BULL & BEAR MUNICIPAL INCOME FUND INC, NSAR-B, 1998-02-27

BULL & BEAR MUNICIPAL INCOME FUND INC
NSAR-B, 1998-02-27

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001 A000000 BULL & BEAR MUNICIPAL INCOME FUND, INC.
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002 A000000 11 HANOVER SQUARE
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013 A000001 TAIT, WELLER & BAKER
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014 A000001 BULL & BEAR SECURITIES, INC.
014 B000001 8-31732
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<PAGE> PAGE 2
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<PAGE> PAGE 3
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SIGNATURE JOSEPH LEUNG
TITLE TREASURER

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Bull &
Bear Municipal Income Fund, Inc. Annual Report and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0000736952
<NAME> Bull & Bear Municipal Income Fund, Inc.
<MULTIPLIER> 1
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</TABLE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON INTERNAL CONTROL STRUCTURE

SHAREHOLDERS AND BOARD OF DIRECTORS
BULL & BEAR MUNICIPAL INCOME FUND, INC.
NEW YORK, NEW YORK

In planning and performing our audit of the financial statements of Bull & Bear
Municipal Income Fund, a series of shares of Bull & Bear Municipal Income Fund,
Inc. for the year ended December 31, 1997, we considered its internal control
structure, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on the internal control structure.

The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition, and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.

Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.

Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses, as defined above, as of
December 31, 1997.

This report is intended solely for the information and use of management and the
Securities and Exchange Commission, and should not be used for any other
purpose.

PHILADELPHIA, PENNSYLVANIA
JANUARY 23, 1998

FORM OF
CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT

THIS AGREEMENT made the 25th day of April, 1997, by and between
INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of
the state of Missouri, having its trust office located at l27 West 10th Street,
Kansas City, Missouri 64105 ("Custodian"), and each registered investment
company listed on Exhibit A hereto, as it may be amended from time to time, each
a having its principal office and place of business at 11 Hanover Square, New
York, NY 10005 (each a "Fund" and collectively the "Funds").

WITNESSETH:

WHEREAS, each Fund desires to appoint Investors Fiduciary Trust Company
as custodian of the securities and monies of such Fund's investment portfolio
and as its agent to perform certain investment accounting and recordkeeping
functions; and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN. Each Fund hereby constitutes and appoints
Custodian as:
A. Custodian of the securities and monies at any time owned by the
Fund; and
B. Agent to perform certain accounting and recordkeeping
functions relating to portfolio transactions required of a
duly registered investment company under Rule 31a of the
Investment Company Act of 1940 (the "1940 Act") and to
calculate the net asset value of the Fund.
2. REPRESENTATIONS AND WARRANTIES.
A. Each Fund hereby represents, warrants and acknowledges to Custodian:
1. That it is a corporation duly organized and existing and in
good standing under the laws of its state of organization,
and that it is registered under the 1940 Act; and
2. That it has the requisite power and authority under
applicable law, its articles of incorporation and its
bylaws to enter into this Agreement; that it has
taken all requisite action necessary to appoint
Custodian as custodian and investment accounting and
recordkeeping agent for the Fund; that this

<PAGE>

Agreement has been duly executed and delivered by
Fund; and that this Agreement constitutes a legal,
valid and binding obligation of Fund, enforceable in
accordance with its terms.
B. Custodian hereby represents, warrants and acknowledges to the
Funds:
1. That it is a trust company duly organized and
existing and in good standing under the laws of the
State of Missouri; and
2. That it has the requisite power and authority under
applicable
law, its charter and its bylaws to enter into and
perform this Agreement; that this Agreement has been
duly executed and delivered by Custodian; and that
this Agreement constitutes a legal, valid and binding
obligation of Custodian, enforceable in accordance
with its terms.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Except as permitted by the 1940 Act, each Fund will deliver or
cause to be delivered to Custodian on the effective date of
this Agreement, or as soon thereafter as practicable, and from
time to time thereafter, all portfolio securities acquired by
it and monies then owned by it or from time to time coming
into its possession during the time this Agreement shall
continue in effect. Custodian shall have no responsibility or
liability whatsoever for or on account of securities or monies
not so delivered.
B. Delivery of Accounts and Records
Each Fund shall turn over or cause to be turned over to
Custodian all of the Fund's relevant accounts and records
previously maintained. Custodian shall be entitled to rely
conclusively on the completeness and correctness of the
accounts and records turned over to it, and each Fund shall
indemnify and hold Custodian harmless of and from any and all
expenses, damages and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other
deficiency of such Fund's accounts and records or in the
failure of such Fund to provide, or to provide in a timely
manner, any accounts, records or information needed by the
Custodian to perform its functions hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets
of each Fund delivered to it from time to time segregated in a
separate account, and if any Fund is comprised of more than
one portfolio of investment securities (each a "Portfolio")
Custodian shall keep the

<PAGE>

assets of each Portfolio segregated in a separate account.
Custodian will not deliver, assign, pledge or hypothecate any
such assets to any person except as permitted by the
provisions of this Agreement or any agreement executed by it
according to the terms of Section 3.S. of this Agreement. Upon
delivery of any such assets to a subcustodian pursuant to
Section 3.S. of this Agreement, Custodian will create and
maintain records identifying those assets which have been
delivered to the subcustodian as belonging to the applicable
Fund, by Portfolio if applicable. The Custodian is responsible
for the safekeeping of the securities and monies of the Funds
only until they have been transmitted to and received by other
persons as permitted under the terms of this Agreement, except
for securities and monies transmitted to subcustodians
appointed under Section 3.S. of this Agreement, for which
Custodian remains responsible to the extent provided in
Section 3.S. hereof. Custodian may participate directly or
indirectly through a subcustodian in the Depository Trust
Company (DTC), Treasury/Federal Reserve Book Entry System (Fed
System), Participant Trust Company (PTC) or other depository
approved by the Funds (as such entities are defined at 17 CFR
Section 270.17f-4(b)) (each a "Depository" and collectively,
the "Depositories").

<PAGE>

D. Registration of Securities
The Custodian shall at all times hold registered securities of
the Funds in the name of the Custodian, the applicable Fund,
or a nominee of either of them, unless specifically directed
by instructions to hold such registered securities in
so-called "street name," provided that, in any event, all such
securities and other assets shall be held in an account of the
Custodian containing only assets of the applicable Fund, or
only assets held by the Custodian as a fiduciary or custodian
for customers, and provided further, that the records of the
Custodian at all times shall indicate the Fund or other
customer for which such securities and other assets are held
in such account and the respective interests therein. If,
however, any Fund directs the Custodian to maintain securities
in "street name", notwithstanding anything contained herein to
the contrary, the Custodian shall be obligated only to utilize
its best efforts to timely collect income due the Fund on such
securities and to notify the Fund of relevant corporate
actions including, without limitation, pendency of calls,
maturities, tender or exchange offers. All securities, and the
ownership thereof by the applicable Fund, which are held by
Custodian hereunder, however, shall at all times be
identifiable on the records of the Custodian. Each Fund agrees
to hold Custodian and its nominee harmless for any liability
as a shareholder of record of its securities held in custody.
E. Exchange of Securities
Upon receipt of instructions as defined herein in Section 4.A,
Custodian will exchange, or cause to be exchanged, portfolio
securities held by it for the account of a Fund for other
securities or cash issued or paid in connection with any
reorganization, recapitalization, merger, consolidation,
split-up of shares, change of par value, conversion or
otherwise, and will deposit any such securities in accordance
with the terms of any reorganization or protective plan.
Without instructions, Custodian is authorized to exchange
securities held by it in temporary form for securities in
definitive form, to effect an exchange of shares when the par
value of the stock is changed, and, upon receiving payment
therefor, to surrender bonds or other securities held by it at
maturity or when advised of earlier call for redemption,
except that Custodian shall receive instructions prior to
surrendering any convertible security.
F. Purchases of Investments of a Fund - Other Than Options and
Futures

<PAGE>

Each Fund will, on each business day on which a purchase of
securities (other than options and futures) shall be made by
it, deliver to Custodian instructions which shall specify with
respect to each such purchase: 1. If applicable, the name of
the Portfolio making such purchase; 2. The name of the issuer
and description of the security; 3. The number of shares and
the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission,
taxes and other expenses payable in connection with the
purchase;
7. The total amount payable upon such purchase;
8. The name of the person from whom or the broker or dealer
through whom the purchase was made; and
9. Whether the security is to be received in certificated form
or via a specified Depository.
In accordance with such instructions, Custodian will pay for
out of monies held for the account of the applicable Fund, but
only insofar as such monies are available for such purpose,
and receive the portfolio securities so purchased by or for
the account of the applicable Fund, except that Custodian may
in its sole discretion advance funds to the Fund which may
result in an overdraft because the monies held by the
Custodian on behalf of the Fund are insufficient to pay the
total amount payable upon such purchase. Except as otherwise
instructed by the applicable Fund, such payment shall be made
by the Custodian only upon receipt of securities: (a) by the
Custodian; (b) by a clearing corporation of a national
exchange of which the Custodian is a member; or (c) by a
Depository. Notwithstanding the foregoing, (i) in the case of
a repurchase agreement, the Custodian may release funds to a
Depository prior to the receipt of advice from the Depository
that the securities underlying such repurchase agreement have
been transferred by book-entry into the account maintained
with such Depository by the Custodian, on behalf of its
customers, provided that the Custodian's instructions to the
Depository require that the Depository make payment of such
funds only upon transfer by book-entry of the securities
underlying the repurchase agreement in such account; (ii)

<PAGE>

in the case of time deposits, call account deposits, currency
deposits and other deposits, foreign exchange transactions,
futures contracts or options, the Custodian may make payment
therefor before receipt of an advice or confirmation
evidencing said deposit or entry into such transaction; and
(iii) in the case of the purchase of securities, the
settlement of which occurs outside of the United States of
America, the Custodian may make, or cause a subcustodian
appointed pursuant to Section 3.S.2. of this Agreement to
make, payment therefor in accordance with generally accepted
local custom and market practice.
G. Sales and Deliveries of Investments of a Fund - Other Than
Options and Futures Each Fund will, on each business day on
which a sale of investment securities (other than options and
futures) of such Fund has been made, deliver to Custodian
instructions specifying with respect to each such sale:
1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or
other information identifying the securities sold and to be
delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes
or other expenses payable in connection with such sale;
8. The total amount to be received by Fund upon such sale; and
9. The name and address of the broker or dealer through whom
or person to whom the sale was made.
In accordance with such instructions, Custodian will deliver
or cause to be delivered the securities thus designated as
sold for the account of the applicable Fund to the broker or
other person specified in the instructions relating to such
sale. Except as otherwise instructed by the applicable Fund,
such delivery shall be made upon receipt of: (a) payment
therefor in such form as is satisfactory to the Custodian; (b)
credit to the account of the Custodian with a clearing
corporation of a national securities exchange of which the
Custodian is a member; or (c) credit to the

<PAGE>

account of the Custodian, on behalf of its customers, with a
Depository. Notwithstanding the foregoing: (i) in the case of
securities held in physical form, such securities shall be
delivered in accordance with "street delivery custom" to a
broker or its clearing agent; or (ii) in the case of the sale
of securities, the settlement of which occurs outside of the
United States of America, the Custodian may make, or cause a
subcustodian appointed pursuant to Section 3.S.2. of this
Agreement to make, such delivery upon payment therefor in
accordance with generally accepted local custom and market
practice.
H. Purchases or Sales of Options and Futures
Each Fund will, on each business day on which a purchase or
sale of the following options and/or futures shall be made by
it, deliver to Custodian instructions which shall specify with
respect to each such purchase or sale: 1. If applicable, the
name of the Portfolio making such purchase
or sale;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or call; h.
Whether the option is written or purchased; i. Market
on which option traded; and j. Name and address of
the broker or dealer through whom
the sale or purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening,
exercising, expiring or closing transaction;

<PAGE>

h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer
through whom the sale or purchase was made, or
other applicable settlement instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the contract
and, when available, the closing level, thereof;
b. The index level on the date the contract is
entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in
addition to instructions, and if not already
in the possession of Custodian, Fund shall
deliver a substantially complete and
executed custodial safekeeping account and
procedural agreement which shall be
incorporated by reference into this Custody
Agreement); and
f. The name and address of the futures
commission merchant through whom the sale or
purchase was made, or other applicable
settlement instructions.
5. Options on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Securities Pledged or Loaned
If specifically allowed for in the prospectus of the applicable
Fund, and subject to such additional terms and conditions as
Custodian may require:
1. Upon receipt of instructions, Custodian will release or
cause to be released securities held in custody to the
pledgee designated in such instructions by way of pledge
or

<PAGE>

hypothecation to secure any loan incurred by such
Fund; provided, however, that the securities shall be
released only upon payment to Custodian of the monies
borrowed, except that in cases where additional
collateral is required to secure a borrowing already
made, further securities may be released or caused to
be released for that purpose upon receipt of
instructions. Upon receipt of instructions, Custodian
will pay, but only from funds available for such
purpose, any such loan upon redelivery to it of the
securities pledged or hypothecated therefor and upon
surrender of the note or notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated
in such instructions; provided, however, that the
securities will be released only upon deposit with
Custodian of full cash collateral as specified in
such instructions, and that such Fund will retain the
right to any dividends, interest or distribution on
such loaned securities. Upon receipt of instructions
and the loaned securities, Custodian will release
the cash collateral to the borrower.
J. Routine Matters
Custodian will, in general, attend to all routine and
mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with
securities or other property of the Funds except as may be
otherwise provided in this Agreement or directed from time to
time by the applicable Fund in writing.
K. Deposit Accounts
Custodian will open and maintain one or more special purpose
deposit accounts for each Fund in the name of Custodian
("Accounts"), subject only to draft or order by Custodian upon
receipt of instructions. All monies received by Custodian from
or for the account of any Fund shall be deposited in the
appropriate Accounts. Barring events not in the control of the
Custodian such as strikes, lockouts or labor disputes, riots,
war or equipment or transmission failure or damage, fire,
flood, earthquake or other natural disaster, action or
inaction of governmental authority or other causes beyond its
control, at 9:00 a.m., Kansas City time, on the second
business day after deposit of any check into an Account,

<PAGE>

Custodian agrees to make Fed Funds available to the applicable
Fund in the amount of the check. Deposits made by Federal
Reserve wire will be available to the Fund immediately and ACH
wires will be available to the Fund on the next business day.
Income earned on the portfolio securities will be credited to
the Fund based on the schedule attached as Exhibit A. The
Custodian will be entitled to reverse any credited amounts
where credits have been made and monies are not finally
collected. If monies are collected after such reversal, the
Custodian will credit the Fund in that amount. Custodian may
open and maintain Accounts in such banks or trust companies as
may be designated by it or by the applicable Fund in writing,
all such Accounts, however, to be in the name of Custodian and
subject only to its draft or order. Funds received and held
for the account of different Portfolios shall be maintained in
separate Accounts established for each Portfolio.

L. Income and Other Payments to the Funds
Custodian will:
1. Collect, claim and receive and deposit for the account of the
applicable Fund all income and other payments which become due
and payable on or after the effective date of this Agreement
with respect to the securities deposited under this Agreement,
and credit the account of such Fund in accordance with the
schedule attached hereto as Exhibit A. If, for any reason,
the Fund is credited with income that is not subsequently
collected, Custodian may reverse that credited amount.
2. Execute ownership and other certificates and
affidavits for all federal, state and local tax
purposes in connection with the collection of bond
and note coupons; and
3. Take such other action as may be necessary or proper
in connection with:
a. the collection, receipt and
deposit of such income and
other payments, including but not limited to the
presentation for payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be
called, redeemed, retired or otherwise become
payable and regarding which the Custodian has

<PAGE>

actual knowledge, or should reasonably be
expected to have knowledge; and
b. the endorsement for collection, in the name of
the applicable Fund, of all checks, drafts or
other negotiable instruments.
Custodian, however, will not be required to institute suit or
take other extraordinary action to enforce collection except
upon receipt of instructions and upon being indemnified to its
satisfaction against the costs and expenses of such suit or
other actions. Custodian will receive, claim and collect all
stock dividends, rights and other similar items and will deal
with the same pursuant to instructions.
M. Payment of Dividends and Other Distributions
On the declaration of any dividend or other distribution on the
shares of capital stock of any Fund("Fund Shares") by the Board of
Directors of such Fund, such Fund shall deliver to Custodian
instructions with respect thereto. On the date specified in such
instructions for the payment of such dividend or other distribution
,Custodian will pay out of the monies held for the account of such
Fund, insofar as the same shall be available for such purposes, and
credit to the account of the Dividend Disbursing Agent for such
Fund, such amount as may be specified in such instructions.
N. Shares of a Fund Purchased by Such Fund
Whenever any Fund Shares are repurchased or redeemed by a
Fund, such Fund or its agent shall advise Custodian of the
aggregate dollar amount to be paid for such shares and shall
confirm such advice in writing. Upon receipt of such advice,
Custodian shall charge such aggregate dollar amount to the
account of such Fund and either deposit the same in the
account maintained for the purpose of paying for the
repurchase or redemption of Fund Shares or deliver the same in
accordance with such advice. Custodian shall not have any duty
or responsibility to determine that Fund Shares have been
removed from the proper shareholder account or accounts or
that the proper number of Fund Shares have been cancelled and
removed from the shareholder records.
O. Shares of a Fund Purchased from Such Fund
Whenever Fund Shares are purchased from any Fund, such Fund
will deposit or cause to be deposited with Custodian the
amount received for such shares. Custodian shall not have any
duty or

<PAGE>

responsibility to determine that Fund Shares purchased from
any Fund have been added to the proper shareholder account or
accounts or that the proper number of such shares have been
added to the shareholder records.
P. Proxies and Notices
Custodian will promptly deliver or mail or have delivered or
mailed to the applicable Fund all proxies properly signed, all
notices of meetings, all proxy statements and other notices,
requests or announcements affecting or relating to securities
held by Custodian for such Fund and will, upon receipt of
instructions, execute and deliver or cause its nominee to
execute and deliver or mail or have delivered or mailed such
proxies or other authorizations as may be required. Except as
provided by this Agreement or pursuant to instructions
hereafter received by Custodian, neither it nor its nominee
will exercise any power inherent in any such securities,
including any power to vote the same, or execute any proxy,
power of attorney, or other similar instrument voting any of
such securities, or give any consent, approval or waiver with
respect thereto, or take any other similar action.
Q. Disbursements
Custodian will pay or cause to be paid, insofar as funds are
available for the purpose, bills, statements and other
obligations of each Fund (including but not limited to
obligations in connection with the conversion, exchange or
surrender of securities owned by such Fund, interest charges,
dividend disbursements, taxes, management fees, custodian
fees, legal fees, auditors' fees, transfer agents' fees,
brokerage commissions, compensation to personnel, and other
operating expenses of such Fund) pursuant to instructions of
such Fund setting forth the name of the person to whom payment
is to be made, the amount of the payment, and the purpose of
the payment.
R. Daily Statement of Accounts
Custodian will, within a reasonable time, render to each Fund
a detailed statement of the amounts received or paid and of
securities received or delivered for the account of the Fund
during each business day. Custodian will, from time to time,
upon request by any Fund, render a detailed statement of the
securities and monies held for such Fund under this Agreement,
and Custodian will maintain such books and records as are
necessary to enable it to do so.

<PAGE>

Custodian will permit such persons as are authorized by any
Fund, including such Fund's independent public accountants,
reasonable access to such records or will provide reasonable
confirmation of the contents of such records, and if demanded,
Custodian will permit federal and state regulatory agencies to
examine the securities, books and records. Upon the written
instructions of any Fund or as demanded by federal or state
regulatory agencies, Custodian will instruct any subcustodian
to permit such persons as are authorized by such Fund,
including such Fund's independent public accountants,
reasonable access to such records or to provide reasonable
confirmation of the contents of such records, and to permit
such agencies to examine the books, records and securities
held by such subcustodian which relate to such Fund.
S. Appointment of Subcustodians

1. Notwithstanding any other provisions of this Agreement, all or
any of the monies or securities of the Funds may be held in
Custodian's own custody or in the custody of one or more other
banks or trust companies acting as subcustodians as may be
selected by Custodian. Any such subcustodian selected by the
Custodian must have the qualifications required for a
custodian under the 1940 Act, as amended. Custodian shall be
responsible to the applicable Fund for any loss, damage or
expense suffered or incurred by the Fund resulting from the
actions or omissions of any subcustodians selected and
appointed by Custodian (except subcustodians appointed at the
request of the Fund and as provided in Subsection 2 below) to
the same extent Custodian would be responsible to the Fund
under Section 5. of this Agreement if it committed the act or
omission itself. Upon request of any Fund, Custodian shall be
willing to contract with other subcustodians reasonably
acceptable to the Custodian for purposes of (i) effecting
third-party repurchase transactions with banks, brokers,
dealers, or other entities through the use of a common
custodian or subcustodian, or (ii) providing depository and
clearing agency services with respect to certain variable rate
demand note securities, or (iii) for other reasonable purposes
specified by such Fund; provided, however, that the Custodian
shall be responsible to the Fund for any loss, damage or
expense suffered or incurred by the Fund resulting from the

<PAGE>

actions or omissions of any such subcustodian only to
the same extent such subcustodian is responsible to
the Custodian. The Fund shall be entitled to review
the Custodian's contracts with any such subcustodians
appointed at its request. Custodian shall be
responsible to the applicable Fund for any loss,
damage or expense suffered or incurred by the Fund
resulting from the actions or omissions of any
Depository only to the same extent such Depository is
responsible to Custodian.

2. Notwithstanding any other provisions of this Agreement, each
Fund's foreign securities (as defined in Rule 17f-5(c)(1)
under the 1940 Act) and each Fund's cash or cash equivalents,
in amounts deemed by the Fund to be reasonably necessary to
effect Fund's foreign securities transactions, may be held in
the custody of one or more banks or trust companies acting as
subcustodians, and thereafter, pursuant to a written contract
or contracts as approved by such Fund's Board of Directors,
may be transferred to accounts maintained by any such
subcustodian with eligible foreign custodians, as defined in
Rule 17f-5(c)(2). Custodian shall be responsible to the Fund
for any loss, damage or expense suffered or incurred by the
Fund resulting from the actions or omissions of any foreign
subcustodian only to the same extent the foreign subcustodian
is liable to the domestic subcustodian with which the
Custodian contracts for foreign subcustody purposes.
T. Accounts and Records
Custodian will prepare and maintain, with the direction and as
interpreted by each Fund, its accountants and/or other
advisors, in complete, accurate and current form all accounts
and records (i) required to be maintained by such Fund with
respect to portfolio transactions under Rule 31a of the 1940
Act, (ii) required to be maintained as a basis for calculation
of such Fund's net asset value, and (iii) as otherwise agreed
upon between the parties. Custodian will preserve said records
in the manner and for the periods prescribed in the 1940 Act
or for such longer period as is agreed upon by the parties.
Custodian relies upon each Fund to furnish, in writing or its
electronic or digital equivalent, accurate and timely
information needed by Custodian to complete such Fund's
records and perform daily calculation of such Fund's net

<PAGE>

asset value. Custodian shall incur no liability and each Fund
shall indemnify and hold harmless Custodian from and against
any liability arising from any failure of such Fund to furnish
such information in a timely and accurate manner, even if such
Fund subsequently provides accurate but untimely information.
It shall be the responsibility of each Fund to furnish
Custodian with the declaration, record and payment dates and
amounts of any dividends or income and any other special
actions required concerning each of its securities when such
information is not readily available from generally accepted
securities industry services or publications.
U. Accounts and Records Property of the Funds
Custodian acknowledges that all of the accounts and records
maintained by Custodian pursuant to this Agreement are the
property of the applicable Fund, and will be made available to
such Fund for inspection or reproduction within a reasonable
period of time, upon demand. Custodian will assist any Fund's
independent auditors, or upon approval of the Fund, or upon
demand, any regulatory body, in any requested review of the
Fund's accounts and records but shall be reimbursed by the
Fund for all expenses and employee time invested in any such
review outside of routine and normal periodic reviews.
Upon receipt from any Fund of the necessary information or
instructions, Custodian will supply information from the books
and records it maintains for such Fund that the Fund needs for
tax returns, questionnaires, periodic reports to shareholders
and such other reports and information requests as such Fund
and Custodian shall agree upon from time to time.
V. Adoption of Procedures
Custodian and each Fund may from time to time adopt procedures
as they agree upon, and Custodian may conclusively assume that
no procedure approved or directed by a Fund or its accountants
or other advisors conflicts with or violates any requirements
of its prospectus, articles of incorporation, bylaws, any
applicable law, rule or regulation, or any order, decree or
agreement by which such Fund may be bound. Each Fund will be
responsible to notify Custodian of any changes in statutes,
regulations, rules, requirements or policies which might
necessitate changes in Custodian's responsibilities or
procedures.
W. Calculation of Net Asset Value

<PAGE>

Custodian will calculate each Fund's net asset value, in
accordance with such Fund's prospectus. Custodian will price
the securities and foreign currency holdings of each Fund for
which market quotations are available by the use of outside
services designated by such Fund which are normally used and
contracted with for this purpose; all other securities and
foreign currency holdings will be priced in accordance with
such Fund's instructions. Custodian will have no
responsibility for the accuracy of the prices quoted by these
outside services or for the information supplied by any Fund
or for acting upon such instructions.

<PAGE>

X. Advances
In the event Custodian or any subcustodian shall, in its sole
discretion, advance cash or securities for any purpose
(including but not limited to securities settlements, purchase
or sale of foreign exchange or foreign exchange contracts and
assumed settlement) for the benefit of any Fund or Portfolio
thereof, the advance shall be payable by the applicable Fund
or Portfolio on demand. Any such cash advance shall be subject
to an overdraft charge at the rate set forth in the
then-current fee schedule from the date advanced until the
date repaid. As security for each such advance, each Fund
hereby grants Custodian and such subcustodian a lien on and
security interest in all property at any time held for the
account of the Fund or applicable Portfolio, including without
limitation all assets acquired with the amount advanced.
Should the Fund fail to promptly repay the advance, the
Custodian and such subcustodian shall be entitled to utilize
available cash and to dispose of such Fund's or Portfolio's
assets pursuant to applicable law to the extent necessary to
obtain reimbursement of the amount advanced and any related
overdraft charges.
Y. Exercise of Rights; Tender Offers
Upon receipt of instructions, the Custodian shall: (a) deliver
warrants, puts, calls, rights or similar securities to the
issuer or trustee thereof, or to the agent of such issuer or
trustee, for the purpose of exercise or sale, provided that
the new securities, cash or other assets, if any, are to be
delivered to the Custodian; and (b) deposit securities upon
invitations for tenders thereof, provided that the
consideration for such securities is to be paid or delivered
to the Custodian or the tendered securities are to be returned
to the Custodian.
4. INSTRUCTIONS.
A. The term "instructions", as used herein, means written (including
telecopied or telexed) or oral instructions which Custodian
reasonably believes were given by a designated representative of any
Fund. Each Fund shall deliver to Custodian, prior to delivery of
any assets to Custodian and thereafter from time to time as changes
therein are necessary, written instructions naming one or more
designated representatives to give instructions in the name and on
behalf of such Fund, which instructions may be received and accepted
by Custodian as conclusive evidence of the authority of any

<PAGE>

designated representative to act for such Fund and may be
considered to be in full force and effect (and Custodian will
be fully protected in acting in reliance thereon) until
receipt by Custodian of notice to the contrary. Unless such
written instructions delegating authority to any person to
give instructions specifically limit such authority to
specific matters or require that the approval of anyone else
will first have been obtained, Custodian will be under no
obligation to inquire into the right of such person, acting
alone, to give any instructions whatsoever which Custodian may
receive from such person. If any Fund fails to provide
Custodian any such instructions naming designated
representatives, any instructions received by Custodian from a
person reasonably believed to be an appropriate representative
of such Fund shall constitute valid and proper instructions
hereunder. "Designated representatives" of a Fund may include
its employees and agents, including investment managers and
their employees.
B. No later than the next business day immediately following each
oral instruction, the applicable Fund will send Custodian
written confirmation of such oral instruction. At Custodian's
sole discretion, Custodian may record on tape, or otherwise,
any oral instruction whether given in person or via telephone,
each such recording identifying the date and the time of the
beginning and ending of such oral instruction.
C. If Custodian shall provide any Fund any direct access to any
computerized recordkeeping and reporting system used hereunder or if
Custodian and any Fund shall agree to utilize any electronic system
of communication, such Fund shall be fully responsible for any and
all consequences of the use or misuse of the terminal device,
passwords, access instructions and other means of access to such
system(s) which are utilized by, assigned to or otherwise made
available to the Fund. Each Fund agrees to implement and enforce
appropriate security policies and procedures to prevent unauthorized
or improper access to or use of such system(s). Custodian shall be
fully protected in acting hereunder upon any instructions,
communications, data or other information received by Custodian by
such means as fully and to the same effect as if delivered to
Custodian by written instrument signed by the requisite authorized
representative(s) of the applicable Fund. Each Fund shall indemnify
and hold Custodian harmless from and against any and all losses,

<PAGE>

damages, costs, charges, counsel fees, payments, expenses and
liability which may be suffered or incurred by Custodian as a
result of the use or misuse, whether authorized or
unauthorized, of any such system(s) by such Fund or by any
person who acquires access to such system(s) through the
terminal device, passwords, access instructions or other means
of access to such system(s) which are utilized by, assigned to
or otherwise made available to the Fund, except to the extent
attributable to any negligence or willful misconduct by
Custodian.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall at all times use reasonable care and due diligence
and act in good faith in performing its duties under this Agreement.
Custodian shall not be responsible for, and the applicable Fund
shall indemnify and hold Custodian harmless from and against, any
and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability which may be asserted against Custodian,
incurred by Custodian or for which Custodian may be held to be
liable, arising out of or attributable to:
1. All actions taken by Custodian pursuant to this Agreement or
any instructions provided to it hereunder, provided that
Custodian has acted in good faith and with due diligence and
reasonable care; and
2. The Fund's refusal or failure to comply with the
terms of this Agreement (including without limitation
the Fund's failure to pay or reimburse Custodian
under this indemnification provision), the Fund's
negligence or willful misconduct, or the failure of
any representation or warranty of the Fund hereunder
to be and remain true and correct in all respects at
all times.
B. Custodian may request and obtain at the expense of the applicable
Fund the advice and opinion of counsel for such Fund or of its own
counsel with respect to questions or matters of law, and it shall be
without liability to such Fund for any action taken or omitted by it
in good faith, in conformity with such advice or opinion. If
Custodian reasonably believes that it could not prudently act
according to the instructions of any Fund or the Fund's accountants
or counsel, it may in its discretion, with notice to the Fund, not
act according to such instructions.

<PAGE>

C. Custodian may rely upon the advice and statements of any Fund,
its accountants and officers or other authorized individuals,
and other persons believed by it in good faith to be expert in
matters upon which they are consulted, and Custodian shall not
be liable for any actions taken, in good faith, upon such
advice and statements.
D. If any Fund requests Custodian in any capacity to take any
action which involves the payment of money by Custodian, or
which might make it or its nominee liable for payment of
monies or in any other way, Custodian shall be indemnified and
held harmless by such Fund against any liability on account of
such action; provided, however, that nothing herein shall
obligate Custodian to take any such action except in its sole
discretion.
E. Custodian shall be protected in acting as custodian hereunder upon
any instructions, advice, notice, request, consent, certificate or
other instrument or paper appearing to it to be genuine and to have
been properly executed. Custodian shall be entitled to receive upon
request as conclusive proof of any fact or matter required to be
ascertained from any Fund hereunder a certificate signed by an
officer or designated representative of the Fund. Each Fund shall
also provide Custodian instructions with respect to any matter
concerning this Agreement requested by Custodian.
F. Custodian shall be under no duty or obligation to inquire
into, and shall not be liable for:
1. The validity of the issue of any securities purchased by or
for any Fund, the legality of the purchase of any
securities or foreign currency positions or evidence
of ownership required by any Fund to be received by
Custodian, or the propriety of the decision to
purchase or amount paid therefor;
2. The legality of the sale of any securities or foreign currency
positions by or for any Fund, or the propriety of the amount
for which the same are sold;
3. The legality of the issue or sale of any Fund Shares,
or the sufficiency of the amount to be received
therefor;
4. The legality of the repurchase or redemption of any
Fund Shares, or the propriety of the amount to be
paid therefor; or
5. The legality of the declaration of any dividend by
any Fund, or the legality of the issue of any Fund
Shares in payment of any stock dividend.

<PAGE>

G. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for the
payment of money to be received by it on behalf of the applicable
Fund until Custodian actually receives such money; provided,
however, that it shall advise such Fund promptly if it fails to
receive any such money in the ordinary course of business and shall
cooperate with the Fund toward the end that such money shall be
received.
H. Except as provided in Section 3.S., Custodian shall not be
responsible for loss occasioned by the acts, neglects,
defaults or insolvency of any broker, bank, trust company, or
any other person with whom Custodian may deal.
I. Custodian shall not be responsible or liable for the failure or
delay in performance of its obligations under this Agreement, or
those of any entity for which it is responsible hereunder, arising
out of or caused, directly or indirectly, by circumstances beyond
the affected entity's reasonable control, including, without
limitation: any interruption, loss or malfunction of any utility,
transportation, or communication service or computer (hardware or
software) services of third parties unrelated to Custodian;
inability to obtain labor, material, equipment or transportation, or
a delay in mails; governmental or exchange action, statute,
ordinance, rulings, regulations or direction; war, strike, riot,
emergency, civil disturbance, terrorism, vandalism, explosions,
labor disputes, freezes, floods, fires, tornados, acts of God or
public enemy, revolutions, or insurrection.
J. EXCEPT FOR VIOLATIONS OF SECTION 9, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE
TO ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY,
FOR CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES FOR ANY ACT OR
FAILURE TO ACT UNDER ANY PROVISION OF THIS AGREEMENT EVEN IF
ADVISED OF THIS POSSIBILITY THEREOF.
6. COMPENSATION. In consideration for its services hereunder as Custodian
and investment accounting and recordkeeping agent, each Fund will pay
to Custodian such compensation as shall be set forth in a separate fee
schedule to be agreed to by the Funds and Custodian from time to time.
A copy of the initial fee schedule is attached hereto and incorporated
herein by reference. Custodian shall also be entitled to receive, and

<PAGE>

each Fund agrees to pay to Custodian, on demand, reimbursement for
Custodian's cash disbursements and reasonable out-of-pocket costs and
expenses, including attorney's fees, incurred by Custodian in
connection with the performance of services hereunder. Custodian may
charge such compensation against monies held by it for the account of
the applicable Fund. Custodian will also be entitled to charge against
any monies held by it for the account of the applicable Fund the amount
of any loss, damage, liability, advance, overdraft or expense for which
it shall be entitled to reimbursement from such Fund, including but not
limited to fees and expenses due to Custodian for other services
provided to the Fund by Custodian. Custodian will be entitled to
reimbursement by the Fund for the losses, damages, liabilities,
advances, overdrafts and expenses of subcustodians only to the extent
that (i) Custodian would have been entitled to reimbursement hereunder
if it had incurred the same itself directly, and (ii) Custodian is
obligated to reimburse the subcustodian therefor.
7. TERM AND TERMINATION. The initial term of this Agreement shall be for a
period of one year. Thereafter, each Fund and Custodian may terminate the
same by notice in writing, delivered or mailed, postage prepaid, to the
other and received not less than ninety (90) days prior to the date upon
which such termination will take effect. Upon termination of this
Agreement, each applicable Fund will pay Custodian its fees and
compensation due hereunder and its reimbursable disbursements, costs and
expenses paid or incurred to such date and each applicable Fund shall
designate a successor custodian by notice in writing to Custodian by the
termination date. In the event no written order designating a successor
custodian has been delivered to Custodian on or before the date when such
termination becomes effective, then Custodian may, at its option, deliver
the securities, funds and properties of the Fund to a bank or trust
company at the selection of Custodian, and meeting the qualifications for
custodian set forth in the 1940 Act and having not less that Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided profits, as
shown by its last published report, or apply to a court of competent
jurisdiction for the appointment of a successor custodian or other proper
relief, or take any other lawful action under the circumstances; provided,
however, that the applicable Fund shall reimburse Custodian for its costs
and expenses, including reasonable attorney's fees, incurred in connection
therewith. Custodian will, upon termination of this Agreement and payment
of all sums due to Custodian from each applicable Fund hereunder or

<PAGE>

otherwise, deliver to the successor custodian so specified or
appointed, or as specified by the court, at Custodian's office, all
securities then held by Custodian hereunder, duly endorsed and in form
for transfer, and all funds and other properties of each applicable
Fund deposited with or held by Custodian hereunder, and Custodian will
co-operate in effecting changes in book-entries at all Depositories.
Upon delivery to a successor custodian or as specified by the court,
Custodian will have no further obligations or liabilities under this
Agreement. Thereafter such successor will be the successor custodian
under this Agreement and will be entitled to reasonable compensation
for its services. In the event that securities, funds and other
properties remain in the possession of the Custodian after the date of
termination hereof owing to failure of any Fund to appoint a successor
custodian, the Custodian shall be entitled to compensation as provided
in the then-current fee schedule hereunder for its services during such
period as the Custodian retains possession of such securities, funds
and other properties, and the provisions of this Agreement relating to
the duties and obligations of the Custodian shall remain in full force
and effect.
8. NOTICES. Notices, requests, instructions and other writings addressed to
any Fund at 11 Hanover Square, New York, NY 10005, or at such other
address as the Funds may have designated to Custodian in writing, will be
deemed to have been properly given to such Fund hereunder; and notices,
requests, instructions and other writings addressed to Custodian at its
offices at 127 West 10th Street, Kansas City, Missouri 64105, Attention:
Custody Department, or to such other address as it may have designated to
the Funds in writing, will be deemed to have been properly given to
Custodian hereunder.
9. CONFIDENTIALITY.
A. Each Fund shall preserve the confidentiality of the computerized
investment portfolio and custody recordkeeping and accounting
systems used by Custodian (the "Systems") and the tapes, books,
reference manuals, instructions, records, programs, documentation
and information of, and other materials relevant to, the Systems and
the business of Custodian ("Confidential Information"). Each Fund
agrees that it will not voluntarily disclose any such Confidential
Information to any other person other than its own employees who
reasonably have a need to know such information pursuant to this
Agreement. Each Fund shall return all such Confidential Information
to Custodian upon termination or expiration of this Agreement.

<PAGE>

B. Each Fund has been informed that the Systems are licensed for use by
Custodian from third parties ("Licensors"), and each Fund
acknowledges that Custodian and the Licensors have proprietary
rights in and to the Systems and all other Custodian or Licensor
programs, code, techniques, know-how, data bases, supporting
documentation, data formats, and procedures, including without
limitation any changes or modifications made at the request or
expense or both of any Fund (collectively, the "Protected
Information"). Each Fund acknowledges that the Protected
Information constitutes confidential material and trade secrets of
Custodian and the Licensors. Each Fund shall preserve the
confidentiality of the Protected Information, and each Fund hereby
acknowledges that any unauthorized use, misuse, disclosure or taking
of Protected Information, residing or existing internal or external
to a computer, computer system, or computer network, or the knowing
and unauthorized accessing or causing to be accessed of any
computer, computer system, or computer network, may be subject to
civil liabilities and criminal penalties under applicable law. Each
Fund shall so inform employees and agents who have access to the
Protected Information or to any computer equipment capable of
accessing the same. The Licensors are intended to be and shall be
third party beneficiaries of the Funds' obligations and undertakings
contained in this paragraph.
10. MULTIPLE FUNDS AND PORTFOLIOS.
A. Each Fund, and as to any Fund which is comprised of more than one
Portfolio, each Portfolio, shall be regarded for all purposes
hereunder as a separate party apart from each other. Unless the
context otherwise requires, with respect to every transaction
covered by this Agreement, every reference herein to a Fund shall be
deemed to relate solely to the particular Fund, and, if applicable,
Portfolio thereof to which such transaction relates. Under no
circumstances shall the rights, obligations or remedies with respect
to a particular Fund or Portfolio constitute a right, obligation or
remedy applicable to any other. The use of this single document to
memorialize the separate agreement of each Fund is understood to be
for clerical convenience only and shall not constitute any basis for
joining the Funds for any reason.
B. Additional Funds and Portfolios may be added to this
Agreement, provided that Custodian consents to such addition.
Rates or charges

<PAGE>

for each additional Fund or Portfolio shall be as agreed upon
by Custodian and the applicable Fund in writing. Additional
Funds may be added hereto by execution of instruments amending
Exhibit A to add such Funds thereto.

11. MISCELLANEOUS.
A. This Agreement shall be construed according to, and the rights
and liabilities of the parties hereto shall be governed by,
the laws of the State of Missouri, without reference to the
choice of laws principles thereof.
B. All terms and provisions of this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted
assigns.
C. The representations and warranties, the indemnifications
extended hereunder, and the provisions of Section 9. hereof
are intended to and shall continue after and survive the
expiration, termination or cancellation of this Agreement.
D. No provisions of the Agreement may be amended or modified in
any manner except by a written agreement properly authorized
and executed by each party hereto.
E. The failure of any party to insist upon the performance of any terms
or conditions of this Agreement or to enforce any rights resulting
from any breach of any of the terms or conditions of this Agreement,
including the payment of damages, shall not be construed as a
continuing or permanent waiver of any such terms, conditions, rights
or privileges, but the same shall continue and remain in full force
and effect as if no such forbearance or waiver had occurred. No
waiver, release or discharge of any party's rights hereunder shall
be effective unless contained in a written instrument signed by the
party sought to be charged.
F. The captions in the Agreement are included for convenience of
reference only, and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
G. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
H. If any provision of this Agreement shall be determined to be
invalid or unenforceable, the remaining provisions of this
Agreement shall not be affected thereby, and every provision
of this Agreement shall

<PAGE>

remain in full force and effect and shall remain enforceable
to the fullest extent permitted by applicable law.
I. This Agreement may not be assigned by any Fund or Custodian
without the prior written consent of the other.
J. Neither the execution nor performance of this Agreement shall
be deemed to create a partnership or joint venture by and
between Custodian and any Fund or Funds.
K. Except as specifically provided herein, this Agreement does
not in any way affect any other agreements entered into among
the parties hereto and any actions taken or omitted by either
party hereunder shall not affect any rights or obligations of
the other party hereunder. IN WITNESS WHEREOF, the parties
have caused this Agreement to be
executed by their respective duly authorized officers.

INVESTORS FIDUCIARY TRUST COMPANY

By:

Title:

EACH REGISTERED INVESTMENT
COMPANY LISTED ON EXHIBIT A HERETO

By:

Title:

<PAGE>

EXHIBIT A

LIST OF FUNDS

Bull & Bear Funds I, Inc.:
Bull & Bear U.S. and Overseas Fund

Bull & Bear Funds II, Inc.:
Bull & Bear Dollar Reserves

Bull & Bear Global Income Fund, Inc.

Bull & Bear U.S. Government Securities Fund, Inc.

Bull & Bear Special Equities Fund, Inc.

Bull & Bear Gold Investors Ltd.

Bull & Bear Municipal Income Fund, Inc.

Midas Fund, Inc.

Rockwood Fund, Inc.

<PAGE>

EXHIBIT B

INVESTORS FIDUCIARY TRUST COMPANY
AVAILABILITY SCHEDULE BY TRANSACTION TYPE

TRANSACTION DTC PHYSICAL FED
- --------------- ------------------------- -------------------------- -----------------------------
TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE
=============== ========================= ========================== =============================
<S> <C> <C> <C> <C> <C> <C>
Calls Puts As Received C or F* As Received C or F*
Maturities As Received C or F* Mat. Date C or F* Mat. Date F
Tender Reorgs. As Received C As Received C N/A
Dividends Paydate C Paydate C N/A
Floating Rate Paydate C Paydate C N/A
Int.
Floating Rate N/A As Rate C N/A
Int. (No Rate) Received
Mtg. Backed P&I Paydate C Paydate + 1 C Paydate F
Bus. Day
Fixed Rate Int. Paydate C Paydate C Paydate F
Euroclear N/A C Paydate C
=========================== ================= ============ ========================== ==========================
</TABLE>

Legend

C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based on how received.

[DESCRIPTION] Credit Facilities Agreement

FORM OF AGREEMENT

July 1, 1997

William J. Maynard, Vice President
The Bull & Bear Funds
11 Hanover Square
New York, New York 10005

Dear Mr. Maynard:

This is to advise you that, based on the information you have furnished to us
and our discussions to date, State Street Bank and Trust Company (the "Bank")
has established a $1 million committed, unsecured line of credit (the "Committed
Line of Credit") for the funds (or to the extent a series thereof is a borrower,
such series) listed in Appendix I (collectively the "Borrowers" and each, a
"Borrower"), effective July 1, 1997 (the "Effective Date"). When the Borrower is
a series of a fund listed in Appendix I, the term Borrower shall refer only to
such series.

Our willingness to provide the proposed financing is contingent upon and subject
to the terms and conditions in this letter (the "Agreement").

The proceeds of advances made under the Committed Line of Credit (a "Loan" and
collectively, the "Loans") may be used as follows:

1. To temporarily finance the purchase or sale of securities for prompt
delivery, if the Loan is to be repaid promptly in the ordinary course of
business upon completion of the purchase or sale transaction;

2. To finance the redemption of a Borrower's shares; or

3. To enable the Borrower to meet emergency expenses not reasonably
foreseeable on the Effective Date of this Agreement, but only if the
Borrower submits a written statement executed by a duly authorized officer
of the Borrower to the effect that the advance is necessitated by a change
in circumstances involving extreme hardship, not reasonably foreseeable on
the Effective Date of this Agreement.

In any event, a Loan must be repaid in full within 60 days from the date of an
advance.

The following are attached as exhibits:

<PAGE>

amended (the "1940 Act") and the Prospectus and Statement of Additional
Information of the Borrower, and (ii) use of the Loan in accordance with
this Agreement;

2. A Promissory Note in the form attached hereto as Exhibit II;

3. An Officer's Certificate in the form attached hereto as Exhibit III;

4. An opinion of counsel to the Borrowers in a form satisfactory to the
Bank, attached hereto as Exhibit IV; and

5. An Instruction and Confirmation Certificate in the form attached hereto
as Exhibit V addressed to Investors Fiduciary Trust Company ("IFTC") in its
capacity as custodian.

At the time the Agreement is executed, the Bank shall have received an executed
Promissory Note, an executed Officer's Certificate, an opinion of counsel in a
form satisfactory to the Bank, and an executed Instruction and Confirmation
Certificate.

All Loans under the Committed Line of Credit will be evidenced by a Promissory
Note in the form attached hereto as Exhibit II. The outstanding amount of the
Loan(s) set forth on the Bank's books and records shall be conclusive evidence
of the principal amount thereof owing and unpaid to the Bank, absent manifest
error. The failure to record, or any error in so recording, any such amount on
the Bank's books and records, or any other record maintained by the Bank, shall
not limit or otherwise affect the obligation of each Borrower hereunder or under
the Promissory Note to make payments of principal of and interest on the
Promissory Note when due.

Loans under the Committed Line of Credit will be available at the Overnight
Federal Funds rate as in effect from time to time, plus 0.75% per annum.
Requests for advances or decreases under the Committed Line of Credit will be
made on the Loan Advance/Paydown Request Form, attached as Exhibit I to this
Agreement and delivered to the Bank at the time of the request. At the time each
Loan is made, the Bank shall mail to the applicable Borrower a written
confirmation of the amount of such Loan and the interest rate initially
applicable thereto. The interest rate will be calculated on a 360 days basis for
actual days elapsed.

The Bank will honor requests for Loans under the Committed Line of Credit for a
364-day period commencing on the Effective Date.

As compensation for holding available this lending commitment, each Borrower
agrees to pay its pro-rata share of a 20 basis points per annum fee (0.20%) on
the unused portion of the commitment. The commitment fee will be calculated on a
360 days basis for actual days elapsed. The fee will be payable quarterly in
arrears with the first payment commencing on October 15, 1997 (for the period
from the Effective Date through the quarter ending September 30, 1997) and every
90 days thereafter during the term of the Committed Line of Credit.

Temporary or emergency borrowings in the aggregate will be limited to an amount
not greater than 20% of the value of the applicable Borrower's total net assets
(the "Leverage Covenant"), at the time the borrowing is made, or a lesser amount
to the extent provided in the Borrower's Prospectus and Statement of Additional
Information or the 1940 Act registration statement, as the case may be. The

<PAGE>

Leverage Covenant is calculated as follows: ((total assets less total
liabilities) plus aggregate bank borrowings)/aggregate bank borrowings. If at
any time a Borrower is in violation of the Leverage Covenant, that Borrower is
required within three (3) business days to repay Loans in an amount sufficient
to achieve compliance with the Leverage Covenant.

Each Borrower hereby promises to pay the principal and interest of each Loan
made to it and related fees on the day when due to the Bank at its address
stated above. Each Borrower hereby authorizes the Bank, if and to the extent a
payment is owed by that Borrower, to charge against the Borrower's deposit
account with the Bank any amount so due on the 15th business day of the
following month.

Each Borrower agrees that it shall not borrow from any other bank, issue
preferred stock or create, incur or assume or suffer to exist any lien
(statutory or otherwise), security interest, priority, conditional sale, pledge,
charge or other encumbrance or similar rights of others or any agreement to give
any of the foregoing liens, upon or with respect to any of its properties, owned
or acquired during such period, except as a result of its investment activities
as described in its then current Prospectus and Statement of Additional
Information or Registration Statement under the 1940 Act, and indebtedness in
favor of the Borrower's custodian consisting of extensions of credit from the
custodian in the ordinary course of business to cover securities trades or liens
in favor of the Borrower's custodian granted pursuant to the custody
agreement(s) in force.

Each Borrower agrees to furnish to the Bank (1) a statement of assets and
liabilities as of the end of each semi-annual period; (2) audited annual
statements; (3) the portfolio of investments as of the end of each semi-annual
period; and (4) proxy materials, reports to the shareholders and such other
information as the Bank shall reasonably request from time to time. Such audited
annual statements and semi-annual statements shall present fairly in all
material respects the financial position of the Borrower and conform with
generally accepted accounting principles.

Each Borrower agrees that it will not change its investment objective or
fundamental investment policies, as set forth in the Borrower's most recent
Statement of Additional Information or most recent Prospectus, without the
consent of the Bank. Each Borrower agrees that it will be a default hereunder if
the investment adviser set forth opposite the Borrower's name on Appendix I
ceases to be its investment adviser, or the Borrower changes its Custodian
without the consent of the Bank, which consent will not be unreasonably
withheld.

Notwithstanding any provision to the contrary contained herein, each Loan made
to a Borrower shall be made only with respect to that Borrower and shall be
repaid solely from the assets of that Borrower, or a series of that Borrower as
the case may be, and the Bank shall have no right of recourse or offset, or any
other right whatsoever, against the assets of any other series of the Borrower
or any other Borrower with respect to such Loan or any default in respect
thereof. A default by any Borrower shall not, by itself, constitute a default by
any other Borrower hereunder.

As an inducement to the Bank to extend the Committed Line of Credit, and at any
time Loans are outstanding to a Borrower or at any time a Loan Request is made
by that Borrower, that Borrower represents and warrants to the Bank as to itself
and not as to any other Borrower that:

1. The Borrower is, or is a series of a corporation, duly organized, validly
existing and in good standing under the laws of the state of its
organization and has all corporate powers and all

<PAGE>

governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted;

2. Neither the Bank nor any affiliate of the Bank individually or in the
aggregate owns, controls or holds with the power to vote, 5% or more of the
outstanding shares of the Borrower or any affiliate of the Borrower, and
neither the Borrower nor any affiliate of the Borrower, directly or
indirectly, individually or in the aggregate, owns, controls or holds with
the power to vote, 5% or more of the outstanding voting securities of the
Bank or any affiliate of the Bank known to the Borrower;

3. Neither the Borrower nor any affiliate of the Borrower, directly or
indirectly, individually or in the aggregate, controls or, to the best
knowledge of the Borrower after due inquiry, is controlled by or under
common control of the Bank or any affiliate of the Bank known to the
Borrower. Furthermore, no officer, director, trustee or employee of the
Borrower or any affiliate of the Borrower is an affiliated person of the
Bank or of any affiliate of the Bank known to the Borrower;

4. The Borrower has no subsidiaries;

5. The Borrower is not a member of an ERISA group and has no liability in
respect of any benefit arrangement, plan or multi-employer plan subject to
ERISA;

6. The Borrower qualifies as a "regulated investment company" within the
meaning of the Internal Revenue Code, and as such, because it intends to
timely distribute all its income (including capital gains) to its
shareholders, its income will not be subject to tax at the trust level under
the Internal Revenue Code. The Borrower has filed all United States Federal
income tax returns and all other material tax returns which are required to
be filed by it and has paid all taxes due pursuant to such returns or
pursuant to any assessment received by the Borrower. The charges, accruals
and reserves on the Books of the Borrower in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate;

7. All information heretofore furnished by the Borrower to the Bank for
purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by the
Borrower to the Bank will be, true and accurate in all material respects on
the date as of which such information is stated or certified. The Borrower
has disclosed to the Bank in writing any and all facts which, to the best of
the Borrower's knowledge after due inquiry, materially and adversely affect
or may affect (to the extent the Borrower can now reasonably foresee), the
business, operations or financial condition of the Borrower or the ability
of the Borrower to perform its obligations under this Agreement or the Note;

8. The execution, delivery and performance of all of the agreements and
instruments in connection with the Committed Line of Credit are within the
Borrower's power and authority and have been authorized by all necessary
proceedings and will not contravene any provision of the Borrower's
organizational documents, by laws, then-current Prospectus and Statement of
Additional Information (or 1940 Act registration statement, as the case may
be) or any agreement or undertaking binding upon the Borrower;

<PAGE>

9. There is no litigation, proceeding or investigation pending, or to the
knowledge of the Borrower, threatened against the Borrower, which would have
a material adverse effect on the Borrower's ability to carry out its
obligations hereunder or under the Note;

10. The Borrower has statutory authority to enter into this Agreement and
any loan requests hereunder will not result in an aggregate of all loans
outstanding which exceed the limits permitted under the Borrower's
then-current Prospectus and Statement of Additional Information (or 1940
Act registration statement, as the case may be), the 1940 Act, or any
applicable rule, regulation, statute or Leverage Covenant, as defined
herein;

11. The Borrower is a registered open-end management investment company
under the 1940 Act and the shares of common stock of each Borrower have
been registered under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and applicable state
securities or so-called "Blue Sky" laws; and

12. The Borrower is in compliance in all material respects with applicable
law, including the 1940 Act and Federal Reserve Regulation U.

Upon the occurrence of any of the following events, a Borrower shall be deemed
to be in default under this Agreement:

1. Failure of a Borrower to make payment when due of any Loan; or available
cash in the deposit account is insufficient to repay any Loan due the Bank
by the Borrower;

2. Breach or failure to perform by the Borrower of any terms or conditions
as set forth in this Agreement, or any obligation of the Borrower to the
Bank;

3. If any representation, statement or warranty made or furnished in any
manner to the Bank by the Borrower in connection with this Agreement or the
Loan was false in any material respect when made or furnished;

4. A material adverse change in the business, assets, financial condition or
prospects for that particular Borrower (but no such adverse change shall be
deemed to have occurred as a result of a decline in net assets resulting
from redemptions by shareholders or investors or as a result of a decline in
the value of the securities held by the Borrower), as reasonably determined
by the Bank, has occurred;

5. A material adverse change, as reasonably determined by the Bank shall
have occurred in the facts or information disclosed to the Bank or otherwise
relied on by the Bank in considering requests hereunder;

6. If, by reason of any default by the Borrower, any obligation of the
Borrower to any other person or entity for money borrowed or on account of
any bond, note or debenture is accelerated prior to maturity;

<PAGE>

maker, surety, or guarantor of the Borrower, or entry of any final judgment
or order against them for the payment of money in excess of $500,000 shall
be rendered against the Borrower and such judgment or order shall remain
unsatisfied, undischarged, or unstayed for a period of 10 days; or

8. Upon the issuance of or notice of any tax levy, attachment, by trustee
process or otherwise, levy of execution or other process issued against the
Borrower.

Upon the occurrence of any of the events specified in the preceding section
hereof, or at any time thereafter, the Bank may, at its option, terminate this
Agreement and declare any Loans made to such Borrower under the Committed Line
of Credit to be immediately due and payable. The Bank shall thereafter have
available to it all other rights and remedies hereunder, or under any other
agreement or paper executed by the Borrower, or available to the Bank under
applicable law. Furthermore, the Borrower authorizes IFTC in its capacity as
Custodian to the Borrower, in accordance with the Instruction and Confirmation
Certificate affixed hereto as Exhibit V, to dispose of the Borrower's assets as
selected by the Borrower's investment adviser to the extent necessary to repay
all amounts due to the Bank.

Any Borrower may terminate the Committed Line of Credit by giving five (5) days
irrevocable prior written notice to the Bank and repaying in full all amounts
then outstanding to it under the Committed Line of Credit or the Note.

The Bank agrees that prior to assigning to any other lender (but not the Federal
Reserve Bank) any of its rights and obligations under the Committed Line of
Credit or the Note, or granting to any other lender any participation in any of
such rights and obligations, the Bank will obtain the Borrowers' prior written
consent, which consent shall not unreasonably be withheld.

Copies of all notices and confirmations hereunder and under the Note shall be
sent to the Bank at its address above, Attention: Edward A. Siegel, Assistant
Vice President, and to a Borrower at its address on the signature page hereto,
to the attention of the person signing on behalf of that Borrower, or to such
other address or person for notice as the parties shall have last furnished in
writing to the person giving the notice.

Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand, overnight courier or facsimile
to a responsible officer of the party to which it is directed, at the time of
receipt thereof by such officer or the sending of such facsimile and (ii) if
sent by registered or certified first-class mail, postage prepaid, on the third
business day following the mailing thereof.

This Agreement shall take effect as a sealed instrument and shall be governed by
the laws (other than the conflict of law rules) of the Commonwealth of
Massachusetts. The Agreement and the Note constitute the entire understanding
between the Borrowers and the Bank on this subject and supersede all prior
discussions. If the foregoing satisfactorily sets forth the terms and conditions
of the Committed Line of Credit, please execute and return the enclosed copy of
this Agreement together with the enclosed documents and the opinion of your
outside counsel concerning this transaction.

Sincerely,

STATE STREET BANK AND TRUST COMPANY

By: ____________________________
Name:
Title:

<PAGE>

ACCEPTED:

Bull & Bear Funds I, Inc. on behalf of:
Bull & Bear U.S. and Overseas Fund

Rockwood Fund, Inc.

By: __________________________
Name:
Title:

Address:

11 Hanover Square
New York, New York 10005

<PAGE>

APPENDIX I

BORROWER Investment Adviser
Bull & Bear Funds I, Inc. on behalf of: Bull & Bear Advisers, Inc.
Bull & Bear U.S. and Overseas Fund

Rockwood Fund, Inc. Aspen Securities and Advisory, Inc.
- ------------------------- -----------------------------------

<PAGE>

EXHIBIT I

LOAN ADVANCE/PAYDOWN
REQUEST FORM

DATE:
----------------------------------------------

TO: STATE STREET BANK AND TRUST COMPANY
----------------------------------------------

ATTN: Chuck Reid/Ned Siegel
facsimile: (617) 537-2663
----------------------------------------------

FROM: [insert borrower]
----------------------------------------------

ON BEHALF OF: [insert fund name, if a series]
----------------------------------------------

SUBJECT:

In connection with the Agreement dated July 1, 1997 with State Street Bank and
Trust Company, please increase or reduce the outstanding balance as indicated
below. The Loan should be recorded on the books of the Borrower to the Bank and
interest payable to the Bank should be recorded at the agreed upon rate.

Increase/ Cumulative Total Assets
(Decrease) Balance
Date the Loan by Outstanding

$ $ $
- --------------- ------------- ---------------- -----------

Further, the Borrower hereby represents and warrants that:

1. Proceeds from the advance shall be limited to conform with the
usage specified in the Agreement, and

2. The Borrower is in compliance with all the terms and conditions in the
Agreement.

By:
Name:
Title:
Date:
----------------------------------------------

<PAGE>

EXHIBIT II

PROMISSORY NOTE

$1,000,000 July 1, 1997
Boston, Massachusetts

For value received, each of the undersigned, (each herein called
"Borrower"), severally and not jointly hereby promise(s) to pay to the order of
State Street Bank and Trust Company (herein called "Bank") at the principal
office of Bank at 225 Franklin Street, Boston, Massachusetts 02110, or such
other place as the holder hereof shall designate

$1 MILLION DOLLARS

or, if less, the aggregate principal amount of all loans made by the Bank to the
applicable Borrower pursuant to the Agreement dated July 1, 1997 as such
agreement may be amended, extended or replaced, as evidenced on the books and
records of the Bank, together with interest on each loan at the rate or rates
per annum set forth in the Agreement.

Interest on the unpaid balance of each loan shall be payable monthly in
arrears, at the rate per annum set forth in the Agreement. Interest shall be
calculated on the basis of actual days elapsed and a 360-day year. Overdue
payments of principal (whether at stated maturity, by acceleration or otherwise)
shall bear interest, payable on demand, at a fluctuating interest rate per annum
equal to 2% (two percent), above the Prime Rate in effect from time to time.
"Prime Rate" shall mean the rate of interest announced by the Bank in Boston,
Massachusetts from time to time as its "Prime Rate".

All loans hereunder and all payments on account of principal and interest
hereof shall be recorded on the books and records of the Bank. The entries on
the books and records of the Bank (including any appearing on this Note) shall
be prima facie evidence of amounts outstanding hereunder, absent manifest error.

The obligations of each Borrower under this Note are several and not joint.
The principal amount of the Committed Line of Credit made for use by a
particular Borrower and interest thereon shall be paid or repaid solely from the
assets of such Borrower (or series thereof, if the borrowing is made on behalf
of a series of the Borrower), and the Bank shall have no right of recourse or
offset, or any other right whatsoever, against the assets of any other series of
the Borrower or any other Borrower. A default by any particular Borrower shall
not, by itself, constitute a default by any other Borrower hereunder.

Each Borrower hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement hereof and consents that this Note may be
extended from time to time and that no extension or other indulgence and no
substitution, release or surrender of collateral shall discharge or otherwise
affect the liability of the Borrower. No delay or omission on the part of the
Bank in exercising any right hereunder shall operate as a waiver of such right
or of any other right hereunder, and a waiver of any such right

<PAGE>

on any one occasion shall not be construed as a bar to or waiver of any such
right on any future occasion. "Holder" means the payee or any endorsee of this
Note who is in possession of it.

This Note shall take effect as a sealed instrument and shall be governed by
the laws (other than the conflict of law rules) of The Commonwealth of
Massachusetts.

Bull & Bear Funds I, Inc. on behalf of:
Bull & Bear U.S. and Overseas Fund

Rockwood Fund, Inc.

By:_______________________
Name:
Title:
Date:

<PAGE>

EXHIBIT III

OFFICER'S CERTIFICATE

I, _______________________ , do hereby certify that I am the duly elected
Secretary of ____________________________________________ , a Maryland
corporation (the "Corporation"), and that as such officer, I am authorized to
execute and deliver this Certificate on behalf of the Trust.
In that capacity I do hereby further certify as follows:

1. Attached hereto as Exhibit A is full, true and correct copy of the
Certificate of Incorporation of the Corporation, and said Certificate of
Incorporation remains in full force and effect on the date hereof;

2. Attached hereto as Exhibit B is a full, true and correct copy of the By-Laws
of the Corporation, and said By-Laws remain in full force and effect as of the
date hereof;

3. Attached hereto as Exhibit C are true, correct and complete copies of the
votes adopted by the Board of the Corporation on , 199_ , authorizing the
Borrower to borrow from time to time in accordance with the terms described in
this Agreement, which resolutions are in full force and effect and have not been
amended, modified, revoked or rescinded as of the date hereof;

4. Attached hereto as Exhibit D are full, true and correct copies of the current
prospectus and statement of additional information for the Corporation;

5. Attached hereto as Exhibit E and F are full, true and correct copies of the
Annual Report to --------------- Shareholders dated , 199_ , and Semi-Annual
Report to Shareholders dated , 199_ , and

6. The following are the duly elected, qualified and acting officers of the
Corporation, holding the offices set forth below their respective names, and the
signature of each such officer (where set forth hereon) is such officer's true
and genuine signature:

------------------------------

IN WITNESS WHEREOF, I have hereunto set forth my hand this ____ day of
__________, 199__

Name:___________________________

The undersigned being the _____________________ of the Corporation, DOES HEREBY
CERTIFY THAT _________________________ is duly elected, qualified and acting
Secretary of the Corporation and that the signature set forth above is his/her
true and genuine signature.

IN WITNESS WHEREOF, I have hereunto set forth my hand this _____ day of
__________, 199__.

<PAGE>

EXHIBIT IV

LEGAL OPINION OF COUNSEL

<PAGE>

EXHIBIT V

INSTRUCTION AND CONFIRMATION CERTIFICATE

BORROWER'S LETTERHEAD

July 1, 1997

TO: Investors Fiduciary Trust Company
127 West Tenth Street
Kansas City, MO 64105

RE: Bull & Bear Funds I, Inc. on behalf of:
Bull & Bear U.S. and Overseas Fund

Rockwood Fund, Inc.

Ladies and Gentlemen:

This letter serves as confirmation that the mutual funds listed in Appendix I
(each, a "Borrower") are authorized under the Committed Line of Credit to borrow
in the aggregate up to $1 million from State Street Bank and Trust Company, as
lender (the "Bank").

Pursuant to the terms contained in an Agreement dated July 1, 1997, each Loan
made to the Borrower (or series thereof, as applicable) shall be made only with
respect to a specific Borrower and shall be repaid solely from the assets of
that Borrower (or series thereof, if the Borrower is borrowing on behalf of a
particular series), and the Bank shall have no right of recourse or offset, or
any other right whatsoever, against the assets of any other Borrower with
respect to such Loan or any default in respect thereof.

Investors Fiduciary Trust Company ("IFTC"), in its capacity as custodian of the
Borrower (the "Custodian"), under the Custodian Contract (s) between the
Borrower and IFTC, dated __________________________ , 19___ , is hereby
authorized and directed by the Borrower to dispose of the Borrower's assets as
selected by the Borrower's investment adviser to the extent necessary to repay
all amounts due to the Bank to the extent that the Loans have not been paid when
due or if a default occurs as defined in the Agreement dated July 1, 1997.

The Custodian is hereby directed to act on any written instructions you receive
from the Bank with respect to the disposal of the Borrower's assets to
accomplish the foregoing. These instructions may not be amended or terminated
without the prior written consent of the Bank.

<PAGE>

IN WITNESS WHEREOF, the undersigned has duly caused these instructions to be
executed on this _____ day of ________, 19___.

Bull & Bear Funds I, Inc. on behalf of:
Bull & Bear U.S. and Overseas Fund

Rockwood Fund, Inc.

By: ___________________________
Name:
Title:

IFTC, by signing below, acknowledges receipt of, and hereby agrees to accept
instructions in accordance with the foregoing confirmation.

INVESTORS FIDUCIARY TRUST COMPANY

By: ____________________________
Name:
Title:

<PAGE>

EXECUTION COPY OF PROMISSORY NOTE

<PAGE>

PROMISSORY NOTE

$1,000,000 July 1, 1997
Boston, Massachusetts

$1 MILLION DOLLARS

The obligations of each Borrower under this Note are several and not joint.
The principal amount of the Committed Line of Credit made for use by a
particular Borrower and interest thereon shall be paid or repaid solely from the
assets of such Borrower, and the Bank shall have no right of recourse or offset,
or any other right whatsoever, against the assets of any other Borrower. A
default by any particular Borrower shall not, by itself, constitute a default by
any other Borrower hereunder.

<PAGE>

This Note shall take effect as a sealed instrument and shall be governed by
the laws (other than the conflict of law rules) of The Commonwealth of
Massachusetts.

Bull & Bear Funds I, Inc. on behalf of:
Bull & Bear U.S. and Overseas Fund

Rockwood Fund, Inc.

By : _______________________
Name:
Title:
Date:

<PAGE>

EXECUTION COPY OF OFFICER'S CERTIFICATE

<PAGE>

OFFICER'S CERTIFICATE

2. Attached hereto as Exhibit B is a full, true and correct copy of the By-Laws
of the Corporation, and said By-Laws remain in full force and effect as of the
date hereof;

4. Attached hereto as Exhibit D are full, true and correct copies of the current
prospectus and statement of additional information for the Corporation;

5. Attached hereto as Exhibit E and F are full, true and correct copies of the
Annual Report to Shareholders dated , 199_ , and Semi-Annual Report to
Shareholders dated 199_ , and

------------------------------

IN WITNESS WHEREOF, I have hereunto set forth my hand this ____ day of
__________, 199__

Name:___________________________

IN WITNESS WHEREOF, I have hereunto set forth my hand this _____ day of
__________, 199__.

<PAGE>

EXECUTION COPY OF INSTRUCTION AND CONFIRMATION CERTIFICATE

(MUST BE ON BORROWER'S LETTERHEAD)

<PAGE>

FORM OF AGREEMENT

July 1, 1997

William J. Maynard, Vice President
The Bull & Bear Funds
11 Hanover Square
New York, New York 10005

Dear Mr. Maynard:

This is to advise you that, based on the information you have furnished to us
and our discussions to date, State Street Bank and Trust Company (the "Bank")
has established a $15 million uncommitted, unsecured line of credit (the
"Uncommitted Line of Credit") for the funds (or to the extent a series thereof
is the borrower, such series) listed in Appendix I (collectively the "Borrowers"
and each, a "Borrower"), effective July 1, 1997 (the "Effective Date"). When the
Borrower is a series of a fund listed in Appendix I, the term "Borrower" shall
refer only to such series.

Our willingness to provide the proposed financing is contingent upon and subject
to the terms and conditions in this letter (the "Agreement"). This facility
carries no legal obligation on the part of the Bank to lend any amount of money
to any Borrower at any point in time, and the Borrowers will not be paying a
commitment fee for this facility.

The proceeds of advances made under the Uncommitted Line of Credit (a "Loan" and
collectively, the "Loans") may be used as follows:

2. To finance the redemption of a Borrower's shares; or

In any event, a Loan must be repaid in full within 60 days from the date of an
advance.

<PAGE>

The following are attached as exhibits:

1. A Loan request in the form attached hereto as Exhibit I (the "Loan
Advance/Paydown Request Form") stating the principal amount of the requested
Loan and warranting, at the time of borrowing, (i) compliance by such
Borrower with the Investment Company Act of 1940, as amended (the "1940
Act") and the Prospectus and Statement of Additional Information of the
Borrower, and (ii) use of the Loan in accordance with this Agreement;

2. A Promissory Note in the form attached hereto as Exhibit II;

3. An Officer's Certificate in the form attached hereto as Exhibit III;

4. An opinion of counsel to the Borrowers in a form satisfactory to the
Bank, attached hereto as Exhibit IV; and

5. An Instruction and Confirmation Certificate in the form attached hereto as
Exhibit V addressed to Investors Fiduciary Trust Company ("IFTC") in its
capacity as custodian.

All Loans made under the Uncommitted Line of Credit will be evidenced by a
Promissory Note in the form attached hereto as Exhibit II. The outstanding
amount of the Loan(s) set forth on the Bank's books and records shall be
conclusive evidence of the principal amount thereof owing and unpaid to the
Bank, absent manifest error. The failure to record, or any error in so
recording, any such amount on the Bank's books and records, or any other record
maintained by the Bank, shall not limit or otherwise affect the obligation of
each Borrower hereunder or under the Promissory Note to make payments of
principal of and interest on the Promissory Note when due.

At the time each Loan is made, a Borrower and the Bank shall agree as to the
principal amount of each Loan, the interest rate applicable to each Loan prior
to maturity, and the term thereof, provided that no Loan shall have a maturity
date more than 60 days from the date such Loan is made. Loans made under the
Uncommitted Line of Credit will be available at the Overnight Federal Funds rate
as in effect from time to time, plus a spread to be determined at the time of
borrowing. Interest on the unpaid principal amount of each Loan shall be payable
at Maturity on the same day as the principal amount of such Loan is paid or, if
the Loan is paid prior to Maturity, on the 15th business day of the following
month at the rate determined at the time of borrowing. Interest shall be
calculated on the basis of actual days elapsed for a 360-day year. Requests for
advances or decreases under the Uncommitted Line of Credit will be made on the
Loan Advance/Paydown Request Form, attached as Exhibit I to this Agreement and
delivered to the Bank at the time of the request. At the time each Loan is made,
the Bank shall mail to the applicable Borrower a written confirmation of the
amount of such Loan and the interest rate initially applicable thereto.

The Bank will honor requests for Loans under the Uncommitted Line of Credit for
a 364-day period commencing on the Effective Date.

<PAGE>

If at any time a Borrower is in violation of the Leverage Covenant, that
Borrower is required within three (3) business days to repay Loans in an amount
sufficient to achieve compliance with the Leverage Covenant.

Notwithstanding any provision to the contrary contained herein, each Loan made
to a Borrower shall be made only with respect to that Borrower and shall be
repaid solely from the assets of that Borrower, or a series of that Borrower as
the case may be, and the Bank shall have no right of recourse or offset, or any
other right whatsoever, against the assets of any other series of the
Borrower or any other Borrower with respect to such Loan or any default in
respect thereof. A default by any Borrower shall not, by itself, constitute a
default by any other Borrower hereunder. A default by a Borrower under the
Uncommitted Line of Credit shall constitute a default by that Borrower and only
that Borrower under the Leveraging Line of Credit. Similarly, a default by a

<PAGE>

Borrower under the Leveraging Line of Credit shall also constitute a default by
that Borrower and only that Borrower under the Uncommitted Line of Credit.

As an inducement to the Bank to extend the Uncommitted Line of Credit, and at
any time Loans are outstanding to a Borrower or at any time a Loan Request is
made by that Borrower, that Borrower represents and warrants to the Bank as to
itself and not as to any other Borrower that:

1. The Borrower is, or is a series of a corporation, duly organized, validly
existing and in good standing under the laws of the state of its
organization and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as
now conducted;

4. The Borrower has no subsidiaries;

5. The Borrower is not a member of an ERISA group and has no liability in
respect of any benefit arrangement, plan or multi-employer plan subject to
ERISA;

<PAGE>

8. The execution, delivery and performance of all of the agreements and
instruments in connection with the Uncommitted Line of Credit are within the
Borrower's power and authority and have been authorized by all necessary
proceedings and will not contravene any provision of the Borrower's
organizational documents, by laws, then-current Prospectus and Statement of
Additional Information (or 1940 Act registration statement, as the case may
be) or any agreement or undertaking binding upon the Borrower;

11. The Borrower is a registered management investment company under the
1940 Act and the shares of common stock of each Borrower have been
registered under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and applicable state securities or
so-called "Blue Sky" laws; and

12. The Borrower is in compliance in all material respects with applicable
law, including the 1940 Act and Federal Reserve Regulation U.

Upon the occurrence of any of the following events, a Borrower shall be deemed
to be in default under this Agreement:

1. Failure of a Borrower to make payment when due of any Loan; or available
cash in the deposit account is insufficient to repay any Loan due the Bank
by the Borrower;

2. Breach or failure to perform by the Borrower of any terms or conditions
as set forth in this Agreement, or any obligation of the Borrower to the
Bank;

<PAGE>

7. Upon termination of existence, insolvency, business failure, appointment
of a receiver of any part of the property of the Borrower, assignment for
the benefit of creditors by, the calling of a meeting of creditors, or the
commencement of any voluntary or involuntary proceeding under any bankruptcy
or insolvency laws by or against the Borrower or any co-maker, accommodation
maker, surety, or guarantor of the Borrower, or entry of any final judgment
or order against them for the payment of money in excess of $500,000 shall
be rendered against the Borrower and such judgment or order shall remain
unsatisfied, undischarged, or unstayed for a period of 10 days; or

8. Upon the issuance of or notice of any tax levy, attachment, by trustee
process or otherwise, levy of execution or other process issued against the
Borrower.

Upon the occurrence of any of the events specified in the preceding section
hereof, or at any time thereafter, the Bank may, at its option, terminate this
Agreement and declare any Loans made to such Borrower under the Uncommitted Line
of Credit to be immediately due and payable. The Bank shall thereafter have
available to it all other rights and remedies hereunder, or under any other
agreement or paper executed by the Borrower, or available to the Bank under
applicable law. Furthermore, the Borrower authorizes IFTC in its capacity as
Custodian to the Borrower, in accordance with the Instruction and Confirmation
Certificate affixed hereto as Exhibit V, to dispose of the Borrower's assets as
selected by the Borrower's investment adviser to the extent necessary to repay
all amounts due to the Bank.

Any Borrower may terminate the Uncommitted Line of Credit by giving five (5)
days irrevocable prior written notice to the Bank and repaying in full all
amounts then outstanding to it under the Uncommitted Line of Credit or the Note.

The Bank agrees that prior to assigning to any other lender (but not the Federal
Reserve Bank) any of its rights and obligations under the Uncommitted Line of
Credit or the Note, or granting to any other lender any participation in any of
such rights and obligations, the Bank will obtain the Borrowers' prior written
consent, which consent shall not unreasonably be withheld.

<PAGE>

This Agreement shall take effect as a sealed instrument and shall be governed by
the laws (other than the conflict of law rules) of the Commonwealth of
Massachusetts. The Agreement and the Note constitute the entire understanding
between the Borrowers and the Bank on this subject and supersede all prior
discussions. If the foregoing satisfactorily sets forth the terms and conditions
of the Uncommitted Line of Credit, please execute and return the enclosed copy
of this Agreement together with the enclosed documents and the opinion of your
outside counsel concerning this transaction.

Sincerely,

STATE STREET BANK AND TRUST COMPANY

By: ____________________________
Name:
Title:

ACCEPTED:

Bull & Bear Funds I, Inc. on behalf of:
Bull & Bear U.S. and Overseas Fund
Bull & Bear Funds II, Inc. on behalf of:
Bull & Bear Dollar Reserves
Rockwood Fund, Inc.
Midas Fund, Inc.
Bull & Bear Gold Investors Ltd.
Bull & Bear Special Equities Fund, Inc.
Bull & Bear U.S. Government Securities Fund, Inc.
Bull & Bear Municipal Income Fund, Inc.
Bull & Bear Global Income Fund, Inc.

By: __________________________
Name:
Title:

Address:

11 Hanover Square
New York, New York 10005

<PAGE>

APPENDIX I

BORROWER Investment Adviser
- -------------------------------------- ---------------------------------
Bull & Bear Funds I, Inc. on behalf of:
Bull & Bear U.S. and Overseas Fund Bull & Bear Advisers, Inc.
Bull & Bear Funds II, Inc. on behalf of:
Bull & Bear Dollar Reserves Bull & Bear Advisers, Inc.
Rockwood Fund, Inc. Aspen Securities and Advisory, Inc.
Midas Fund, Inc. Midas Management Corporation
Bull & Bear Gold Investors Ltd. Midas Management Corporation
Bull & Bear Special Equities Fund, Inc. Bull & Bear Advisers, Inc.
Bull & Bear U.S. Government Securities Fund, Inc. Bull & Bear Advisers, Inc.
Bull & Bear Municipal Income Fund, Inc. Bull & Bear Advisers, Inc.
Bull & Bear Global Income Fund, Inc. Bull & Bear Advisers, Inc.
- ---------------------------------------- -----------------------------

<PAGE>

EXHIBIT I

LOAN ADVANCE/PAYDOWN
REQUEST FORM

DATE:
---------------------------------------------

TO: STATE STREET BANK AND TRUST COMPANY
----------------------------------------------

ATTN: Chuck Reid/Ned Siegel
facsimile: (617) 537-2663
----------------------------------------------

FROM: [insert borrower]
----------------------------------------------

ON BEHALF OF: [insert fund name, if a series]
----------------------------------------------

SUBJECT:

Increase/ Cumulative Total Assets
(Decrease) Balance
Date the Loan by Outstanding

$ $ $
- ----------- ------------ ------------- --------------

Further, the Borrower hereby represents and warrants that:

1. Proceeds from the advance shall be limited to conform with the
usage specified in the Agreement, and

2. The Borrower is in compliance with all the terms and conditions in the
Agreement.

By:
Name:
Title:
Date:
---------------------------------------------------

<PAGE>

EXHIBIT II

PROMISSORY NOTE

$15,000,000 July 1, 1997
Boston, Massachusetts

$15 MILLION DOLLARS

The obligations of each Borrower under this Note are several and not joint.
The principal amount of the Uncommitted Line of Credit made for use by a
particular Borrower and interest thereon shall be paid or repaid solely from the
assets of such Borrower (or series thereof, if the borrowing is made on behalf
of a series of the Borrower), and the Bank shall have no right of recourse or
offset, or any other right whatsoever, against the assets of any other series of
the Borrower or any other Borrower. A default by any particular Borrower shall
not, by itself, constitute a default by any other Borrower hereunder.

<PAGE>

This Note shall take effect as a sealed instrument and shall be governed by
the laws (other than the conflict of law rules) of The Commonwealth of
Massachusetts.

By: _______________________
Name:
Title:
Date:

<PAGE>

EXHIBIT III

OFFICER'S CERTIFICATE

2. Attached hereto as Exhibit B is a full, true and correct copy of the By-Laws
of the Corporation, and said By-Laws remain in full force and effect as of the
date hereof;

4. Attached hereto as Exhibit D are full, true and correct copies of the current
prospectus and statement of additional information for the Corporation;

5. Attached hereto as Exhibit E and F are full, true and correct copies of the
Annual Report to Shareholders dated , 199_ , and Semi-Annual Report to
Shareholders dated , 199_ , and

------------------------------

IN WITNESS WHEREOF, I have hereunto set forth my hand this ____ day of
__________, 199__

Name:___________________________

IN WITNESS WHEREOF, I have hereunto set forth my hand this _____ day of
__________, 199__.

<PAGE>

EXHIBIT IV

LEGAL OPINION OF COUNSEL

<PAGE>

EXHIBIT V

INSTRUCTION AND CONFIRMATION CERTIFICATE

BORROWER'S LETTERHEAD

July 1, 1997

TO: Investors Fiduciary Trust Company
127 West Tenth Street
Kansas City, MO 64105

RE: 1. Bull & Bear Funds I, Inc. on behalf of:
Bull & Bear U.S. and Overseas Fund
2. Bull & Bear Funds II, Inc. on behalf of:
Bull & Bear Dollar Reserves
3. Rockwood Fund, Inc.
4. Midas Fund, Inc.
5. Bull & Bear Gold Investors Ltd.
6. Bull & Bear Special Equities Fund, Inc.
7. Bull & Bear U.S. Government Securities Fund, Inc.
8. Bull & Bear Municipal Income Fund, Inc.
9. Bull & Bear Global Income Fund, Inc.

Ladies and Gentlemen:

This letter serves as confirmation that the mutual funds listed in Appendix I
(each, a "Borrower") are authorized under the Uncommitted Line of Credit to
borrow in the aggregate up to $15 million from State Street Bank and Trust
Company, as lender (the "Bank").

Pursuant to the terms contained in the Agreement dated July 1, 1997, each Loan
made to a Borrower (or series thereof, as applicable) shall be made only with
respect to a specific Borrower and shall be repaid solely from the assets of
that Borrower (or series thereof, if the Borrower is borrowing on behalf of a
particular series), and the Bank shall have no right of recourse or offset, or
any other right whatsoever, against the assets of any other Borrower with
respect to such Loan or any default in respect thereof.

Investors Fiduciary Trust Company ("IFTC"), in its capacity as custodian of the
Borrower (the "Custodian"), under the Custodian Contract (s) between the
Borrower and IFTC, dated ______________ , 19___ , is hereby authorized and
directed by the Borrower to dispose of the Borrower's assets as selected by the
Borrower's investment advise r to the extent necessary to repay all amounts due
to the Bank to the extent that the Loans have not been paid when due or if a
default occurs as defined in the Agreement dated July 1, 1997.

<PAGE>

IN WITNESS WHEREOF, the undersigned has duly caused these instructions to be
executed on this _____ day of ________, 199__.

By: ___________________________
Name:
Title:

IFTC, by signing below, acknowledges receipt of, and hereby agrees to accept
instructions in accordance with the foregoing confirmation.

INVESTORS FIDUCIARY TRUST COMPANY

By: ____________________________
Name:
Title:

<PAGE>

EXECUTION COPY OF PROMISSORY NOTE

<PAGE>

PROMISSORY NOTE

$15,000,000 July 1, 1997
Boston, Massachusetts

$15 MILLION DOLLARS

<PAGE>

This Note shall take effect as a sealed instrument and shall be governed by
the laws (other than the conflict of law rules) of The Commonwealth of
Massachusetts.

By: _______________________
Name:
Title:
Date:

<PAGE>

EXECUTION COPY OF OFFICER'S CERTIFICATE

<PAGE>

OFFICER'S CERTIFICATE

2. Attached hereto as Exhibit B is a full, true and correct copy of the By-Laws
of the Corporation, and said By-Laws remain in full force and effect as of the
date hereof;

4. Attached hereto as Exhibit D are full, true and correct copies of the current
prospectus and statement of additional information for the Corporation;

5. Attached hereto as Exhibit E and F are full, true and correct copies of the
Annual Report to Shareholders dated , 199_ , and Semi-Annual Report to
Shareholders dated , 199_ , and

------------------------------

IN WITNESS WHEREOF, I have hereunto set forth my hand this ____ day of
__________, 199__

Name:___________________________

IN WITNESS WHEREOF, I have hereunto set forth my hand this _____ day of
__________, 199__.

<PAGE>

EXECUTION COPY OF INSTRUCTION AND CONFIRMATION CERTIFICATE

(MUST BE ON BORROWER'S LETTERHEAD)

[DESCRIPTION] Securities Lending Authorization Agreement

SECURITIES LENDING AUTHORIZATION AGREEMENT

Between

THE CLIENTS IDENTIFIED ON SCHEDULE A

and

STATE STREET BANK AND TRUST COMPANY

w:client\BULLBEA1.doc
(MUTUALSB)

<PAGE>

TABLE OF CONTENTS
PAGE
1. APPOINTMENT OF STATE STREET.................................... 1

2. SECURITIES TO BE LOANED........................................ 1

3. BORROWERS...................................................... 2

4. SECURITIES Loan AGREEMENTS..................................... 3

5. LOANS OF AVAILABLE SECURITIES.................................. 4

6. DISTRIBUTIONS ON AND VOTING RIGHTS WITH RESPECT TO
LOANED SECURITIES.............................................. 4

7. COLLATERAL..................................................... 5

8. COMPENSATION FOR THE CLIENT AND STATE STREET................... 6

9 FEE DISCLOSURE................................................. 7

10. RECORD KEEPING AND REPORTS..................................... 7

11. STANDARD OF CARE............................................... 8

12. REPRESENTATIONS AND WARRANTIES................................. 8

13. DEFINITIONS.................................................... 9

14. CONTINUING AGREEMENT; TERMINATION; REMEDIES.................... 10

15. NOTICES........................................................ 10

16. MISCELLANEOUS.................................................. 11

17. SECURITIES INVESTORS PROTECTION ACT............................ 11

18. MODIFICATION................................................... 12

<PAGE>

EXHIBITS AND SCHEDULES

EXHIBIT 3.1

EXHIBIT 3.2

SCHEDULE A

SCHEDULE B

SCHEDULE 7.1

<PAGE>

SECURITIES LENDING AUTHORIZATION AGREEMENT

Agreement dated the ____ day of ______________, 1997 THE CLIENTS IDENTIFIED ON
SCHEDULE A (each a "Client" or collectively, "Clients"), and STATE STREET BANK
AND TRUST COMPANY, a Massachusetts trust company ("State Street"), setting forth
the terms and conditions under which State Street is authorized to act on behalf
of the Client with respect to the lending of certain securities of the Client
held by State Street as trustee, agent or custodian.

Each undersigned Client, whether organized as a portfolio, series, class of
shares, or otherwise, shall be regarded for all purposes hereunder as a separate
party apart from each other. Unless the context otherwise requires, with respect
to every transaction covered by this Agreement, every reference herein shall be
deemed to relate solely to the particular client to which such transaction
relates. Under no circumstances shall the rights, obligations or remedies with
respect to a particular Client constitute a right, obligation or remedy
applicable to any other Client. The use of this single document to memorialize
the separate agreement of each Client is understood to be for administrative
convenience only and shall not constitute any basis for joining the Clients for
any reason.

Certain capitalized terms used in this Agreement are defined in Section 13.

The Client and State Street, as the parties hereto, hereby agree as follows:

1. Appointment of State Street. The Clients hereby authorize State Street as its
agent to lend Available Securities to Borrowers in accordance with the terms of
this Agreement. State Street shall have the responsibility and authority to do
or cause to be done all acts State Street shall determine to be desirable,
necessary, or appropriate to implement and administer this securities lending
program. Client agrees that State Street is acting as a fully disclosed agent
and not as principal in connection with the securities lending program. State
Street may take action as agent of the Client on an undisclosed or a disclosed
basis. State Street is also hereby authorized to request a third party bank to
undertake certain custodial functions in connection with holding of the
Collateral provided by a Borrower pursuant to the terms hereof. In connection
therewith, State Street may instruct said third party to establish and maintain
a Borrower's account and a State Street account wherein all Collateral,
including cash shall be maintained by said third party in accordance with the
terms of a form of custodial arrangement which shall also be consistent with the
terms hereof.

2. Securities to be Loaned. State Street acts or will act as agent,
trustee or custodian of certain securities owned by the Clients. All of the
Clients' securities held by State Street as agent, trustee or custodian shall be
subject to this securities lending program and constitute Available Securities
hereunder, except those securities which the Client or the Investment Manager
specifically identifies in notices to State Street as not being Available
Securities. In the absence of any such notice identifying specific securities,
State Street shall have no authority or responsibility for determining whether
any of the Client's securities should be excluded from the lending program.

3. Borrowers. The Available Securities may be loaned to any Borrower identified
on the Schedule of Borrowers, as such Schedule may be modified from time to time
by State Street and Client, including without limitation, the Capital Markets
division of State Street; provided, however, if Available Securities are loaned
to the Capital Markets division, in addition to being consistent with the terms
hereof, said Loan shall be made in accordance with

<PAGE>

the terms of the Securities Loan Agreement attached hereto as Exhibit 3.1, as
modified form time to time in accordance with the provisions hereof
(hereinafter, the "State Street Securities Loan Agreement"). The form of the
State Street Securities Loan Agreement may be modified by State Street from time
to time, without the consent of the Client, in order to comply with the
requirements of law or any regulatory authority having jurisdiction over State
Street, the Client or the securities lending program or in any other manner that
is not material and adverse to the interests of the Client.

Client acknowledges that it is aware that State Street, acting as "Lender's
Agent" hereunder and thereunder, is or may be deemed to be the same legal entity
as State Street acting as "Borrower" under the State Street Securities Loan
Agreement, notwithstanding the different designations used herein and therein or
the dual roles assumed by State Street hereunder and thereunder. Client
represents that the power granted herein to State Street, as agent, to lend U.S.
Securities owned by Client (including, in legal effect, the power granted to
State Street to make Loans to itself) and the other powers granted to State
Street, as agent herein, are given expressly for the purpose of averting and
waiving any prohibitions upon such lending or other exercise of such powers
which might exist in the absence of such powers, and that transactions effected
pursuant to and in compliance with this Agreement and the State Street
Securities Loan Agreement will not constitute a breach of trust or other
fiduciary duty by State Street.

Client further acknowledges that it has granted State Street the power to
effect securities lending transactions with the Capital Markets division of
State Street and other powers assigned to State Street hereunder and under the
Securities Loan Agreements and the State Street Securities Loan Agreement as a
result of Client's desire to increase the opportunity for it to lend securities
held in its account on fair and reasonable terms to qualified Borrowers without
such loans being considered a breach of State Street's fiduciary duty. In
connection therewith, each party hereby agrees that it shall furnish to the
other party (i) the most recent available audited statement of its financial
condition, and (ii) the most recent available unaudited statement of its
financial condition, if more recent than the audited statement. As long as any
Loan is outstanding under this Agreement, each party shall also promptly deliver
to the other party all such financial information that is subsequently
available, and any other financial information or statements that such other
party may reasonably request.

In the event any such Loan is made to the Capital Markets division, State Street
hereby covenants and agrees for the benefit of the Clients that it has adopted
and implemented procedural safeguards to help ensure that all actions taken by
it hereunder will be effected by individuals other than, and not under the
supervision of, individuals who are acting in a capacity as Borrower thereunder,
and that all trades effected hereunder will take place at the same fully
negotiated "arms length" prices offered to similarly situated third parties by
State Street when it acts as lending agent, notwithstanding the inherent
conflict of interest with respect to Loans to be effected by State Street to the
Capital Markets division.

In the event Client approves lending to borrowers resident in the United
Kingdom, Client shall complete Part 1 of the document known as a "MOD-2 form,"
which is attached hereto as Exhibit 3.2.

In the event that securities lending activity is undertaken through its London
office, State Street becomes subject to additional regulation in the UK, and
State Street is obliged to notify Client of the following matters:

i. State Street shall make available to Client established procedures in
accordance with the requirements of the Securities and Futures Authority for

<PAGE>

the effective consideration of complaints concerning State Street's activities
carried on in the UK.

ii. Where a liability in one currency is to be matched by an asset in a
different currency, or where an investment transaction relates to an investment
denominated in a currency other than sterling, a movement of exchange rates may
have a separate effect, favorable or unfavorable, on the gain or loss which
would otherwise be experienced on the investment.

iii. State Street or an affiliate may have an interest that is material to the
investment or transaction concerned and neither State Street nor any such
affiliate shall be obliged to disclose such interest or account to Client for
any profits or benefits made or derived by it or any of its associates from any
such transaction.

iv. Any assets which State Street holds in the form of money shall not be
treated by State Street as Clients' Money as defined by The Financial Services
(Client Money) Regulations 1991 of the United Kingdom as amended (the "Clients'
Money Regulations") and will not be held in accordance with the Clients' Money
Regulations or such other regulations as shall amend or replace the Clients'
Money Regulations from time to time.

4. Securities Loan Agreements. The Client authorizes State Street to enter into
one or more Securities Loan Agreements with such Borrowers as may be selected by
State Street. Each Securities Loan Agreement shall have such terms and
conditions as State Street may negotiate with the Borrower, however certain
terms of individual loans, including rebate fees to be paid to the Borrower for
the use of cash Collateral, shall be negotiated at the time a loan is made.

5. Loans of Available Securities. State Street shall have authority to
make Loans of Available Securities to Borrowers, and to deliver such securities
to Borrowers. State Street shall be responsible for determining whether any such
Loan shall be made, and for negotiating and establishing the terms of each such
Loan. State Street shall have the authority to terminate any Loan in its
discretion, at any time and without prior notice to the Client.

The Client acknowledges that State Street administers securities lending
programs for other clients of State Street. State Street will allocate
securities lending opportunities among its clients, using reasonable and
equitable methods established by State Street from time to time. State Street
does not represent or warrant that any amount or percentage of the Client's
Available Securities will in fact be loaned to Borrowers. Client agrees that it
shall have no claim against State Street and State Street shall have no
liability arising from, based on, or relating to, loans made for other clients,
or loan opportunities refused hereunder, whether or not State Street has made
fewer or more loans for any other client, and whether or not any loan for
another client, or the opportunity refused, could have resulted in loans made
under this Agreement.

The Client also acknowledges that, under the applicable Securities Loan
Agreements, Borrowers will not be required to return Loaned Securities
immediately upon receipt of notice from State Street terminating the applicable
Loan, but instead will be required to return such Loaned Securities within such
period of time following such notice as is specified in the applicable
Securities Loan Agreement. Upon receiving a notice from the Client or the
Investment Manager that Available Securities which have been loaned to a
Borrower should no longer be considered Available Securities (whether because of
the sale of such securities or otherwise), State Street shall use its reasonable
efforts to notify promptly thereafter the Borrower which has

<PAGE>

borrowed such securities that the Loan of such securities is terminated and that
such securities are to be returned within the time specified by the applicable
Securities Loan Agreement.

6. Distributions on and Voting Rights with Respect to Loaned Securities. The
Client represents and warrants that it is the beneficial owner of (or exercises
complete investment discretion over) all Available Securities free and clear of
all liens, claims, security interests and encumbrances and no such security has
been sold, and that it is entitled to receive all distributions made by the
issuer with respect to Loaned Securities. Except as provided in the next
sentence, all interest, dividends, and other distributions paid with respect to
Loaned Securities shall be credited to the Client's account on the date such
amounts are delivered by the Borrower to State Street. Any non-cash distribution
on Loaned Securities which is in the nature of a stock split or a stock dividend
shall be added to the Loan (and shall be considered to constitute Loaned
Securities) as of the date such non-cash distribution is received by the
Borrower; provided that the Client (or Investment Manager) may, by giving State
Street ten (l0) Business Days' notice prior to the date of such non-cash
distribution, direct State Street to request that the Borrower deliver such
non-cash distribution to State Street, pursuant to the applicable Securities
Loan Agreement, in which case State Street shall credit such non-cash
distribution to the Client's account on the date it is delivered to State
Street.

The Client acknowledges that it will not be entitled to participate in any
dividend reinvestment program or to vote with respect to securities that are on
loan on the applicable record date for such securities.

The Client also acknowledges that any payments of distributions from Borrower to
Client are in substitution for the interest or dividend accrued or paid in
respect of Loaned Securities and that the tax treatment of such payment may
differ from the tax treatment of such interest or dividend.

If an installment, call or rights issue becomes payable on or in respect of any
Loaned Securities, State Street shall use all reasonable endeavors to ensure
that any timely instructions from the Client are complied with, but State Street
shall not be required to make any payment unless the Client has first placed it
in funds to make such payment.

7. Collateral. The Client authorizes State Street to receive and to hold, on the
Client's behalf, Collateral from Borrowers to secure the obligations of
Borrowers with respect to any loan of securities made on behalf of the Client
pursuant to the Securities Loan Agreements. All investments of cash Collateral
shall be for the account and risk of the Client. Concurrently with the delivery
of the Loaned Securities to the Borrower under any Loan, State Street shall
receive from the Borrower Collateral in any of the forms listed on Schedule 7.1.
Said Schedule may be amended from time to time by State Street upon written
notice to the Client. With respect to foreign cash Collateral, State Street will
provide Client with a multicurrency investment vehicle through which the foreign
cash will be converted to U.S. dollars and invested pursuant to Section 8 hereof
(MCIV"). Client acknowledges that State Street, in providing MCIV, will receive
additional compensation by earning a spread on the foreign currency conversions.
Such Collateral shall have a Market Value of not less than one hundred percent
(l00%) of the Market Value of the Loaned Securities. Thereafter, State Street
shall take such action as is appropriate with respect to the Collateral under
the applicable Securities Loan Agreement.

The Collateral shall be returned to Borrower at the termination of the
Loan upon the return of the Loaned Securities by Borrower to State Street in
accordance with the applicable Securities Loan Agreement. State Street shall

<PAGE>

invest cash Collateral in accordance with any directions, including any
limitations established by the Client in a writing identified to this Agreement
and acknowledged in writing by State Street and shall exercise reasonable care,
skill, diligence and prudence in the investment of Collateral. Subject to the
foregoing limits and standard of care, State Street does not assume any market
or investment risk of loss with respect to the currency conversions associated
with the use of MCIV or the investment of cash Collateral and if, at any time
during the term of any Loan, the value of the cash Collateral so invested is
insufficient to return the rebate fee (i.e., the return to the Borrower), the
full amount of the Collateral, U.S. dollar or otherwise or any and all other
amounts due to such Borrower pursuant to the Securities Loan Agreement, Client
shall be solely responsible for such shortfall and hereby agrees to pay an
amount equal to such shortfall to State Street. In addition, State Street shall
be entitled to charge Client's accounts for such shortfall in accordance with
Section 8.

8. Compensation for the Client and State Street. To the extent that a Loan is
secured by cash Collateral, such Collateral, including money received with
respect to the investment of the same, or upon the maturity, sale, or
liquidation of any such investments, shall be invested by State Street, subject
to the directions referred to above, if any, in short-term instruments, short
term investment funds maintained by State Street, money market mutual funds and
such other investments as State Street may from time to time to time select,
including without limitation investments in obligations or other securities of
State Street or of any State Street affiliate and investments in any short-term
investment fund, mutual fund, securities lending trust or other collective
investment fund with respect to which State Street and/or its affiliates provide
investment management or advisory, trust, custody, transfer agency, shareholder
servicing and/or other services for which they are compensated.

The Client acknowledges that interests in such mutual funds, securities lending
trusts and other collective investment funds, to which State Street and/or one
or more of its affiliates provide services are not guaranteed or insured by
State Street or any of its affiliates or by the Federal Deposit Insurance
Corporation or any government agency. The Client hereby authorizes State Street
to purchase or sell investments of cash Collateral to or from other accounts
held by State Street or its affiliates.

The net income generated by any investment made pursuant to the preceding
paragraph of this Section 8 shall be allocated among the Borrower, State Street,
and the Client, as follows: (a) a portion of such income shall be paid to the
Borrower in accordance with the agreement negotiated between the Borrower and
State Street; (b) the balance, if any, shall be split between State Street [as
compensation for its services in connection with this securities lending program
and the Client [as such income shall be credited to the Client's account], in
accordance with the fee schedule attached hereto as Schedule B.

In the event the net income generated by any investment made pursuant
to the first paragraph of this Section 8 does not equal or exceed the amount due
the Borrower in accordance with the agreement between Borrower and State Street,
State Street shall debit the Client's account by an amount equal to the
difference between the net income generated and the amounts to be paid to the
Borrower pursuant to the Securities Loan Agreement. In the event debits to the
Client's account produce a deficit therein, State Street shall sell or otherwise
liquidate investments made with cash Collateral and credit the net proceeds of
such sale or liquidation to satisfy the deficit. In the event the foregoing does
not eliminate the deficit, State Street shall have the right to charge the
deficiency to any other account or accounts maintained by the Client with State
Street.

<PAGE>

In the event of a Loan to a Borrower resident in Canada, which is made over
record date for a dividend reinvestment program ("DRP") and is secured by cash
Collateral, the Borrower shall pay the Client a substitute payment equal to the
full amount of the cash dividend declared, and may pay a loan premium, the
amount of which shall be negotiated by State Street, above the amount of the
cash dividend. Such loan premium shall be allocated between State Street and the
Client as follows: (a) a portion of such loan premium shall be paid to State
Street as compensation for its services in connection with this securities
lending program, in accordance with Schedule A and (b) the remainder of such
loan premium shall be credited to the Client's account.

To the extent that a Loan is secured by non-cash Collateral, the
Borrower shall be required to pay a loan premium, the amount of which shall be
negotiated by State Street. Such loan premium shall be allocated between State
Street and the Client as follows: (a) a portion of such loan premium shall be
paid to State Street as compensation for its services in connection with this
securities lending program, in accordance with Schedule A hereto; and (b) the
remainder of such loan premium shall be credited to the Client's account.

Client acknowledges that in the event that Client's participation in securities
lending generates income for the Client, State Street may be required to
withhold tax or may claim such tax from the Client as is appropriate in
accordance with applicable law.

The Client shall reimburse State Street for such reasonable fees and expenses
that State Street may incur in connection with the performance of its
obligations hereunder, including, without limitation: (i) the ordinary
telecommunication charges associated with the movement of securities in
connection with the securities lending activity contemplated by this Agreement;
and (ii) any and all funds advanced by State Street on behalf of the Client as a
consequence of the Client's obligations hereunder, including the Client's
obligation to return cash Collateral to the Borrower and to pay any fees due the
Borrower, all as provided in Section 7 hereof.

9. Fee Disclosure. The fees associated with the investment of cash Collateral in
funds maintained or advised by State Street are disclosed on Schedule B hereto.
Said Schedule may be replaced from time to time by State Street upon notice to
Client. An annual report with respect to such funds is available to the Client,
at no expense, upon request.

10. Recordkeeping and Reports. State Street will establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. On a monthly basis, State Street will provide the
Client with a statement describing the Loans made, and the income derived from
Loans, during the period covered by such statement. Each party to this Agreement
shall comply with the reasonable requests of the other for information necessary
to the requester's performance of its duties in connection with this securities
lending program.

11. Standard of Care Subject to the requirements of applicable law, State Street
shall not be liable for any loss or damage, including counsel fees and court
costs, whether or not resulting from their acts or omissions to act hereunder or
otherwise, unless the loss damage arises out of State Street's own gross
negligence. Except for any liability, loss, or expense arising from or connected
with State Street's own gross negligence, the Client agrees to reimburse and
hold State Street harmless from and against any liability, loss and expense,
including counsel fees and expenses and court costs, arising in connection with
this Agreement or any Loan or arising from or connected with claims of any third
parties, including any Borrower, from and against all taxes and other
governmental charges, and from and against any out-of-pocket

<PAGE>

or incidental expenses. State Street may charge any amounts to which it is
entitled hereunder against the Client's account. Without limiting the generality
of the foregoing, Client agrees: (i) that State Street shall not be responsible
for any statements, representations or warranties which any Borrower makes in
connection with any securities loans hereunder, or for the performance by any
Borrower of the terms of a Loan, or any agreement related thereto, and shall not
be required to ascertain or inquire as to the performance or observance of, or a
default under the terms of, a Loan or any agreement related thereto; (ii) that
State Street shall be fully protected in acting in accordance with the oral or
written instructions of any person believed by State Street to be authorized to
execute this Agreement on behalf of the Client (an "Authorized Person"); (iii)
that in the event of a default by a Borrower under a Loan, State Street shall be
fully protected in acting in its sole discretion in a manner it deems
appropriate; and (iv) that the records of State Street shall be presumed to
reflect accurately any oral instructions given by an Authorized Person or a
person believed by State Street to be an Authorized Person.

State Street, in determining the Market Value of Securities, including without
limitation, Collateral, may rely upon any recognized pricing service and shall
not be liable for any errors made by such service.

12. Representations and Warranties. Each party hereto represents and warrants
that (a) it has the power to execute and deliver this Agreement, to enter into
the transactions contemplated hereby, and to perform its obligations hereunder;
(b) it has taken all necessary action to authorize such execution, delivery, and
performance; (c) this Agreement constitutes a legal, valid, and binding
obligation enforceable against it; and (d) the execution, delivery, and
performance by it of this Agreement will at all times comply with all applicable
laws and regulations. Client represents and warrants that (a) it has made its
own determination as to the tax treatment of any dividends, remuneration or
other funds received hereunder; and (b) the financial statements delivered to
State Street pursuant to Section 3 fairly present its financial condition and
there has been no material adverse change in its financial condition or the
financial condition of any parent company since the date of the balance sheet
included within such financial statements. Each Loan shall constitute a present
representation by Client that there has been no material adverse change in its
financial condition or the financial condition of any parent company that has
not been disclosed in writing to State Street since the date of the most recent
financial statements furnished to State Street pursuant to Section 3.

The person executing this Agreement on behalf of the Client represents that he
or she has the authority to execute this Agreement on behalf of the Client.

The Client hereby represents to State Street that: (i) its policies generally
permit it to engage in securities lending transactions; (ii) its policies permit
it to purchase shares of the Navigator Securities Lending Trust with cash
Collateral; (iii) its participation in the securities lending program, including
the investment of cash collateral in the Navigator Securities Lending Trust, and
the existing series' thereof, has been approved by a majority of the directors
or trustees that are not "interested persons" within the meaning of section
2(a)(19) of the Investment Company Act of 1940, and such directors or trustees
will evaluate the securities lending program no less frequently than annually to
determine that the investment of cash collateral in the Navigator Securities
Lending Trust, including any series thereof, is in the Client's best interest
and (iv) its prospectus provides appropriate disclosure concerning its
securities lending activity; and (v) that it is not subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") with respect to
this Agreement and the Securities. The Client also hereby represents that it
qualifies as an "accredited investor"

<PAGE>

within the meaning of Rule 501 of Regulation D under the Securities Act of 1933,
as amended.

13. Definitions. For the purposes hereof:

(a) "Available Securities" means the securities of the Client that are available
for Loans pursuant to Section 2.

(b) "Borrower" means any of the entities to which Available Securities may be
loaned under a Securities Lending Agreement, as described in Section 3.

(d) "Investment Manager," when used in any provision, means the person or entity
who has discretionary authority over the investment of the Available Securities
to which the provision applies.

(e) "Loan" means a loan of Available Securities to a Borrower.

(f) "Loaned Security" shall mean any "security" which is delivered as a Loan
under a Securities Loan Agreement; provided that, if any new or different
security shall be exchanged for any Loaned Security by recapitalization, merger,
consolidation, or other corporate action, such new or different security shall,
effective upon such exchange, be deemed to become a Loaned Security in
substitution for the former Loaned Security for which such exchange was made.

(g) "Market Value" of a security means the market value of such security
(including, in the case of a Loaned Security that is a debt security, the
accrued interest on such security) as determined by the independent pricing
service designated by State Street, or such other independent sources as may be
selected by State Street on a reasonable basis.

(h) "Securities Loan Agreement" means the agreement between a Borrower and State
Street (on behalf of the Client) that governs Loans, as described in Section 4.

14. Continuing Agreement; Termination; Remedies. It is the intention of the
parties hereto that this Agreement shall constitute a continuing agreement in
every respect and shall apply to each and every Loan, whether now existing or
hereafter made. The Client and State Street may each at any time terminate this
Agreement upon five (5) Business Days' written notice to the other to that
effect. The only effects of any such termination of this Agreement will be that
(a) following such termination, no further Loans shall be made hereunder by
State Street on behalf of the Client, and (b) State Street shall, within a
reasonable time after termination of this Agreement, terminate any and all
outstanding Loans. The provisions hereof shall continue in full force and effect
in all other respects until all Loans have been terminated and all obligations
satisfied as herein provided.

15. Notices. Except as otherwise specifically provided herein, notices under
this Agreement may be made orally, in writing, or by any other means mutually
acceptable to the parties. If in writing, a notice shall be sufficient if
delivered to the party entitled to receive such notices at the following
addresses:

If to Client:

Bull & Bear Advisers

<PAGE>

11 Hanover Square
New York, N.Y. 10005
Attn: Thomas B. Winmill
President

If to State Street:

State Street Bank and Trust Company
Global Securities Lending Division
Two International Place, Floor 31
Boston, Massachusetts 02110

or to such other addresses as either party may furnish the other party by
written notice under this section.

Whenever this Agreement permits or requires the Client to give notice to,
direct, provide information to State Street, such notice, direction, or
information shall be provided to State Street on the Client's behalf by any
individual designated for such purpose by the Client in a written notice to
State Street. (This Agreement shall be considered such a designation of the
person executing the Agreement on the client's behalf.) After its receipt of
such a notice of designation, and until its receipt of a notice revoking such
designation, State Street shall be fully protected in relying upon the notices,
directions, and information given by such designee.

16. Miscellaneous. This Agreement supersedes any other agreement between the
parties or any representations made by one party to the other, whether oral or
in writing, concerning loans of securities by State Street on behalf of the
Client. This Agreement shall not be assigned by either party without the prior
written consent of the other party. Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, representatives, successors, and assigns. This Agreement
shall be governed and construed in accordance with the laws of the Commonwealth
of Massachusetts. Client hereby irrevocably submits to the jurisdiction of any
Massachusetts state or federal court sitting in The Commonwealth of
Massachusetts in any action or proceeding arising out of or related to this
agreement, hereby irrevocably agrees that all claims in respect of such action
or proceeding may be heard and determined in such Massachusetts state or Federal
court except that this provision shall not preclude any party from removing any
action to federal court. Client hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. Client hereby irrevocably appoints as
its agent to receive on its behalf service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding (the "Process Agent"). Such service may be made by mailing or
delivering a copy of such process, in care of the Process Agent at the above
address. Client hereby irrevocably authorizes and directs the Process Agent to
accept such service on its behalf. As an alternative method of service, Client
also irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to Client at its
address specified in Section 15 hereof. Client agrees that a final judgment

<PAGE>

in any such action or proceeding, all appeals having been taken or the time
period for such appeals having expired, shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision hereof shall not affect any other provision of
this Agreement. If in the construction of this Agreement any court should deem
any provision to be invalid because of scope or duration, then such court shall
forthwith reduce such scope or duration to that which is appropriate and enforce
this Agreement in its modified scope or duration.

17. Securities Investors Protection Act of 1970 Notice. CLIENT IS
HEREBY ADVISED AND ACKNOWLEDGES THAT THE PROVISIONS OF THE SECURITIES INVESTOR
PROTECTION ACT OF 1970 MAY NOT PROTECT THE CLIENT WITH RESPECT TO THE LOAN OF
SECURITIES HEREUNDER AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO THE CLIENT
MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF THE BROKER'S OR DEALER'S
OBLIGATION IN THE EVENT THE BROKER OR DEALER FAILS TO RETURN THE SECURITIES.

18. Modification. This Agreement shall not be modified, except by an
instrument in writing signed by the party against whom enforcement is sought.

<PAGE>

BULL & BEAR FUNDS I, INC. on behalf BULL & BEAR FUNDS II, INC.on of its
series BULL & BEAR U.S. AND behalf of its series
OVERSEAS FUND BULL & BEAR DOLLAR RESERVES

By: _____________________ By: ____________________

Name: ___________________ Name: _________________

Its: ______________________ Its: ___________________

BULL & BEAR GOLD INVESTORS LTD. BULL & BEAR SPECIAL
EQUITIES FUND, INC.

By: ______________________ By: _______________________

Name: ___________________ Name: ____________________

Its: ______________________ Its: ______________________

BULL & BEAR MUNICIPAL INCOME BULL & BEAR GLOBAL
FUND, INC. INCOME FUND, INC.

By: ______________________ By: ______________________
Name: ___________________ Name: ___________________
Its: ______________________ Its: ______________________

<PAGE>

BULL & BEAR U.S. GOVERNMENT MIDAS FUND, INC.
SECURITIES FUND, INC.

By: ________________________ By: _______________________

Name: _____________________ Name: ____________________

Its: ________________________ Its: ______________________

ROCKWOOD FUND, INC. STATE STREET BANK AND
TRUST COMPANY

By: _____________________ By: ____________________

Name: ___________________ Name: __________________

Its: ______________________ Its: ____________________

<PAGE>

SCHEDULE A

This Schedule is attached to and made part of the
Securities Lending Authorization Agreement,
dated the ____day of _______, 1997
between THE CLIENTS IDENTIFIED ON SCHEDULE A (each a "Client" or collectively
"Clients") and
STATE STREET BANK AND TRUST COMPANY ("State Street").

PARTIES TO THE SECURITIES LENDING AUTHORIZATION AGREEMENT

BULL & BEAR FUNDS I, INC. (TIN 13-3368373), on behalf of its series BULL &
BEAR U.S. AND OVERSEAS FUND

BULL & BEAR FUNDS II, INC. (TIN 22-2037796), on behalf of its series BULL &
BEAR DOLLAR RESERVES (TIN 13-6900645)

BULL & BEAR GOLD INVESTORS LTD. (TIN 13-6059519)

BULL & BEAR SPECIAL EQUITIES FUND, INC. (TIN 13-3343918)

BULL & BEAR MUNICIPAL INCOME FUND, INC. (TIN 13-3196171)

BULL & BEAR GLOBAL INCOME FUND, INC. (TIN 13-3926714)

BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC. (TIN 13-3907058)

MIDAS FUND, INC. (TIN 41-1536110)

ROCKWOOD FUND, INC. (TIN 82-0395554)

<PAGE>

SCHEDULE B

This Schedule is attached to and made part of the
Securities Lending Authorization Agreement,
dated the ____ day of _______, 1997
between THE CLIENTS IDENTIFIED ON SCHEDULE A (each a "Client" or collectively
"Clients") and
STATE STREET BANK AND TRUST COMPANY ("State Street").

SCHEDULE OF FEES

1. Subject to Paragraph 2 below, all proceeds collected by State Street on
investment of Cash Collateral or any fee income shall be allocated as follows

- - Sixty-five percent (65%) payable to the Client, and

- - Thirty-five percent (35%) payable to State Street.

2. All payments to be allocated under Paragraph 1 above shall be made after
deduction of such other amounts payable to State Street or to the Borrower under
the terms of the attached Securities Lending Authorization Agreement.

3. Investment Management Fees

The Navigator Securities Lending Trust:

On an annualized basis, the management/trust/custody fee for investing cash
Collateral in the Navigator Securities Lending Prime Portfolio is not more than
10.00 basis points netted out of yield. The trustee may pay out of the assets of
the Portfolio all reasonable expenses and fees of the Portfolio, including
professional fees or disbursements incurred in connection with the operation of
the Portfolio.

<PAGE>

SCHEDULE 7.1

ACCEPTABLE FORMS OF COLLATERAL

- - Cash (U.S. and foreign currency);

- - Securities issued or guaranteed by the United States government or its
agencies;

- - Sovereign debt rated A or better

- - Convertible Bonds

- - Irrevocable bank letters of credit issued by a person other than the Borrower
or an affiliate of the Borrower may be accepted as Collateral, if State Street
has determined that it is appropriate to accept such letters of credit as
Collateral under the securities lending programs it administers; and

- - Such other Collateral as the parties may agree to in writing from time
to time.

[DESCRIPTION] Segregated Account Procedural Agreement

SEGREGATED ACCOUNT PROCEDURAL AND SAFEKEEPING AGREEMENT

THIS AGREEMENT is made effective the 17th day of June, 1997, by and
between INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the
laws of the state of Missouri, having its trust office and principal place of
business in Kansas City, Missouri ("IFTC"); STATE STREET BANK AND TRUST COMPANY,
a trust company organized under the laws of the Commonwealth of Massachusetts,
having its trust office and principal place of business in North Quincy,
Massachusetts ("Bank"); SMITH BARNEY, INC., a registered futures commission
merchant ("Broker"); and each registered investment company listed on Schedule A
hereto, as it may be amended from time to time, incorporated herein by this
reference (each a "Customer"); and

WHEREAS, Customer, on behalf of each of the Portfolios identified in
Schedule A, as it may be amended from time to time, incorporated herein by this
reference, has opened or may hereafter open a trading account with Broker for
the purpose of purchasing and selling futures contracts and related options
("Contracts") through Broker; and

WHEREAS, in connection with the opening of such trading account,
Customer and Broker have entered or will enter into a Customer Agreement
requiring Customer to deposit as collateral the initial margin (including
subsequent margin calls and any additional initial margin requirements for short
option positions) ("Margin") with respect to each Contract as required by the
Commodity Exchange Act, Commodity Futures Trading Commission regulations, and
the rules and regulations of the Chicago Mercantile Exchange, the Chicago Board
of Trade, the Commodity Exchange, and such other exchanges on which Broker may
effect or cause to be effected transactions as broker for Customer (collectively
the "Rules and Regulations"); and

WHEREAS, IFTC serves as custodian of certain monies and securities
owned by Customer ("Assets") pursuant to a Custody Agreement between IFTC and
Customer (each a "Custody Agreement"); and

WHEREAS, Bank serves as IFTC's sub-custodian of said Assets pursuant to
a Sub-Custody Agreement between Bank and IFTC (the "Sub-Custody Agreement"); and

WHEREAS, the parties hereto desire to provide for segregated accounts
for the benefit of Customer to be established at Bank (the "Safekeeping
Accounts") for custody of the Margin;

NOW, THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:

1. GOVERNING AGREEMENT. As between each Customer and IFTC, the Assets in the
Safekeeping Account as collateral for the Margin ("Collateral") and all
instructions, deliveries, duties, rights and liabilities of such Customer and
IFTC with respect to such Safekeeping Account shall be governed in all respects
by the Custody Agreement, except as expressly provided otherwise in this
Agreement. As between IFTC and Bank, the Collateral and all instructions,
deliveries, duties, rights and liabilities of IFTC and Bank with respect to the
Safekeeping Accounts shall be governed in all respects by the Sub-Custody
Agreement, except as expressly provided otherwise in this Agreement.

2. SAFEKEEPING ACCOUNT. Pursuant to the applicable Custody Agreement, IFTC shall
establish and maintain a Safekeeping Account at Bank for each Customer, and,
pursuant to the Sub-Custody Agreement, Bank shall open, upon instruction from
IFTC, such Safekeeping Account in the name of "Smith Barney Customer Funds for
the benefit of [applicable Customer Name] (Customer Segregated Account)"

<PAGE>

for the Collateral, in accordance with the Rules and Regulations. In its
custodial capacity, IFTC is limited to holding the Collateral in safekeeping for
Customer pursuant to the Custody Agreement and dealing with it as herein
expressed unless otherwise mutually agreed in writing. IFTC shall make or cause
Bank to make purchases, sales, withdrawals and deliveries of securities held as
Collateral only as Customer may direct, subject to the rights of Broker
hereunder. IFTC is hereby authorized and directed to, and to cause Bank to:

A. Collect income and principal on bearer securities in the
Safekeeping Accounts;

B. Dispose of the monies received from income collections,
maturity, redemption, sale, or other disposition of the Assets
pursuant to the terms hereof;

C. Send daily confirmations of receipts and disbursements to
Customer and to Broker;

D. Provide monthly lists of Assets held in the Safekeeping
Accounts to Customer and to Broker;

E. On request, confirm to Broker and Customer all account charges
and positions; and

F. Provide Broker and Customer with prompt Written Notice, as
hereinafter defined, of each transfer of Collateral into or
out of the Safekeeping Account of such Customer.

Bank may hold Assets in the Safekeeping Account in bearer, nominee, book entry,
or other form and in any depository or clearing corporation, with or without
indicating that such Assets are held hereunder; provided, however, that all
Assets held in the Safekeeping Account shall be identified on IFTC's and Bank's
records as subject to this Agreement and shall be in a form that permits
transfer without additional authorization or consent of Customer.

Pursuant to Section 1.20 of the Commodity Futures Trading Commission
Regulations, IFTC and Bank hereby acknowledge that all Collateral is that of a
"commodity or option" customer of Broker and is being separately accounted for
and held as segregated and secured funds. Such Collateral will not be treated by
IFTC or Bank as the funds or securities of any person other than Customer, and
will not be used by IFTC or Bank in connection with the obligations of any
person other than Customer. IFTC and Bank have no claim, and will assert no
lien, right of set off or any other claim or interest in the Collateral, and
will not use the Collateral to margin, collateralize, secure or to extend credit
to Customer, to any of its affiliates, to Broker, to any of Broker's affiliates
or to any other persons for such activities or otherwise. IFTC and Bank hereby
agree that the books and records accounting for the Collateral may be examined
by an authorized employee of the Commodity Futures Trading Commission.

<PAGE>

3. DEPOSIT OF COLLATERAL. IFTC shall direct Bank to deposit, transfer and
maintain assets specified by Customer by Written Notice as Collateral in the
Safekeeping Account in an amount sufficient to provide such Margin as shall be
required by the Rules and Regulations, and Bank shall provide Broker and IFTC
with Written Notice of each such deposit. Customer may deposit amounts in excess
of such requirements. The designation "Customer Funds" in the account title is
intended to indicate the status of the Safekeeping Accounts under the Rules and
Regulations; however, to the extent not inconsistent with such Rules and
Regulations, the provisions of this Agreement shall be controlling as to the
rights of the parties in the Collateral.

4. FORM OF COLLATERAL. The Collateral shall be in the form, as Customer elects,
of cash, of eligible securities of the U.S. Government (valued at the current
market value), other securities issued by United States issuers as Broker shall
accept, or of a combination thereof. Customer may substitute U.S. Government
securities of equal or greater value upon prior approval by Broker, which
approval shall not be unreasonably withheld. Upon receipt of such substitute
securities and Written Notice of Broker's approval, IFTC shall cause Bank to
release from the Safekeeping Account cash or securities of an equal value, or
such lesser amount as may be directed by Customer. Separate interest payments on
the Collateral shall be automatically credited by IFTC in Federal Funds to
demand deposit accounts designated in Written Notice from Customer on the date
that such interest becomes due and received unless Notice of Default has been
given to IFTC pursuant to Paragraph 7. Amounts due on Assets which mature or are
redeemed will be credited to the applicable Safekeeping Account in Federal Funds
on the date such amounts are received.

5. WITHDRAWALS. Withdrawals from the Safekeeping Account shall be effected upon
receipt by Bank of Written Notice from Customer and Broker's prior written
consent to such withdrawal. Broker shall, upon request of Customer, inform
Customer of the amount of any excess Collateral in the Safekeeping Account.

6. VARIATION MARGIN. If additional Collateral is required by Broker due to
variation in the value of one or more Contracts held in the trading account or
otherwise pursuant to the Customer Agreement ("Variation Margin"):

A. Broker shall give Customer Written Notice of such requirement
and such Variation Margin shall be satisfied from any amounts
currently credited to Customer's trading account, to the
extent thereof.

B. If the Variation Margin cannot be satisfied as set forth in
Paragraph A, then Customer shall immediately transfer the
Variation Margin to Broker and Broker shall give Customer
prompt Written Notice of receipt.

C. If the Variation margin is not satisfied as set forth in Paragraphs
A or B, then, Broker may give notice to IFTC of the failure to deposit or pay
such amount and the amount required, which notice shall state that all
conditions precedent to Broker's right to receive Collateral have been
satisfied. Immediately upon receipt of such notice, IFTC shall transfer
Collateral of such specified amount from the Safekeeping Account to
or for the account of Broker.

7. DEFAULT. If Customer has failed to deposit sufficient Collateral pursuant to
Paragraph 3 hereof, or transfer the required Variation Margin pursuant to
Paragraph 6.B hereof, Broker shall give Customer immediate Written Notice of
such failure, specifying the amount of such default ("Notice of Default"). In
the event that Broker gives Notice of Default to IFTC, Broker shall immediately
give

<PAGE>

Written Notice to Customer thereof and, without prejudice to any rights of
Broker hereunder, IFTC shall give Written Notice to Customer of its receipt of,
and the instructions, if any, contained in, such Notice of Default. The Notice
of Default by Broker to IFTC shall certify that all conditions precedent to
Broker's right to direct disposition of Collateral hereunder have been
satisfied, and shall include instructions to IFTC to instruct Bank:

A. To transfer specified eligible U.S. Government securities or other
securities held as Collateral to Broker, in which event Broker shall
have the right to sell or otherwise dispose of such securities in
the principal market for such securities or, in the event such
principal market is closed, in a manner commercially reasonable for
such securities; provided, however, that Broker shall remit to
Customer any proceeds of such sale or disposition in excess of the
amount specified in the Notice of Default;

B. To sell at the prevailing market price sufficient Collateral to
provide for payment to Broker of the amount specified in the Notice
of Default, in which event Bank shall give consideration to any
timely request by Customer by Written Notice with respect to
particular Collateral to be sold and shall sell any Collateral in
the principal market therefor, or, in the event such principal
market is closed, in a manner commercially reasonable for such
Collateral; or

C. With respect to cash Collateral, to immediately transfer cash
in the amount specified in the Notice of Default from the
Safekeeping Account to Broker.

IFTC shall cause Bank to retain in the Safekeeping Account any Collateral not
transferred as set forth above, including any proceeds from the Bank's sale of
Collateral in excess of the amount required. In no event shall IFTC or Bank be
required to transfer any amount in excess of the value of the Collateral.

8. CREDITS TO CUSTOMER. Broker shall promptly credit to the trading account of
Customer any Variation Margin resulting from the variation in value of one or
more Contracts purchased or sold by Customer in accordance with the Rules and
Regulations. Each business day such a credit is made, Broker shall transfer
trading account balances of Customer in Federal Funds to IFTC, or to such other
bank account in Customer's name as Customer shall direct. Amounts due to a
Customer as a result of the variation in value of such Customer's short option
positions shall be credited to Customer by reducing the amount of Collateral
required to be maintained in the Safekeeping Account.

9. LIMITATION OF LIABILITY.

a. IFTC and Bank shall not be responsible or liable for, and
Customer and Broker shall indemnify and hold IFTC and Bank
harmless from and against, any and all costs, expenses,
losses, damages, charges, counsel fees, payments and
liabilities which may be asserted against or incurred by IFTC
or Bank or for which IFTC or Bank may be held to be liable,
arising out of or attributable to:

<PAGE>

i. IFTC's or Bank's action or omission to act pursuant
hereto; provided that IFTC or Bank have acted in good
faith and with due diligence and reasonable care; and
provided further, that IFTC shall not be liable for
consequential, special, or punitive damages in any
event.

ii. IFTC's action or omission to act hereunder upon any Written
Notice, instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing
to it to be genuine and to have been properly executed,
including but not limited to instructions contained in a
Notice of Default, it being expressly understood that IFTC and
Bank shall have no duty to determine whether a default has, in
fact, occurred, or any other duty of inquiry or verification
with respect thereto.

iii. Customer's or Broker's refusal or failure to comply
with the terms hereof (including without limitation
failure to pay or reimburse IFTC or Bank and under
Section 9 hereof), Customer's or Broker's acts or
omissions, negligence or willful misconduct, or the
failure of any representation or warranty of Customer
or Broker hereunder to be and remain true and correct
in all respects at all times.

iv. The failure or delay in performance of its obligations
hereunder, or those of any entity for which it is responsible
hereunder, arising out of or caused, directly or indirectly,
by circumstances beyond the affected entity's reasonable
control, including, without limitation: any interruption,
loss or malfunction of any utility, transportation, computer
(hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a
delay in mails; governmental or exchange action, statute,
ordinance, rulings, regulations or direction; war, strike,
riot, emergency, civil disturbance, terrorism, vandalism,
explosions, labor disputes, freezes, floods, fires, tornados,
acts of God or public enemy, revolutions, or insurrection.

v. The sufficiency or adequacy of the Collateral deposited
hereunder from time to time, or compliance with any statute or
regulation regarding the amount and form of Collateral, it
being understood that IFTC and Bank shall have no duty to
require any Assets to be delivered at any time, or the
establishment or maintenance of margin credit, including but
not limited to the Rules and Regulations, Regulations T or X
of the Board of Governors of the Federal
Reserve System, or with any rules or regulations of the
Options Clearing Corporation or the Securities and Exchange
Commission.

b. Broker shall not be responsible or liable for any loss
incurred by any Customer by reason of IFTC's or Bank's
negligence or willful misconduct in performing their duties
under this Agreement.

<PAGE>

10. NOTICE. All notices, instructions and communications shall be given by the
most expeditious means possible and shall be deemed a valid "Written Notice"
hereunder if delivered by hand, sent by registered or certified mail (return
receipt requested), transmitted by telegraph, telex or telecopier (receipt
confirmed) or given by telephone (promptly followed by written copy) and shall
be deemed effective when given if given by telephone and when received by the
addressee at the address set forth opposite its signature hereto or at such
other address given by Written Notice if given in a manner other than by
telephone.

11. FEES AND EXPENSES. Customer shall pay as compensation to IFTC for its
services hereunder such amount as may be agreed to by Customer and IFTC from
time to time in writing. Any and all expenses of establishing, maintaining, or
terminating a Safekeeping Account shall be borne by the applicable Customer.

12. TERMINATION. As to each Safekeeping Account, this Agreement shall terminate:
(a) on the effective date of IFTC's or Bank's resignation or termination as
custodian or sub-custodian (b) upon the consent by Written Notice of Customer
and Broker, or (c) upon thirty (30) days prior written notice by IFTC and Bank
to Broker and Customer. Upon any termination, all Assets in the Safekeeping
Account shall be held by Bank pursuant to the Sub-Custody Agreement.

13. INDIVIDUAL CUSTOMERS. Each Customer shall be regarded for all purposes as a
separate party apart from any other Customer and every reference to Customer
shall be deemed a reference solely to the particular Customer to which a
particular transaction under the Agreement relates. Under no circumstances shall
the rights, obligations or remedies with respect to a particular Customer
constitute a right, obligation or remedy applicable to any other Customer. The
use of this single document to memorialize the separate agreement of each
Customer is understood to be for clerical convenience only and shall not
constitute any basis for joining Customers for any reason.

14. MISCELLANEOUS.

a. This Agreement shall be construed according to, and the rights
and liabilities of the parties hereto shall be governed by,
the laws of the State of New York, without reference to the
choice of laws principles thereof.

b. All terms and provisions hereof shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.

<PAGE>

c. The representations and warranties, the indemnifications
extended hereunder, and the provisions of Section 9 hereof are
intended to and shall continue after and survive the
expiration, termination or cancellation hereof.

d. No provisions hereof may be amended or modified in any manner
except by a written agreement properly authorized and executed
by each party hereto.

e. The failure of either party to insist upon the performance of any
terms or conditions hereof or to enforce any rights resulting from
any breach of any of the terms or conditions hereof, including the
payment of damages, shall not be construed as a continuing or
permanent waiver of any such terms, conditions, rights or
privileges, but the same shall continue and remain in full force and
effect as if no such forbearance or waiver had occurred. No waiver,
release or discharge of any party's rights hereunder shall be
effective unless contained in a written instrument signed by the
party sought to be charged.

f. The captions herein are included for convenience of reference
only, and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.

g. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

h. If any provision hereof shall be determined to be invalid,
illegal, in conflict with any law or otherwise unenforceable,
the remaining provisions hereof shall be considered severable
and shall not be affected thereby, and every remaining
provision hereof shall remain in full force and effect and
shall remain enforceable to the fullest extent permitted by
applicable law.

i. This Agreement may not be assigned by any party hereto without
the prior written consent of the other party.

j. Neither the execution nor performance hereof shall be deemed
to create a partnership or joint venture by and among any of
the parties hereto.

k. Except as specifically provided herein, this Agreement does
not in any way affect any other agreements entered into among
the parties hereto and any actions taken or omitted by either
party hereunder shall not affect any rights or obligations of
the other party hereunder.

<PAGE>

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed on the date first above written.

Bull & Bear Global Income Fund, Inc.:
Bull & Bear Funds I, Inc.:
Bull & Bear Funds II, Inc.:
Bull & Bear U.S. Government
Securities Fund, Inc.
Bull & Bear Special Equities Fund, Inc.
Bull & Bear Gold Investors Ltd.
Bull & Bear Municipal Income Fund, Inc.
Midas Fund, Inc.
Rockwood Fund, Inc.

Bull & Bear By:
11 Hanover Square, 11th Floor Title:
New York, NY 10005
Attn: Heidi Keating

Smith Barney, Inc. SMITH BARNEY, INC.
388 Greenwich Street By:
New York, NY 10013 Title:
Attn: Michael Schaefer

127 West 10th Street INVESTORS FIDUCIARY TRUST COMPANY
Kansas City, MO 64105 By:
Attn: Custody Department Title:

1776 Heritage Drive STATE STREET BANK AND TRUST COMPANY
North Quincy, MA 02171 By:
Attn: Securities Services Division Title:

<PAGE>

SCHEDULE A
LIST OF CUSTOMERS

Portfolios of Customer under the Segregated Account Procedural and Safekeeping
Agreement with Smith Barney, Inc. ("Broker").

CUSTOMER AND PORTFOLIO NAME TAX ID NUMBER
--------------------------- ---------------------
Bull & Bear Funds I, Inc.:
Bull & Bear U.S. and Overseas Fund 13-3368373
Bull & Bear Funds II, Inc.:
Bull & Bear Dollar Reserves 13-6900645
Bull & Bear U.S. Government Securities Fund, Inc. 13-3907058
Bull & Bear Special Equities Fund, Inc. 13-3343918
Bull & Bear Gold Investors Ltd. 13-6059519
Bull & Bear Municipal Income Fund, Inc. 13-3196171
Midas Fund, Inc. 41-1536110
Rockwood Fund, Inc. 82-0395554
Bull & Bear Global Income Fund, Inc. 13-3926714

Customer is a series investment company currently consisting of the Portfolios
set forth above. For purposes of the Segregated Account Procedural and
Safekeeping Agreement, each Portfolio shall be regarded for all purposes
hereunder as a separate party apart from each other Portfolio. Unless the
context otherwise requires, with respect to every transaction covered hereby,
every reference herein to Customer shall be deemed to relate solely to the
particular Portfolio to which such transaction relates. Under no circumstances
shall the rights, obligations or remedies with respect to a particular Portfolio
constitute a right, obligation or remedy applicable to any other Portfolio. The
use of this single document to memorialize the separate agreement of each
Portfolio is understood to be for clerical convenience only and shall not
constitute any basis for joining the Portfolios for any reason.

Customer may add additional Portfolios to the Segregated Account Procedural and
Safekeeping Agreement from time to time by written notice to the other parties,
provided that IFTC consents to such addition. Rates or charges for each
additional Portfolio shall be as agreed upon by IFTC and Customer in writing.

[DESCRIPTION] Transfer Agency Agreement

Form of
TRANSFER AGENCY AND SERVICE AGREEMENT

THIS AGREEMENT made as of the 7th day of February, 1997, by and between
INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of
the State of Missouri, having its trust office located at 127 West 10th Street,
Kansas City, Missouri 64105 ("IFTC"); and each registered investment company
listed on Exhibit A hereto, as it may be amended from time to time, each having
its principal office and place of business at 11 Hanover Square, New York, NY
10005 (each a "Fund" and collectively the "Funds".)

WHEREAS, each Fund desires to appoint IFTC as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and IFTC desires to accept such
appointment;

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

l. Terms of Appointment; Duties of IFTC

1.1 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints IFTC to act as, and IFTC agrees to act
as its transfer agent for the Fund's authorized and issued shares of
its common stock ("Shares"), dividend disbursing agent, custodian of
certain retirement plans and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of the Fund
("Shareholders") and set out in the currently effective prospectus and
statement of additional information ("prospectus") of the Fund,
including without limitation any periodic investment plan, periodic
withdrawal program, or dividend reinvestment plan, if any.

1.2 IFTC agrees that it will perform the following services:

(a) In accordance with procedures established from time to time by
agreement between the Fund and IFTC, IFTC shall:

(i) Receive for acceptance, orders for the
purchase of Shares, and promptly deliver
payment and appropriate documentation
thereof to the Custodian of the Fund
authorized pursuant to the Articles of
Incorporation of the Fund (the "Custodian");

(ii) Pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate Shareholder
account;

(iii) In respect to the transactions in items (i) and (ii)
transactions directly with broker-dealers authorized by the
Fund;

(iv) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;

(v) Prepare and transmit payments for dividends and
distributions declared by the Fund;

(vi) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt by
IFTC of indemnification satisfactory to IFTC and protecting
IFTC and the Fund, and IFTC at its option, may issue
replacement certificates in

<PAGE>

place of mutilated stock certificates upon presentation
thereof and without such indemnity;

(vii) Maintain records of account for and advise the Fund and
its Shareholders as to the foregoing; and

(viii) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. IFTC
shall also provide the Fund on a regular basis with the total
number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or
to take cognizance of any laws relating to the issue or sale
of such shares, which functions shall be the sole
responsibility of the Fund.

(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), IFTC shall: (i) perform
the customary services of a transfer agent, dividend disbursing agent,
custodian of certain retirement plans and, as relevant, agent in
connection with accumulation, open-account or similar plans (including
without limitation any periodic investment plan, periodic withdrawal
program, or dividend reinvestment plan, if any), including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxies, mailing Shareholder reports and
prospectuses to current Shareholders, withholding taxes on U.S.
resident and non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required
with respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and
statements of account to Shareholders for all purchases of Shares and
other confirmable transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and providing Shareholder
account information and (ii) provide a system which will enable the
Fund to monitor the total number of Shares sold in each State.

(c) In addition, the Fund shall (i) identify to IFTC in writing those
transactions and assets to be treated as exempt from blue sky reporting
for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of IFTC for the
Fund's blue sky State registration status is solely limited to the
initial establishment of transactions subject to blue sky compliance by
the Fund and the reporting of such transactions to the Fund as provided
above.

(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between the
Fund and IFTC per the attached service responsibility schedule. IFTC
may at times perform only a portion of these services and the Fund or
its agent may perform these services on the Fund's behalf.

(e) IFTC shall provide additional services on behalf of the Fund (i.e.,
escheatment services) which may be agreed upon in writing between the
Fund and IFTC.

2. Fees and Expenses

<PAGE>

2.1 For the performance by IFTC pursuant to this Agreement, the Fund agrees
to pay IFTC an annual maintenance fee for each Shareholder account as
set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.2 below
may be changed from time to time subject to mutual written agreement
between the Fund and IFTC.

2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees to
reimburse IFTC for out-of-pocket expenses, including but not limited to
confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred
by IFTC for the items set out in the fee schedule attached hereto. In
addition, any other expenses incurred by IFTC at the request or with
the consent of the Fund, will be reimbursed by the Fund.

2.3 The Fund agrees to pay all fees and reimbursable expenses within five
days following the receipt of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to
all shareholder accounts shall be advanced to IFTC by the Fund at least
seven (7) days prior to the mailing date of such materials.

3. Representations and Warranties of IFTC. IFTC represents and warrants to
--------------------------------------
the Fund that it is a trust company duly organized and existing and in
good standing under the laws of the State of Missouri; that it is duly
qualified to carry on its business in the State of Missouri; that it is
empowered under applicable laws and by its Charter and By-Laws to enter
into and perform this Agreement; that all requisite corporate proceedings
have been taken to authorize it to enter into and perform this Agreement;
and that it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations
under this Agreement.

4. Representations and Warranties of the Fund. The Fund represents and
------------------------------------------
warrants to IFTC that it is a corporation duly organized and existing and
in good standing under the laws of the state of its incorporation; that it
is empowered under applicable laws and by its Articles of Incorporation
and By-Laws to enter into and perform this Agreement; that all corporate
proceedings required by said Articles of Incorporation and By-Laws have
been taken to authorize it to enter into and perform this Agreement; that
it is a closed-end diversified management investment company registered
under the Investment Company Act of 1940, as amended; and that a
registration statement under the Securities Act of 1933, as amended is
currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.

5. Data Access and Proprietary Information

5.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by IFTC as part of the
Fund's ability to access certain Fund-related data ("Customer Data")
maintained by IFTC on data bases under the control and ownership of
IFTC or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to IFTC
or other third party. In no event shall Proprietary Information be
deemed Customer Data. The Fund agrees to

<PAGE>

treat all Proprietary Information as proprietary to IFTC and further
agrees that it shall not divulge any Proprietary Information to any
person or organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its employees
and agents:

(a) to access Customer Data solely from locations as may be designated
in writing by IFTC and solely in accordance with IFTC's applicable user
documentation;

(b) to refrain from copying or duplicating in any way the Proprietary
Information;

(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with IFTC's instructions;

(d) to refrain from causing or allowing the data acquired hereunder
from being retransmitted to any other computer facility or other
location, except with the prior written consent of IFTC;

(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;

(f) to honor all reasonable written requests made by IFTC to protect at
IFTC's expense the rights of IFTC in Proprietary Information at common
law, under federal copyright law and under other federal or state law.

Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 5. The obligations of this
Section shall survive any earlier termination of this Agreement.

5.2 If the Fund notifies IFTC that any of the Data Access Services do not
operate in material compliance with the most recently issued user
documentation for such services, IFTC shall endeavor in a timely manner
to correct such failure. Organizations from which IFTC may obtain
certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make
no claim against IFTC arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA ACCESS
SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. IFTC
EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

5.3 If the transactions available to the Fund include the ability to
originate electronic instructions to IFTC in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information, then in such event IFTC shall be
entitled to rely on the validity and authenticity of such instruction
without undertaking any further inquiry as long as such instruction is
undertaken in conformity with security procedures established by IFTC
from time to time.

6. Indemnification

6.1 IFTC shall not be responsible for, and the Fund shall indemnify and hold

<PAGE>

IFTC harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of
or attributable to:

(a) All actions of IFTC or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without negligence or willful misconduct.

(b) The Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty of the
Fund hereunder.

(c) The reliance on or use by IFTC or its agents or subcontractors of
information, records, documents or services which (i) are received by
IFTC or its agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer
agent or registrar.

(d) The reliance on, or the carrying out by IFTC or its agents or
subcontractors of any instructions or requests of the Fund.

(e) The offer or sale of Shares in violation of federal or state
securities laws or regulations that such Shares be registered or in
violation of any stop order or other determination or ruling by any
federal or any state agency with respect to the offer or sale of such
Shares.

(f) The negotiations and processing of checks made payable to
prospective or existing Shareholders tendered to IFTC for the purchase
of Shares, such checks are commonly known as "third party checks."

6.2 At any time IFTC may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising
in connection with the services to be performed by IFTC under this
Agreement, and IFTC and its agents or subcontractors shall not be
liable and shall be indemnified by the Fund for any action taken or
omitted by it in reliance upon such instructions or upon the opinion of
such counsel. IFTC, its agents and subcontractors shall be protected
and indemnified in acting upon any paper or document, reasonably
believed to be genuine and to have been signed by the proper person or
persons, or upon any instruction, information, data, records or
documents provided IFTC or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized
by the Fund, and shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof from
the Fund. IFTC, its agents and subcontractors shall also be protected
and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the
officers of the Fund, and the proper countersignature of any former
transfer agent or former registrar, or of a co-transfer agent or
co-registrar.

6.3 In order that the indemnification provisions contained in this Section
6 shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify IFTC, IFTC shall promptly notify the Fund of such
assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with IFTC in the defense of such claim or to defend against

<PAGE>

said claim in its own name or in the name of IFTC. IFTC shall in no
case confess any claim or make any compromise in any case in which the
Fund may be required to indemnify IFTC except with the Fund's prior
written consent.

7. Standard of Care. IFTC shall at all times act in good faith and agrees
to use its best efforts within reasonable limits to insure the accuracy
of all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees.

8. Covenants of the Fund and IFTC

8.1 The Fund shall promptly furnish to IFTC the following:

(a) A certified copy of the resolution of the Board of Directors of the
Fund authorizing the appointment of IFTC and the execution and delivery
of this Agreement.

(b) A copy of the Articles of Incorporation and By-Laws of the Fund and
all amendments thereto.

8.2 IFTC hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of,
such certificates, forms and devices.

8.3 IFTC shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as
amended, and the Rules thereunder, IFTC agrees that all such records
prepared or maintained by IFTC relating to the services to be performed
by IFTC hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.

8.4 IFTC and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required by law.

8.5 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, IFTC will endeavor to notify the Fund
and to secure instructions from an authorized officer of the Fund as to
such inspection. IFTC reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder
records to such person.

9. Termination of Agreement

9.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.

<PAGE>

9.2 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
borne by the Fund. Additionally, IFTC reserves the right to charge for
any other reasonable expenses associated with such termination and/or a
charge equivalent to the average of three (3) months' fees.

10. Assignment

10.1 Except as provided in Section 10.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party
without the written consent of the other party.

10.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.

10.3 IFTC may, without further consent on the part of the Fund, (a) open and
maintain in its parent corporation, State Street Bank & Trust Company
("State Street") or in other financial institutions selected by IFTC,
one or more non-interest bearing deposit accounts as agent for Fund,
into which the moneys received for the account of Fund and moneys for
payment of dividends, distributions or other disbursements provided for
hereunder will be deposited, and against which checks and drafts will
be drawn; and (b) subcontract for the performance hereof with (i) State
Street, (ii) Boston Financial Data Services, Inc., a Massachusetts
corporation ("BFDS"), a wholly-owned subsidiary of State Street which
is duly registered as a transfer agent pursuant to Section 17A(c)(2) of
the Securities Exchange Act of 1934, as amended ("Section 17A(c)(2)"),
(ii) an BFDS subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(2) or (iii) an BFDS affiliate; provided, however, that
IFTC shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.

11. Amendment. This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a
resolution of the Board of Directors of the Fund.

12. Missouri Law to Apply. This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of
the State of Missouri.

13. Force Majeure. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably beyond
its control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages resulting
from such failure to perform or otherwise from such causes.

14. Consequential Damages. Neither party to this Agreement shall be liable
to the other party for consequential damages under any provision of
this Agreement or for any consequential damages arising out of any act
or failure to act hereunder.

15. Merger of Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof whether oral or written.

16. Counterparts. This Agreement may be executed by the parties hereto on
any

<PAGE>

number of counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.

17. Reproduction of Documents. This Agreement and all schedules, exhibits,
-------------------------
attachments and amendments hereto may be reproduced by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other
similar process. The parties hereto each agree that any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding, whether or not the original is in existence and
whether or not such reproduction was made by a party in the regular course
of business, and that any enlargement, facsimile or further reproduction
shall likewise be admissible in evidence.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.

EACH REGISTERED INVESTMENT COMPANY LISTED
ON EXHIBIT A HERETO

By:

Title:

INVESTORS FIDUCIARY TRUST COMPANY

By:

Title:

<PAGE>

EXHIBIT A

Bull & Bear Global Income Fund, Inc.

Bull & Bear Municipal Income Fund, Inc.

Bull & Bear U.S. Government Securities Fund, Inc.

<PAGE>

INVESTORS FIDUCIARY TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*

Service Performed Responsibility
IFTC Fund

1. Receives orders for the purchase of Shares. x

2. Issue Shares and hold Shares in
Shareholders accounts. x

3. Receive redemption requests. x (Issue
certificate, redeem only the fractional shares)

4. Effect transactions 1-3 above directly with
broker-dealers. x (IFTC only 2-3)

5. Pay over monies to redeeming Shareholders. x

6. Effect transfers of Shares. x

7. Prepare and transmit dividends and distributions. x

8. Issue Replacement Certificates. x

9. Reporting of abandoned property. N/A N/A

10.Maintain records of account. x

11.Maintain and keep a current and accurate
control book x x for each issue of securities.

12.Mail proxies. N/A N/A

13.Mail Shareholder reports. x x

14.Mail prospectuses to current Shareholders. N/A N/A

15.Withhold taxes on U.S. resident and
non-resident alien accounts. x

16.Prepare and file U.S. Treasury Department forms. x

17.Prepare and mail account and confirmation
statements for x Shareholders.

18.Provide Shareholder account information. x

19.Blue sky reporting. N/A N/A

* Such services are more fully described in Section 1.2 (a), (b) and (c)
of the Agreement.

Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

AMENDED BY-LAWS

BULL & BEAR GLOBAL INCOME FUND, INC.

A MARYLAND CORPORATION

<PAGE>

Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

AMENDED BY-LAWS
OF
BULL & BEAR GLOBAL 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 Global
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 November 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. The secretary shall call a special meeting of the stockholders on the
written request of stockholders entitled to cast at least a majority of all the
votes entitled to be cast at the meeting. Such request shall state the purpose
of such meeting and the matters proposed to be acted on thereat, and no other
business shall be transacted at any such special meeting. The secretary shall
inform such stockholders of the reasonably estimated costs of preparing and
mailing the notice of the meeting, and upon payment to the Corporation of such
costs, the secretary shall give not less than ten nor more than 90 days' notice
of the time, place and purpose of the meeting in the manner provided in Section
2.3 of this Article II.

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

<PAGE>

Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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 Articles of
Incorporation, as amended and/or restated from time to time (the "Charter")
provide otherwise, at every stockholders meeting, each stock holder 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.

<PAGE>

Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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.

Section 2.9. Election of Directors. Subject to the Charter, the election of any
director 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
("Meeting"), unless such action is previously approved by the vote of a majority
of the Continuing Directors, as defined in the Charter, in which case such
action requires the affirmative vote of a plurality of the votes cast 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.

<PAGE>

Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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 Bylaws, 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

<PAGE>

Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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 one half 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

<PAGE>

Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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 calcula tions 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

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Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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

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Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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

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Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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.

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Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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

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Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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 30th day of June.

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

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Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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

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Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

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.

<PAGE>

Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997

AMENDED 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
Section 2.9. Election of Directors................................3

ARTICLE III -- BOARD OF DIRECTORS............................................3
Section 3.1. General Powers.......................................3
Section 3.2. Power to Issue and Sell Stock........................4
Section 3.3. Power to Declare Dividends...........................4
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. [Reserved.]..........................................4
Section 3.8. Regular Meetings.....................................4
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.....................................................5
Section 4.1. Organization.........................................5
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

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Bull & Bear Global Income Fund, Inc.
By-laws As Amended December 11, 1997
ARTICLE V -- OFFICERS.......................................................6
Section 5.1. Officers.........................................6
Section 5.2. Election, Tenure and Qualifications..............6
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............................13
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

[DESCRIPTION] Amended By-Laws
Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

AMENDED BY-LAWS

BULL & BEAR MUNICIPAL INCOME FUND, INC.

A MARYLAND CORPORATION

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

AMENDED 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.

ARTICLE II -- STOCKHOLDERS

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

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 2.5. Voting and Inspectors. Unless statute or the Amended and Restated
Articles of Incorpora tion, as amended and/or restated from time to time (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.

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

Section 2.9. Election of Directors. Subject to the Charter, the election of any
director 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
("Meeting"), unless such action is approved by the vote of a majority of the
Board of Directors, in which case such action requires the affirmative vote of a
plurality of the votes cast at the Meeting.

ARTICLE III -- BOARD OF DIRECTORS

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

Directors need not be stockholders of the Corporation.

Section 3.7. [Reserved.]

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

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

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

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.

ARTICLE V -- OFFICERS

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

exercise such other powers and perform such other duties as from time to time
may be assigned by the board of directors.

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

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.

ARTICLE VI -- EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

ARTICLE VII -- CAPITAL STOCK

Every certificate exchanged, surrendered for redemption or otherwise returned to
the Corporation shall be marked "canceled" with the date of cancellation.

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

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

ARTICLE VIII -- CONFLICT OF INTEREST TRANSACTIONS

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 31th day of
December.

ARTICLE X -- INDEMNIFICATION AND INSURANCE

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Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

(b) The Corporation shall not indemnify any such person
unless:

(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

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

there is reason to believe that such person
will be found to be entitled to
indemnification.

ARTICLE XI -- AMENDMENTS

<PAGE>

Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997

AMENDED 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
Section 2.9. Election of Directors............................3

ARTICLE III -- BOARD OF DIRECTORS...........................................3
Section 3.1. General Powers...................................3
Section 3.2. Power to Issue and Sell Stock....................4
Section 3.3. Power to Declare Dividends.......................4
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. [Reserved.]......................................4
Section 3.8. Regular Meetings.................................4
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....................................................5
Section 4.1. Organization.....................................5
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

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Bull & Bear Municipal Income Fund, Inc.
By-laws As Amended December 11, 1997
ARTICLE V -- OFFICERS.......................................................6
Section 5.1. Officers.........................................6
Section 5.2. Election, Tenure and Qualifications..............6
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 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

[DESCRIPTION] Amended By-Laws
Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

AMENDED BY-LAWS

BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.

A MARYLAND CORPORATION

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

AMENDED BY-LAWS
OF
BULL & BEAR U.S. GOVERNMENT SECURITIES 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 U.S. Government
Securities Fund, Inc.

ARTICLE II -- STOCKHOLDERS

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

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.

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.

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

Section 2.9. Election of Directors. Subject to the Charter, the election of any
director 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
("Meeting"), unless such action is approved by the vote of a majority of the
Board of Directors, in which case such action requires the affirmative vote of a
plurality of the votes cast at the Meeting.

ARTICLE III -- BOARD OF DIRECTORS

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

Directors need not be stockholders of the Corporation.

Section 3.7. [Reserved.]

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

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

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

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.

ARTICLE V -- OFFICERS

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

exercise such other powers and perform such other duties as from time to time
may be assigned by the board of directors.

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

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.

ARTICLE VI -- EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

ARTICLE VII -- CAPITAL STOCK

Every certificate exchanged, surrendered for redemption or otherwise returned to
the Corporation shall be marked "canceled" with the date of cancellation.

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

ARTICLE VIII -- CONFLICT OF INTEREST TRANSACTIONS

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 30th day of June.

ARTICLE X -- INDEMNIFICATION AND INSURANCE

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

(b) The Corporation shall not indemnify any such person
unless:

(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

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

there is reason to believe that such person
will be found to be entitled to
indemnification.

ARTICLE XI -- AMENDMENTS

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

AMENDED BY-LAWS

TABLE OF CONTENTS

PAGE

ARTICLE IV -- COMMITTEES....................................................5
Section 4.1. Organization.....................................5
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

<PAGE>

Bull & Bear U.S. Government Securities Fund, Inc.
By-laws As Amended November 24, 1997

ARTICLE V -- OFFICERS........................................................6
Section 5.1. Officers..........................................6
Section 5.2. Election, Tenure and Qualifications...............6
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 10.2. Insurance of Officers, Directors,
Employees and Agents.............................13
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