Reynolds Associates,
Inc., also executive recruiting consultants. He is also a Director of
six other investment companies in the Funds Complex.
FREDERICK A. PARKER, JR. -- Director. 219 East 69th Street, New York,
NY 10021. He is President and Chief Executive Officer of American Pure
Water Corporation, a manufacturer of water purifying equipment. He was
born November 14, 1926. He is also a Director of six other investment
companies in the Funds Complex.
JOHN B. RUSSELL -- Director. 334 Carolina Meadows Villa, Chapel Hill,
NC 27514. He was Executive Vice President and a Director of Dan River,
Inc., a diversified textile company, from 1969 until he retired in
1981. He was born February 9, 1923. He is a Director of Wheelock,
Inc., a manufacturer of signal products, and a consultant for the
National Executive Service Corps in the health care industry. He is
also a Director of six other investment companies in the Funds
Complex.
MARK C. WINMILL -- Co-President, Co-Chief Executive Officer, and Chief
Financial Officer. He is Co-President, Co-Chief Executive Officer, and
Chief Financial Officer of the Funds Complex and of Group and three of
its affiliates, Chairman of the Investment Manager and Investor
Service Center, Inc. (the "Distributor"), and President of Bull & Bear
Securities, Inc. ("BBSI"). He was born November 26, 1957. He received
his M.B.A. from the Fuqua School of Business at Duke University in
1987. From 1983 to 1985 he was Assistant Vice President and Director
of Marketing of E.P. Wilbur & Co., Inc., a real estate development and
syndication firm and Vice President of E.P.W. Securities, its
broker/dealer subsidiary. He is a son of Bassett S. Winmill and
brother of Thomas B. Winmill. He is also a Director of four other
investment companies in the Funds Complex.
THOMAS B. WINMILL -- Co-President, Co-Chief Executive Officer, and
General Counsel. He is Co-President, Co-Chief Executive Officer, and
General Counsel of the Funds Complex and of Group and certain of its
affiliates, President of the Investment Manager and the Distributor,
and Chairman of BBSI. He was born June 25, 1959. He was associated
with the law firm of Harris, Mericle & Orr from 1984 to 1987. He is a
member of the New York State Bar and the SEC Rules Committee of the
Investment Company Institute. He is a son of Bassett S. Winmill and
brother of Mark C. Winmill. He is also a Director of certain other
investment companies in the Funds Complex.
STEVEN A. LANDIS -- Senior Vice President. He is Senior Vice President
of the Funds Complex, the Investment Manager and certain of its
affiliates. He was born March 1, 1955. From 1993 to 1995, he was
Associate Director -- Proprietary Trading at Barclays De Zoete Wedd
Securities Inc., from 1992 to 1993 he was Director, Bond Arbitrage at
WG Trading Company, and from 1989 to 1992 he was Vice President of
Wilkinson Boyd Capital Markets.
BRETT B. SNEED, CFA -- Senior Vice President. He is Senior Vice
President of the Funds Complex, the Investment Manager and certain of
its affiliates. He was born June 11, 1941. He is a Chartered Financial
Analyst, a member of the Association for Investment Management and
Research, and a member of the New York Society of Security Analysts.
From 1986 to 1988, he managed private accounts, from 1981 to 1986, he
was Vice President of Morgan Stanley Asset Management, Inc. and prior
thereto was a portfolio manager and member of the Finance and
Investment Committees of American International Group, Inc., an
insurance holding company.
JOSEPH LEUNG, CPA -- Treasurer and Chief Accounting Officer (since
1995). He is Treasurer and Chief Accounting Officer of the Investment
Manager and its affiliates. From 1992 to 1995 he held various
positions with Coopers & Lybrand L.L.P., a public accounting firm.
From 1991 to 1992, he was the accounting supervisor at Retirement
Systems Group, a mutual fund company. From 1987 to 1991, he held
various positions with Ernst & Young, a public accounting firm. He is
a member of the American Institute of Certified Public Accountants. He
was born September 15, 1965.
WILLIAM J. MAYNARD -- Vice President and Secretary. He is Vice
President and Secretary of the Funds Complex, the Investment Manager
and its affiliates. He was born September 13, 1964. From 1991 to 1994
he was associated with the law firm of Skadden, Arps, Slate, Meagher &
Flom. He is a member of the New York State Bar.
* Bassett S. Winmill and Robert D. Anderson are "interested persons"
of the Fund as defined by the 1940 Act, because of their positions
with the Investment Manager.
COMPENSATION TABLE
NAME OF AGGREGATE PENSION OR ESTIMATED TOTAL
PERSON, COMPENSA- RETIREMENT ANNUAL COMPENSATION
POSITION TION FROM BENEFITS BENEFITS FROM
REGISTRANT ACCRUED AS UPON REGISTRANT
PART OF FUND RETIREMENT AND FUND
EXPENSES COMPLEX
PAID TO
DIRECTORS
Bassett S. None None None None
Winmill
Chairman
Robert D. None None None None
Anderson
Vice
Chairman
Bruce B. $500 None None $12,500
Huber from 7
Director Investment
Companies
James E. $500 None None $12,500
Hunt from 7
Director Investment
Companies
Frederick $500 None None $12,500
A. Parker from 7
Director Investment
Companies
John B. $500 None None $12,500
Russell from 7
Director Investment
Companies
Information in the above table is based on fees paid during the
year ended December 31, 1995.
No officer, Director or employee of the Fund's Investment Manager
receives any compensation from the Fund for acting as an officer,
Director or employee of the Fund. As of October 30, 1996, officers and
Directors of the Fund owned less than 1% of the outstanding shares of
the Fund. As of October 30, 1996, no owner of record owned more than
5% of the outstanding shares of the Fund.
THE INVESTMENT MANAGER
The Fund's Investment Manager is Bull & Bear Advisers, Inc., 11
Hanover Square, New York, NY 10005. The Investment Manager, a
registered investment adviser, is a wholly owned subsidiary of Group.
The other principal subsidiaries of Group include Investor Service
Center, Inc., the Fund's distributor and a registered broker/dealer,
Midas Management Corporation and Rockwood Advisers, Inc., registered
investment advisers, and Bull & Bear Securities, Inc., a registered
broker/dealer providing discount brokerage services.
Group is a publicly owned company whose securities are listed on
Nasdaq and traded in the over-the-counter market. Bassett S. Winmill
may be deemed a controlling person of Group on the basis of his
ownership of 100% of Group's voting stock. The Fund and its investment
company affiliates had net assets in excess of $400 million as of
October 30, 1996.
INVESTMENT MANAGEMENT AGREEMENT
Under the Investment Management Agreement, the Fund assumes and
pays all expenses required for the conduct of its business including,
but not limited to, custodian and transfer agency fees, accounting and
legal fees, investment management fees, fees of disinterested
Directors, association fees, printing, salaries of certain
administrative and clerical personnel, necessary office space, all
expenses relating to the registration or qualification of the shares
of the Fund under Blue Sky laws and reasonable fees and expenses of
counsel in connection with such registration and qualification,
miscellaneous expenses and such non-recurring expenses as may arise,
including actions, suits or proceedings affecting the Fund and the
legal obligation which the Fund may have to indemnify its officers and
Directors with respect thereto. For the fiscal years ended December
31, 1993, 1994, and 1995 the Fund paid to the Investment Manager
aggregate investment management fees of $133,084, $112,479 and
$98,069, respectively, of which $1,667, $19,178 and $28,287,
respectively, were waived by the Investment Manager pursuant to the
investment management fee waiver described below.
The Investment Manager has agreed in the Investment Management
Agreement that it will guarantee that the operating expenses of the
Fund (including investment management fees but excluding taxes,
interest, brokerage commissions, and certain extraordinary expenses),
expressed as a percentage of average daily net assets, will not exceed
for each fiscal year the lowest rate prescribed by any state in which
shares of the Fund are qualified for sale. Currently such limitation
is 2.5% of the first $30 million of the Fund's net assets, 2% of the
next $70 million of such assets, and 1.5% of such assets above $100
million. Currently, the Investment Manager has voluntarily agreed to
waive its management fee to the extent, if any, that such expenses
exceed an annual rate of 1.25% of the average daily net assets of the
Fund.
If requested by the Board of Directors, the Investment Manager
may provide other services to the Fund such as, without limitation,
the functions of billing, accounting, certain shareholder
communications and services, administering state and Federal
registrations, filings and controls and other administrative services.
Any services so requested and performed will be for the account of the
Fund and the costs of the Investment Manager in rendering such
services shall be reimbursed by the Fund, subject to examination by
those directors of the Fund who are not interested persons of the
Investment Manager or any affiliate thereof. For such services, the
Fund reimbursed the Investment Manager $14,449, $12,187 and $13,322
for the fiscal years ended December 31, 1993, 1994, and 1995,
respectively.
The Investment Management Agreement is not assignable and
terminates automatically in the event of its assignment. The
Investment Management Agreement may also be terminated without penalty
on 60 days' written notice at the option of either party thereto or by
a vote of the Fund's shareholders. The Investment Management Agreement
provides that the Investment Manager shall not be liable to the Fund
or any shareholder of the Fund for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with any
investment policy or the purchase, sale or retention of any security
on the recommendation of the Investment Manager. Nothing contained in
the Investment Management Agreement, however, shall be construed to
protect the Investment Manager against any liability to the Fund by
reason of willful malfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of
obligations and duties under the Investment Management Agreement.
Group has granted the Fund a non-exclusive license to use the
service mark "Bull & Bear" under certain terms and conditions on a
royalty free basis. Such license may be withdrawn by Group in the
event the investment manager of the Fund shall not be the Investment
Manager or another subsidiary of Group. If the license is terminated,
the Fund will eliminate all reference to "Bull & Bear" in its
corporate name and cease to use any of such service marks or any
similar service marks in its business.
DETERMINATION OF NET ASSET VALUE
Net asset value will normally be calculated (a) no less
frequently than weekly, (b) on the last business day of each month and
(c) at any other times determined by the Directors. Net asset value is
calculated by dividing the value of the Fund's net assets (the value
of its assets less its liabilities) by the total number of shares of
its common stock outstanding. Municipal securities with remaining
maturities of more than 60 days are valued in accordance with
valuations furnished by the pricing service employed by the Fund that
are based on a computerized matrix system or appraisals by the pricing
service. Debt obligations with remaining maturities of 60 days or less
are valued at cost adjusted for amortization of premiums and
accretions of discounts. All other assets will be valued at fair value
as determined in good faith by or under the direction of the Board of
Directors.
ALLOCATION OF BROKERAGE
The Fund seeks to obtain prompt execution of orders at the most
favorable net prices. Fund transactions in municipal and over-the-
counter securities generally are with dealers acting as principals at
net prices with little or no brokerage costs. In certain
circumstances, however, the Fund may engage a broker as agent for a
commission to effect transactions for such securities. Transactions
are directed to brokers and dealers qualified to execute orders or
provide research, brokerage or other services, and who may sell shares
of the Fund or of other affiliated funds. The Investment Manager may
also allocate portfolio transactions to other broker/dealers that
remit a portion of their commissions as a credit against the
custodian's charges. No formula exists and no arrangement is made with
or promised to any broker/dealer which commits either a stated volume
or percentage of brokerage business based on research, brokerage or
other services furnished to the Investment Manager or upon sale of
Fund shares. Purchases of securities from underwriters include a
commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked
price. While the Investment Manager generally seeks competitive
spreads or commissions, the Fund will not necessarily be paying the
lowest spread or commission available.
The Investment Manager directs portfolio transactions to
broker/dealers for execution on terms and at rates which it believes,
in good faith, to be reasonable in view of the overall nature and
quality of services provided by a particular broker/dealer, including
brokerage and research services, sales of Fund shares and shares of
other affiliated funds, and allocation of commissions to the Fund's
custodian. With respect to brokerage and research services,
consideration may be given in the selection of broker/dealers to
brokerage or research services provided and payment may be made of a
fee higher than that charged by another broker/dealer which does not
furnish brokerage or research services or which furnishes brokerage or
research services deemed to be of lesser value, so long as the
criteria of Section 28(e) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or other applicable law are met. Section
28(e) of the 1934 Act was adopted in 1975 and specifies that a person
with investment discretion shall not be "deemed to have acted
unlawfully or to have breached a fiduciary duty" solely because such
person has caused the account to pay a higher commission than the
lowest available under certain circumstances. To obtain the benefit of
Section 28(e), the person so exercising investment discretion must
make a good faith determination that the commissions paid are
"reasonable in relation to the value of the brokerage and research
services provided ... viewed in terms of either that particular
transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion." Thus,
although the Investment Manager may direct portfolio transactions
without necessarily obtaining the lowest price at which such
broker/dealer, or another, may be willing to do business, the
Investment Manager seeks the best value for the Fund on each trade
that circumstances in the market place permit, including the value
inherent in on-going relationships with quality brokers.
Currently, it is not possible to determine the extent to which
commissions that reflect an element of value for brokerage or research
services might exceed commissions that would be payable for execution
alone, nor generally can the value of such services to the Fund be
measured, except to the extent such services have a readily
ascertainable market value. There is no certainty that services so
purchased, or the sale of Fund shares, if any, will be beneficial to
the Fund, and it may be that other affiliated funds will derive
benefit therefrom. Such services being largely intangible, no dollar
amount can be attributed to benefits realized by the Fund or to
collateral benefits, if any, conferred on affiliated entities. Those
services may include (1) furnishing advice as to the value of
securities, the advisability of investing in, purchasing or selling
securities and the availability of securities or purchasers or sellers
of securities, (2) furnishing analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio
strategy, and the performance of accounts, and (3) effecting
securities transactions and performing functions incidental thereto
(such as clearance, settlement, and custody). Pursuant to arrangements
with certain broker/dealers, such broker/dealers provide and pay for
various computer hardware, software and services, market pricing
information, investment subscriptions and memberships, and other third
party and internal research of assistance to the Investment Manager in
the performance of its investment decision-making responsibilities for
transactions effected by such broker/dealers for the Fund. Commission
"soft dollars" may be used only for "brokerage and research services"
provided directly or indirectly by the broker/dealer and under no
circumstances will cash payments be made by such broker/dealers to the
Investment Manager. To the extent that commission "soft dollars" do
not result in the provision of any "brokerage and research services"
by a broker/dealer to whom such commissions are paid, the commissions,
nevertheless, are the property of such broker/dealer. To the extent
such services are utilized by the Investment Manager for other than
the performance of its investment decision-making responsibilities,
the Investment Manager makes an appropriate allocation of the cost of
such services according to their use.
During the fiscal years ended December 31, 1993, 1994, and 1995
the Fund did not pay any brokerage commissions and no transactions
were directed to broker/dealers during such periods for selling shares
of the Fund or any other affiliated funds.
Investment decisions for the Fund and for the other Funds managed
by the Investment Manager and its affiliates are made independently
based on each Fund's investment objectives and policies. The same
investment decision, however, may occasionally be made for two or more
Funds. In such a case, the Investment Manager may combine orders for
two or more Funds for a particular security if it appears that a
combined order would reduce brokerage commissions and/or result in a
more favorable transaction price. Combined purchase or sale orders are
then averaged as to price and allocated as to amount according to a
formula deemed equitable to each Fund. While in some cases this
practice could have a detrimental effect upon the price or quantity
available of the security with respect to the Fund, the Investment
Manager believes that the larger volume of combined orders can
generally result in better execution and prices.
The Fund is not obligated to deal with any particular broker,
dealer or group thereof. Certain broker/dealers that the Funds Complex
does business with may, from time to time, own more than 5% of the
publicly traded Class A non-voting Common Stock of Group, the parent
of the Investment Manager, and may provide clearing services to BBSI.
The Fund's portfolio turnover rate may vary from year to year and
will not be a limiting factor when the Investment Manager deems
portfolio changes appropriate. The portfolio turnover rate is
calculated by dividing the lesser of the Fund's annual sales or
purchases of portfolio securities (exclusive of purchases or sales of
securities whose maturities at the time of acquisition were one year
or less) by the monthly average value of securities in the portfolio
during the year.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to continue to qualify for treatment as a
regulated investment company ("RIC") under the Internal Revenue Code
of 1986, as amended ("Code"). To qualify for this treatment, the Fund
must distribute to its shareholders for each taxable year at least 90%
of the sum of its net interest income excludable from gross income
under section 103(a) of the Code ("tax-exempt interest") plus its
investment company taxable income (consisting generally of taxable net
investment income and net short term capital gain) and must meet
several additional requirements. Among these requirements are the
following: (1) at least 90% of the Fund's gross income each taxable
year must be derived from dividends, interest, payments with respect
to securities loans, and gains from the sale or other disposition of
securities, or other income derived with respect to its business of
investing in securities ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the
sale or other disposition of securities that were held for less than
three months ("Short-Short Limitation"); and (3) the Fund's
investments must satisfy certain diversification requirements. In any
year during which the applicable requirements of the Code are
satisfied, the Fund will not be liable for Federal income tax on
income and capital gain that is distributed to its shareholders. If
for any taxable year the Fund does not qualify for treatment as a RIC,
all of its taxable income will be taxed at corporate rates and all
distributions to its shareholders (including the portion thereof
attributable to tax-exempt interest) will be fully taxable to them.
Dividends paid by the Fund will qualify as "exempt-interest"
dividends, and thus will be excludable from gross income by its
shareholders, if the Fund satisfies the additional requirement that,
at the close of each quarter of its taxable year, at least 50% of the
value of its total assets consists of securities the interest on which
is tax-exempt; the Fund intends to continue to satisfy this
requirement. The aggregate amount annually designated by the Fund as
exempt-interest dividends may not exceed its tax-exempt interest. The
shareholders' treatment of dividends from the Fund under state and
local income tax laws may differ from the treatment thereof under the
Code.
Dividends and other distributions declared by the Fund in
October, November or December of any year and payable to shareholders
of record on a date in any of those months will be deemed to have been
paid by the Fund and received by the shareholders on December 31 of
that year if the distributions are paid by the Fund during the
following January. The Fund invests exclusively in debt securities and
receives no dividend income; accordingly, no portion of the dividends
or other distributions paid by the Fund is eligible for the
dividends-received deduction allowed to corporations.
If Fund shares are sold at a loss after being held for six months
or less, the loss will be disallowed to the extent of any
exempt-interest dividends received on those shares; and the portion,
if any, that is not disallowed will be treated as long term, instead
of short term, capital loss to the extent of any capital gain
distributions received thereon. Investors also should be aware that if
shares are purchased shortly before the record date for a taxable
dividend or capital gain distribution, the shareholder will pay full
price for the shares and receive some portion of the price back as a
taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax to the
extent it fails to distribute by the end of any calendar year
substantially all of its ordinary (taxable) income for that year and
capital gain net income for the 12 month period ending on October 31
of that year, plus certain other amounts.
Interest received on certain otherwise tax-exempt securities (so-
called "private activity" bonds) issued after August 7, 1986, which
are used for purposes other than those generally performed by
governmental units, e.g., bonds used for commercial or housing
purposes, is a tax preference item for purposes of the Federal
alternative minimum tax ("AMT") for both individuals and corporations.
The Fund reports to its shareholders after its fiscal year-end the
portion, if any, of its dividends paid during the preceding year that
is a tax-preference item for these purposes.
Corporations also may be subject to the AMT based in part on
certain differences between taxable income as adjusted for other tax
preferences and "adjusted current earnings." Because exempt-interest
dividends paid by the Fund will be included in adjusted current
earnings, a corporate shareholder may be required to pay AMT on those
dividends, without regard to whether they are derived to any extent
from interest on private activity bonds.
Entities or other persons who are "substantial users" (or persons
related to "substantial users") of facilities financed by private
activity bonds or industrial development bonds should consult their
tax advisers before purchasing Fund shares because, for users of
certain of these facilities, the interest on such bonds is not exempt
from Federal income tax. For these purposes, the term "substantial
user" is defined generally to include a "non-exempt person" who
regularly uses in trade or business a part of a facility financed from
the proceeds of such bonds.
Up to 85% of social security and railroad retirement benefits may
be included in taxable income for recipients whose adjusted gross
income (including income from tax-exempt sources such as the Fund)
plus 50% of their benefits exceeds certain base amounts.
Exempt-interest dividends from the Fund still are tax-exempt to the
extent described above; they are only included in the calculation of
whether a recipient's income exceeds the established amounts.
If the Fund invests in any instruments that generate taxable
income, under the circumstances described in the Prospectus,
distributions of the interest earned thereon will be taxable to its
shareholders as ordinary income to the extent of its earnings and
profits. Moreover, if the Fund realizes capital gain as a result of
market transactions, any distributions of such gain will be taxable to
its shareholders.
The Fund is required to withhold 31% of all taxable 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. The
Fund also is required to withhold 31% of all taxable dividends and
capital gain distributions payable to such shareholders who otherwise
are subject to backup withholding.
From time to time, proposals have been introduced before Congress
that would restrict or eliminate the Federal income tax exemption for
interest on municipal securities, and it can be expected that similar
proposals may continue to be introduced. Should such a proposal be
enacted, both the availability and value of municipal securities would
be affected and the Board of Directors would consider possible changes
for shareholder approval in the Fund's investment objective and
policies.
The foregoing discussion of Federal income tax consequences is
based on the tax law in effect on the date of this Statement of
Additional Information, which is subject to change by legislative,
judicial or administrative action. The Fund may be subject to state or
local tax in jurisdictions in which it may be deemed to be doing
business.
REPORTS TO SHAREHOLDERS
The Fund issues, at least semi-annually, reports to its
shareholders including a list of investments held and statements of
assets and liabilities, income and expense, and changes in net assets
of the Fund. The Fund's fiscal year ends on December 31 each year.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Investors Bank & Trust Company, 89 South Street, Boston, MA
02109, has been retained to act as custodian of the Fund's investments
and may appoint one or more subcustodians, provided such
subcustodianship is in compliance with the rules and regulations
promulgated under the 1940 Act. The custodian also performs accounting
services for the Fund. As part of its agreement with the Fund, the
custodian may apply credits or charges for its services to the Fund
for, respectively, positive or deficit cash balances maintained by the
Fund with the Custodian. Investors Fiduciary Trust Company, P.O. Box
419789, Kansas City, MO 64141-6789, is the Fund's transfer and
dividend disbursing agent.
AUDITORS
Tait, Weller & Baker, Two Penn Center, Suite 700, Philadelphia,
PA 19102-1707, are the independent accountants for the Fund. Financial
statements of the Fund are audited annually.
FINANCIAL STATEMENTS
The Fund's Financial Statements for the fiscal year ended
December 31, 1995, together with the Report of the Fund's independent
accountants thereon, appear in the Fund's Annual Report to
Shareholders and are incorporated herein by reference.
APPENDIX
Ratings of Municipal Bonds
FITCH INVESTORS SERVICE, L.P. 'AAA' rated bonds are considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal,
which is unlikely to be affected by reasonably foreseeable events.
'AA' rated bonds are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated
'AAA'. 'A' rated bonds are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds
with higher ratings. BBB rated bonds are considered to be investment
grade and of satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate. Adverse
changes in economic conditions and circumstances, however, are more
likely to have adverse impact on these bonds and, therefore, impair
timely payment. The likelihood that the ratings of these bonds will
fall below investment grade is higher than for bonds with higher
ratings. Plus and minus signs are used with a rating symbol to
indicate the relative position of an issuer within the rating
category. Plus and minus signs, however, are not used in the 'AAA'
category.
MOODY'S INVESTORS SERVICE, INC. Bonds which are rated 'Aaa' are judged
to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edged".
Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such
issues. Bonds which are rated 'Aa' are judged to be of high quality by
all standards. Together with the 'Aaa' group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
'Aaa' securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long term risk appear somewhat larger than the 'Aaa' securities.
Bonds which are rated 'A' possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
some time in the future. Bonds which are rated 'Baa' are considered as
medium grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length
of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
STANDARD & POOR'S RATINGS SERVICES. Debt rated 'AAA' has the highest
rating assigned by Standard & Poor's. Capacity to pay interest and
repay principal is extremely strong. Debt rated 'AA' has a very strong
capacity to pay interest and repay principal and differs from the
higher rated issues only in small degree. Debt rated 'A' has a strong
capacity to pay interest and repay principal although it is somewhat
more susceptible to the adverse effects of changes in circumstances
and economic conditions than debt in higher rated categories. Debt
rated 'BBB' is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
Ratings of Municipal Notes
FITCH INVESTORS SERVICE, L.P. 'F-1+': (Exceptionally strong credit
quality) Issues assigned this rating are regarded as having the
strongest degree of assurance for timely payment. 'F-1': (Very strong
credit quality) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than issues rated 'F-1+'.
'F-2': (Good credit quality) Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned 'F-1+' and 'F-1'
ratings. 'F-3': (Fair credit quality) Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could cause
these securities to be rated below investment grade.
MOODY'S INVESTORS SERVICE, INC. 'MIG 1': This designation denotes best
quality. There is present strong protection by established cash flows,
superior liquidity support or demonstrated broad based access to the
market for refinancing. 'MIG 2': This designation denotes high
quality, with margins of protection ample although not so large as in
the preceding group. 'MIG 3': This designation denotes favorable
quality, with all security elements accounted for, but lacking the
undeniable strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is likely
to be less well established.
STANDARD & POOR'S RATINGS SERVICES. 'SP-1': Very strong or strong
capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics will be given a plus (+)
designation. 'SP-2': Satisfactory capacity to pay principal and
interest. 'SP-3': Speculative capacity to pay principal and interest.
Ratings of Commercial Paper
FITCH INVESTORS SERVICE, L.P. 'F-1+': (Exceptionally strong credit
quality) Issues assigned this rating are regarded as having the
strongest degree of assurance for timely payment. 'F-1': (Very strong
credit quality) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than issues rated 'F-1+'.
'F-2': (Good credit quality) Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned 'F-1+' and 'F-1'
ratings.
MOODY'S INVESTORS SERVICE, INC. Issuers rated 'Prime-1' (or supporting
institutions) have a superior ability for repayment of senior short
term debt obligations. 'Prime-1' repayment ability will often be
evidenced by many of the following characteristics: leading market
positions in well-established industries; high rates of return on
funds employed; conservative capitalization structure with moderate
reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation;
well-established access to a range of financial markets and assured
sources of alternate liquidity. Issuers rated Prime-2 (or supporting
institutions) have a strong ability for repayment of senior short term
debt obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is
maintained.
STANDARD & POOR'S RATINGS GROUP SERVICES. 'A-1': This designation
indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation. 'A-2':
Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated 'A-1'.
BULL AND BEAR MUNICIPAL INCOME FUND, INC.
Part C. Other Information
Item 24. Financial Statements and Exhibits
1. Financial Statements.*
2. (a) Amended and Restated Articles of Incorporation**
(b) Amended and Restated By-Laws**
(c) Not applicable
(d) Specimen stock certificate**
(e) Automatic Dividend Reinvestment Plan**
(f) Not applicable
(g) Investment Management Agreement**
(h) Not applicable
(i) Not applicable
(j) Custodian Agreement***
(k) Transfer Agent Agreement***
(l) Not applicable
(m) Not applicable
(n) Not applicable
(o) Not applicable
(p) Not applicable
(q) Not applicable
_________________________________
* Incorporated by reference from Registrant's Annual Report for the
fiscal year ended December 31, 1995, as filed with the Securities
and Exchange Commission on April 15, 1996, Accession Number
736952- 96-000003.
** Filed herewith.
*** Incorporated by reference from Registrant's Statement on Form
N-1A, File Nos. 2-57953 and 811-2474, as filed with the
Securities and Exchange Commission on April 15, 1996, Accession
Number 736952-96-000003.
Item 25. Marketing Arrangements
None
Item 26. Other Expenses of Issuance and Distribution
Not applicable.
Item 27. Persons Controlled by or under Common Control with Registrant
Insofar as the following have substantially identical boards of
directors or trustees, they may be deemed with the Registrant to be
under common control: Bull & Bear Dollar Reserves and Bull & Bear
Global Income Fund, each a series of shares issued by Bull & Bear
Funds II, Inc.; Bull & Bear U.S. Government Securities Fund, Inc.;
Bull & Bear Gold Investors Ltd.; Bull & Bear U.S. and Overseas Fund, a
series of Bull & Bear Funds I, Inc.; Bull & Bear Special Equities
Fund, Inc.; The Rockwood Growth Fund, Inc.; and Midas Fund, Inc.
Item 28. Number of Holders of Securities
Number of Record Holders
Title of Class (as of October 31, 1996)
Shares of Common Stock 850
$0.01 par value
Item 29. Indemnification
The Registrant is incorporated under Maryland law. Section 2-418
of the Maryland General Corporation Law requires the Registrant to
indemnify its directors, officers and employees against expenses,
including legal fees, in a successful defense of a civil or criminal
proceeding. The law also permits indemnification of directors,
officers, employees and agents unless it is proved that (a) the act or
omission of the person was material and was committed in bad faith or
was the result of active or deliberate dishonesty, (b) the person
received an improper personal benefit in money, property or services
or (c) in the case of a criminal action, the person had reasonable
cause to believe that the act or omission was unlawful.
The Registrant's Amended and Restated Articles of Incorporation
(the "Articles"): (1) provide that, to the maximum extent permitted by
applicable law, a director or officer will not be personally liable to
the Registrant or its stockholders; (2) require the Registrant to
indemnify and advance expenses as provided in the Amended and Restated
By-laws (the "By-laws") to its present and past directors, officers,
employees, agents, and persons who are serving or have served at the
request of the Registrant in similar capacities for other entities in
advance of final disposition of any action against that person to the
extent permitted by Maryland law and the 1940 Act; (3) allow the
corporation to purchase insurance for any present or past director,
officer, employee, or agent; and (4) require that any repeal or
modification of the Articles of Incorporation or By-laws or adoption
or modification of any provision of the Articles of Incorporation or
By-laws inconsistent with the indemnification provisions, be
prospective only to the extent such repeal or modification would, if
applied retrospectively, adversely affect any limitation on the
liability of or indemnification and advance of expenses available to
any person covered by the indemnification provisions of the Articles
of Incorporation and By-laws.
Section 1 of Article 11 of the By-Laws sets forth the procedures
by which the Registrant will indemnify its directors, officers,
employees and agents. Section 2 of Article 11 of the By-Laws further
provides that the Registrant may purchase and maintain insurance or
other sources of reimbursement to the extent permitted by law on
behalf of any person who is or was a director or officer of the
Registrant, or is or was serving at the request of the Registrant as a
director or officer of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him or her and incurred by him or her in or arising out of his
or her position.
The Registrant's Investment Management Agreement between the
Registrant and Bull & Bear Advisers, Inc. (the "Investment Manager")
provides that the Investment Manager shall not be liable to the
Registrant or any shareholder of the Registrant for any error of
judgment or mistake of law or for any loss suffered by the Registrant
in connection with the matters to which the Investment Management
Agreement relates. However, the Investment Manager is not protected
against any liability to the Registrant by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under the Investment Management Agreement.
The Registrant undertakes to carry out all indemnification
provisions of its Articles of Incorporation and By-Laws and the above-
described Investment Management Agreement in accordance with
Investment Company Act Release No. 11330 (September 4, 1980) and
successor releases.
Item 30. Business and Other Connections of Investment Adviser
The directors and officers of Bull & Bear Advisers, Inc., the
Investment Manager, are also directors and officers of the other Funds
managed by the Investment Manager, a wholly-owned subsidiary of Bull &
Bear Group, Inc. (the "Bull & Bear Funds"). In addition, such officers
are officers and directors of Bull & Bear Group, Inc. and its other
subsidiaries: Investor Service Center, Inc., the distributor of the
Bull & Bear Funds and a registered broker/dealer; Midas Management
Corporation and Rockwood Advisers, Inc., registered investment
advisers; and Bull & Bear Securities, Inc., a discount brokerage firm.
Bull & Bear Group, Inc.'s predecessor was organized in 1976. In 1978,
it acquired control of and subsequently merged with Investors Counsel,
Inc., a registered investment adviser organized in 1959. The principal
business of both companies since their founding has been to serve as
investment manager to registered investment companies. The Investment
Manager serves as investment manager of Bull & Bear Dollar Reserves
and Bull & Bear Global Income Fund, each a series of shares issued by
Bull & Bear Funds II, Inc.; Bull & Bear U.S. Government Securities
Fund, Inc.; Bull & Bear Gold Investors Ltd.; Bull & Bear U.S. and
Overseas Fund, a series of Bull & Bear Funds I, Inc.; and Bull & Bear
Special Equities Fund, Inc.
Item 31. Location of Accounts and Records
The minute books of Registrant and copies of its filings with the
Commission are located at 11 Hanover Square, New York, NY 10005 (the
offices of the Registrant and its Investment Manager). All other
records required by Section 31(a) of the Investment Company Act of
1940 are located at Investors Bank & Trust Company, 89 South Street,
Boston, MA 02111 (the offices of Registrant's custodian) and Investors
Fiduciary Trust Company, c/o DST Systems, Inc., 1055 Broadway, Kansas
City, MO 64105-1594 (the offices of the Registrant's Transfer and
Dividend Disbursing Agent). Copies of certain of the records located
at Investors Bank & Trust Company and Investors Fiduciary Trust
Company are kept at 11 Hanover Square, New York, NY 10005 (the offices
of Registrant and the Investment Manager).
Item 32. Management Services -- none
Item 33. Undertakings -- not applicable
SIGNATURES
Pursuant to the requirements of the Investment Company Act of
1940, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City, County and State of New York on this 8th day of November,
1996.
BULL & BEAR MUNICIPAL INCOME FUND, INC.
By: /s/ Thomas B. Winmill
___________________________________
Thomas B. Winmill
SCHEDULE OF EXHIBITS TO FORM N-2
Exhibit Page
Number Exhibit Number
Exhibit A Amended and Restated Articles of Incorporation**. .
Exhibit B Amended and Restated By-Laws** . . . . . . . . . .
Exhibit C Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit D Specimen Stock Certificate** . . . . . . . . . . .
Exhibit E Automatic Dividend Reinvestment Plan** . . . . . .
Exhibit F Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit G Investment Management Agreement** . . . . . . . . .
Exhibit H Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit I Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit J Custodian Agreement*** . . . . . . . . . . . . . .
Exhibit K Transfer Agent Agreement*** . . . . . . . . . . . .
Exhibit L Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit M Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit N Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit O Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit P Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit Q Not Applicable . . . . . . . . . . . . . . . . . .
Exhibit R Not Applicable . . . . . . . . . . . . . . . . . .
_______________________________
* Incorporated by reference from Registrant's Annual Report for the
fiscal year ended December 31, 1995, as filed with the Securities
and Exchange Commission on April 15, 1996.
** Filed herein.
*** Incorporated by reference from Registrant's Statement on Form N-
1A, File Nos. 2-57953 and 811-2474, as filed with the Securities
and Exchange Commission on April 15, 1996, Accession Number
736952-96-000003.
ARTICLES OF
AMENDMENT AND RESTATEMENT
OF
BULL & BEAR MUNICIPAL SECURITIES, INC.
* * * * *
Bull & Bear Municipal Securities, Inc., a Maryland corporation
(the "Corporation") certifies that:
FIRST: The Corporation desires to amend and restate its charter
as currently in effect and as hereinafter amended; and
SECOND: The charter of the Corporation is hereby amended in its
entirety by striking out Articles I through XI in their entirety and
inserting in lieu thereof the following:
ARTICLE I
(1) The name and address of each incorporator of the Corporation are as
follows:
Perez C. Ehrich John T. Landry, Jr.
11 Pine Ridge Road 438 Scarsdale Road
Greenwich, Connecticut 06830 Yonkers, New York 10707
(2) Each of said incorporators is over eighteen years of age.
(3) Said incorporators are forming a corporation under the general laws
of the State of Maryland.
ARTICLE II NAME
The name of the corporation is Bull & Bear Municipal Income
Fund, Inc. (the "Corporation").
ARTICLE III PURPOSES AND POWERS
The purpose for which the Corporation is formed is to exercise
and enjoy all of the general powers, rights and privileges granted to, or
conferred upon, corporations by the Maryland General Corporation Law now
or hereafter in force.
ARTICLE IV PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the principal office of the Corporation in the
State of Maryland is 11 East Chase Street, Baltimore, Maryland 21202. The
name of the resident agent of the Corporation in the State of Maryland is
United States Corporation Company, a corporation of the State of
Maryland, and the address of the resident agent is 11 East Chase Street,
Baltimore, Maryland 21202.
ARTICLE V CAPITAL STOCK
(1) The total number of shares of capital stock of all classes
which the Corporation shall have authority to issue is One Billion
(1,000,000,000) shares, all of which shall have a par value of ($.01) per
share and an aggregate par value of Ten Million Dollars ($10,000,000).
(2) (a) The Board of Directors of the Corporation is authorized
to classify or to reclassify, from time to time, any unissued shares of
stock of the Corporation, whether now or hereafter authorized, by
setting, changing or eliminating the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms and conditions or rights to require redemption
of the stock.
(b) Without limiting the generality of the foregoing, the
dividends and distributions or other payments with respect to the stock
of the Corporation, and with respect to each class that hereafter may be
created, shall be in such amount as may be declared from time to time by
the Board of Directors, and such dividends and distributions may vary
from class to class to such extent and for such purposes as the Board of
Directors may deem appropriate, including, but not limited to, the
purpose of complying with requirements of regulatory or legislative
authorities.
(c) Until such time as the Board of Directors shall
provide otherwise pursuant to the authority granted in this section (2),
all the authorized shares of the Corporation are designated as Common
Stock. Shares of the Common Stock and the holders thereof, and shares of
any class and the holders thereof, shall be subject to the following
provisions, provided, however, that if no shares of any class other than
Common Stock are outstanding, the shares of the Common Stock and the
holders thereof shall nevertheless be subject to the following provisions
except to the extent that such provisions are by their terms applicable
only when shares of two or more classes are outstanding.
(3) Shares of each class of stock shall be entitled to such
dividends or distributions, in stock or in cash or both, as may be
declared from time to time by the Board of Directors, acting in its sole
discretion, with respect to such class.
(4) In the event of the liquidation or dissolution of the
Corporation, the holders of the Common Stock of the Corporation's stock
shall be entitled to receive all the assets of the Corporation not
attributable to other classes of stock through any preference. The assets
so distributable to the stockholders shall be distributed among such
stockholders in proportion to the number of shares of that class held by
them and recorded on the books of the Corporation.
(5) Unless otherwise expressly provided in these Amended and
Restated Articles of Incorporation, including any Articles Supplementary
creating any additional class of capital stock, on each matter submitted
to a vote of stockholders, each holder of a share of capital stock of the
Corporation entitled to vote shall be entitled to one vote for each share
outstanding in such holder's name on the books of the Corporation, and
all shares of all classes of capital stock entitled to vote shall vote
together as a single class; provided, however, that as to any matter with
respect to which a separate vote of any class or series is required by
applicable law, such requirement as to a separate vote by that class or
series shall apply in lieu of a vote of all classes voting together as a
single class as described above.
(6) All shares purchased by the Corporation shall constitute
authorized but unissued shares and the number of the authorized shares of
stock of the Corporation shall not be reduced by the number of any shares
purchased by it. Unless and until their classification is changed in
accordance with section (2) of this Article V, all shares of capital
stock so purchased shall continue to belong to the same class to which
they belonged at the time of their purchase.
(7) The Corporation may issue shares of stock in fractional
denominations to the same extent as its whole shares, and shares in
fractional denominations shall be shares of capital stock having
proportionately to the respective fractions represented thereby all the
rights of whole shares of the same class, including without limitation,
the right to vote, the right to receive dividends and distributions, and
the right to participate upon liquidation of the Corporation, but
excluding the right to receive a stock certificate representing
fractional shares.
(8) All persons who shall acquire capital stock or other
securities of the Corporation shall acquire the same subject to the
provisions of these Amended and Restate Articles of Incorporation and the
Amended and Restated By-Laws of the Corporation, as each may be amended
from time to time.
ARTICLE VI PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation shall initially
be six (6), which number may be increased or decreased by or pursuant to
the Amended and Restated By-Laws of the Corporation but shall never be
less than three nor more than fifteen. The names of the persons who shall
act as directors until the first annual meeting of the Board of Directors
after effectiveness of these Amended and Restated Articles of
Incorporation and until their successors are duly elected and qualify
are:
Basset S. Winmill, Robert D. Anderson, Bruce B. Huber, James E. Hunt,
Frederick A. Parker, John B. Russell
Beginning with the first annual meeting of the Board of
Directors after effectiveness of these Amended and Restated Articles of
Incorporation, the directors shall be divided into five classes,
designated Class I, Class II, Class III, Class IV and Class V. Prior to
any change in the number of directors, Classes I-IV shall consist of one
director each and Class V shall consist of two directors. At the first
annual meeting of stockholders after effectiveness of these Amended and
Restated Articles of Incorporation, each Class I director shall be
elected for an initial term of one year, each Class II director for an
initial term of two years, each Class III director for an initial term of
three years, each Class IV director for an initial term of four years,
and each Class V director for an initial term of five years. Upon the
expiration of the initial term of each class, such class of directors
shall be elected for successive five-year terms. A director elected at an
annual meeting shall hold office until the annual meeting for the year in
which his or her term expires and until his or her successor shall be
elected and shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office. If the number of
director is changed, any increase or decrease shall be appointed among
the classes, as of the annual meeting of stockholders next succeeding any
such change, so as to maintain a number of directors in each class as
nearly equal as possible. In no case shall a decrease in the number of
directors shorten the term of any incumbent director. Any vacancy on the
Board of Directors that results from an increase in the number of
directors may be filled by a majority of the entire Board of Directors,
provided that a quorum is present, and any other vacancy occurring in the
Board of Directors may be filled by a majority of the directors then in
office, whether or not sufficient to constitute a quorum, or by a sole
remaining director; provided, however, that if the stockholders of any
class of the Corporation's capital stock are elected by that class may
fill any vacancy among the number of directors elected by that class. A
director elected by the Board of Directors to fill any vacancy in the
Board of Directors shall serve until the next annual meeting of
stockholders and until his or her successor shall be elected and shall
qualify, subject, however, prior to death, resignation, retirement,
disqualification or removal from office. At any annual meeting of
stockholders, any director elected to fill any vacancy in the board of
Directors that has arisen since the preceding annual meeting of
stockholders (whether or not any such vacancy has been filled by election
of a new director by the Board of Directors) shall hold office for a term
which coincides with the remaining term of the class to which such
directorship was previously assigned, if such vacancy arose other than by
an increase in the number of directors, and until his or her successor
shall be elected and shall qualify. In the event such vacancy arose due
to an increase in the number of directors, any director so elected to
fill such vacancy at an annual meeting shall hold office for a term which
coincides with that of the class to which such directorship has been
apportioned as heretofore provided, and until his or her successor shall
be elected and shall qualify. A director may be removed for cause only,
and not without cause, and only by action taken by the holders of at
least eighty percent (80%) of the outstanding shares of all classes of
voting stock then entitled to vote in an election of such director.
(2) The Board of Directors of the Corporation is hereby
empowered to authorize the issuance from time to time of shares of
capital stock, whether now or hereafter authorized, for such
consideration as the Board of Directors may be deemed advisable, subject
to such limitations as may be set forth in these Amended and Restated
Articles of Incorporation or in the Amended and Restated By-Laws of the
Corporation or applicable law.
(3) (a) To the maximum extent permitted by applicable law, as
currently in effect or as may hereafter be amended:
(i) no director or officer of the Corporation shall be liable
to the Corporation or its stockholders of monetary damages; and
(ii) the Corporation shall indemnify and advance expenses to
its present and past directors, officers, employees and agents, and
persons who are serving or have served at the request of the Corporation
as a director, officer, employee or agent in similar capacities for other
entities.
(b) The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another in any
such capacity or arising out of his or her status as such, whether or not
the Corporation would have the power to indemnify him or her against such
liability.
(c) Any repeal or modification of this Section (3) of this
Article VI by the stockholders of the Corporation, or adoption or
modification of any other provision of the Amended and Restated Articles
of Incorporation or Amended and Restated By-Laws inconsistent with this
Section, shall be prospective only, to the extent that such repeal or
modification would, if applied retrospectively, adversely affect any
limitation on the liability of any director or officer of the Corporation
or indemnification and advance of expenses available to any person
covered by these provisions with resect to any act or omission which
occurred prior to such repeal, modification or adoption.
(4) The Board of Directors of the Corporation shall have the
exclusive authority to make, alter or repeal from time to time any of the
Amended and Restated By-Laws of the Corporation except any particular
By-Law which is specified as not subject to alteration or repeal by the
Board of Directors.
ARTICLE VII DENIAL OF PREEMPTIVE RIGHTS
No stockholder of the Corporation shall by reason of holding
shares of capital stock have any preemptive or preferential right to
purchase or subscribe to any shares of capital stock of the Corporation,
now or hereafter authorized, or any notes, debentures, bonds or other
securities convertible into shares of capital stock, now or hereafter to
be authorized, whether or not the issuance of any such shares of capital
stock, or notes, debentures, bonds or other securities would adversely
affect the dividend or voting rights of such stockholder; and the Board
of Directors may issue shares of any class of capital stock of the
Corporation, or any notes, debentures, bonds, or other securities
convertible into shares of any class of capital stock of the Corporation,
either, whole or in part, to the existing stockholders.
ARTICLE VIII CERTAIN VOTES OF STOCKHOLDERS
(1) (a) Except as otherwise provided in these Amended and
Restated Articles of Incorporation and notwithstanding any other
provision of the Maryland General Corporation Law to the contrary, any
action submitted to a vote by stockholders requires the affirmative vote
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 such action is approved by the vote of
a majority of the Board of Directors, in which case such action requires
(A) if applicable, the proportion of votes required by the Investment
Company Act of 1940, as amended (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.
(b) The Corporation elects not to be governed by any provision
of Section 3-602 of Subtitle 6 of the Maryland General Corporation Law.
(2) (a) Except as otherwise provided in paragraph (b) of this
Section (2) of this Article VIII, the affirmative vote 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, other than voting stock held by any interested stockholder or
any affiliate thereof, shall be necessary to authorize any of the
following actions:
(i) the merger or consolidation or share exchange of the
Corporation with or into any other person or company (including, without
limitation, a partnership, corporation, joint venture, business trust,
common law trust or any other business organization);
(ii) the issuance or transfer by the Corporation (in one
or a series of transactions in any 12-month period) of any securities of
the Corporation to any other person or entity for cash, securities or
other property (or combination thereof) having an aggregate fair market
value of $1,000,000 or more, excluding (A) sales of any securities of the
Corporation in connection with a public offering thereof, (B) issuance of
securities of the Corporation pursuant to a dividend reinvestment plan
adopted by the Corporation and (C) issuances of securities of the
Corporation upon the exercise of any stock subscription rights
distributed by the Corporation;
(iii) a sale, lease, exchange, mortgage, pledge, transfer
or other disposition by the Corporation (in one or a series of
transactions in any 12-month period) to or with any person of any assets
of the Corporation having an aggregate fair market value of $1,000,000 or
more, except for transactions in securities effected by the Corporation
in the ordinary course of its business; or
(iv) any proposal as to the voluntary liquidation or
dissolution of the Corporation or any amendment to the Corporation's
Amended and Restated Articles of Incorporation to terminate its
existence.
(b) Notwithstanding paragraph (a) of this Section (2), the
actions enumerated in such paragraph will be authorized if approved by a
vote of at least (i) a majority of the members of the Board of Directors
of the Corporation and (ii) a majority of the number of votes entitled to
be cast thereon, including votes of voting stock held by any interested
stockholder or any affiliate thereof.
ARTICLE IX DETERMINATION BINDING
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 Board of Directors,
as to the amount of assets, obligations or liabilities of the
Corporation, as to the amount of net income of the Corporation, as to the
amount of net income of the Corporation 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
property thereof, as to 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
value of any security or other instrument or asset owned by the
Corporation or as to any matters relating to the issuance, sale,
redemption or other acquisition or disposition of securities or shares of
capital stock of the Corporation, and any reasonable determination made
in good faith by the Board of Directors shall be final and conclusive,
and shall be binding upon the Corporation and all holders of its capital
stock, past, present and future, and shares of capital stock of the
Corporation are issued and sold on the condition and understanding,
evidenced by the purchase of shares of capital stock or acceptance of
share certificates or other evidence thereof, that any and all such
determinations shall be binding as aforesaid. No provision of these
Amended and Restated Articles of Incorporation shall be effective to (a)
require a waiver of compliance with any provision of the Securities Act
of 1933. as amended, or the 1940 Act, or of any valid rule, regulation or
order of the Securities and Exchange Commission thereunder or (b) protect
or purport to protect any director or officer of the Corporation against
any liability to the Corporation 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.
ARTICLE X PRIVATE PROPERTY OF STOCKHOLDERS
The private property of stockholders shall not be subject to
the payment of corporate debts to any extent whatsoever.
ARTICLE XI UNLIMITED TERM OF EXISTENCE
The Corporation shall have an unlimited period of existence.
ARTICLE XII CONVERSION TO OPEN-END COMPANY
Notwithstanding any other provisions of these Amended and
Restated Articles of Incorporation or the Amended and Restated By-Laws of
the Corporation, the approval, adoption or authorization of any amendment
to these Amended and Restated Articles of Incorporation that makes the
Common Stock or any other class of capital stock a "redeemable security"
as that term is defined in the 1940 Act shall 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 approved by at
least a majority of the 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.
The Corporation shall notify the holders of all capital stock
of the approval, in accordance with the preceding paragraph of this
Article XII, of any amendment to these Amended and Restated Articles of
Incorporation that makes the Common Stock or any other class of capital
stock a "redeemable security" (as that term is defined in the 1940 Act)
no later than thirty (30) days prior to the date of filing of such
amendment with the Department of Assessments and Taxation (or any
successor agency) of the State of Maryland; such amendment may not be so
filed, however, until the later of (a) ninety (90) days following the
date of approval of such amendment by the holders of capital stock in
accordance with the preceding paragraph of this Article XII and (b) the
next January 1 or July 1, whichever is sooner, following the date of such
approval by holders of capital stock.
ARTICLE XIII AMENDMENT
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Amended and Restated Articles of
Incorporation, in the manner now or hereafter prescribed by statute, and
all rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding any other provisions of these Amended and
Restate Articles of Incorporation or the Amended and Restated By-Laws of
the Corporation (and notwithstanding the fact that a lesser percentage
may be specified by law, these Amended and Restated Articles of
Incorporation or the Amended and Restate By-Laws of the Corporation), the
amendment or repeal of Section (8) of Article V, Section (1), Section (3)
or Section (4) or Article VI, Section (1) and Section (2) of Article
VIII, Article X, Article XI, Article XII or this Article XIII of these
Amended and Restated Articles of Incorporation shall 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
approved by at least a majority of the 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 case thereon.
ARTICLE XIV
The name "Bull & Bear" included in the name of the Corporation
shall be used pursuant to a royalty-free nonexclusive license from Bull &
Bear Group, Inc. or a subsidiary of Bull & Bear Group, Inc. The license
may be withdrawn by Bull & Bear Group, Inc. or its subsidiary at any time
in their sole discretion, in which case the Corporation shall no further
right to use the name "Bull & Bear" in its corporate name or otherwise
and the Corporation, the holders of its capital stock and its officers
and directors, shall promptly take whatever action may be necessary to
change its name accordingly.
THIRD: This amendment to and restatement of the Charter of the
Corporation as hereinabove set forth was advised by the Board of
Directors and approved by the stockholders of the Corporation.
FOURTH: The current address of the principal office of the
Corporation is as set forth in Article IV of the foregoing amendment and
restatement of the Charter.
FIFTH: The name and address of the Corporation's current
resident agent is set forth in Article IV of the foregoing amendment and
restatement of the Charter.
SIXTH: The current number of directors of the Corporation shall
be six (6), which number may be increased or decreased by or pursuant to
the By-Laws of the Corporation but shall never be less than the minimum
number permitted by the Maryland General Corporation Law now or hereafter
in force. The names of the persons who currently shall act as directors
until the next annual meeting and until their successors are duly elected
and qualify are:
Bassett S. Winmill
Robert D. Anderson
Bruce B. Huber
James E. Hunt
Frederick A. Parker
John B. Russell.
EIGHTH: In accordance with Section 2-610.1 of Maryland General
Corporation Law, these Articles of Amendment and Restatement shall become
effective on November 8th, 1996 at 9:00 a.m.
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment and Restatement to be signed in its name and on its behalf
by its Co-President and its corporate seal to be hereunder affixed and
attested by its Secretary on this 5th day of November, 1996, and its
Co-President acknowledges that these Articles of Amendment and
Restatement are the act of the Corporation and that to the best of his
knowledge, information on behalf and under penalty of perjury all matters
and facts contained in these Articles of Amendment and Restatement are
true in all material respects.
Bull & Bear Municipal Income Fund, Inc.
ATTEST: By:_____________________ (SEAL)
Thomas B. Winmill,
Co-President
___________________
William J. Maynard
Secretary
The undersigned, being the duly elected and acting Co-President
of Bull & Bear Municipal Income Fund, Inc. hereby acknowledges that the
foregoing Articles of Amendment and Restatement, of which this
certificate is a part, is the act and deed of such corporation, and
certifies, under the penalties of perjury, to the best of his knowledge,
information and belief, that all matters and facts set forth herein are
true in all material respects.
Bull & Bear Municipal Income Fund, Inc.
By:_____________________ (SEAL)
Thomas B. Winmill,
Co-President
AMENDED AND RESTATED
BY-LAWS
OF
BULL & BEAR MUNICIPAL
INCOME FUND, INC.
A MARYLAND CORPORATION
AMENDED AND RESTATED
BY-LAWS
OF
BULL & BEAR MUNICIPAL INCOME FUND, INC.
(A MARYLAND CORPORATION)
ARTICLE I
NAME OF CORPORATION, LOCATION OF
OFFICES AND SEAL
Section 1.1. Name. The name of the Corporation is Bull & Bear
Municipal Income Fund, Inc.
Section 1.2. Principal Offices. The principal office of the
Corporation in the State of Maryland shall be located in
Baltimore, Maryland. The Corporation may, in addition, establish
and maintain such other offices and places of business as the
board of directors may, from time to time, determine.
Section 1.3. Seal. The corporate seal of the Corporation shall
consist of two (2) concentric circles, between which shall be the
name of the Corporation, and in the center shall be inscribed the
year of its incorporation, and the words "Corporate Seal". The
form of the seal shall be subject to alteration by the board of
directors and the seal may be used by causing it or a facsimile
to be impressed or affixed or printed or otherwise reproduced.
Any officer or director of the Corporation shall have authority
to affix the corporate seal of the Corporation to any document
requiring the same.
ARTICLE II
STOCKHOLDERS
Section 2.1. Annual Meetings. There shall be no stockholders'
meetings for the election of directors and the transaction of
other proper business except as required by law, the listing
requirements of the stock exchange or market where the
Corporation's stock is listed, or as hereinafter provided, in
which case the annual meeting shall be held in September of each
year.
Section 2.2. Special Meetings. Special meetings of
stockholders may be called at any time by the chairman of the
board or the president or a co-president and shall be held at
such time and place as may be stated in the notice of the
meeting.
Section 2.3. Notice of Meetings. The secretary shall cause
notice of the place, date and hour and, in the case of a special
meeting or as otherwise required by law, the purpose or purposes
for which the meeting is called, to be served personally or to be
mailed, postage prepaid, not less than 10 nor more than 90 days
before the date of the meeting, to each stockholder entitled to
vote at such meeting at his address as it appears on the records
of the Corporation at the time of such mailing. Notice shall be
deemed to be given when deposited in the United States mail
addressed to the stockholders as aforesaid.
Notice of any stockholders meeting need not be given to any
stockholder who shall sign a written waiver of such notice
whether before or after the time of such meeting, which waiver
shall be filed with the records of such meeting, or to any
stockholder who is present at such meeting in person or by proxy.
Notice of adjournment of a stockholders meeting to another time
or place need not be given if such time and place are announced
at the meeting.
Irregularities in the notice of any meeting to, or the nonreceipt
of any such notice by, any of the stockholders shall not
invalidate any action otherwise properly taken by or at any such
meeting.
Section 2.4. Quorum and Adjournment of Meetings. The presence
at any stockholders meeting, in person or by proxy, of
stockholders entitled to cast one-third of all votes entitled to
be cast thereat shall be necessary and sufficient to constitute a
quorum for the transaction of business, provided that with
respect to any matter to be voted upon separately by any class of
shares, a quorum shall consist of the holders of one-third of the
shares of that class outstanding and entitled to vote on the
matter. In the absence of a quorum, the stockholders present in
person or by proxy or, if no stockholder entitled to vote is
present in person or by proxy, any officer present entitled to
preside or act as secretary of such meeting may adjourn the
meeting without determining the date of the new meeting or from
time to time without further notice to a date not more than 120
days after the original record date. Any business that might
have been transacted at the meeting originally called may be
transacted at any such adjourned meeting at which a quorum is
present.
Section 2.5. Voting and Inspectors. Unless statute or the
Amended and Restated Articles of Incorporation (the "Charter")
provide otherwise, at every stockholders meeting, each
stockholder shall be entitled to one vote for each share and a
fractional vote for each fraction of a share of stock of the
Corporation validly issued and outstanding and standing in his
name on the books of the Corporation on the record date fixed in
accordance with Section 7.4 hereof, either in person or by proxy
appointed by instrument in writing subscribed by such stockholder
or his duly authorized attorney, except that no shares held by
the Corporation shall be entitled to a vote.
If no record date has been fixed, the record date for the
determination of stockholders entitled to notice of or to vote at
a meeting of stockholders shall be the later of the close of
business on the day on which notice of the meeting is mailed or
the 30th day before the meeting, or, if notice is waived by all
stockholders, at the close of business on the 11th day preceding
the day on which the meeting is held.
Except as otherwise specifically provided in the Charter or these
By-laws or as required by applicable law, all matters shall be
decided by a vote of the majority of the votes validly cast at a
meeting at which a quorum is present. The vote upon any question
shall be by ballot whenever requested by any person entitled to
vote, but, unless such a request is made, voting may be conducted
in any way approved by the meeting.
At any meeting at which there is an election of directors, the
chairman of the meeting may appoint two inspectors of election
who shall first subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and
shall, after the election, make a certificate of the result of
the vote taken. No candidate for the office of director shall be
appointed as an inspector.
Section 2.6. Validity of Proxies. The right to vote by proxy
shall exist only if the instrument authorizing such proxy to act
shall have been signed by the stockholder or by his duly
authorized attorney. Unless a proxy provides otherwise, it shall
not be valid more than 11 months after its date. All proxies
shall be delivered to the secretary of the Corporation or to the
person acting as secretary of the meeting before being voted, who
shall decide all questions concerning qualification of voters,
the validity of proxies, and the acceptance or rejection of
votes. If inspectors of election have been appointed by the
chairman of the meeting, such inspectors shall decide all such
questions. A proxy with respect to stock held in the name of two
or more persons shall be valid if executed by one of them unless
at or prior to exercise of such proxy the Corporation receives
from any one of them a specific written notice to the contrary
and a copy of the instrument or order which so provides. A proxy
purporting to be executed by or on behalf of a stockholder shall
be deemed valid unless challenged at or prior to its exercise.
Section 2.7. Stock Ledger and List of Stockholders. It shall
be the duty of the secretary or assistant secretary of the
Corporation to cause an original or duplicate stock ledger
containing the names and addresses of all the stockholders and
the number of shares held by them, respectively, to be maintained
at the office of the Corporation's transfer agent. Such stock
ledger may be in written form or any other form capable of being
converted into written form within a reasonable time for visual
inspection.
Section 2.8. Action Without Meeting. Any action required or
permitted to be taken by stockholders at a meeting of
stockholders may be taken without a meeting if (a) all
stockholders entitled to vote on the matter consent to the action
in writing, (b) all stockholders entitled to notice of the
meeting but not entitled to vote at it sign a written waiver of
any right to dissent, and (c) the consents and waivers are filed
with the records of the meetings of stockholders. Such consent
shall be treated for all purposes as a vote at the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. General Powers. Except as otherwise provided by
operation of law, by the Charter, or by these By-laws, the
property, business and affairs of the Corporation shall be
managed under the direction of and all the powers of the
Corporation shall be exercised by or under authority of its board
of directors.
Section 3.2. Power to Issue and Sell Stock. The board of
directors may from time to time issue and sell or cause to be
issued and sold any of the Corporation's authorized shares to
such persons and for such consideration as the board of directors
shall deem advisable, subject to the provisions of the Charter.
Section 3.3. Power to Declare Dividends. The board of
directors, from time to time as they may deem advisable, may
declare and pay dividends in stock, cash or other property of the
Corporation, out of any source available for dividends, to the
stockholders according to their respective rights and interests
in accordance with the provisions of the Charter. The board of
directors may prescribe from time to time that dividends declared
may be payable at the election of any of the stockholders
(exercisable before or after the declaration of the dividend),
either in cash or in shares of the Corporation, provided that the
sum of the cash dividend actually paid to any stockholder and the
asset value of the shares received (determined as of such time as
the board of directors shall have prescribed, pursuant to the
Charter, with respect to shares sold on the date of such
election) shall not exceed the full amount of cash to which the
stockholder would be entitled if he elected to receive only cash.
Section 3.4. Number and Term of Directors. Except for the
initial board of directors, the board of directors shall consist
of not fewer than three nor more than fifteen directors, as
specified by a resolution of a majority of the entire board of
directors. Each director shall hold office until his successor
is elected and qualified or until his earlier death, resignation
or removal. Any vacancy created by an increase in directors may
be filled in accordance with Section 3.6 of this Article III.
All acts done at any meeting of the directors or by any person
acting as a director, so long as his successor shall not have
been duly elected or appointed, shall, notwithstanding that it be
afterwards discovered that there was some defect in the election
of the directors or of such person acting as a director or that
they or any of them were disqualified, be as valid as if the
directors or such other person, as the case may be, had been duly
elected and were or was qualified to be directors or a director
of the Corporation.
Directors need not be stockholders of the Corporation.
Section 3.5. Election. The initial director or directors shall
be that person or persons named as such in the Charter. At each
annual meeting, the stockholders shall elect directors to hold
office until the expiration of the term of his class or until the
annual election of directors next succeeding his election and
until his death, or until he shall have resigned, have been
removed as hereinafter provided in these By-laws, or as otherwise
provided by statute or the Charter.
Section 3.6. Vacancies and Newly Created Directorships. Any
vacancies in the board of directors, whether arising from death,
resignation, removal, an increase in the number of directors or
otherwise, shall be filled by a vote of the board of directors in
accordance with the Charter.
Section 3.7. [Reserved.]
Section 3.8. Regular Meetings. The meeting of the board of
directors for choosing officers and transacting other proper
business, and all other meetings, shall be held at such time and
place, within or outside the state of Maryland, as the board may
determine and as provided by resolution. Notice of such meetings
need not be given, following the annual meeting of stockholders,
provided that notice of any change in the time or place of such
meetings shall be sent promptly to each director not present at
the meeting at which such change was made, in the manner provided
for notice of special meetings. Members of the board of
directors or any committee designated thereby may participate in
a meeting of such board or committee by means of a conference
telephone or similar communications equipment that allows all
persons participating in the meeting to hear each other at the
same time; and participation by such means shall constitute
presence in person at a meeting.
Section 3.9. Special Meetings. Special meetings of the board
of directors shall be held whenever called by the chairman of the
board or the president or a co-president (or, in the absence or
disability of the chairman of the board or the president or a co-
president, by any officer or director, as they so designate) at
the time and place (within or outside of the State of Maryland)
specified in the respective notice or waivers of notice of such
meetings. At least three days before the day on which a special
meeting is to be held, notice of special meetings, stating the
time and place, shall be (a) mailed to each director at his
residence or regular place of business or (b) delivered to him
personally or transmitted to him by telegraph, telefax, telex,
cable or wireless.
Section 3.10. Waiver of Notice. No notice of any meeting need
be given to any director who is present at the meeting or who
waives notice of such meeting in writing (which waiver shall be
filed with the records of such meeting), either before or after
the time of the meeting.
Section 3.11. Quorum and Voting. At all meetings of the board
of directors, the presence of onehalf of the number of directors
then in office shall constitute a quorum for the transaction of
business, provided that there shall be present at least two
directors. In the absence of a quorum, a majority of the
directors present may adjourn the meeting, from time to time,
until a quorum shall be present. The action of a majority of the
directors present at a meeting at which a quorum is present shall
be the action of the board of directors, unless concurrence of a
greater proportion is required for such action by law, by the
Charter or by these By-laws.
Section 3.12. Action Without a Meeting. As amended, any action
required or permitted to be taken at any meeting of the board of
directors or of any committee thereof may be taken without a
meeting if a written consent to such action is signed by all
members of the board or of such committee, as the case may be,
and such written consent is filed with the minutes of proceedings
of the board or committee.
Section 3.13. Compensation of Directors. Directors may receive
such compensation for their services as may from time to time be
determined by resolution of the board of directors.
ARTICLE IV
COMMITTEES
Section 4.1. Organization. By resolution adopted by the board
of directors, the board may designate one or more committees of
the board of directors, including an Executive Committee, each
consisting of at least two directors. Each member of a committee
shall be a director and shall hold committee membership at the
pleasure of the board. The chairman of the board, if any, shall
be a member of the Executive Committee. The board of directors
shall have the power at any time to change the members of such
committees and to fill vacancies in the committees.
Section 4.2. Powers of the Executive Committee. Unless
otherwise provided by resolution of the board of directors, when
the board of directors is not in session the Executive Committee
shall have and may exercise all powers of the board of directors
in the management of the business and affairs of the Corporation
that may lawfully be exercised by an Executive Committee except
the power to declare a dividend or distribution on stock,
authorize the issuance of stock, recommend to stockholders any
action requiring stockholders approval, amend these By-laws,
approve any merger or share exchange which does not require
stockholder approval or approve or terminate any contract with an
"investment adviser" or "principal underwriter," as those terms
are defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). Notwithstanding the above, such Executive
Committee may make such dividend calculations and payments as are
consistent with applicable law, including the Maryland General
Corporation Law.
Section 4.3. Powers of Other Committees of the Board of
Directors. To the extent provided by resolution of the board,
other committees of the board of directors shall have and may
exercise any of the powers that may lawfully be granted to the
Executive Committee.
Section 4.4. Proceedings and Quorum. In the absence of an
appropriate resolution of the board of directors, each committee
may adopt such rules and regulations governing its proceedings,
quorum and manner of acting as it shall deem proper and
desirable, provided that a quorum shall not be less than two
directors. In the event any member of any committee is absent
from any meeting, the members thereof present at the meeting,
whether or not they constitute a quorum, may appoint a member of
the board of directors to act in the place of such absent member.
Section 4.5. Other Committees. The board of directors may
appoint other committees, each consisting of one or more persons,
who need not be directors. Each such committee shall have such
powers and perform such duties as may be assigned to it from time
to time by the board of directors, but shall not exercise any
power which may lawfully be exercised only by the board of
directors or a committee thereof.
ARTICLE V
OFFICERS
Section 5.1. Officers. The officers of the Corporation shall
be a president or co-presidents, a secretary, and a treasurer,
and may include one or more vice presidents (including executive
and senior vice presidents), assistant secretaries or assistant
treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 5.11 hereof. The board
of directors may, but shall not be required to, elect a chairman
and vice chairman of the board.
Section 5.2. Election, Tenure and Qualifications. The officers
of the Corporation (except those appointed pursuant to Section
5.11 hereof) shall be elected by the board of directors at its
first meeting or such subsequent meetings as shall be held prior
to its first annual meeting, and thereafter at regular board
meetings, as required by applicable law. If any officers are not
elected at any annual meeting, such officers may be elected at
any subsequent meetings of the board. Except as otherwise
provided in this Article V, each officer elected by the board of
directors shall hold office until his or her successor shall have
been elected and qualified. Any person may hold one or more
offices of the Corporation except that no one person may serve
concurrently as both the president or a co-president and vice
president. A person who holds more than one office in the
Corporation may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be
executed,. acknowledged, or verified by more than one officer.
The chairman of the board shall be chosen from among the
directors of the Corporation and may hold such office only so
long as he continues to be a director. No other officer need be
a director.
Section 5.3. Vacancies and Newly Created Offices. If any
vacancy shall occur in any office by reason of death,
resignation, removal, disqualification or other cause, or if any
new office shall be created, such vacancies or newly created
offices may be filled by the chairman of the board at any meeting
or, in the case of any office created pursuant to Section 5.11
hereof, by any officer upon whom such power shall have been
conferred by the board of directors.
Section 5.4. Removal and Resignation. At any meeting called
for such purpose, the Executive Committee may remove any officer
from office (either with or without cause) by the affirmative
vote, given at the meeting, of a majority of the members of the
Committee. Any officer may resign from office at any time by
delivering a written resignation to the board of directors, the
president or a co-president, the secretary, or any assistant
secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
Section 5.5. Chairman of the Board. The chairman of the board,
if there be such an officer, shall be the senior officer of the
Corporation, shall preside at all stockholders meetings and at
all meetings of the board of directors and shall be ex officio a
member of all committees of the board of directors. He shall
have such other powers and perform such other duties as may be
assigned to him from time to time by the board of directors.
Section 5.6. Vice Chairman of the Board. The board of
directors may from time to time elect a vice chairman who shall
have such powers and perform such duties as from time to time may
be assigned to him by the board of directors, chairman of the
board or the president or a co-president. At the request of, or
in the absence or in the event of the disability of the chairman
of the board, the vice chairman may perform all the duties of the
chairman of the board or the president or a copresident and, when
so acting, shall have all the powers of and be subject to all the
restrictions upon such respective officers.
Section 5.7. President, Co-President. The president or co-
presidents shall be the chief executive officer or co-chief
executive officers, as the case may be, of the Corporation and,
in the absence of the chairman of the board or vice chairman or
if no chairman of the board or vice chairman has been chosen,
shall preside at all stockholders meetings and at all meetings of
the board of directors and shall in general exercise the powers
and perform the duties of the chairman of the board. Subject to
the supervision of the board of directors, the president or the
co-presidents shall have general charge of the business, affairs
and property of the Corporation and general supervision over its
officers, employees and agents. Except as the board of directors
may otherwise order, the president or a co-president may sign in
the name and on behalf of the Corporation all deeds, bonds,
contracts, or agreements. The president or a co-president shall
exercise such other powers and perform such other duties as from
time to time may be assigned by the board of directors.
Section 5.8. Vice President. The board of directors may from
time to time elect one or more vice presidents (including
executive and senior vice presidents) who shall have such powers
and perform such duties as from time to time may be assigned to
them by the board of directors or the president or co-presidents.
At the request of, or in the absence or in the event of the
disability of, the president or both co-presidents, the vice
president (or, if there are two or more vice presidents, then the
senior of the vice presidents present and able to act) may
perform all the duties of the president or co-presidents and,
when so acting, shall have all the powers of and be subject to
all the restrictions upon the president or co-presidents.
Section 5.9. Treasurer and Assistant Treasurers. The treasurer
shall be the chief accounting officer of the Corporation and
shall have general charge of the finances and books of account of
the Corporation. The treasurer shall render to the board of
directors, whenever directed by the board, an account of the
financial condition of the Corporation and of all transactions as
treasurer; and as soon as possible after the close of each
financial year he shall make and submit to the board of directors
a like report for such financial year. The treasurer shall cause
to be prepared annually a full and complete statement of the
affairs of the Corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year,
which shall be submitted at the annual meeting of stockholders
and filed within 20 days thereafter at the principal office of
the Corporation in the state of Maryland. The treasurer shall
perform all acts incidental to the office of treasurer, subject
to the control of the board of directors.
Any assistant treasurer may perform such duties of the treasurer
as the treasurer or the board of directors may assign, and, in
the absence of the treasurer, may perform all the duties of the
treasurer.
Section 5.10. Secretary and Assistant Secretaries. The
secretary shall attend to the giving and serving of all notices
of the Corporation and shall record all proceedings of the
meetings of the stockholders and directors in books to be kept
for that purpose. The secretary shall keep in safe custody the
seal of the Corporation, and shall have responsibility for the
records of the Corporation, including the stock books and such
other books and papers as the board of directors may direct and
such books, reports, certificates and other documents required by
law to be kept, all of which shall at all reasonable times be
open to inspection by any director. The secretary shall perform
such other duties which appertain to this office or as may be
required by the board of directors.
Any assistant secretary may perform such duties of the secretary
as the secretary or the board of directors may assign, and, in
the absence of the secretary, may perform all the duties of the
secretary.
Section 5.11. Subordinate Officers. The chairman of the board
from time to time may appoint such other officers or agents as he
may deem advisable, each of whom shall have such title, hold
office for such period, have such authority and perform such
duties as the board of directors may determine. The chairman of
the board from time to time may delegate to one or more officers
or agents the power to appoint any such subordinate officers or
agents and to prescribe their respective rights, terms of office,
authorities and duties. Any officer or agent appointed in
accordance with the provisions of this Section 5.11 may be
removed, either with or without cause, by any officer upon whom
such power of removal shall have been conferred by the board of
directors.
Section 5.12. Remuneration. The salaries or other compensation
of the officers of the Corporation shall be fixed from time to
time by resolution of the board of directors, except that the
board of directors may by resolution delegate to any person or
group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in
accordance with the provisions of Section 5.11 hereof.
Section 5.13. Surety Bonds. The board of directors may require
any officer or agent of the Corporation to execute a bond
(including, without limitation, any bond required by applicable
law, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder) to the Corporation in such sum
and with such surety or sureties as the board of directors may
determine, conditioned upon the faithful performance of his or
her duties to the Corporation, including responsibility for
negligence and for the accounting of any of the Corporation's
property, funds or securities that may come into his hands.
ARTICLE VI
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
Section 6.1. Checks, Notes, Drafts, Etc. So long as the
Corporation shall employ a custodian to keep custody of the cash
and securities of the Corporation, all checks and drafts for the
payment of money by the Corporation may be signed in the name of
the Corporation by the custodian. Promissory notes, checks or
drafts payable to the Corporation may be endorsed only to the
order of the custodian or its nominee and only by any two of the
following: the treasurer, the president or a co-president, a
vice president (including executive and senior vice presidents)
or by such other person or persons as shall be authorized by the
board of directors, provided that no one person may sign in the
capacity of two such officers. Except as otherwise authorized by
the board of directors, all requisitions or orders for the
assignment of securities standing in the name of the custodian or
its nominee, or for the execution of powers to transfer the same,
shall be signed in the name of the Corporation by any two of the
following: the president or a co-president, vice president
(including executive and senior vice presidents), treasurer or an
assistant treasurer, provided that no one person may sign in the
capacity of two such officers.
Section 6.2. Voting of Securities. Unless otherwise ordered by
the board of directors, the president or a co-president, or any
vice president (including executive and senior vice presidents)
shall have full power and authority on behalf of the Corporation
to attend and to act and to vote, or in the name of the
Corporation to execute proxies to vote, at any meeting of
stockholders of any company in which the Corporation may hold
stock. At any such meeting such officer shall possess and may
exercise (in person or by proxy) any and all rights, powers and
privileges incident to the ownership of such stock. The board of
directors may by resolution from time to time confer like powers
upon any other person or persons in accordance with the laws of
the State of Maryland.
ARTICLE VII
CAPITAL STOCK
Section 7.1. Certificates of Stock. The interest of each
stockholder of the Corporation may be, but shall not be required
to be, evidenced by certificates for shares of stock in such form
not inconsistent with the Charter as the board of directors may
from time to time authorize. No certificate shall be valid
unless it is signed in the name of the Corporation by a president
or a co-president or a vice president and countersigned by the
secretary or an assistant secretary or the treasurer or an
assistant treasurer of the Corporation and sealed with the seal
of the Corporation, or bears the facsimile signatures of such
officers and a facsimile of such seal. In case any officer who
shall have signed any such certificate, or whose facsimile
signature has been placed thereon, shall cease to be such an
officer (because of death, resignation or otherwise) before such
certificate is issued, such certificate may be issued and
delivered by the Corporation with the same effect as if he were
such officer at the date of issue.
The number of each certificate issued, the name and address of
the person owning the shares represented thereby, the number of
such shares and the date of issuance shall be entered upon the
stock ledger of the Corporation at the time of issuance.
Every certificate exchanged, surrendered for redemption or
otherwise returned to the Corporation shall be marked "canceled"
with the date of cancellation.
Section 7.2. Transfer of Shares. Shares of the Corporation
shall be transferable on the books of the Corporation by the
holder of record thereof (in person or by his duly authorized
attorney or legal representative) (a) if a certificate or
certificates have been issued, upon surrender duly endorsed or
accompanied by proper instruments of assignment and transfer,
with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require, or (b) as
otherwise prescribed by the board of directors. Except as
otherwise provided in the Charter, the shares of stock of the
Corporation may be freely transferred, subject to the charging of
customary transfer fees, and the board of directors may, from
time to time, adopt rules and regulations with reference to the
method of transfer of the shares of stock of the Corporation.
The Corporation shall be entitled to treat the holder of record
of any share of stock as the absolute owner thereof for all
purposes, and accordingly shall not be bound to recognize any
legal, equitable or other claim or interest in such share on the
part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise expressly provided by
law or the statutes of the State of Maryland.
Section 7.3. Transfer Agents and Registrars. The board of
directors may from time to time appoint or remove transfer agents
or registrars of transfers for shares of stock of the
Corporation, and it may appoint the same person as both transfer
agent and registrar. Upon any such appointment being made all
certificates representing shares of capital stock thereafter
issued shall be countersigned by one of such transfer agents or
by one of such registrars of transfers or by both and shall not
be valid unless so countersigned. If the same person shall be
both transfer agent and registrar, only one countersignature by
such person shall be required.
Section 7.4. Fixing of Record Date. The board of directors may
fix in advance a date as a record date for the determination of
the stockholders entitled to notice of or to vote at any
stockholders meeting or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or to
receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose
of any other lawful action, provided that (a) such record date
shall be within 90 days prior to the date on which the particular
action requiring such determination will be taken, except that a
meeting of stockholders convened on the date for which it was
called may be adjourned from time to time without further notice
to a date not more than 120 days after the original record date;
(b) the transfer books shall not be closed for a period longer
than 20 days; and (c) in the case of a meeting of stockholders,
the record date shall be at least 10 days before the date of the
meeting.
Section 7.5. Lost, Stolen or Destroyed Certificates. Before
issuing a new certificate for stock of the Corporation alleged to
have been lost, stolen or destroyed, the board of directors or
any officer authorized by the board may, in its discretion,
require the owner of the lost, stolen or destroyed certificate
(or his legal representative) to give the Corporation a bond or
other indemnity, in such form and in such amount as the board or
any such officer may direct and with such surety or sureties as
may be satisfactory to the board or any such officer, sufficient
to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of such new certificate.
ARTICLE VIII
CONFLICT OF INTEREST TRANSACTIONS
Section 8.1. Validity of Contract or Transactions. In the
event that any officer or director of the Corporation shall have
any interest, direct or indirect, in any other firm, association
or corporation as officer, employee, director or stockholder, no
transaction or contract made by the Corporation with any such
other firm, association or corporation shall be valid unless such
interest shall have been disclosed or made known to all of the
directors or to a majority of the directors and such transaction
or contract shall have been approved by a majority of a quorum of
directors, which majority shall consist of directors not having
any such interest or a majority of the directors in office,
including directors having such an interest.
ARTICLE IX
FISCAL YEAR AND ACCOUNTANT
Section 9.1. Fiscal Year. The fiscal year of the Corporation
shall, unless otherwise ordered by the board of directors, be
twelve calendar months ending on the 31st day of December.
ARTICLE X
INDEMNIFICATION AND INSURANCE
Section 10.1. Indemnification of Officers, Directors, Employees
and Agents. In accordance with applicable law, including the
Maryland General Corporation Law, the Corporation shall indemnify
each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), by reason of the fact that he or
she is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, partner, trustee or
agent of another corporation, partnership, joint venture, trust,
or other enterprise, against all reasonable expenses (including
attorneys' fees) actually incurred, and judgments, fines,
penalties and amounts paid in settlement in connection with such
Proceeding to the maximum extent permitted by law, now existing
or hereafter adopted. Notwithstanding the foregoing, the
following provisions shall apply with respect to indemnification
of the Corporation's directors, officers, and investment manager
(as defined in the 1940 Act):
(a) Whether or not there is an adjudication of
liability in such Proceeding, the Corporation
shall not indemnify any such person for any
liability arising by reason of such person's
willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in
the conduct of his or her office or under any
contract or agreement with the Corporation
("disabling conduct").
(b) The Corporation shall not indemnify any such
person unless:
(1) the court or other body before which the
Proceeding was brought (a) dismisses the
Proceeding for insufficiency of evidence of any
disabling conduct, or (b) reaches a final decision
on the merits that such person was not liable by
reason of disabling conduct; or
(2) absent such a decision, a reasonable
determination is made, based upon a review of the
facts, by (a) the vote of a majority of a quorum
of the directors of the Corporation who are
neither interested persons of the Corporation as
defined in the 1940 Act, nor parties to the
Proceeding, or (b) if such quorum is not
obtainable, or even if obtainable, if a majority
of a quorum of directors described above so
directs, based upon a written opinion by
independent legal counsel, that such person was
not liable by reason of disabling conduct.
(c) Reasonable expenses (including attorneys' fees)
incurred in defending a Proceeding involving any
such person will be paid by the Corporation in
advance of the final disposition thereof upon an
undertaking by such person to repay such expenses
unless it is ultimately determined that he or she
is entitled to indemnification, if:
(1) such person shall provide adequate security
for his or her undertaking;
(2) the Corporation shall be insured against
losses arising by reason of such advance; or
(3) a majority of a quorum of the directors of
the Corporation who are neither interested
persons of the Corporation as defined in the
1940 Act, nor parties to the Proceeding, or
independent legal counsel in a written
opinion, shall determine, based on a review
of readily available facts, that there is
reason to believe that such person will be
found to be entitled to indemnification.
Section 10.2. Insurance of Officers, Directors, Employees and
Agents. The Corporation may purchase and maintain insurance or
other sources of reimbursement to the extent permitted by law on
behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee, partner,
trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him or her and incurred by him or her in or arising out
of his position.
Section 10.3. Non-exclusivity. The indemnification and
advancement of expenses provided by, or granted pursuant to, this
Article X shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses
may be entitled under the Charter, these By-laws, agreement, vote
of stockholders or directors, or otherwise, both as to action in
his or her official capacity and as to action in another capacity
while holding such office.
Section 10.4. Amendment. Notwithstanding anything to the
contrary herein, no amendment, alteration or repeal of this
Article or the adoption, alteration or amendment of any other
provisions to the Charter or these By-laws inconsistent with this
Article shall adversely affect any right or protection of any
person under this Article with respect to any act or failure to
act which occurred prior to such amendment, alteration, repeal or
adoption.
ARTICLE XI
AMENDMENTS
Section 11.1. General. Except as provided in Section 11.2 of
this Article XI, all By-laws of the Corporation, whether adopted
by the board of directors or the stockholders, shall be subject
to amendment, alteration or repeal, and new By-laws may be made
only by the affirmative vote of a majority of directors, at any
meeting the notice or waiver of notice of which shall have
specified or summarized the proposed amendment, alteration,
repeal or new By-law. No amendment of any Section of these By-
laws shall be made by the stockholders of the Corporation except
as set forth in Section 11.2 of this Article XI.
Section 11.2. By Stockholders Only. No amendment of any section
of these By-laws shall be made except by the stockholders of the
Corporation if the By-laws provide that such section may not be
amended, altered or repealed except by the stockholders. From
and after the issuance of any shares of the capital stock of the
Corporation no amendment, alteration or repeal of this Article XI
shall be made except by the stockholders of the Corporation.
AMENDED AND RESTATED
BY-LAWS
TABLE OF CONTENTS
PAGE
ARTICLE I NAME OF CORPORATION, LOCATION OF OFFICES AND
SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Name . . . . . . . . . . . . . . . . . . 1
Section 1.2. Principal Offices . . . . . . . . . . . . 1
Section 1.3. Seal . . . . . . . . . . . . . . . . . . 1
ARTICLE II STOCKHOLDERS . . . . . . . . . . . . . . . . . . 1
Section 2.1. Annual Meetings . . . . . . . . . . . . . 1
Section 2.2. Special Meetings. . . . . . . . . . . . . 1
Section 2.3. Notice of Meetings . . . . . . . . . . . 1
Section 2.4. Quorum and Adjournment of Meetings . . . 2
Section 2.5. Voting and Inspectors. . . . . . . . . . 2
Section 2.6. Validity of Proxies . . . . . . . . . . . 3
Section 2.7. Stock Ledger and List of Stockholders . . 3
Section 2.8. Action Without Meeting . . . . . . . . . 3
ARTICLE III BOARD OF DIRECTORS . . . . . . . . . . . . . . 3
Section 3.1. General Powers . . . . . . . . . . . . . 3
Section 3.2. Power to Issue and Sell Stock . . . . . . 3
Section 3.3. Power to Declare Dividends. . . . . . . . 3
Section 3.4. Number and Term of Directors . . . . . . 4
Section 3.5. Election . . . . . . . . . . . . . . . . 4
Section 3.6. Vacancies and Newly Created
Directorships . . .. . . . . . . . . . . 4
Section 3.7. Removal . . . . . . . . . . . . . . . . . 4
Section 3.8. Regular Meetings . . . . . . . . . . . . 5
Section 3.9. Special Meetings . . . . . . . . . . . . 5
Section 3.10. Waiver of Notice . . . . . . . . . . . . 5
Section 3.11. Quorum and Voting . . . . . . . . . . . . 5
Section 3.12. Action Without a Meeting . . . . . . . . 5
Section 3.13. Compensation of Directors . . . . . . . . 5
ARTICLE IV COMMITTEES . . . . . . . . . . . . . . . . . . . 6
Section 4.1. Organization . . . . . . . . . . . . . . 6
Section 4.2. Powers of the Executive Committee . . . . 6
Section 4.3. Powers of Other Committees of the Board
of Directors . . . . . . . . . . . . . . 6
Section 4.4. Proceedings and Quorum . . . . . . . . . 6
Section 4.5. Other Committees . . . . . . . . . . . . 6
ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . 6
Section 5.1. Officers . . . . . . . . . . . . . . . . 6
Section 5.2. Election, Tenure and Qualifications . . . 7
Section 5.3. Vacancies and Newly Created Offices . . . 7
Section 5.4. Removal and Resignation. . . . . . . . . 7
Section 5.5. Chairman of the Board. . . . . . . . . . 7
Section 5.6. Vice Chairman of the Board . . . . . . . 7
Section 5.7. President, Co-President . . . . . . . . . 7
Section 5.8. Vice President . . . . . . . . . . . . . 8
Section 5.9. Treasurer and Assistant Treasurers . . . 8
Section 5.10. Secretary and Assistant Secretaries . . . 8
Section 5.11. Subordinate Officers . . . . . . . . . . 8
Section 5.12. Remuneration . . . . . . . . . . . . . . 9
Section 5.13. Surety Bonds . . . . . . . . . . . . . . 9
ARTICLE VI EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES . 9
Section 6.1. Checks, Notes, Drafts, Etc. . . . . . . . 9
Section 6.2. Voting of Securities. . . . . . . . . . . 9
ARTICLE VII CAPITAL STOCK . . . . . . . . . . . . . . . . 10
Section 7.1. Certificates of Stock. . . . . . . . . . 10
Section 7.2. Transfer of Shares . . . . . . . . . . . 10
Section 7.3. Transfer Agents and Registrars . . . . . 10
Section 7.4. Fixing of Record Date . . . . . . . . . . 10
Section 7.5. Lost, Stolen or Destroyed Certificates . 11
ARTICLE VIII CONFLICT OF INTEREST TRANSACTIONS . . . . . . 11
Section 8.1. Validity of Contract or Transactions . . 11
ARTICLE IX FISCAL YEAR AND ACCOUNTANT . . . . . . . . . . . 11
Section 9.1. Fiscal Year . . . . . . . . . . . . . . . 11
ARTICLE X INDEMNIFICATION AND INSURANCE . . . . . . . . . . 11
Section 10.1 Indemnification of Officers, Directors,
Employees and Agents . . . . . . . . . . 11
Section 10.2. Insurance of Officers, Directors,
Employees and Agents . . . . . . . . . . 12
Section 10.3. Non-exclusivity . . . . . . . . . . . . . 13
Section 10.4. Amendment . . . . . . . . . . . . . . . . 13
ARTICLE XI AMENDMENTS . . . . . . . . . . . . . . . . . . . 13
Section 11.1. General . . . . . . . . . . . . . . . . . 13
Section 11.2. By Stockholders Only. . . . . . . . . . . 13
BULL & BEAR MUNICIPAL INCOME FUND, INC
The Corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences
and relative, participating, optional or other special rights of
each class of stock or series thereof of the Corporation, and the
qualifications, limitations, or restrictions of such preferences
and/or rights. The Corporation will also furnish without charge
to each stockholder who so requests a description of the
authority of the Corporation's board of directors to set the
relative rights and preferences of unissued series of the
Corporation's capital stock. Such requests may be made to the
Corporation or the transfer agent.
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
<TABLE>
<S> <C>
TEN COM -as tenants in common UNIF GIFT MIN ACT -Custodian
TEN ENT -as tenants by the entireties (Cust) (Minor)
JT TEN -as joint tenants with right of under Uniform Gifts to Minors Act
survivorship and not as tenants
in common ________________________________
(State)
Additional abbreviations may also be used though not in the above list
</TABLE>
For value received, _______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
/______________________________________/___________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
________________________ Shares of the Stock represented by the
within Certificate, and do hereby irrevocably constitute and
appoint
__________________________________________________________________
Attorney to transfer the said Stock on the books of the within-
named Corporation with full power of substitution in the premises.
Dated: ________________________
____________________________________
Signature
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
COMMON STOCK
PAR VALUE $.01 Shares
INCORPORATED UNDER THE LAWS
OF THE STATE OF MARYLAND
THIS CERTIFICATE
IS TRANSFERABLE IN
KANSAS CITY, MO OR
IN NEW YORK, NY
CUSIP 120176 3
SEE REVERSE FOR
CERTAIN DEFINITIONS
BULL & BEAR MUNICIPAL INCOME FUND, INC.
THIS CERTIFIES THAT
IS THE OWNER OF
FULL PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF
Bull & Bear Municipal Income Fund, Inc., transferable on the books of the
Corporation by the holder hereof in person or by duly authorized attorney
upon surrender of this Certificate properly endorsed. This Certificate
and the shares represented hereby are issued and shall be subject to all
of the provisions of the Amended and Restated Articles of Incorporation
and Amended and Restated By-Laws of the Corporation, such as from time
to time amended, to all of which the holder by acceptance hereof assents.
This Certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
DATED
SECRETARY CO-PRESIDENT
COUNTERSIGNED AND REGISTERED
TRANSFER AGENT
AND REGISTRAR
AUTHORIZED SIGNATURE
FORM OF TERMS AND CONDITIONS OF
THE DIVIDEND REINVESTMENT PLAN
OF _____________________
1. Each shareholder (the "Shareholder")
holding shares of common stock (the "Shares") of__________
__________________________________ (the "Fund") will
automatically be a participant in the Dividend
Reinvestment Plan (the "Plan"), unless the Shareholder
specifically elects to receive all dividends and capital
gains in cash paid by check mailed directly to the
Shareholder by _________________________ as agent under
the Plan (the "Agent"). The Agent will open an account
for each Shareholder under the Plan in the same name in
which such Shareholder's shares of Common Stock are
registered.
2. Whenever the Fund declares a capital gain
distribution or an income dividend payable in Shares or
cash, participating Shareholders will take the
distribution or dividend entirely in Shares and the Agent
will automatically receive the Shares, including
fractions, for the Shareholder's account in accordance
with the following:
Whenever the Market Price (as defined in
Section 3 below) per Share is equal to or exceeds
the net asset value per Share at the time Shares are
valued for the purpose of determining the number of
Shares equivalent to the cash dividend or capital
gain distribution (the "Valuation Date"),
participants will be issued additional Shares equal
to the amount of such dividend divided by the Fund's
net asset value per Share. Whenever the Market
Price per Share is less than such net asset value on
the Valuation Date, participants will be issued
additional Shares equal to the amount of such
dividend divided by the Market Price. The Valuation
Date is the dividend or distribution payment date
or, if that date is not an American Stock Exchange
trading day, the next trading day. If the Fund
should declare a dividend or capital gain
distribution payable only in cash, the Agent will,
as purchasing agent for the participating
Shareholders, buy Shares in the open market, on the
American Stock Exchange (the "Exchange") or
elsewhere, for such Shareholders' accounts after the
payment date, except that the Agent will endeavor to
terminate purchases in the open market and cause the
Fund to issue the remaining Shares if, following the
commencement of the purchases, the market value of
the Shares exceeds the net asset value. These
remaining Shares will be issued by the Fund at a
price equal to the Market Price.
In a case where the Agent has terminated open
market purchases and caused the issuance of
remaining Shares by the Fund, the number of shares
received by the participant in respect of the cash
dividend or distribution will be based on the
weighted average of prices paid for Shares purchased
in the open market and the price at which the Fund
issues remaining Shares. To the extent that the
Agent is unable to terminate purchases in the open
market before the Agent has completed its purchases,
or remaining Shares cannot be issued by the Fund
because the Fund declared a dividend or distribution
payable only in cash, and the market price exceeds
the net asset value of the Shares, the average Share
purchase price paid by the Agent may exceed the net
asset value of the Shares, resulting in the
acquisition of fewer Shares than if the dividend or
capital gain distribution had been paid in Shares
issued by the Fund.
The Agent will apply all cash received as a
dividend or capital gain distribution to purchase
shares of common stock on the open market as soon as
practicable after the payment date of the dividend
or capital gain distribution, but in no event later
than 45 days after that date, except when necessary
to comply with applicable provisions of the federal
securities laws.
3. For all purposes of the Plan: (a) the
Market Price of the Shares on a particular date shall be
the average closing market price on the five trading days
the Shares traded ex-dividend on the Exchange prior to
such date or, if no sale occurred on the Exchange prior
to such date, then the mean between the closing bid and
asked quotations for the Shares on the Exchange on such
date, and (b) net asset value per share on a particular
date shall be as determined by or on behalf of the Fund.
4. The open-market purchases provided for
herein may be made on any securities exchange on which
the Shares are traded, in the over-the-counter market or
in negotiated transactions, and may be on such terms as
to price, delivery and otherwise as the Agent shall
determine. Funds held by the Agent uninvested will not
bear interest, and it is understood that, in any event,
the Agent shall have no liability in connection with any
inability to purchase Shares within 45 days after the
initial date of such purchase as herein provided, or with
the timing of any purchases effected. The Agent shall
have no responsibility as to the value of the Shares
acquired for the Shareholder's account.
5. The Agent will hold Shares acquired
pursuant to the Plan in noncertificated form in the
Agent's name or that of its nominee. At no additional
cost, a Shareholder participating in the Plan may send to
the Agent for deposit into its Plan account those
certificate shares of the Fund in its possession. These
shares will be combined with those unissued full and
fractional shares acquired under the Plan and held by the
Agent. Shortly thereafter, such Shareholder will receive
a statement showing its combined holdings. The Agent
will forward to the Shareholder any proxy solicitation
material and will vote any Shares so held for the
Shareholder only in accordance with the proxy returned by
him or her to the Fund. Upon the Shareholder's written
request, the Agent will deliver to him or her, without
charge, a certificate or certificates for the full
Shares.
6. The Agent will confirm to the Shareholder
each acquisition for his or her account as soon as
practicable but not later than 60 days after the date
thereof. Although the Shareholder may from time to time
have an individual fractional interest (computed to three
decimal places) in a Share, no certificates for
fractional Shares will be issued. However, dividends and
distributions on fractional Shares will be credited to
Shareholders' accounts. In the event of a termination of
a Shareholder's account under the Plan, the Agent will
adjust for any such undivided fractional interest in cash
at the opening market value of the Shares at the time of
termination.
7. Any stock dividends or split Shares
distributed by the Fund on Shares held by the Agent for
the Shareholder will be credited to the Shareholder's
account. In the event that the Fund makes available to
the Shareholder the right to purchase additional Shares
or other securities, the Shares held for a Shareholder
under the Plan will be added to other shares held by the
Shareholder in calculating the number of rights to be
issued by such Shareholder.
8. The Agent's service fee for handling
capital gain distributions or income dividends will be
paid by the Fund. The Shareholder will be charged a pro
rata share of brokerage commissions on all open market
purchases.
9. The Shareholder may terminate his or her
account under the Plan by notifying the Agent in writing.
A termination will be effective immediately if notice is
received by the Agent at any time prior to any dividend
or distribution record date; otherwise such termination
will be effective, with respect to any subsequent
dividend or distribution, on the first trading day after
a dividend paid for the record date has been credited to
the Shareholder's account. Upon any termination the
Agent will cause a certificate or certificates for the
full Shares held for the Shareholder under the Plan and
cash adjustment for any fraction to be delivered to him
or her.
10. These terms and conditions may be amended
or supplemented by the Agent or the Fund at any time or
times but, except when necessary or appropriate to comply
with applicable law or the rules or policies of the
Securities and Exchange Commission or any other
regulatory authority, only by mailing to the Shareholder
appropriate written notice at least 30 days prior to the
effective date thereof. The amendment or supplement
shall be deemed to be accepted by the Shareholder unless,
prior to the effective date thereof, the Agent receives
written notice of the termination of such Shareholder's
account under the Plan. Any such amendment may include
an appointment by the Fund of a successor agent in its
place and stead under these terms and conditions, with
full power and authority to perform all or any of the
acts to be performed by the Agent. Upon any such
appointment of an Agent for the purpose of receiving
dividends and distributions, the Fund will be authorized
to pay to such successor Agent all dividends and
distributions payable on Shares held in the Shareholder's
name or under the Plan for retention or application by
such successor Agent as provided in these terms and
conditions.
11. In the case of Shareholders, such as
banks, brokers or nominees, which hold Shares for others
who are the beneficial owners, the Agent will administer
the Plan on the basis of the number of Shares certified
from time to time by the Shareholders as representing the
total amount registered in the Shareholder's name and
held for the account of beneficial owners who are to
participate in the Plan.
12. The Agent shall at all times act in good
faith and agree to use its best efforts within reasonable
limits to insure the accuracy of all services performed
under this agreement and to comply with applicable law,
but assumes no responsibility and shall not be liable for
loss or damage due to errors unless the errors are caused
by its negligence, bad faith or willful misconduct or
that of its employees.
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made on November 8, 1996, by and between
BULL & BEAR MUNICIPAL INCOME FUND, INC., a Maryland
corporation (the "Fund") and BULL & BEAR ADVISERS, INC., a
Delaware corporation (the "Investment Manager").
WHEREAS the Fund intends to register under the
Investment Company Act of 1940, as amended (the "1940 Act"),
as a closed-end management investment company; and
WHEREAS, the Fund desires to retain the Investment
Manager to furnish certain investment advisory and portfolio
management services to the Fund, and the Investment Manager
desires to furnish such services;
NOW THEREFORE, in consideration of the mutual
promises and agreements herein contained and other good and
valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed between the parties hereto
as follows:
1. The Fund hereby employs the Investment Manager
to manage the investment and reinvestment of its assets,
including the regular furnishing of advice with respect to
the Fund's portfolio transactions subject at all times to the
control and oversight of the Fund's Board of Directors, for
the period and on the terms set forth in this Agreement. The
Investment Manager hereby accepts such employment and agrees
during such period to render the services and to assume the
obligations herein set forth, for the compensation herein
provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way, or
otherwise be deemed an agent of the Fund.
2. The Fund assumes and shall pay all the expenses
required for the conduct of its business including, but not
limited to, salaries of administrative and clerical
personnel, brokerage commissions, taxes, insurance, fees of
the transfer agent, custodian, legal counsel and auditors,
association fees, costs of filing, printing and mailing
proxies, reports and notices to shareholders, preparing,
filing and printing the prospectus and statement of
additional information, payment of dividends, costs of stock
certificates, costs of shareholders meetings, fees of the
independent directors, necessary office space rental, all
expenses relating to the registration or qualification of
shares of the Fund under applicable Blue Sky laws and
reasonable fees and expenses of counsel in connection with
such registration and qualification and such non-recurring
expenses as may arise, including, without limitation,
actions, suits or proceedings affecting the Fund and the
legal obligation which the Fund may have to indemnify its
officers and directors with respect thereto.
3. If requested by the Fund's Board of Directors,
the Investment Manager may provide other services to the Fund
such as, without limitation, the functions of billing,
accounting, certain shareholder communications and services,
administering state and Federal registrations, filings and
controls and other administrative services. Any services so
requested and performed will be for the account of the Fund
and the costs of the Investment Manager in rendering such
services shall be reimbursed by the Fund, subject to
examination by those directors of the Fund who are not
interested persons of the Investment Manager or any affiliate
thereof.
4. The services of the Investment Manager are not
to be deemed exclusive, and the Investment Manager shall be
free to render similar services to others in addition to the
Fund so long as its services hereunder are not impaired
thereby.
5. The Investment Manager shall create and
maintain all necessary books and records in accordance with
all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the 1940 Act
and the rules thereunder, as the same may be amended from
time to time, pertaining to the investment management
services performed by it hereunder and not otherwise created
and maintained by another party pursuant to a written
contract with the Fund. Where applicable, such records shall
be maintained by the Investment Manager for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The
books and records pertaining to the Fund which are in the
possession of the Investment Manager shall be the property of
the Fund. The Fund, or the Fund's authorized
representatives, shall have access to such books and records
at all times during the Investment Manager's normal business
hours. Upon the reasonable request of the Fund, copies of
any such books and records shall be provided by the
Investment Manager to the Fund or the Fund's authorized
representatives.
6. As compensation for its services provided
pursuant to this Agreement, the Fund will pay to the
Investment Manager a fee from its assets, such fee to be
computed weekly and paid monthly in arrears at the annual
rate of 0.60% of the first $500 million and 0.50% over $500
million of the Fund's net assets. If this Agreement becomes
effective or terminates before the end of any month, the fee
for the period from the effective date to the end of the
month or from the beginning of such month to the date of
termination, as the case may be, shall be protected according
to the proportion which such period bears to the full month
in which such effectiveness or termination occurs.
7. The Investment Manager shall direct portfolio
transactions to broker/dealers for execution on terms and at
rates which it believes, in good faith, to be reasonable in
view of the overall nature and quality of services provided
by a particular broker/dealer, including brokerage and
research services and sales of shares of the Fund and shares
of the other funds in the Bull & Bear fund complex. The
Investment Manager may also allocate portfolio transactions
to broker/dealers that remit a portion of their commissions
as a credit against Fund expenses. With respect to brokerage
and research services, the Investment Manager may consider in
the selection of broker/dealers brokerage or research
provided and payment may be made of a fee higher than that
charged by another broker/dealer which does not furnish
brokerage or research services or which furnishes brokerage
or research services deemed to be of lesser value, so long as
the criteria of Section 28(e) of the Securities Exchange Act
of 1934, as amended, or other applicable laws are met.
Although the Investment Manager may direct portfolio
transactions without necessarily obtaining the lowest price
at which such broker/dealer, or another, may be willing to do
business, the Investment Manager shall seek the best value
for the Fund on each trade that circumstances in the market
place permit, including the value inherent in on-going
relationships with quality brokers. To the extent any such
brokerage or research services may be deemed to be additional
compensation to the Investment Manager from the Fund, it is
authorized by this Agreement. The Investment Manager may
place brokerage for the Fund through an affiliate of the
Investment Manager, provided that: the Fund not deal with
such affiliate in any transaction in which such affiliate
acts as principal; the commissions, fees or other
remuneration received by such affiliate be reasonable and
fair compared to the commissions, fees or other remuneration
paid to other brokers in connection with comparable
transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of
time; and such brokerage be undertaken in compliance with
applicable law. The Investment Manager's fees under this
Agreement shall not be reduced by reason of any commissions,
fees or other remuneration received by such affiliate from
the Fund.
8. The Investment Manager shall waive all or part
of its fee or reimburse the Fund monthly if and to the extent
the aggregate operating expenses of the Fund exceed the most
restrictive limit imposed by any state in which shares of the
Fund are qualified for sale. In calculating the limit of
operating expenses, all expenses excludable under state
regulation or otherwise shall be excluded. If this Agreement
is in effect for less than all of a fiscal year, any such
limit will be applied proportionately.
9. Subject to and in accordance with the Articles
of Incorporation and By-laws of the Fund and of the
Investment Manager, it is understood that directors,
officers, agents and shareholders of the Fund are or may be
interested in the Fund as directors, officers, shareholders
and otherwise, that the Investment Manager is or may be
interested in the Fund as a shareholder or otherwise and that
the effect and nature of any such interests shall be governed
by law and by the provisions, if any, of said Articles of
Incorporation or By-laws.
10. A. This Agreement shall become effective upon
the date hereinabove written provided that this Agreement
shall not take effect unless it has first been approved (i)
by a vote of a majority of the Directors of the Fund who are
not parties to this Agreement, or interested persons of any
such party and (ii) by vote of the holders of a majority of
the Fund's outstanding voting securities.
B. Unless sooner terminated as provided herein,
this Agreement shall continue in effect for two years from
the above written date. Thereafter, if not terminated, this
Agreement shall continue automatically for successive periods
of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a
majority of the Directors of the Fund who are not parties to
this Agreement, or interested persons of any such party and
(ii) by the Board of Directors of the Fund by the vote of the
holders of a majority of the outstanding voting securities of
the Fund.
C. This Agreement may be terminated without
penalty at any time either by vote of the Board of Directors
of the Fund or by vote of the holders of a majority of the
Fund's outstanding voting securities on 60 days' written
notice to the Investment Manager, or by the Investment
Manager on 60 days' written notice to the Fund. This
Agreement shall immediately terminate in the event of its
assignment.
11. The Investment Manager shall not be liable to
the Fund or any shareholder of the Fund for any error of
judgment or mistake of law or for any loss suffered by the
Fund or the Fund's shareholders in connection with the
matters to which this Agreement relates, but nothing herein
contained shall be construed to protect the Investment
Manager against any liability to the Fund or the Fund's
shareholders by reason of willful misfeasance, bad faith, or
gross negligence in the performance of its duties or by
reason of its reckless disregard of obligations and duties
under this Agreement.
12. As used in this Agreement, the terms
"interested person," "assignment," and "majority of the
outstanding voting securities" shall have the meanings
provided therefor in the 1940 Act, and the rules and
regulations thereunder.
13. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement, with respect to the subject hereof whether oral or
written. If any provision of this Agreement shall be held or
made invalid by a court or regulatory agency, decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
14. This Agreement shall be construed in
accordance with and governed by the laws of the State of New
York, provided, however, that nothing herein shall be
construed in a manner inconsistent with the 1940 Act or any
rule or regulation promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the day and year first above
written.
ATTEST: BULL & BEAR MUNCIPAL INCOME
FUND, INC.
________________________
By:_________________________
ATTEST: BULL & BEAR ADVISERS, INC.
_________________________
By:_________________________
