The sole investment objective of Bull & Bear Special Equities Fund is
capital appreciation. The Fund invests primarily in equity securities, often
involving special situations and emerging growth companies. To increase the
potential opportunities for achieving its objective, the Fund may borrow money
from banks from time to time to purchase or carry securities. The activities of
the Fund, a non-diversified management investment company, entail investment
risks significantly greater than the usual practices of most mutual funds and
may result in higher portfolio turnover, increased expenses and a greater amount
of short term capital gains and losses. There is no assurance that the Fund will
achieve its investment objective.
-------------------------------------------------------
NEWSPAPER LISTING. Shares of the Fund are sold at the net asset value per share
which is shown daily in the mutual fund section of newspapers under the "Bull &
Bear Group" heading.
-------------------------------------------------------
This prospectus contains information you should know about the Fund before
you invest. Please keep it for future reference. The Fund's Statement of
Additional Information, dated May 1, 1998, has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated by reference in this
prospectus. It is available at no charge by calling 1-800-847-4200. The SEC
maintains a Web site (http://www.sec.gov) that contains the Fund's Statement of
Additional Information, material incorporated by reference, and other
information regarding registrants that file electronically with the SEC, as does
the Fund. Fund shares are not bank deposits or obligations of, or guaranteed or
endorsed by any bank or any affiliate of any bank, and are not Federally insured
by, obligations of or otherwise supported by the U.S. Government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
<PAGE>
EXPENSE TABLES. The tables and example below are designed to help you understand
the various costs and expenses that you will bear directly or indirectly as an
investor in the Fund. A $5 monthly account fee is charged if your average
monthly balance is less than $500, unless you are in the Bull & Bear Automatic
Investment Program (see "How to Purchase Shares").
SHAREHOLDER TRANSACTION EXPENSES ANNUAL FUND OPERATING EXPENSES
Sales Load Imposed on Purchases.....NONE (as a percentage of average net assets)
Sales Load Imposed on Management Fees........ 0.87%
Reinvested Dividends....... NONE
Deferred Sales Load.................NONE 12b-1 Fees............. 1.00%
Redemption Fee within Other Expenses ......... 0.94%
30 days of purchase........ 1.00%
-----
Redemption Fee after Total Fund Operating
30 days of purchase......... NONE Expenses................... 2.81%
Exchange Fees.................... NONE
EXAMPLE 1 year 3 years 5 years 10 years
------ ------- ------- --------
You would pay the following $28 $87 $148 $314
expenses on a $1,000 investment,
assuming a 5% annual return and a
redemption at the end of each time period.
The example set forth above assumes reinvestment of all dividends and other
distributions and assumes a 5% annual rate of return as required by the SEC. THE
EXAMPLE IS AN ILLUSTRATION ONLY AND SHOULD NOT BE CONSIDERED AN INDICATION OF
PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS AND EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN. The percentages given for Annual Fund Operating
Expenses are based on the Fund's operating expenses and average daily net assets
during its fiscal year ended December 31, 1997. Long term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.'s ("NASD")
rules regarding investment companies. "Other Expenses" includes amounts paid to
the Fund's Custodian and Transfer Agent and reimbursable to the Investment
Manager and the Distributor for certain administrative and shareholder services.
FINANCIAL HIGHLIGHTS are presented below for a share of capital stock
outstanding throughout each period since the Fund's inception. The following
information is supplemental to the Fund's financial statements and report
thereon of Tait, Weller & Baker, independent accountants, appearing in the
December 31, 1997 Annual Report to Shareholders and incorporated by reference in
the Statement of Additional Information.
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
PER SHARE DATA*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $22.96 $25.42 $19.11 $23.13 $24.88 $19.38 $13.79 $21.68 $18.17 $15.75
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment loss.............. (.38) (.73) (.81) (.55) (.76) (.58) (.36) (.68) (1.14) (.86)
Net realized and unrealized gain
(loss) on investments............... 1.55 0.99 8.51 (3.28) 4.65 6.08 5.95 (7.21) 8.70 4.43
---- ---- ---- ----- ----- ---- ------ ----- --- -----
Total from investment operations. 1.17 0.26 7.70 (3.83) 3.89 5.50 5.59 (7.89) 7.56 3.57
---- ---- ---- ------ ---- ---- ---- ------ ---- ----
Less distributions:
Distributions from net realized
gains on investments............ (.75) (2.72) (1.39) (.19) (5.64) -- -- -- (4.05) (1.15)
Net increase (decrease) in
net asset value................ .42 (2.46) 6.31 (4.02)(1.75) 5.50 5.59 (7.89) 3.51 2.42
Net asset value at end of period.... $23.38 $22.96 $25.42 $19.11 $23.13 $24.88 $19.38 $13.79 $21.68 $18.17
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN........................ 5.25% 1.0% 40.5% (16.5)% 16.4% 28.4% 40.5% (36.4)% 42.3% 22.7%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of
period (000's omitted)............. $44,773 $49,840 $56,340$45,614 $73,957 $68,314 $16,738 $8,475 $6,317 $2,982
Ratio of expenses to average
net assets(a)..................... 2.53% 2.45% 2.88% 2.92% 2.74% 3.07% 2.83% 3.10% 3.50% 2.94%
Ratio of net investment loss to
average net assets............... 1.48% 2.81% 2.70% 2.43% 2.73% 2.78% 2.11% 3.19% 3.23% 1.49%
Portfolio turnover rate............. 260% 311% 319% 309% 256% 261% 384% 475% 433% 514%
Average commission per share........ $0.0505 $0.0714
</TABLE>
*Per share net investment loss and net realized and unrealized gain (loss) on
investments have been computed using the average number of shares outstanding.
These computations had no effect on net asset value per share. (a) Ratios
including interest expense were 2.81%, 2.92% and 3.67% for the years ended
December 31, 1997, 1996 and 1995, respectively. (b) Ratio after custodian fee
credits was 2.51% for the year ended December 31, 1997. Prior to 1995, such
credits were reflected in the ratio. There were no custodian fee credits for
1996 and 1995. Information relating to outstanding debt during the fiscal
periods shown below:
<TABLE>
<CAPTION>
Amount of Debt Average Amount of Average Number of Average Amount of
Fiscal Year Ended Outstanding at Debt Outstanding Shares Outstanding Debt Per Share
December 31 End of Period During the Period During the Period During the Period
<S> <C> <C> <C> <C>
1997 $3,462,218 $2,160,383 2,000,257 $1.08
1996 9,147,819 3,633,850 2,105,499 1.73
1995 0 4,925,275 2,345,320 2.10
1994 6,820,000 2,566,493 2,669,001 0.96
1993 2,469,000 4,230,400 2,680,212 1.58
1992 8,007,000 2,889,822 1,786,311 1.62
1991 168,000 715,875 997,025 0.72
1990 0 1,307,671 649,739 2.01
1989 1,600,000 733,150 193,256 3.79
1988 0 423,497 146,469 2.89
</TABLE>
TABLE OF CONTENTS
Expense Tables......................2 Distributions and Taxes...............11
Financial Highlights................2 Determination of Net Asset Value......12
General.............................3 Investment Manager....................12
Risk Factors........................3 Performance Information...............13
How to Purchase Shares..............7 Distribution of Shares................13
Shareholder Services................8 Capital Stock.........................14
How to Redeem Shares...............10 Custodian and Transfer Agent..........14
GENERAL
PURPOSE OF THE FUND. The Fund is designed for investors seeking solely capital
appreciation. The Fund is not intended for investors whose objective is income
or conservation of capital, and you should not consider a purchase of Fund
shares to be a complete investment program.
INVESTMENT TECHNIQUES. The Fund seeks capital appreciation by investing
aggressively, depending on the Investment Manager's assessment of economic and
market factors, in equity securities, warrants, convertible securities, and debt
instruments. The Fund may invest in the securities of a particular company that,
in the opinion of the Investment Manager, will appreciate within a reasonable
period of time, typically because of a development solely applicable to that
company, and regardless of general business conditions or movements of the
market as a whole ("special situations"). The Investment Manager may also use
strategies involving short sales, options, futures, forward currency contracts,
and borrowings for investment purposes ("leverage"). Generally, the Investment
Manager seeks to invest in the special situations and emerging growth companies
offering the greatest potential capital appreciation, although there is no
assurance that the Fund will achieve its objective.
THE FUND'S INVESTMENT PROGRAM. Under normal conditions, at least 65% of the
Fund's total assets will be invested long or short in equity securities of U.S.
and foreign issuers and up to 35% may be invested for capital appreciation in
corporate bonds, debentures, or preferred stocks (both convertible and
non-convertible) of U.S. and foreign issuers, securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities ("U.S. Government
Securities"), and municipal securities. These are fundamental policies that may
not be changed without shareholder approval. When the Investment Manager deems
it advisable, the Fund may, for temporary defensive purposes or in anticipation
of more favorable opportunities for the purchase of equity securities, hold cash
or invest all or a portion of its assets in short term fixed income securities
or repurchase agreements.
RISK FACTORS
Because of the following considerations, the Fund's investment program should
be considered speculative and involving substantial risk and should not be
considered a complete investment program. The investment program of the Fund is
designed for investors seeking capital appreciation, rather than current income,
and who are willing to assume the risks inherent in the Fund's investment
policies and practices. The activities in which the Fund engages entail
investment risks significantly greater than are inherent in the usual practices
of most mutual funds and may result in higher portfolio turnover, increased
expenses, and a greater amount of capital gains and losses.
SPECIAL SITUATIONS. The Fund may invest without limit in special situations.
Developments creating special situations might include, among others:
liquidations, reorganizations, recapitalizations, mergers, material litigation,
technological breakthroughs, and new management or management policies. Although
large, well-known companies may be involved, special situations more often
involve comparatively small or unseasoned companies. Special situations often
involve much greater risk than is inherent in ordinary investments due to, among
other things, a lack of or presumed inapplicability of the company's operating
history, a limited market in the company's securities, and the unreliable nature
of the company's anticipated earnings
2
<PAGE>
growth. Companies in actual or anticipated reorganizations or restructurings
often provide limited financial information and markets for their securities may
be erratic and volatile.
SHORT TERM INVESTING. The Fund may seek capital appreciation by investing for
the short term on the basis of both technical and fundamental considerations as
evaluated by the Investment Manager. Long term investments, by contrast, are
usually based upon fundamental evaluations. Short term investing may result in
the Fund's portfolio turnover rate being substantially greater than that of
similar investment companies. In 1995 the Fund's portfolio turnover rate was
319%, in 1996 it was 311% and in 1997 it was 260%. Higher turnover may increase
Fund brokerage costs and taxes payable by shareholders.
BORROWING. The Fund may borrow money from banks (including its custodian bank)
to purchase and carry securities and will pay interest thereon. If the
investment income on securities purchased with borrowed money exceeds the
interest paid on the borrowing, the Fund's income will be correspondingly
higher. If the investment income fails to cover the Fund's costs, including
interest on borrowings, or if there are losses, the net asset value of the
Fund's shares will decrease faster than would otherwise be the case. Such
borrowing is referred to as leverage, is speculative, and increases both
investment opportunity and investment risk. The Investment Company Act of 1940,
as amended ("1940 Act"), requires the Fund to maintain asset coverage of at
least 300% for all such borrowings, and should such asset coverage at any time
fall below 300%, the Fund will be required to reduce its borrowing within three
days to the extent necessary to meet the requirements of the 1940 Act. To reduce
its borrowing the Fund might be required to sell securities at a disadvantageous
time. Interest on money borrowed is an expense the Fund would not otherwise
incur, and it may therefore have little or no investment income during periods
of substantial borrowings.
SHORT SALES. The Fund may from time to time use short sales, which means that
the Fund may sell a security that it does not own in the hope of replacing it by
a later purchase at a lower price. In order to make delivery to the buyer, the
Fund must borrow the security. When it does, the Fund incurs an obligation to
replace that security, whatever its price may be, at the time the Fund purchases
it for delivery to the lender. The Fund must also pay to the lender of the
security the dividends or interest payable during such period and may have to
pay a premium to borrow the security. The proceeds of the short sale will be
retained by the broker, to the extent necessary to meet the margin requirements,
until the short position is closed out. The obligation to restore the borrowed
security will at all times also be secured by collateral consisting of cash or
liquid securities whose value is marked to the market daily. In addition to the
amount required to be maintained by the broker, a similarly collateralized
deposit will be made to a segregated account at the Fund's custodian bank in an
amount such that the value of these two deposits will, at all times, be at least
equal to the current market value of the securities sold short. Ordinarily, no
interest will be received by the Fund on the proceeds of the short sale held by
the broker, although income from the collateral securities will belong to the
Fund. The Fund will incur a loss, which could be substantial, if the price of
the security increases between the date of the short sale and the date on which
it purchases securities to replace those borrowed. The Fund will realize a gain
if the security declines in price between those dates. Any such gain will be a
short term gain.
The frequency of short sales by the Fund may vary substantially, and no
specified portion of the Fund's assets will be invested in short sales. However,
not more than 25% of the Fund's net assets will be used to collateralize short
sales. To adhere to the 25% limitation, the Fund may be required to cover short
sales at a disadvantageous time.
The Fund may also make short sales "against the box." A short sale is "against
the box" to the extent that the Fund contemporaneously owns or has the right to
obtain without additional cost securities identical to those sold short. Such
sales will not be subject to the limitations referred to above.
WARRANTS. Warrants give their holder the right to purchase a given number of
shares of a particular company at specified prices within certain periods of
time. The purchaser of a warrant expects that the market price of the security
to which the warrant pertains will exceed the exercise price before the
warrant's expiration date. The purchaser risks losing the entire purchase price
of the warrant if the market price does not rise. Warrants are usually tradable
in the open market without actual exercise. Warrants are sometimes sold in unit
form with other securities of an issuer, and are frequently employed in
financing young, unseasoned companies. A warrant's purchase price varies with
its exercise price, current market value of the underlying security, life of the
warrant and various other investment factors.
3
<PAGE>
The purchase price of warrants and premiums on put and call options written by
others, combinations thereof, or similar options will be limited to no more than
20% of the Fund's net assets. This non-fundamental limitation may cause the Fund
to dispose of warrants or put or call options at disadvantageous times.
4
<PAGE>
OPTIONS, FUTURES CONTRACTS, AND FORWARD CURRENCY CONTRACTS. The Fund may
purchase call options on
securities that the Investment Manager intends to include in the Fund's
portfolio in order to fix the cost of a future purchase or to attempt to enhance
return by, for example, participating in an anticipated price increase of a
security. The Fund may purchase put options to hedge against a decline in the
market value of securities held in the Fund's portfolio or to attempt to enhance
return. The Fund may write (sell) covered put and call options on securities in
which it is authorized to invest. The Fund may purchase and write covered
straddles, purchase and write put and call options on stock and bond indexes,
and take positions in options on foreign currencies to hedge against the risk of
foreign exchange rate fluctuations on foreign securities the Fund holds in its
portfolio or that it intends to purchase. The Fund may purchase and sell futures
contracts on interest rates, stock and bond indexes, and foreign currencies and
may purchase put and call options and write covered put and call options on such
futures contracts.
The Fund may enter into forward currency contracts to set the rate at which
currency exchanges will be made for contemplated or completed transactions. The
Fund might also enter into forward currency contracts in amounts approximating
the value of one or more portfolio positions to fix the U.S. dollar value of
those positions. For example, when the Investment Manager believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, the Fund may enter into a forward contract to sell, for
a fixed amount of dollars, the amount of foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in such
foreign currency. The Fund has no specific limitation on the percentage of
assets it may commit to foreign currency exchange contracts, except that it will
not enter into a forward contract if the amount of assets set aside to cover the
contract would impede portfolio management or the Fund's ability to meet
redemption requests.
Strategies with options, financial futures, and forward currency contracts may
be limited by market conditions, regulatory limits and tax considerations, and
the Fund might not employ any of the strategies described above. There can be no
assurance that any strategy used will be successful. The loss from investing in
futures transactions is potentially unlimited. Options and futures may fail as
hedging techniques in cases where price movements of the securities underlying
the options and futures do not follow the price movements of the portfolio
securities subject to the hedge. Gains and losses on investments in options and
futures depend on the Investment Manager's ability to predict correctly the
direction of stock prices, interest rates, and other economic factors. In
addition, the Fund will likely be unable to control losses by closing its
position where a liquid secondary market does not exist and there is no
assurance that a liquid secondary market for hedging instruments will always
exist. It also may be necessary to defer closing out hedged positions to avoid
adverse tax consequences. The percentage of the Fund's assets segregated to
cover its obligations under options, futures, or forward currency contracts
could impede effective portfolio management or the ability to meet redemption or
other current obligations. To the extent that the Fund enters into futures
contracts, options on futures contracts and options on foreign currencies traded
on a Commodity Futures Trading Commission ("CFTC") regulated exchange, in each
case that is not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the liquidation value of the Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts to which the Fund is a
party.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest in securities that are
not widely traded, and the Fund's position in such securities may be substantial
in relation to their market. In some cases it may be difficult for the Fund to
dispose of such securities at prevailing market prices in order to meet
redemptions. As a non-fundamen tal investment restriction, the Fund may invest
up to 15% of its net assets in illiquid securities, including repurchase
agreements with a maturity of more than seven days.
FOREIGN SECURITIES, MARKETS, AND CURRENCIES. You should understand and consider
carefully the substantial risks involved in foreign investing. Investing in
foreign securities, which are generally denominated in foreign currencies, and
utilization of forward contracts on foreign currencies involve certain
considerations comprising both risk and opportunity not typically associated
with investing in U.S. securities. These considerations include: fluctuations in
currency exchange rates; restrictions on foreign investment and repatriation of
capital; costs of converting foreign currency into U.S. dollars; greater price
volatility and trading illiquidity; less public information on issuers of
securities; non-negotiable brokerage commissions; difficulty in enforcing legal
rights outside of the United States; lack of uniform accounting, auditing and
financial reporting standards; the possible imposition of foreign taxes,
exchange controls (which may include suspension of the ability to transfer
currency from a given country), and currency restrictions; and the possible
greater political, economic and social instability of developing as well as
developed countries, including nationalization, expropriation of assets, and
war. Furthermore, individual
5
<PAGE>
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position. These
risks are often heightened for investments in developing countries and emerging
markets or when the Fund's investments are concentrated in a small number of
countries. In addition, because transactional and custodial expenses for foreign
securities are generally higher than for domestic securities, the Fund's expense
ratio can be expected to be higher than that of investment companies investing
exclusively in domestic securities.
The Fund may purchase securities on U.S. and foreign stock exchanges or in the
over-the-counter market. Foreign stock markets are generally not as developed or
efficient as those in the United States. In most foreign markets volume and
liquidity are less than in the United States and, at times, volatility of price
can be greater than in the United States. Fixed commissions on some foreign
stock exchanges are higher than the negotiated commissions on U.S. exchanges.
There is generally less government supervision and regulation of foreign stock
exchanges, brokers and companies than in the United States. If the Fund invests
in countries in which settlement of transactions is subject to delay, its
ability to purchase and sell portfolio securities at the time it desires may be
hampered. Delays in settlement practices in foreign countries may also affect
the Fund's liquidity, making it more difficult to meet redemption requests, or
require the Fund to maintain a greater portion of its assets in money market
investments in order to meet such requests. Some of the securities in which the
Fund invests may not be widely traded, and the Fund's position in such
securities may be substantial in relation to the market for such securities.
Accordingly, it may be difficult for the Fund to dispose of such securities at
prevailing market prices in order to meet redemption requests.
Since investment in foreign securities usually involves foreign currencies and
since the Fund may temporarily hold cash in bank deposits in foreign currencies
in order to facilitate portfolio transactions, the value of the assets of the
Fund as measured in U.S. dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations. For
example, if the value of the U.S. dollar decreases relative to a foreign
currency in which a Fund investment is denominated or which is temporarily held
by the Fund to facilitate portfolio transactions, the value of such Fund assets
and the Fund's net asset value per share will increase, all else being equal.
Conversely, an increase in the value of the U.S. dollar relative to such a
foreign currency will result in a decline in the value of such Fund assets and
its net asset value per share. The Fund may incur additional costs in connection
with conversions of currencies and securities into U.S. dollars. The Fund will
conduct its foreign currency exchange transactions either on a spot (i.e., cash)
basis, or through entering into forward currency contracts. The Fund generally
will not enter into a forward contract with a term of greater than one year.
LENDING. Pursuant to an agency arrangement with an affiliate of its Custodian,
the Fund may lend portfolio securities or other assets through such affiliate
for a fee to other parties. The Fund's agreement requires that the loans be
continuously secured by cash, securities issued or guaranteed by the U. S.
Government, its agencies or instrumentalities, or any combination of cash and
such securities, as collateral equal at all times to at least the market value
of the assets lent. Loans of portfolio securities may not exceed one-third of
the Fund's total assets. There are risks to the Fund of delay in receiving
additional collateral and risks of delay in recovery of, and failure to recover,
the assets lent should the borrower fail financially or otherwise violate the
terms of the lending agreement. Loans will be made only to borrowers deemed to
be creditworthy. Any loan made by the Fund will provide that it may be
terminated by either party upon reasonable notice to the other party.
OTHER INVESTMENTS. The Fund may also invest in repurchase agreements, U.S.
Government Securities, municipal securities, preferred stocks, and debt
securities (including lower rated debt securities). In the last year however,
the Fund did not invest more than 5% of its net assets in such securities and
does not currently intend to do so.
OTHER INFORMATION. The Fund is "non-diversified," as defined in the 1940 Act,
but intends to continue to qualify as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended (the "Code") for Federal
income tax purposes. This means, in general, that more than 5% of the Fund's
total assets may be invested in the securities of one issuer (including a
foreign government), but only if at the close of each quarter of the Fund's
taxable year, the aggregate amount of such holdings does not exceed 50% of the
value of its total assets and no more than 25% of the value of its total assets
is invested in the securities of a single issuer. To the extent that the Fund's
portfolio at times may include the securities of a smaller number of issuers
than if it were diversified (as defined in the 1940 Act), the Fund will at such
times be subject to greater risk with respect to its portfolio securities than
an investment company that invests in a broader range of securities in that
changes in the financial condition or market assessment of a single issuer may
cause greater fluctuation in the Fund's total
6
<PAGE>
return. In addition to the Fund's fundamental investment objective and the
fundamental policies stated above, the Fund has adopted certain fundamental
investment restrictions which may not be changed without shareholder approval.
These fundamental restrictions are set forth in the Statement of Additional
Information. All other investment policies described herein, unless otherwise
stated, are not fundamental and may be changed by the Fund's Board of Directors
without shareholder action.
HOW TO PURCHASE SHARES
The Fund's shares are sold on a continuing basis at the net asset value (see
"Determination of Net Asset Value"). The minimum initial investment is $1,000
for regular and Uniform Gifts/Transfers to Minors Act custody accounts, $1,000
for traditional deductible individual retirement accounts ("IRAs"), Roth IRAs,
simplified employee pension plan IRAs ("SEP-IRAs"), savings incentive match plan
for employee IRAs ("SIMPLE IRAs"), rollover IRAs, 403(b) plan accounts, and $500
for Education IRAs. The minimum subsequent investment is $100. The initial
investment minimums are waived if a shareholder elects to invest $100 or more
each month in the Fund through the Bull & Bear Automatic Investment Program (see
"Additional Investments" below). The Fund in its discretion may waive or lower
the investment minimums.
INITIAL INVESTMENT. The Account Application that accompanies this prospectus
should be completed, signed and, with a check or other negotiable bank draft
drawn to the order of Special Equities Fund, mailed to Investor Service Center,
Box 419789, Kansas City, MO 64141-6789. Initial investments also may be made by
having your bank wire money, as set forth below, in order to avoid mail delays.
ADDITIONAL INVESTMENTS. Additional investments may be made conveniently at any
time by any one or more of the following methods:
o BULL & BEAR AUTOMATIC INVESTMENT PROGRAM. With the Bull & Bear Automatic
Investment Program, you can establish a convenient and affordable long term
investment program through one or more of the Plans explained below. Each Plan
is designed to facilitate an automatic monthly investment of $100 or more into
your Fund account.
The BULL & BEAR BANK TRANSFER PLAN lets you purchase Fund shares on a
certain day each month by transferring electronically a specified
dollar amount from your regular checking account, NOW account, or
bank money market deposit account.
In the BULL & BEAR SALARY INVESTING PLAN, part or all of your salary
may be invested electronically in Fund shares on each pay date,
depending upon your employer's direct deposit program.
The BULL & BEAR GOVERNMENT DIRECT DEPOSIT PLAN allows you to deposit
automatically part or all of certain U.S. Government payments into
your Fund account. Eligible U.S. Government payments include Social
Security, pension benefits, military or retirement benefits, salary,
veteran's benefits and most other recurring payments.
For more information concerning these Plans, or to request the necessary
authorization form(s), please call Investor Service Center, 1-800-847-4200. You
may modify or terminate the Bank Transfer Plan at any time by written notice
received at least 10 days prior to the scheduled investment date. To modify or
terminate the Salary Investing Plan or Government Direct Deposit Plan, you
should contact, respectively, your employer or the appropriate U.S. Government
agency. The Fund reserves the right to redeem any account if participation in
the Program is terminated and the account's value is less than $1,000. The
Program and the Plans do not assure a profit or protect against loss in a
declining market, and you should consider your ability to make purchases when
prices are low.
o CHECK. Mail a check or other negotiable bank draft ($100 minimum), drawn to
the order of Special Equities Fund, together with a Bull & Bear FastDeposit
form to Investor Service Center, Box 419789, Kansas City, MO 64141-6789. If
you do not use that form, please send a letter indicating the Fund and account
number to which the subsequent investment is to be credited, and name(s) of
the registered owner(s).
o ELECTRONIC FUNDS TRANSFER (EFT). With EFT, you may purchase additional Fund
shares quickly and simply, just by calling Investor Service Center,
1-800-847-4200. We will contact the bank you designate on your Account
Application or Authorization Form to arrange for the EFT, which is done
through the Automated
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Clearing House system, to your Fund account. For requests received by 4 p.m.,
eastern time, the investment will be credited to your Fund account ordinarily
within two business days. There is a $100 minimum for each EFT investment.
Your designated bank must be an Automated Clearing House member and any
subsequent changes in bank account information must be submitted in writing
with a voided check.
o FEDERAL FUNDS WIRE. You may wire money, by following the procedures set forth
below, to receive that day's net asset value per share.
INVESTING BY WIRE. For an initial investment by wire, you must first telephone
Investor Service Center, 1-800- 847-4200, to give the name(s) under which the
account is to be registered, tax identification number, the name of the bank
sending the wire, and to be assigned a Bull & Bear Special Equities Fund account
number. You may then purchase shares by requesting your bank to transmit
immediately available funds ("Federal funds") by wire to: United Missouri Bank
NA, ABA #10-10-00695; for Account 98-7052-724-3; Special Equities Fund. Your
account number and name(s) must be specified in the wire as they are to appear
on the account registration. You should then enter your account number on your
completed Account Application and promptly forward it to Investor Service
Center, Box 419789, Kansas City, MO 64141-6789. This service is not available on
days when the Federal Reserve wire system is closed. Subsequent investments by
wire may be made at any time without having to call Investor Service Center by
simply following the same wiring procedures.
SHAREHOLDER ACCOUNTS. When you invest in the Fund, your account will be credited
with all full and fractional shares (to three decimal places), together with any
dividends and other distributions that are paid in additional shares (see
"Distributions and Taxes"). For joint tenant accounts, any account owner has the
authority to act on the account without notice to the other account owners.
Investor Service Center in its sole discretion and for its protection may, but
is not obligated to, require the written consent of all account owners of a
joint tenant account prior to acting upon the instructions of any account owner.
Stock certificates will be issued only for full shares when requested in
writing. In order to facilitate redemptions and exchanges and provide
safekeeping, we recommend that you do not request certificates. You will receive
transaction confirmations upon purchasing or selling shares, and quarterly
statements. Shares of the Fund may also be purchased through certain
broker-dealers and other financial intermediaries that have entered into selling
agreements or related arrangements. Investors may be charged a fee by such
broker or financial intermediary if they effect transactions through such
entity. The Fund or the Distributor may, from time to time, make payments to
broker/dealers or other financial intermediaries for certain services to the
Fund and/or their shareholders, including sub-administration, sub-transfer
agency and shareholder servicing.
WHEN ORDERS ARE EFFECTIVE. The purchase price for Fund shares is the net asset
value of such shares next determined after receipt of a purchase order in proper
form. All purchases are accepted subject to collection at full face value in
Federal funds. Checks must be drawn in U.S. dollars on a U.S. bank. No third
party checks will be accepted and the Fund reserves the right to reject any
order for any reason. Accounts are charged $30 by the Transfer Agent for
submitting checks for investment which are not honored by the investor's bank.
SHAREHOLDER SERVICES
You may modify or terminate your participation in any of the Fund's special
plans or services at any time. Shares or cash should not be withdrawn from any
tax-advantaged retirement plan described below, however, without consulting a
tax adviser concerning possible adverse tax consequences. Additional information
regarding any of the following services is available from Investor Service
Center, 1-800-847-4200.
ELECTRONIC FUNDS TRANSFER (EFT). You automatically have the privilege of linking
your bank account designated on your Account Application or Authorization Form
and your Fund account through Bull & Bear's EFT service. With EFT, you use the
Automated Clearing House system to electronically transfer money quickly and
safely between your bank and Fund accounts. EFT may be used for purchasing and
redeeming Fund shares, direct deposit of dividends and other distributions into
your bank account, the Automatic Investment Program, the Systematic Withdrawal
Plan, and systematic IRA distributions. You may decline this privilege by
checking the indicated box on the Account Application. Any subsequent changes in
bank account information must be submitted in writing (and the Transfer Agent
may require the signature to be guaranteed), with a voided check.
DIVIDEND SWEEP PRIVILEGE. You may elect to have automatically invested either
all dividends or all dividends and other distributions paid by the Fund in any
other Bull & Bear Fund. Shares of the other Bull & Bear Fund will be purchased
at the current net asset value calculated on the payment date. For more
information concerning this
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privilege and the other Bull & Bear Funds, or to request a Dividend Sweep
Authorization Form, please call Investor Service Center, 1-800-847-4200. You may
cancel this privilege by mailing written notification to Investor Service
Center, Box 419789, Kansas City, MO 64141-6789. To select a new Bull & Bear Fund
after cancellation, you must submit a new Authorization Form. Enrollment in or
cancellation of this privilege is generally effective three business days
following receipt. This privilege is available only for existing accounts and
may not be used to open new accounts.
SYSTEMATIC WITHDRAWAL PLAN. If you own Fund shares with a value of at least
$20,000 you may elect an automatic monthly or quarterly withdrawal of cash from
your Fund account in fixed or variable amounts, subject to a minimum amount of
$100. Under the Systematic Withdrawal Plan, all dividends and other
distributions, if any, are reinvested in the Fund.
ASSIGNMENT. Fund shares may be transferred to another owner. Instructions are
available from Investor Service Center, 1-800-847-4200.
EXCHANGE PRIVILEGE. You may exchange at least $500 worth of Fund shares for
shares of any Bull & Bear Fund listed below (provided the registration is
exactly the same, the shares may be sold in your state of residence, and the
exchange may otherwise legally be made).
To exchange shares, please call Investor Service Center toll-free at
1-800-847-4200 between 9 a.m. and 5 p.m., eastern time, on any Fund business day
and provide the following information: account registration information
including address, account number and taxpayer identification number;
percentage, number, or dollar value of shares to be redeemed; name and, if
different, the account number of the Bull & Bear Fund to be purchased; and your
identity and telephone number. The other Bull & Bear Funds are:
o BULL & BEAR DOLLAR RESERVES is a high quality money market fund investing in
U.S. Government securities. Income is generally free from most state and local
income taxes. Free unlimited check writing ($250 minimum per check). Pays
monthly dividends.
o BULL & BEAR GOLD INVESTORS seeks long term capital appreciation in investments
with the potential to provide a hedge against inflation and preserve the
purchasing power of the dollar.
o BULL & BEAR U.S. AND OVERSEAS FUND invests worldwide for the highest possible
total return.
Exchange requests received between 9 a.m. and 4 p.m., eastern time, on any
business day of the Fund will be effected at the net asset values of the Fund
and the other Bull & Bear Fund as determined at the close of that business day.
Exchange requests received between 4 p.m. and 5 p.m., eastern time, on any
business day of the Fund will be effected at the net asset values of the Fund
and the other Bull & Bear Fund as determined at the close of the next Fund
business day. The Fund is designed as a long term investment, and short term
trading is discouraged. Accordingly, if shares of the Fund held for 30 days or
less are redeemed or exchanged, the Fund will deduct a redemption fee equal to
one percent of the net asset value of shares redeemed or exchanged. The fee will
be retained by the Fund and used to offset the transaction costs that short term
trading imposes on the Fund and its shareholders. If an account contains shares
with different holding periods (i.e. some shares held 30 days or less, some
shares held 31 days or more), the shares with the longest holding period will be
redeemed first to determine if the Fund's redemption fee applies. If you are
unable to reach Investor Service Center at the above telephone number you may,
in emergencies, call 1-212-363-1100 or communicate by fax to 1-212- 363-1103.
Exchanges may be difficult or impossible to implement during periods of rapid
changes in economic or market conditions. Exchange privileges may be terminated
or modified by the Fund without notice. For tax purposes, an exchange is treated
as a redemption and purchase of shares. A free prospectus containing more
complete information including charges, expenses and performance, on any of the
Funds listed above is available from Investor Service Center, 1-800-847-4200.
The other Fund's prospectus should be read carefully before exchanging shares.
You may give exchange instructions to Investor Service Center by telephone
without further documentation. If you have requested share certificates, this
procedure may be utilized only if, prior to giving telephone instructions, you
deliver the certificates to the Transfer Agent for deposit into your account.
o BULL & BEAR SECURITIES (DISCOUNT BROKERAGE ACCOUNT) TRANSFERS. If you have an
account at Bull & Bear Securities, Inc., an affiliate of the Investment
Manager and a wholly owned subsidiary of Bull & Bear Group, Inc. offering
discount brokerage services, you may access your investment in any Bull & Bear
Fund to pay for securities purchased in your brokerage account and have
proceeds of securities sold in your brokerage
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account used to purchase shares of any Bull & Bear Fund. You may request a
Discount Brokerage Account Application from Bull & Bear Securities, Inc. by
calling toll-free at 1-800-262-5800.
TAX-ADVANTAGED RETIREMENT PLANS. These plans provide an opportunity to set aside
money for retirement in a tax-advantaged account in which earnings can be
compounded without incurring a tax liability until the money and earnings are
withdrawn. Contributions may be fully or partially deductible for Federal income
tax purposes as noted below. Information on any of these plans is available from
Investor Service Center by calling toll-free at 1-800-847-4200.
The minimum initial investment to establish a Bull & Bear Education IRA is
$500. The minimum initial investment to establish any other Bull & Bear IRA or
retirement account is $1,000.
Minimum subsequent investments are $100. The initial minimum investments are
waived if you elect to invest $100 or more each month in the Fund through the
Bull & Bear Automatic Investment Program. There are no set-up fees for any Bull
& Bear IRA or retirement account. Subject to change on 30 days' notice, the plan
custodian charges Bull & Bear IRAs (excluding Bull & Bear Education IRA) and
retirement accounts a $10 annual fiduciary fee, $10 for each distribution prior
to age 59 1/2, and a $20 plan termination fee; however, the annual fiduciary fee
is waived if your Bull & Bear IRA or retirement account has assets of $10,000 or
more or if you invest regularly through the Bull & Bear Automatic Investment
Program.
HOW TO REDEEM SHARES
Generally, you may redeem by any of the methods explained below. Requests for
redemption should include the following information: your account registration
information including address, account number and taxpayer identification
number; dollar value, number or percentage of shares to be redeemed; how and to
where the proceeds are to be sent; if applicable, the bank's name, address, ABA
routing number, bank account registration and account number, and a contact
person's name and telephone number; and your daytime telephone number.
BY MAIL. You may request that the Fund redeem any amount of shares by submitting
a written request to Investor Service Center, Box 419789, Kansas City, MO
64141-6789, signed by the record owner(s). If the written request is sent to the
Fund, it will be forwarded to the above address. If stock certificates have been
issued for shares being redeemed, they must accompany the written request.
BY TELEPHONE. You may telephone Investor Service Center, 1-800-847-4200 to
expedite redemption of Fund
shares if share certificates have not been issued.
You may redeem as little as $250 worth of shares by requesting Bull & Bear's
Electronic Funds Transfer (EFT) service. With EFT, you can redeem Fund shares
quickly and conveniently because Investor Service Center will contact the bank
designated on your Account Application or Authorization Form to arrange for the
electronic transfer of your redemption proceeds (through the Automated Clearing
House system) to your bank account. EFT proceeds are ordinarily available in
your bank account within two business days.
If you are redeeming $1,000 or more worth of shares, you may request that the
proceeds be mailed to your address of record or mailed or wired to your
authorized bank.
Telephone requests received on Fund business days by 4 p.m., eastern time,
will be redeemed from your account that day, and if after, on the next Fund
business day. Any subsequent changes in bank account information must be
submitted in writing, signature guaranteed, with a voided check. If you are
unable to reach Investor Service Center at the above telephone number you may,
in emergencies, call 1-212-363-1100 or communicate by fax to 1-212-363-1103.
Redemptions by telephone may be difficult or impossible to implement during
periods of rapid changes in economic or market conditions.
CHECK WRITING ACCESS. You may exchange a minimum of $500 at any time by
toll-free telephone call into Bull & Bear Dollar Reserves, Bull & Bear's money
market fund, offering free personalized checks, a $250 check writing minimum
(there is no check writing minimum for Bull & Bear Securities Performance
Plus(R) discount brokerage accounts), and no limit on the number of checks that
may be written. A signature card, which should be submitted for the check
writing privilege, and a free Bull & Bear Dollar Reserves prospectus containing
more complete information including yield, charges and expenses is available
from Investor Service Center, 1-800-847- 4200. Please read the prospectus
carefully before exchanging.
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REDEMPTION PRICE AND FEES. The redemption price is the net asset value per share
next determined after receipt of a redemption request in proper form. The Fund
is designed as a long term investment, and short term trading is discouraged.
Accordingly, if shares of the Fund held for 30 days or less are redeemed or
exchanged, the Fund will deduct a redemption fee equal to one percent of the net
asset value of shares redeemed or exchanged. The fee will be retained by the
Fund and used to offset the transaction costs that short term trading imposes on
the Fund and its shareholders. If an account contains shares with different
holding periods (i.e. some shares held 30 days or less, some shares held 31 days
or more), the shares with the longest holding period will be redeemed first to
determine if the Fund's redemption fee applies. Shares acquired through the
Dividend Sweep Privilege and the reinvestment of dividends and capital gains or
redeemed under the Systematic Withdrawal Plan are exempt from the redemption
fee. Registered broker/dealers, investment advisers, banks, and insurance
companies may open accounts and redeem shares by telephone or wire and may
impose a charge for handling purchases and redemptions when acting on behalf of
others.
REDEMPTION PAYMENT. Payment for shares redeemed will ordinarily be made within
seven days after receipt of the redemption request in proper form. The right of
redemption may not be suspended, or date of payment delayed more than seven
days, except for any period (i) when the New York Stock Exchange is closed or
trading thereon is restricted as determined by the SEC; (ii) under emergency
circumstances as determined by the SEC that make it not reasonably practicable
for the Fund to dispose of securities owned by it or fairly to determine the
value of its assets; or (iii) as the SEC may otherwise permit. The mailing of
proceeds on redemption requests involving any shares purchased by personal,
corporate, or government check or EFT transfer is generally subject to a fifteen
business day delay to allow the check or transfer to clear. The fifteen day
clearing period does not affect the trade date on which a purchase or redemption
order is priced, or any dividends and capital gain distributions to which you
may be entitled through the date of redemption. The clearing period does not
apply to purchases made by wire. Due to the relatively higher cost of
maintaining small accounts, the Fund reserves the right, upon 45 days' notice,
to redeem any account, other than IRA and other Bull & Bear prototype retirement
plan accounts, worth less than $500 except if solely from market action, unless
an investment is made to restore the minimum value.
TELEPHONE PRIVILEGES. You automatically have all telephone privileges to, among
other things, authorize purchases, redemptions and exchanges, with EFT or by
other means, unless declined on the Account Application or otherwise in writing.
Neither the Fund nor Investor Service Center shall be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine and if it does not, it may be
liable for losses due to unauthorized or fraudulent transactions. These
procedures include requiring personal identification prior to acting upon
telephone instructions, providing written confirmation of such transactions, and
recording telephone conversations. The Fund may modify or terminate any
telephone privileges or shareholder services (except as noted) at any time
without notice.
SIGNATURE GUARANTEES. No signature guarantees are required when payment is to be
made to you at your address of record. If the redemption proceeds are to be paid
to a non-shareholder of record, or to an address other than your address of
record, or the shares are to be assigned, the Transfer Agent may require that
your signature be guaranteed by an entity acceptable to the Transfer Agent, such
as a commercial bank or trust company or member firm of a national securities
exchange or of the NASD. A notary public may not guarantee signatures. The
Transfer Agent may require further documentation, and may restrict the mailing
of redemption proceeds to your address of record within 60 days of such address
being changed unless you provide a signature guarantee as described above.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. The Fund pays dividends annually to its shareholders from its net
investment income, if any. The Fund also makes an annual distribution to its
shareholders out of any net realized capital gains, after offsetting any capital
loss carryover, and any net realized gains from foreign currency transactions.
Dividends and other distributions, if any, are declared and payable to
shareholders of record on a date in December of each year. Such distributions
may be paid in January of the following year, in which event they will be deemed
received by the shareholders on the preceding December 31 for tax purposes. The
Fund may also make an additional distribution following the end of its fiscal
year out of any undistributed income and capital gains.
Dividends and other distributions are paid in additional Fund shares or shares
of another Bull & Bear Fund pursuant to the Dividend Sweep Privilege, unless you
elect to receive cash on the Account Application or so elect
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subsequently by calling Investor Service Center, 1-800-847-4200. For Federal
income tax purposes, dividends and other distributions are treated in the same
manner whether received in additional shares of the Fund or another Bull & Bear
Fund or in cash. Any election will remain in effect until you notify Investor
Service Center to the contrary.
TAXES. The Fund intends to continue to qualify for treatment as a RIC under the
Code so that it will be relieved of Federal income tax on that part of its
investment company taxable income (generally consisting of net investment
income, net short term capital gains, and net gains from certain foreign
currency transactions) and net capital gain (the excess of net long term capital
gain over net short term capital loss) that is distributed to its shareholders.
Dividends paid by the Fund from its investment company taxable income (whether
paid in cash or in additional shares) generally are taxable to its shareholders,
other than shareholders that are not subject to tax on their income, as ordinary
income to the extent of the Fund's earnings and profits; a portion of those
dividends may be eligible for the corporate dividends-received deduction.
Distributions by the Fund of its net capital gain (whether paid in cash or in
additional shares) when designated as such by the Fund, are taxable to its
shareholders as long term capital gains, regardless of how long they have held
their Fund shares. The Code provides that an individual generally will be taxed
on his or her net capital gain at a maximum rate of 28% with respect to capital
gain from securities held for more than one year but not more than 18 months and
at a maximum rate of 20% with respect to capital gain from securities held for
more than 18 months. The Fund notifies its shareholders following the end of
each calendar year of the amounts of dividends and capital gain distributions
paid (or deemed paid) that year and of any portion of those dividends that
qualifies for the corporate dividends-received deduction.
Any dividend or other distribution paid by the Fund will reduce the net asset
value of Fund shares by the amount of the distribution. Furthermore, such
distribution, although similar in effect to a return of capital, will be subject
to tax.
The Fund is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to any individuals and certain
other noncorporate shareholders who do not provide the Fund with a correct
taxpayer identification number. Withholding at that rate also is required from
dividends and capital gain distributions payable to such shareholders who are
otherwise subject to backup withholding.
The foregoing is only a summary of some of the important Federal income tax
considerations generally affecting the Fund and its shareholders; see the
Statement of Additional Information for a further discussion. Since other
Federal, state and local tax considerations may apply, you should consult your
tax adviser.
DETERMINATION OF NET ASSET VALUE
The value of a share of the Fund is based on the value of its net assets. The
Fund's net assets are the total of its investments and all other assets minus
any liabilities. The value of one share is determined by dividing the net assets
by the total number of shares outstanding. This is referred to as "net asset
value per share" and is determined as of the close of regular trading on the New
York Stock Exchange (currently, 4 p.m. eastern time, unless weather, equipment
failure or other factors contribute to an earlier closing) each business day of
the Fund. A business day of the Fund is any day on which the New York Stock
Exchange is open for trading. The following are not business days of the Fund:
New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Portfolio securities and other assets of the Fund are valued primarily on the
basis of market quotations, if readily available. Foreign securities, if any,
are valued on the basis of quotations from a primary market in which they are
traded and are translated from the local currency into U.S. dollars using
current exchange rates. Securities and other assets for which quotations are not
readily available will be valued at fair value as determined in good faith by or
under the direction of the Board of Directors.
INVESTMENT MANAGER
Bull & Bear Advisers, Inc. ("Investment Manager") acts as general manager of
the Fund, being responsible for the various functions assumed by it, including
regularly furnishing advice with respect to portfolio transactions. The
Investment Manager manages the investment and reinvestment of the Fund's assets,
subject to the control and final direction of the Board of Directors. The
Investment Manager is authorized to place portfolio transactions with Bull &
Bear Securities, Inc., an affiliate of the Investment Manager, and may allocate
brokerage transactions
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by taking into account the sales of shares of the Fund and other affiliated
investment companies. The Investment Manager may also allocate transactions to
broker/dealers that remit a portion of their commissions as a credit against the
Fund's expenses. Thomas B. Winmill, President and Chief Executive Officer of the
Investment Manager and the Fund, is the Fund's portfolio manager. Mr. Winmill
has served as a member of the Investment Manager's Investment Policy Committee
since 1990 and as portfolio manager of the Fund since May 1, 1998.
For its services, the Investment Manager receives a fee, payable monthly,
based on the average daily net assets of the Fund, at the annual rate of 1% on
the first $10 million, 7/8 of 1% over $10 million up to $30 million, 3/4 of 1%
over $30 million up to $150 million, 5/8 of 1% over $150 million up to $500
million, and 1/2 of 1% over $500 million. From time to time, the Investment
Manager may waive all or part of this fee or reimburse the Fund monthly to
improve the Fund's total return. The Investment Manager provides certain
administrative services to the Fund at cost. During the fiscal year ended
December 31, 1997, investment management fees paid by the Fund represented
approximately 0.87% of average daily net assets. The Investment Manager is a
wholly owned subsidiary of Bull & Bear Group, Inc. ("Group"). Group, a publicly
owned company whose securities are listed on The Nasdaq Stock Market, is a New
York based manager of mutual funds and discount brokerage services. Bassett S.
Winmill may be deemed a controlling person of Group and, therefore, may be
deemed a controlling person of the Investment Manager.
PERFORMANCE INFORMATION
Advertisements and other sales literature for the Fund may refer to the Fund's
"average annual total return" and "cumulative total return." All such quotations
are based upon historical earnings and are not intended to indicate future
performance. The investment return on and principal value of an investment in
the Fund will fluctuate, so that an investor's shares when redeemed may be worth
more or less than their original cost. In addition to advertising average annual
total return and cumulative total return, comparative performance information
may be used from time to time in advertising the Fund's shares, including data
from Morningstar, Inc., Lipper Analytical Services, Inc. and other sources.
"Average annual total return" is the average annual compounded rate of return on
a hypothetical $1,000 investment made at the beginning of the advertised period.
In calculating average annual total return, all dividends and other
distributions are assumed to be reinvested. "Cumulative total return" is
calculated by subtracting a hypothetical $1,000 payment to the Fund from the
ending redeemable value of such payment (at the end of the relevant advertised
period), dividing such difference by $1,000 and multiplying the quotient by 100.
In calculating ending redeemable value, all dividends and other distributions
are assumed to be reinvested in additional Fund shares. Although the Fund
imposes a 1% redemption fee on the redemption of shares held for 30 days or
less, all of the periods for which performance is quoted are longer than 30
days, and therefore the 1% fee is not reflected in the performance calculations.
In addition, there is no sales charge upon reinvestment of dividends or other
distributions. Additional information regarding the Fund's performance is
available in its Annual Report to Shareholders, which is available at no charge
upon request to Investor Service Center, 1-800-847-4200.
DISTRIBUTION OF SHARES
Pursuant to a Distribution Agreement between the Fund and Investor Service
Center, Inc., 11 Hanover Square, New York, NY 10005 ("Distributor"), the
Distributor acts as the Fund's principal agent for the sale of Fund shares. The
Fund has also adopted a plan of distribution ("Plan") pursuant to Rule 12b-1
under the 1940 Act. Pursuant to the Plan, the Fund pays the Distributor monthly
a distribution fee in an amount of three-quarters of one percent per annum of
the Fund's average daily net assets and a service fee in an amount of
one-quarter of one percent per annum of the Fund's average daily net assets. The
service fee portion is intended to cover personal services provided to Fund
shareholders and maintenance of shareholder accounts. The distribution fee
portion is intended to cover all other activities and expenses primarily
intended to result in the sale of the Fund's shares. These fees may be retained
by the Distributor or passed through to brokers, banks and others who provide
services to their customers who are Fund shareholders or to the Distributor. The
Fund will pay the fees to the Distributor until either the Plan is terminated or
not renewed. In that event, the Distributor's expenses in excess of fees
received or accrued through the termination day will be the Distributor's sole
responsibility and not obligations of the Fund. During the period they are in
effect, the Distribution Agreement and Plan obligate the Fund to pay fees to the
Distributor as compensation for its service and distribution activities. If the
Distributor's expenses exceed the fees, the Fund will not be obligated to pay
any additional amount to the Distributor. If the Distributor's expenses are less
than such fees, it may realize a profit. Certain other advertising and sales
materials may be prepared to promote the sale of Fund shares and shares of one
or more other affiliated investment companies. In such cases, the expenses will
be allocated among the Funds involved based on the
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inquiries resulting from the materials or other factors deemed appropriate by
the Board of Directors. The costs of personnel and facilities of the Distributor
to respond to inquiries by shareholders and prospective shareholders will also
be allocated based on such relative inquiries or other factors. There is no
certainty that the allocation of any of the foregoing expenses will precisely
allocate to the Fund costs commensurate with the benefits it receives, and it
may be that the other Funds and Bull & Bear Securities, Inc. will benefit
therefrom.
CAPITAL STOCK
The Fund is a non-diversified open-end management investment company organized
as a Maryland corporation in 1986. The Fund is authorized to issue up to
500,000,000 shares ($.01 par value). The Fund's stock is freely assignable by
way of pledge (as, for example, for collateral purposes), gift, settlement of an
estate and also by an investor to another investor. Each share has equal
dividend, voting, liquidation and redemption rights with every other share. The
shares have no preemptive, conversion or cumulative voting rights and they are
not subject to further call or assessment. The Fund's Board of Directors may
establish additional series or classes of shares, although it has no current
intention of doing so.
The Fund's By-Laws provide that there will be no annual meeting of
shareholders in any year except as required by law. In practical effect, this
means that the Fund will not hold an annual meeting of shareholders in years in
which the only matters which would be submitted to shareholders for their
approval are the election of Directors and ratification of the Directors'
selection of accountants, although holders of a majority of the Fund's shares
may call a meeting at any time. There will normally be no meetings of
shareholders for the purpose of electing Directors unless fewer than a majority
of the Directors holding office have been elected by shareholders. Shareholder
meetings will be held in years in which shareholder approval of the Fund's
investment management agreement, plan of distribution, or changes in its
fundamental investment objective, policies or restrictions is required by the
1940 Act.
CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, MO 64105,
acts as custodian of the Fund's assets, performs certain accounting services for
the Fund, and may appoint one or more subcustodians provided such
subcustodianship is in compliance with the rules and regulations promulgated
under the 1940 Act. The Fund may maintain a portion of its assets in foreign
countries pursuant to such subcustodianships and related foreign depositories.
Utilization of such arrangements will increase the Fund's expenses (see also the
special considerations involving foreign securities discussed above).
The Fund's transfer and dividend disbursing agent is DST Systems, Inc., Box
419789, Kansas City, MO 64141-6789. The Distributor provides certain shareholder
administration services to the Fund and is reimbursed its cost by the Fund. Such
services include receiving and responding to shareholder inquiries concerning
their accounts and processing shareholder telephone requests for transfers,
purchases, redemptions, changes of address and similar matters. The costs of
facilities, personnel and other related expenses are allocated among the Fund
and other affiliated investment companies based on the relative number of
inquiries and other factors. The Fund may also enter into agreements with
brokers, banks and others who may perform on behalf of their customers certain
shareholder services not otherwise provided by the Transfer Agent or the
Distributor.
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[Left Side of Back Cover Page]
SPECIAL
EQUITIES
FUND
- -----------------------------------------------------
1-800-847-4200
CALL TOLL-FREE FOR FUND PERFORMANCE,
EXCHANGES AMONG THE BULL & BEAR FUNDS,
AND TO OBTAIN INFORMATION CONCERNING YOUR
ACCOUNT. OR, ACCESS THE FUND ON THE WEB AT
HTTP://WWW.MUTUALFUNDS.NET
11 HANOVER SQUARE
NEW YORK, NY 10005
Printed on recycled paper.
[Right Side of Back Cover Page]
SPECIAL
EQUITIES
FUND
- ---------------------------------------------------------
INVESTING AGGRESSIVELY
FOR MAXIMUM CAPITAL
APPRECIATION
ELECTRONIC FUNDS TRANSFERS
AUTOMATIC INVESTMENT PROGRAM
RETIREMENT PLANS:
TRADITIONAL DEDUCTIBLE IRA, ROTH IRA, SEP-IRA,
SIMPLE IRA, EDUCATION IRA AND 403(B)
- ---------------------------------------------------------
PROSPECTUS
MAY 1, 1998
- ---------------------------------------------------------
MINIMUM INITIAL INVESTMENT:
REGULAR ACCOUNTS, $1,000
TRADITIONAL DEDUCTIBLE IRA, ROTH IRA, SEP-IRA,
SIMPLE IRA, AND 403(B), $1,000
EDUCATION IRA, $500
AUTOMATIC INVESTMENT PROGRAMS, $100
MINIMUM SUBSEQUENT INVESTMENTS, $100
BULL
&
BEAR------------------
PERFORMANCE DRIVEN(R)
15
