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PROSPECTUS
MAY 1, 1995 U.S. AND
OVERSEAS
FUND
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11 HANOVER SQUARE
NEW YORK, NY 10005
1-800-847-42001-212-363-1100
The objective of Bull & Bear U.S. and Overseas Fund is to seek to obtain the
highest possible total return on its assets from long term growth of capital
and from income principally through a portfolio of securities of U.S. and
overseas issuers. There is no limitation on the percent or amount of the Fund's
assets which may be invested for growth of capital or income, and at any time
the investment emphasis may be placed solely or primarily on growth of capital
or solely or primarily on income. The Fund provides a means for you to
participate in investment opportunities around the world. There is no assurance
that the Fund will achieve its objective.
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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.
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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 l, 1995, has been filed with the Securities
and Exchange Commission and is incorporated by reference in this prospectus. It
is available at no charge by calling 1-800-847-4200. Shares of the Fund are not
bank deposits or obligations of, or guaranteed or endorsed by any bank or any
affiliate of any bank, 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 TABLE. 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 $2 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
<TABLE>
<S> <C>
Sales Load Imposed on Purchases........ NONE
Sales Load Imposed on Reinvested Divi-
dends................................. NONE
Deferred Sales Load.................... NONE
Redemption Fees........................ NONE
Exchange Fees.......................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<S> <C>
(as a percentage of average net assets)
Management Fees (after reimbursement)......... 0.94%
12b-1 Fees.................................... 1.00%
Other Expenses................................ 1.59%
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Total Fund Operating Expenses (after reim-
bursement).................................... 3.53%
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming a 5% annual return
and a redemption at the end of each time
period........................................ $36 $108 $183 $380
</TABLE>
The example set forth above assumes reinvestment of all dividends and
distributions and uses an assumed 5% annual rate of return as required by the
Securities and Exchange Commission ("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, 1994. Without the Investment Manager's expense guarantee,
investment management fees and total operating expenses would have been 1.00%
and 3.59% of average net assets, respectively. This fee is higher than that
paid by most investment companies. 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 (net of brokerage commission credits pursuant to an arrangement not
anticipated to materially increase brokerage commissions paid by the Fund--see
"The Investment Manager") and Transfer Agent and reimbursed to the Investment
Manager and the Distributor for certain administrative and shareholder
services, and does not include interest expense from the Fund's bank
borrowing.
FINANCIAL HIGHLIGHTS are presented below for a share of capital stock
outstanding throughout each period./1/ 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, 1994
Annual Report to Shareholders and incorporated by reference in the Statement
of Additional Information. On February 26, 1992, the Fund adopted its present
name and investment objective. Prior thereto it was known as Bull & Bear
Overseas Fund Ltd. and sought to obtain the highest possible total return on
its assets from long term growth of capital and from income principally
through a diversified portfolio of marketable securities of non-U.S.
companies.
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------
PER SHARE DATA* 1994 1993 1992 1991 1990 1989 1988 1987
------- ------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at be-
ginning of period...... $ 8.71 $ 7.59 $ 8.37 $ 7.62 $ 8.46 $ 8.03 $ 7.46 $ 7.50
------- ------- ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income
( loss)................ (0.13) (0.20) 0.04 0.07 (0.01) (0.10) 0.03 0.01
Net realized and
unrealized gain (loss)
on investments......... (1.01) 2.22 (0.25) 1.64 (0.72) 0.99 0.56 (0.05)
------- ------- ------ ------ ------ ------ ------ ------
Total from investment
operations............. (1.14) 2.02 (0.21) 1.71 (0.73) 0.89 0.59 (0.04)
------- ------- ------ ------ ------ ------ ------ ------
Less distributions:
Distributions from net
investment income...... -- -- -- -- -- (0.02) (0.02) --
Distributions from net
realized gains on in-
vestments.............. (0.49) (0.90) (0.57) (0.96) (0.11) (0.44) -- --
------- ------- ------ ------ ------ ------ ------ ------
Net asset value at end
of period.............. $ 7.08 $ 8.71 $ 7.59 $ 8.37 $ 7.62 $ 8.46 $ 8.03 $ 7.46
======= ======= ====== ====== ====== ====== ====== ======
TOTAL RETURN............ (13.12)% 26.71% 2.57% 22.55% (8.61)% 11.10% 8.00%
0.60%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of pe-
riod (000's omitted)... $ 8,454 $12,250 $9,229 $1,275 $1,158 $1,149 $1,250 $1,042
Ratio of expenses to av-
erage net assets(a).... 3.53% 3.55% 3.56% 3.56% 3.50% 3.50% 3.02% 3.20%**
Ratio of net investment
income (loss) to aver-
age net assets(b)...... (1.65)% (2.36)% .51% .90% (.09)% (1.29)% .44% .57%**
Portfolio turnover rate. 212% 182% 175% 208% 270% 178% 140% 18%
</TABLE>
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/1/ The selected per share data has been restated to reflect the 100% stock
dividend effective February 24, 1992. * From commencement of operations,
October 29, 1987. ** Annualized. (a) Ratios before the Investment Manager's
reimbursement of expenses were 3.59%, 3.69%, 4.09%, 13.35%, 11.98%, 14.36%,
and 10.13%, for the years ended December 31, 1994, 1993, 1992, 1991, 1990,
1989, and 1988, respectively. (b) Ratios before the Investment Manager's
reimbursement of expenses were (1.71)%, (2.50)%, (0.02)%, (8.89)%, (8.57)%,
(12.15)%, and (6.67)%, for the years ended December 31, 1994, 1993, 1992,
1991, 1990, 1989, and 1988, respectively.
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 End Debt Outstanding Shares Outstanding Debt Per Share
December 31 of Period During the Period During the Period During the Period
- ----------------- ------------------ ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
1994 $ 0 $22,355 1,234,685 $0.02
1993 0 22,097 1,211,741 0.02
</TABLE>
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Transaction and Operating Expenses.. 2
Financial Highlights................ 2
General............................. 3
The Fund's Investment Program....... 3
How to Purchase Shares.............. 7
Shareholder Services................ 8
How to Redeem Shares................ 11
</TABLE>
<TABLE>
<S> <C>
Distributions and Taxes........... 13
Determination of Net Asset Value.. 14
The Investment Manager............ 14
Distribution of Shares............ 14
Performance Information........... 15
Capital Stock..................... 15
Custodian and Transfer Agent...... 16
</TABLE>
GENERAL
PURPOSES OF THE FUND. The Fund is for long term investors who wish to invest
in a professionally managed portfolio of securities of U.S. and foreign
issuers without having to become involved with the research, detailed
bookkeeping, and operational procedures normally associated with direct
investment in such securities. The Fund is not intended for investors who wish
to speculate on short term swings in U.S. and foreign securities markets. The
value of the Fund's portfolio securities will fluctuate based on global market
conditions as well as those of individual economies and markets. Consistent
with a long term investment approach, you should be able to maintain your
investment in the Fund during periods of adverse market conditions, and you
should not rely on an investment in the Fund for your short term financial
needs.
GLOBAL INVESTING. At various times since the end of World War II, many foreign
economies have grown faster than the United States' economy, and the return on
investments in these countries has often exceeded the return on similar
investments in the United States. Moreover, there has normally been a wide and
largely unrelated variation in performance among global equity and fixed
income markets over this period. Although there can be no assurance that these
conditions will continue in the future or that the Fund's Investment Manager
will be able to identify and acquire investments in the faster growing
economies or markets, the Investment Manager believes that investment in the
securities of U.S. and foreign issuers offers potential for significant total
return. The Fund's investment program has been developed in light of these
beliefs to provide an opportunity for you to participate in a professionally
managed global portfolio of securities.
PORTFOLIO MANAGEMENT. The Fund's Portfolio Manager since 1994 has been Brett
B. Sneed. Mr. Sneed is Senior Vice President and a member of the Investment
Policy Committee of Bull & Bear Advisers, Inc. (the "Investment Manager"). He
was formerly Vice President of Morgan Stanley Asset Management, Inc., and
prior thereto a portfolio manager and member of the finance and investment
committees of American International Group, Inc., a major insurance company. A
graduate of Columbia College, Mr. Sneed is a Chartered Financial Analyst and a
member of the New York Society of Security Analysts.
THE FUND'S INVESTMENT PROGRAM
INVESTMENT OBJECTIVE AND POLICIES. The Fund's investment objective, which may
not be changed without shareholder approval, is to seek to obtain the highest
possible total return on its assets from long term growth of capital and from
income principally through a portfolio of securities of U.S. and overseas
issuers. The Fund may invest in any type of security including common stocks,
convertible securities, preferred stocks, bonds, notes and other debt
securities (including Eurodollar securities), warrants, obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, or by
foreign governments and their political subdivisions, money market instruments
such as bankers acceptances, commercial paper, short term corporate debt
securities, and repurchase agreements. The Fund may also engage in options,
futures, and forward currency transactions.
3
<PAGE>
Factors considered by the Investment Manager in evaluating and selecting
securities include economic and socio-political considerations, the values of
individual securities relative to other investment alternatives, relative
currency values and trends, trends in the determinants of corporate profits,
and management capabilities and practices. Investments may be made for growth
of capital or for income or any combination thereof for the purpose of
achieving a higher overall total return.
The Fund may invest in companies based in (or governments of or within)
Europe, the Far East, Australia, the United States, Canada, South and Central
America, and such other areas and countries as the Investment Manager may
determine. Under normal market conditions, the Fund's assets will be invested
in at least three different countries, including the United States. For this
purpose, an investment is considered made in a country where the issuer of the
security has substantial activities and interests, taking into account such
factors as location of its assets, personnel, sales and earnings, principal
corporate office, principal trading market for its securities, and place of
organization. There are no limitations on the relative amounts of the Fund's
assets that may be invested in any one country.
FIXED INCOME INVESTING. When seeking income, the Fund will normally invest in
investment grade fixed income securities of varying maturities, depending on
the Investment Manager's evaluation of market patterns and trends. The Fund
may invest up to 35% of its assets in fixed income securities rated below
investment grade, although it has no current intention of investing more than
5% of its assets in such securities during the coming year. The Fund may also
invest without limit in unrated securities if they offer, in the Investment
Manager's opinion, the opportunity for a high overall return by reason of
their yield, discount at purchase or potential for capital appreciation
without undue risk. For temporary defensive purposes the Fund may invest all
or a portion of its assets in high grade fixed income securities.
Investment grade securities are those rated in the top four categories by a
nationally recognized statistical rating organization such as Standard &
Poor's Ratings Group or Moody's Investors Service, Inc., ("Moody's") or, if
unrated, are determined by the Investment Manager to be of comparable quality.
Moody's considers securities in the fourth highest category to have
speculative characteristics. Securities rated below investment grade and many
unrated securities may be considered predominantly speculative and subject to
greater market fluctuations and risks of loss of income and principal than
higher rated fixed income securities. The market value of fixed income
securities usually is affected by changes in the level of interest rates. An
increase in interest rates tends to reduce the market value of such
investments, and a decline in interest rates tends to increase their value. In
addition, fixed income securities with longer maturities, which tend to
produce higher yields, are subject to potentially greater capital appreciation
and depreciation than obligations with shorter maturities. Fluctuations in the
market value of fixed income securities subsequent to their acquisition do not
affect cash income from such securities but are reflected in the Fund's net
asset value.
OVERSEAS INVESTMENTS, MARKETS, AND RISK FACTORS. 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
involves 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; 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 and currency restrictions; and the possible greater
political, economic and social instability of developing as well as developed
countries including without limitation, nationalization, expropriation of
assets, and war. 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 expense ratio of the Fund can be
expected to be higher than that of investment companies investing exclusively
in domestic securities.
4
<PAGE>
Securities may be purchased by the Fund 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. Commissions on
some foreign stock exchanges are higher than the typically 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, the Fund's 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 requiring
the Fund to maintain a greater portion of its assets in money market
instruments 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.
Investments in the equity and fixed income markets of developing countries
involve exposure to economic structures that are generally less diverse and
mature than in the United States and other developed countries, and to
political systems which may be less stable. A developing country can be
considered to be a country which is in the initial stages of its
industrialization cycle. In the past, markets of developing countries, also
known as "emerging markets", have been more volatile than the markets of
developed countries; however, such markets often have provided higher rates of
return to investors, and these characteristics can be expected to continue in
the future. Because there is no limit on the amount of the Fund's assets which
may be invested in companies in, or governments of, developing countries, an
investment in the Fund may be subject to risks greater than those of
investment companies which invest solely or primarily in the United States and
other developed countries.
Since investment in foreign securities usually involves foreign currencies
and since the Fund may temporarily hold funds 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 which a Fund investment is denominated in or which is
temporarily held by the Fund to facilitate portfolio transactions, the value
of such Fund assets (and thus 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
transactions either on a spot (i.e., cash) basis, or through entering into
forward contracts. The Fund generally will not enter into a forward contract
with a term of greater than one year.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with U.S.
banks or dealers involving securities in which the Fund is authorized to
invest. A repurchase agreement is an instrument under which the Fund purchases
securities from a bank or dealer and simultaneously commits to resell the
securities to the bank or dealer at an agreed upon date and price reflecting a
market rate of interest. The Fund's custodian maintains custody of the
underlying securities until their repurchase; thus the obligation of the bank
or dealer to pay the repurchase price is, in effect, secured by such
securities. The Fund's risk is limited to the ability of the seller to pay the
agreed upon amount on the repurchase date; if the seller defaults, the
security constitutes collateral for the seller's obligation to pay. If,
however, the seller defaults and the value of the collateral declines, the
Fund may incur loss and expense in selling the collateral. To attempt to limit
the risk in engaging in repurchase agreements, the Fund enters into repurchase
agreements only with banks and dealers believed by the Investment Manager to
present minimum credit risks in accordance with guidelines established by the
Board of Directors. The Fund will not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 15% of its net
assets would then be invested in such agreements and other illiquid
securities.
5
<PAGE>
HEDGING AND INCOME STRATEGIES. 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 specific contemplated 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, it 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 its ability to meet
redemption requests.
Strategies with options, financial futures, and forward 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 ability of the Investment
Manager 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 correlation between
hedging instruments and the securities or sectors being hedged also may be
imperfect. The percentage of the Fund's assets segregated to cover its
obligations under options, futures, or forward contracts could impede
effective portfolio management or the ability to meet redemption or other
current obligations.
PORTFOLIO TURNOVER. Given the Fund's investment objective, the portfolio
turnover rate will not be a limiting factor when the Investment Manager deems
changes in the portfolio appropriate, and the Fund's investment strategy
therefore includes the possibility of short term transactions. The Fund's
portfolio turnover rate will vary from year to year. In 1993 it was 182% and
in 1994 it was 212%. Higher turnover may increase Fund brokerage costs and
taxes payable by shareholders.
OTHER INFORMATION. The Fund is "non-diversified," as defined in the Investment
Company Act of 1940 ("1940 Act"), but intends to continue to qualify as a
regulated investment company 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
6
<PAGE>
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 return and the price of Fund shares. The Fund
may borrow money from a bank for temporary or emergency purposes or by
engaging in reverse repurchase agreements provided that borrowings do not
exceed one-third of the current value of the Fund's assets taken at market
value, less liabilities other than borrowings. The Fund will not purchase
securities for investment while bank borrowing equaling 5% or more of its
total assets is outstanding. In addition to the Fund's fundamental investment
objective, the Fund has adopted certain fundamental investment restrictions
which may not be changed without shareholder approval. These other 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 per
share next determined after receipt and acceptance of the order by Bull & Bear
Service Center (see "Determination of Net Asset Value"). The minimum initial
investment is $1,000 for regular and gifts/transfers to minors custody
accounts, and $500 for Bull & Bear retirement plans, which include Individual
Retirement Accounts ("IRAs"), SEP-IRAs, rollover IRAs, profit sharing and
money purchase plans, and 403(b) plan accounts. The minimum subsequent
investment is $100. The initial investment minimums are waived if you elect to
invest $100 or more each month in the Fund through the Bull & Bear Automatic
Investment Program (see "Additional Investments" below).
INITIAL INVESTMENT. The Account Application that accompanies this prospectus
should be completed, signed and, with a check or other negotiable bank draft
payable to U.S. and Overseas Fund, mailed to Bull & Bear Service Center, P.O.
Box 419789, Kansas City, MO 64141-6789. Initial investments also may be made
by having your bank wire money, as set forth below, in order to avoid mail
delays.
ADDITIONAL INVESTMENTS. Additional investments may be made conveniently at any
time by any one or more of the following methods:
. 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 shares of the Fund 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 Bull & Bear 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 $500. The
7
<PAGE>
Program does 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.
. CHECK. Mail a check or other negotiable bank draft ($100 minimum), made
payable to U.S. and Overseas Fund, together with a Bull & Bear FastDeposit
form to Bull & Bear Service Center, P.O. 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).
. ELECTRONIC FUNDS TRANSFER (EFT). With EFT, you may purchase additional
shares of the Fund quickly and simply, just by calling Bull & Bear 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 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 or deposit
slip.
. 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
Bull & Bear Service Center, 1-800-847-4200, to give the name(s) under which
the account is to be registered, tax identification number, the name of the
bank sending the wire, and to be assigned a Bull & Bear U.S. and Overseas 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; U.S. and
Overseas 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 Bull & Bear Service Center, P.O. Box 419789, Kansas City, MO 64141-6789.
This service is not available on days when the Federal Reserve wire system is
closed. Subsequent investments by wire may be made at any time without having
to call Bull & Bear 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"). 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.
WHEN ORDERS ARE EFFECTIVE. The purchase price for Fund shares is the net asset
value of such shares next determined after receipt and acceptance by Bull &
Bear Service Center of a purchase order in proper form. 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. The Fund reserves the right to
reject any order. Accounts are charged $30 by the Transfer Agent for
submitting checks for investment which are not honored by the investor's bank.
The Fund may in its discretion waive or lower the investment minimums.
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 the
Fund's Distributor, Bull & Bear Service Center, 1-800-847-4200.
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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
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 Fund may require the signature to be guaranteed), with a voided check
or deposit slip.
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 privilege and the other Bull & Bear Funds, or to
request a Dividend Sweep Authorization Form, please call Bull & Bear Service
Center, 1-800-847-4200. You may cancel this privilege by mailing written
notification to Bull & Bear Service Center, P.O. Box 419789, Kansas City, MO
64141-6789. To select a new Fund after cancellation, 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 Bull & Bear Service Center, 1-800-847-4200.
EXCHANGE PRIVILEGE. You may exchange at least $500 worth of shares of the Fund
for shares of any other Bull & Bear Fund (provided the registration is exactly
the same, the shares may be sold in your state of residence, and the exchange
may otherwise legally be made).
To exchange shares, please call Bull & Bear Service Center toll-free at 1-
800-847-4200 between 9 a.m. and 5 p.m. eastern time on any business day of the
Fund and provide the following information: account registration including
address and number; taxpayer identification number; percentage, number, or
dollar value of shares to be redeemed; name and, if different, the account
number of the Bull & Bear Fund to be purchased; and your identity and
telephone number. The other Bull & Bear Funds are:
. 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.
. BULL & BEAR U.S. GOVERNMENT SECURITIES FUND invests for a high level of
current income, liquidity, and safety of principal. Free unlimited check
writing ($250 minimum per check). Pays monthly dividends.
. BULL & BEAR MUNICIPAL INCOME FUND invests for the highest possible income
exempt from Federal income tax consistent with preservation of principal.
Free unlimited check writing ($250 minimum per check). Pays monthly
dividends.
. BULL & BEAR GLOBAL INCOME FUND seeks a high level of income from a global
portfolio of primarily investment grade fixed income securities. Free
unlimited check writing ($250 minimum per check). Pays monthly dividends.
. BULL & BEAR QUALITY GROWTH FUND seeks growth of capital and income from a
portfolio of common stocks of large, quality companies with potential for
significant growth of earnings and dividends.
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. BULL & BEAR SPECIAL EQUITIES FUND invests aggressively for maximum capital
appreciation.
. BULL & BEAR GOLD INVESTORS seeks long term capital appreciation in
investments with the potential to provide a hedge against inflation and
preserve the purchasing power of the dollar.
Exchange requests received between 9 a.m. and 4 p.m. eastern time on any
business day of the Fund will be effected at the net asset values of the Fund
and the other Bull & Bear Fund as determined at the close of that business
day. Exchange requests received between 4 p.m. and 5 p.m. eastern time on any
business day of the Fund will be effected at the close of the next business
day of the Fund. If you are unable to reach Bull & Bear 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 or cable to the address BULLNBEAR
NEWYORK. 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, exchanges
are 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 Bull & Bear
Service Center, 1-800-847-4200. The other Fund's prospectus should be read
carefully before exchanging. You may give exchange instructions to Bull & Bear
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.
. 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 account used to purchase
shares of any Bull & Bear Fund. You may request a Discount Brokerage
Account Application from Bull & Bear Securities, Inc., 1-800-262-5800.
TAX-ADVANTAGED RETIREMENT PLANS. These plans provide an opportunity to set
aside money for retirement in a tax-advantaged account in which earnings can
be compounded without incurring a tax liability until the money and earnings
are withdrawn. Contributions may be fully or partially deductible for Federal
income tax purposes as noted below. Information on any of the plans described
below is available from Bull & Bear Service Center, 1-800-847-4200.
The minimum investment to establish a Bull & Bear IRA or other retirement
plan is $500. Minimum subsequent investments are $100. The initial investment
minimums are waived 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 Retirement Plans. Subject to change on 30 days' notice,
the plan custodian charges Bull & Bear IRAs 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 IRA has assets of $10,000
or more or if you invest regularly through the Bull & Bear Automatic
Investment Program.
. INDIVIDUAL RETIREMENT ACCOUNTS. Anyone with earned income who is less than
age 70 1/2 at the end of the tax year, even if also participating in
another type of retirement plan, may establish an IRA and contribute each
year up to $2,000 or 100% of earned income, whichever is less, and an
aggregate of up to $2,250 when a non-working spouse is also covered in a
separate spousal account. If each spouse has at least $2,000 of earned
income each year, they may contribute up to $4,000 annually. Employers may
also make contributions to an IRA on behalf of an individual under a
Simplified Employee Pension Plan ("SEP") in any amount up to 15% of up to
$150,000 of compensation. Generally, taxpayers may contribute to an IRA
during the tax year and through the next year until the income tax return
for that year is due, without regard to extensions. Thus, most individuals
may contribute for the 1995 tax year from January 1, 1995 through April 15,
1996.
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DEDUCTIBILITY. IRA contributions are fully deductible for most taxpayers.
For a taxpayer who is an active participant in an employer-maintained
retirement plan (or whose spouse is), a portion of IRA contributions is
deductible if adjusted gross income (before the IRA deductions) is $40,000-
$50,000 (if married) and $25,000-$35,000 (if single). Only IRA
contributions by a taxpayer who is an active participant in an employer-
maintained retirement plan (or whose spouse is) and has adjusted gross
income of more than $50,000 (if married) and $35,000 (if single) will not
be deductible. An eligible individual may establish a Bull & Bear IRA under
the prototype plan available through the Fund, even though such individual
or spouse actively participates in an employer-maintained retirement plan.
. IRA TRANSFER AND ROLLOVER ACCOUNTS. Special forms are available from Bull &
Bear Service Center, 1-800-847-4200, which make it easy to transfer or roll
over IRA assets to a Bull & Bear IRA. An IRA may be transferred from one
financial institution to another without adverse tax consequences.
Similarly, no taxes need be paid on a lump-sum distribution which you may
receive as a payment from a qualified pension or profit sharing plan due to
retirement, job termination or termination of the plan, so long as the
assets are put into an IRA Rollover account within 60 days of the receipt
of the payment. Withholding for Federal income tax purposes is required at
the rate of 20% for "eligible rollover distributions" made from any
retirement plan (other than an IRA) that are not directly transferred to an
"eligible retirement plan," such as a Bull & Bear Rollover Account.
. PROFIT SHARING AND MONEY PURCHASE PLANS. These provide an opportunity to
accumulate earnings on a tax-deferred basis by permitting corporations,
self-employed individuals (including partners) and their employees
generally to contribute (and deduct) up to $30,000 annually or, if less,
25% (15% for profit sharing plans) of compensation or self-employment
earnings of up to $150,000. Corporations and partnerships, as well as all
self-employed persons, are eligible to establish these Plans. In addition,
a person who is both salaried and self-employed, such as a college
professor who serves as a consultant, may adopt these retirement plans
based on self-employment earnings.
. SECTION 403(B) ACCOUNTS. Section 403(b)(7) of the Internal Revenue Code of
1986, as amended ("Code"), permits the establishment of custodial accounts
on behalf of employees of public school systems and certain tax-exempt
organizations. A participant in such a plan does not pay taxes on any
contributions made by the participant's employer to the participant's
account pursuant to a salary reduction agreement, up to a maximum amount,
or "exclusion allowance." The exclusion allowance is generally computed by
multiplying the participant's years of service times 20% of the
participant's compensation included in gross income received from the
employer (reduced by any amount previously contributed by the employer to
any 403(b) account for the benefit of the participant and excluded from the
participant's gross income). However, the exclusion allowance may not
exceed the lesser of 25% of the participant's compensation (limited as
above) or $30,000. Contributions and subsequent earnings thereon are not
taxable until withdrawn, when they are received as ordinary income.
HOW TO REDEEM SHARES
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 Bull & Bear Service Center, P.O. 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.
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BY TELEPHONE. You may telephone Bull & Bear 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 Bull & Bear 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 or deposit
slip. If you are unable to reach Bull & Bear 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 or cable to the address BULLNBEAR NEWYORK.
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
($100 minimum for Bull & Bear Securities Performance Plus SM 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 Bull &
Bear Service Center, 1-800-847-4200. Please read the prospectus carefully
before exchanging.
REDEMPTION PRICE. The redemption price is the net asset value per share next
determined after receipt of the redemption request in proper form. Registered
broker/dealers, investment advisers, banks, and insurance companies may open
accounts and redeem shares by telephone or wire and may impose a charge for
handling purchases and redemptions when acting on behalf of others.
REDEMPTION PAYMENT. Payment for shares redeemed will be made as soon as
possible, ordinarily 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 ten day delay to allow the check or transfer to
clear. The ten day clearing period does not affect the trade date on which a
purchase or redemption order is priced, or any dividends and other
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 Bull & Bear Service Center shall be liable for
any loss or damage for acting in good faith upon instructions received by
telephone and believed to be genuine. The Fund employs reasonable procedures
to confirm that instructions communicated by
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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 tape 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
30 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 made in additional Fund shares, unless
you elect to receive cash on the Account Application or so elect subsequently
by calling Bull & Bear 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 Fund shares or in cash. Any election will
remain in effect until you notify Bull & Bear Service Center to the contrary.
TAXES. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of Federal
income tax on that part of its investment company taxable income (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 Fund
shares) generally are taxable to shareholders, other than shareholders that
are not subject to tax on their income, as ordinary income to the extent of
the Fund's earnings and profits; a portion of those dividends may be eligible
for the corporate dividends-received deduction. Distributions by the Fund of
its net capital gain (whether paid in cash or in additional Fund shares), when
designated as such by the Fund, are taxable to the shareholders as long term
capital gains, regardless of how long they have held their Fund shares. The
Fund notifies its shareholders following the end of each calendar year of the
amounts of dividends and capital gain distributions paid (or deemed paid) that
year and of any portion of those dividends that qualifies for the corporate
dividends-received deduction. Any dividend or other distribution paid by the
Fund will reduce the net asset value of Fund shares by the amount of the
distribution. Furthermore, such distribution, although similar in effect to a
return of capital, will be subject to taxes.
The Fund is required to withhold 31% of all dividends, capital gain
distributions, and redemption proceeds payable to any individuals and certain
other noncorporate shareholders who do not provide the Fund with a correct
taxpayer identification number. Such withholding also is required with respect
to 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 tax
considerations may apply, you should consult your tax adviser.
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DETERMINATION OF NET ASSET VALUE
The value of a share of the Fund is based on the value of its net assets.
The Fund's net assets are the total of the Fund's investments and all other
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, 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 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.
THE INVESTMENT MANAGER
Bull & Bear Advisers, Inc. (the "Investment Manager") acts as general
manager of the Fund, being responsible for the various functions assumed by
it, including 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 by taking into account the
sales of shares of the Fund and the other Bull & Bear Funds. 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.
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. This fee is higher than that paid by
most investment companies. From time to time, the Investment Manager may waive
all or part of this fee or reimburse the Fund to improve the Fund's total
return. During the fiscal year ended December 31, 1994, investment management
fees paid by the Fund represented approximately 0.94% of average daily net
assets net of reimbursement pursuant to the expense guaranty of the Investment
Manager. The Investment Manager provides certain administrative services to
the Fund at cost. The Investment Manager is a wholly owned subsidiary of Bull
& Bear Group, Inc. ("Group"). Group, a publicly owned company whose securities
are listed on Nasdaq, is a New York based manager of mutual funds and discount
brokerage services. Bassett S. Winmill may be deemed a controlling person of
Group and, therefore, may be deemed a controlling person of the Investment
Manager.
DISTRIBUTION OF SHARES
Pursuant to a Distribution Agreement between the Fund and Bull & Bear
Service Center, Inc. (the "Distributor"), the Distributor acts as the Fund's
principal agent for the sale of Fund shares. The Fund has also adopted a plan
of distribution (the "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 at the rate
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of thirty-five basis points on such customer balances. 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 Bull & Bear Funds. In such cases, the expenses
will be allocated among the Funds involved based on the inquiries resulting
from the materials or other factors deemed appropriate by the Board of
Directors. The costs of personnel and facilities of the Distributor to respond
to inquiries by shareholders and prospective shareholders will also be
allocated based on such relative inquiries or other factors. There is no
certainty that 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.
PERFORMANCE INFORMATION
From time to time the Fund may advertise its "average annual total return"
or "total return" (which may be referred to as cumulative total return or
cumulative growth) over specified periods. Average annual total return is
calculated pursuant to a standardized formula which assumes a hypothetical
$10,000 investment in the Fund was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and other
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Total return is computed on
a per share basis, assumes the reinvestment of dividends and other
distributions, and is calculated by combining the income and principal changes
for a specified period and dividing by the net asset value per share at the
beginning of the period. Advertisements may show total return as a percentage
rate or as the value of a hypothetical investment at the end of the period.
The Fund's performance may be compared to the performance of broad groups of
comparable mutual funds, or the performance of unmanaged indexes of comparable
securities. The Fund's total return is based upon historical performance
information and not intended to indicate future performance. The Fund's annual
report to shareholders contains information with respect to the Fund's
performance. The annual report is available upon request.
CAPITAL STOCK
The Fund is a series of Bull & Bear Funds I, Inc. (the "Corporation"), a
Maryland corporation organized in 1986. Prior to September 23, 1993, the
Corporation operated under the name Bull & Bear U.S. and Overseas Fund Ltd.
The Corporation is an open-end management investment company, and is
authorized to issue up to 1,000,000,000 shares ($.01 par value). The Board of
Directors has designated 250,000,000 shares as shares of Bull & Bear U.S. and
Overseas Fund and 250,000,000 as shares of Bull & Bear Quality Growth Fund.
The Board of Directors of the Corporation may establish one or more other
series, although it has no current intention of doing so.
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 By-Laws provide that there will be no annual meeting of
shareholders in any year except as required by law. In practical effect, this
means that the Fund will not hold an annual meeting of shareholders in years
in which the only matters which would be submitted to shareholders for their
approval are the election of Directors and ratification of the Directors'
selection of accountants, although holders of 10% of the 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
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office have been elected by shareholders. Shareholder meetings will be held in
years in which shareholder vote on the Fund's investment management agreement,
plan of distribution, or fundamental investment objective, policies or
restrictions is required by the 1940 Act.
CUSTODIAN AND TRANSFER AGENT
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111, acts as
custodian of the Fund's assets 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 by the Fund of such foreign custodial arrangements
and depositories will increase the Fund's expenses. The custodian also
performs certain accounting services for the Fund.
The Fund's transfer and dividend disbursing agent is DST Systems, Inc., P.O.
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. The costs of facilities, personnel and other related expenses are
allocated among the Bull & Bear Funds based on the relative number of
inquiries and other factors.
16
- --------------------------------------------------------------------------------
PROSPECTUS
MAY 1, 1995 QUALITY
GROWTH
FUND
-------------------------------------------------
11 HANOVER SQUARE
NEW YORK, NY 10005
1-800-847-42001-212-363-1100
Bull & Bear Quality Growth Fund seeks growth of capital as its principal
investment objective and, secondarily, income. The Fund invests primarily in
common stocks of large, quality companies considered to have the potential for
significant growth of earnings and dividends. The Fund's Investment Manager,
Bull & Bear Advisers, Inc., believes that such companies will be rewarded by
the market with higher stock prices over time and investment returns in excess
of the market as a whole. Also, while the business results of such companies
will generally be affected by slowdowns in economic growth, they should be less
affected by adverse economic conditions than more leveraged, cyclical or
smaller companies. There is no assurance that the Fund will achieve its
objectives.
----------------------------------------------------------------------
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, 1995, has been filed with the Securities
and Exchange Commission and is incorporated by reference in this prospectus. It
is available at no charge by calling 1-800-847-4200. Shares of the Fund are not
bank deposits or obligations of, or guaranteed or endorsed by any bank or any
affiliate of any bank, 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 TABLE. 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 $2 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
<TABLE>
<S> <C>
Sales Load Imposed on Purchases........ NONE
Sales Load Imposed on Reinvested Divi-
dends................................. NONE
Deferred Sales Load.................... NONE
Redemption Fees........................ NONE
Exchange Fees.......................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<S> <C>
(as a percentage of average net assets)
Management Fees (after reimbursement)........... 0.00%
12b-1 Fees...................................... 1.00%
Other Expenses.................................. 2.60%
- ----
Total Fund Operating Expenses (after reimburse-
ment).......................................... 3.60%
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming a 5% annual return
and a redemption at the end of each time peri-
od............................................. $36 $110 $186 $386
</TABLE>
The example set forth above assumes reinvestment of all dividends and other
distributions and uses an assumed 5% annual rate of return as required by the
Securities and Exchange Commission ("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 an
assumed level of average net assets in excess of $5 million but less than $10
million. Without the Investment Manager's expense guarantee, investment
management fees, other expenses and total operating expenses would have been
0.25%, 3.45%, and 4.70% of average net assets, respectively. 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 payable to the Fund's Custodian (net of brokerage commission
credits pursuant to an arrangement not anticipated to increase materially
brokerage commissions paid by the Fund--see "The Investment Manager") and
Transfer Agent and reimbursable to the Investment Manager and the Distributor
for certain administrative and shareholder services, and does not include
interest expense from the Fund's bank borrowing.
FINANCIAL HIGHLIGHTS are presented below for a share of capital stock
outstanding throughout each period./1/ 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, 1994
Annual Report to Shareholders and incorporated by reference in the Statement
of Additional Information.
<TABLE>
<CAPTION>
Year Ended
December 31, October 1, 1993* to
1994 December 31, 1993
------------ -------------------
<S> <C> <C>
PER SHARE DATA
Net asset value at beginning of period........ $ 14.47 $ 15.00
Income from investment operations:
Net investment income (loss)................. (0.17) (0.05)
Net realized and unrealized gain (loss) on
investments................................. (0.98) (0.48)
------- -------
Total from investment operations.............. $(1.15) $(0.53)
------- -------
Net asset value at end of period.............. $ 13.32 $ 14.47
======= =======
TOTAL RETURN.................................. (7.95)% (3.53)%
======= =======
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted)... $ 4,151 $ 1,058
Ratio of expenses to average net assets(a).... 3.60% 3.50%**
Ratio of net investment loss to average net
assets(b).................................... 1.14% 2.29%**
Portfolio turnover rate....................... 82% 19%
</TABLE>
- ------
* Commencement of operations. ** Annualized. (a) Ratio before the Investment
Manager's reimbursement was 4.70% and 11.61% for the periods ended December
31, 1994 and 1993, respectively. (b) Ratio before the Investment Manager's
reimbursement was 2.24% and 10.40% for the periods ended December 31, 1994 and
1993, respectively.
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
Years Ended Outstanding at Debt Outstanding Shares Outstanding Debt Per Share
December 31 End of Period During the Period /1/ During the Period /1/ During the Period
- ----------- -------------- --------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
1994 $ 0 $36,957 326,910 $0.11
</TABLE>
/1/ Based on monthly averages.
- ------
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Transaction and Operating Expenses.. 2
Financial Highlights................ 2
General............................. 3
The Fund's Investment Program....... 3
How to Purchase Shares.............. 5
Shareholder Services................ 6
How to Redeem Shares................ 9
</TABLE>
<TABLE>
<S> <C>
Distributions and Taxes........... 11
Determination of Net Asset Value.. 11
The Investment Manager............ 12
Distribution of Shares............ 12
Performance Information........... 13
Capital Stock..................... 14
Custodian and Transfer Agent...... 14
</TABLE>
GENERAL
PURPOSE OF THE FUND. The Fund is designed for investors seeking long term
growth of capital and income from a portfolio of primarily large, quality,
growth companies. The Fund's strategy is to invest in equity securities of
companies whose established records of growth of earnings and dividends are
believed to have long term potential to increase in the future.
WHO SHOULD INVEST. Because of its emphasis on large, quality, growth
companies, the Fund may be appropriate as a core equity component of your
portfolio. While the Fund emphasizes the securities of quality companies with
growth characteristics, an investment in the Fund will be affected by
movements in the overall stock market and therefore is appropriate for those
investors who understand and can accept the risks of stock market investing.
The Fund also offers the benefits and advantages of free transfer to the other
Bull & Bear Funds and a wide range of shareholder services (see "How to
Purchase Shares" and "Shareholder Services").
PORTFOLIO MANAGEMENT. The Fund's Portfolio Manager since 1993 is Bassett S.
Winmill. Mr. Winmill is Chairman of the Investment Policy Committee of Bull &
Bear Advisers, Inc., the Fund's Investment Manager. He is a member of the New
York Society of Security Analysts, the Association for Investment Management
and Research, and the International Society of Financial Analysts.
THE FUND'S INVESTMENT PROGRAM
In pursuing its investment objectives, the Fund will emphasize investments
in common stocks of large, quality, growth companies. These companies are
generally identified by their established history of earnings and dividends,
substantial market capitalization, easy access to credit, good industry
position, and proven management expertise. Such companies exhibit generally
less investment risk and price volatility than companies lacking these
characteristics. In addition, the shares of such companies usually have higher
trading volume and, consequently, better liquidity. Under normal market
conditions, the Fund will invest at least 65%, and may invest up to 100%, of
its total assets in the common stocks of such companies. There is no assurance
that the Fund will achieve its investment objectives.
In addition to the type of common stocks described above, the Fund may
invest up to 35% of its total assets in other investments, including preferred
stocks, debt and other fixed income securities, securities convertible into or
exchangeable for common or preferred stocks, warrants and rights of foreign
and domestic issuers, and common stocks of domestic and foreign issuers that
do not have the characteristics set forth in the Fund's principal investment
policy. The Fund may also invest without limit in high grade debt securities,
securities of the U.S. Government, its agencies or instrumentalities, and
money market instruments, including repurchase agreements, or retain cash when
as a result of market conditions, a defensive position is deemed advisable to
help preserve capital or for other temporary purposes.
OTHER INVESTMENT STRATEGIES. The Fund may employ the following other
investment strategies in seeking to achieve its investment objectives,
although it has no current intention of doing so in such a manner that any one
strategy would involve more than 5% of the Fund's total assets: lending its
portfolio
3
<PAGE>
securities; transactions in put and call options on securities, indexes, and
foreign currencies, and futures contracts on interest rates, stock and bond
indexes, and foreign currencies and options thereon; and, forward foreign
currency contracts. The Fund also has no current intention of investing more
than 5% of its total assets in convertible securities, foreign securities, or
fixed income securities rated below investment grade. Authorizations governing
the use of such strategies and their risks, are set forth in the Statement of
Additional Information.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with U.S.
banks or dealers involving securities in which the Fund is authorized to
invest. A repurchase agreement is an instrument under which the Fund purchases
securities from a bank or dealer and simultaneously commits to resell the
securities to the bank or dealer at an agreed upon date and price reflecting a
market rate of interest. Investors Bank & Trust Company (the "Custodian")
maintains custody of the underlying securities until their repurchase; thus
the obligation of the bank or dealer to pay the repurchase price is, in
effect, secured by such securities. The Fund's risk is limited to the ability
of the seller to pay the agreed upon amount on the repurchase date; if the
seller defaults, the security constitutes collateral for the seller's
obligation to pay. If, however, the seller defaults and the value of the
collateral declines, the Fund may incur loss and expense in selling the
collateral. To attempt to limit the risk of engaging in repurchase agreements,
the Fund enters into repurchase agreements only with banks and dealers
believed by the Investment Manager to present minimum credit risks in
accordance with guidelines established by the Board of Directors. The Fund
will not enter into a repurchase agreement with a maturity of more than seven
days if, as a result, more than 15% of its net assets would then be invested
in such agreements and other illiquid securities.
OTHER INFORMATION. The Fund may borrow money from banks for temporary or
emergency purposes (not for leveraging or investment) and engage in reverse
repurchase agreements, but not in excess of an amount equal to one-third of
the Fund's total assets. The Fund may not purchase securities for investment
while any bank borrowing equaling 5% or more of its total assets is
outstanding.
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 and up
to 10% of its total assets in restricted securities. Illiquid restricted
securities may be sold by the Fund only in privately negotiated transactions
or in a public offering for which a registration statement is in effect under
the Securities Act of 1933. Such securities include those that are subject to
restrictions contained in the securities laws of other countries. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable
price than prevailed when it decided to sell. Securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, are not included within the meaning of
the term "illiquid securities".
The Fund is "non-diversified," as defined in the Investment Company Act of
1940 ("1940 Act"), but intends to qualify as a regulated investment company
for Federal income tax purposes, meaning generally 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 than an investment company that
invests in a broader range of securities because changes in the financial
condition or market assessment of a single issuer may cause greater
fluctuation in the Fund's total return.
In addition to the Fund's principal investment objective of growth of
capital and its secondary investment objective of income, the Fund has adopted
certain fundamental investment restrictions that
4
<PAGE>
may not be changed without shareholder approval. These fundamental
restrictions are set forth in the Statement of Additional Information. The
Fund's other investment policies described herein, unless otherwise stated,
are not fundamental and may be changed by the Board of Directors without
shareholder approval.
HOW TO PURCHASE SHARES
The Fund's shares are sold on a continuing basis at the net asset value per
share next determined after receipt and acceptance of the order by Bull & Bear
Service Center (see "Determination of Net Asset Value"). The minimum initial
investment is $1,000 for regular and gifts/transfers to minors custody
accounts, and $500 for Bull & Bear retirement plans, which include Individual
Retirement Accounts ("IRAs"), SEP-IRAs, rollover IRAs, profit sharing and
money purchase plans, and 403(b) plan accounts. The minimum subsequent
investment is $100. The initial investment minimums are waived if you elect to
invest $100 or more each month in the Fund through the Bull & Bear Automatic
Investment Program (see "Additional Investments" below).
INITIAL INVESTMENT. The Account Application that accompanies this prospectus
should be completed, signed and, with a check or other negotiable bank draft
payable to Quality Growth Fund, mailed to Bull & Bear Service Center, P.O. Box
419789, Kansas City, MO 64141-6789. Initial investments also may be made by
having your bank wire money, as set forth below, in order to avoid mail
delays.
ADDITIONAL INVESTMENTS. Additional investments may be made conveniently at any
time by any one or more of the following methods:
. 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 shares of the Fund 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 Bull & Bear 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 $500. The Program does 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.
. CHECK. Mail a check or other negotiable bank draft ($100 minimum), made
payable to Quality Growth Fund, together with a Bull & Bear FastDeposit
form to Bull & Bear Service Center, P.O. 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).
5
<PAGE>
. ELECTRONIC FUNDS TRANSFER (EFT). With EFT, you may purchase additional
shares of the Fund quickly and simply, just by calling Bull & Bear 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 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 or deposit
slip.
. 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
Bull & Bear Service Center, 1-800-847-4200, to give the name(s) under which
the account is to be registered, tax identification number, the name of the
bank sending the wire, and to be assigned a Bull & Bear Quality Growth 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; Quality Growth
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 Bull &
Bear Service Center, P.O. Box 419789, Kansas City, MO 64141-6789. This service
is not available on days when the Federal Reserve wire system is closed.
Subsequent investments by wire may be made at any time without having to call
Bull & Bear 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"). 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.
WHEN ORDERS ARE EFFECTIVE. The purchase price for Fund shares is the net asset
value of such shares next determined after receipt and acceptance by Bull &
Bear Service Center of a purchase order in proper form. 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. The Fund reserves the right to
reject any order. Accounts are charged $30 by the Transfer Agent for
submitting checks for investment which are not honored by the investor's bank.
The Fund may in its discretion waive or lower the investment minimums.
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 the
Fund's Distributor, Bull & Bear 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
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 Fund may require the signature to be guaranteed), with a voided check
or deposit slip.
6
<PAGE>
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 privilege and the other Bull & Bear Funds, or to
request a Dividend Sweep Authorization Form, please call Bull & Bear Service
Center, 1-800-847-4200. You may cancel this privilege by mailing written
notification to Bull & Bear Service Center, P.O. Box 419789, Kansas City, MO
64141-6789. To select a new Fund after cancellation, 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 Bull & Bear Service Center, 1-800-847-4200.
EXCHANGE PRIVILEGE. You may exchange at least $500 worth of shares of the Fund
for shares of any other Bull & Bear Fund (provided the registration is exactly
the same, the shares may be sold in your state of residence, and the exchange
may otherwise legally be made).
To exchange shares, please call Bull & Bear Service Center toll-free at 1-
800-847-4200 between 9 a.m. and 5 p.m. eastern time on any business day of the
Fund and provide the following information: account registration including
address and number; taxpayer identification number; percentage, number, or
dollar value of shares to be redeemed; name and, if different, the account
number of the Bull & Bear Fund to be purchased; and your identity and
telephone number. The other Bull & Bear Funds are:
. 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.
. BULL & BEAR U.S. GOVERNMENT SECURITIES FUND invests for a high level of
current income, liquidity, and safety of principal. Free unlimited check
writing ($250 minimum per check). Pays monthly dividends.
. BULL & BEAR MUNICIPAL INCOME FUND invests for the highest possible income
exempt from Federal income tax consistent with preservation of principal.
Free unlimited check writing ($250 minimum per check). Pays monthly
dividends.
. BULL & BEAR GLOBAL INCOME FUND seeks a high level of income from a global
portfolio of primarily investment grade fixed income securities. Free
unlimited check writing ($250 minimum per check). Pays monthly dividends.
. BULL & BEAR U.S. AND OVERSEAS FUND invests worldwide for the highest
possible total return.
. BULL & BEAR SPECIAL EQUITIES FUND invests aggressively for maximum capital
appreciation.
. BULL & BEAR GOLD INVESTORS seeks long term capital appreciation in
investments with the potential to provide a hedge against inflation and
preserve the purchasing power of the dollar.
Exchange requests received between 9 a.m. and 4 p.m. eastern time on any
business day of the Fund will be effected at the net asset values of the Fund
and the other Bull & Bear Fund as determined at the close of that business
day. Exchange requests received between 4 p.m. and 5 p.m. eastern time on any
business day of the Fund will be effected at the close of the next business
day of the Fund. If you are unable to reach Bull & Bear 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 or cable to the address BULLNBEAR
NEWYORK. Exchanges may be difficult or impossible to implement during periods
of rapid changes in
7
<PAGE>
economic or market conditions. Exchange privileges may be terminated or
modified by the Fund without notice. For tax purposes, exchanges are 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 Bull & Bear Service Center, 1-800-
847-4200. The other Fund's prospectus should be read carefully before
exchanging. You may give exchange instructions to Bull & Bear 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.
. 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 account used to purchase
shares of any Bull & Bear Fund. You may request a Discount Brokerage
Account Application from Bull & Bear Securities, Inc., 1-800-262-5800.
TAX-ADVANTAGED RETIREMENT PLANS. These plans provide an opportunity to set
aside money for retirement in a tax-advantaged account in which earnings can
be compounded without incurring a tax liability until the money and earnings
are withdrawn. Contributions may be fully or partially deductible for Federal
income tax purposes as noted below. Information on any of the plans described
below is available from Bull & Bear Service Center, 1-800-847-4200.
The minimum investment to establish a Bull & Bear IRA or other retirement
plan is $500. Minimum subsequent investments are $100. The initial investment
minimums are waived 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 Retirement Plans. Subject to change on 30 days' notice,
the plan custodian charges Bull & Bear IRAs 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 IRA has assets of $10,000
or more or if you invest regularly through the Bull & Bear Automatic
Investment Program.
. INDIVIDUAL RETIREMENT ACCOUNTS. Anyone with earned income who is less than
age 70 1/2 at the end of the tax year, even if also participating in
another type of retirement plan, may establish an IRA and contribute each
year up to $2,000 or 100% of earned income, whichever is less, and an
aggregate of up to $2,250 when a non-working spouse is also covered in a
separate spousal account. If each spouse has at least $2,000 of earned
income each year, they may contribute up to $4,000 annually. Employers may
also make contributions to an IRA on behalf of an individual under a
Simplified Employee Pension Plan ("SEP") in any amount up to 15% of up to
$150,000 of compensation. Generally, taxpayers may contribute to an IRA
during the tax year and through the next year until the income tax return
for that year is due, without regard to extensions. Thus, most individuals
may contribute for the 1995 tax year from January 1, 1995 through April 15,
1996.
DEDUCTIBILITY. IRA contributions are fully deductible for most taxpayers.
For a taxpayer who is an active participant in an employer-maintained
retirement plan (or whose spouse is), a portion of IRA contributions is
deductible if adjusted gross income (before the IRA deductions) is $40,000-
$50,000 (if married) and $25,000-$35,000 (if single). Only IRA
contributions by a taxpayer who is an active participant in an employer-
maintained retirement plan (or whose spouse is) and has adjusted gross
income of more than $50,000 (if married) and $35,000 (if single) will not
be deductible at all. An eligible individual may establish a Bull & Bear
IRA under the prototype plan available through the Fund, even though such
individual or spouse actively participates in an employer-maintained
retirement plan.
. IRA TRANSFER AND ROLLOVER ACCOUNTS. Special forms are available from Bull &
Bear Service Center, 1-800-847-4200, which make it easy to transfer or roll
over IRA assets to a Bull & Bear IRA. An IRA may be transferred from one
financial institution to another without adverse tax consequences.
Similarly, no taxes need be paid on a lump-sum distribution which you may
receive as a payment
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from a qualified pension or profit sharing plan due to retirement, job
termination or termination of the plan, so long as the assets are put into
an IRA Rollover account within 60 days of the receipt of the payment.
Withholding for Federal income tax purposes is required at the rate of 20%
for "eligible rollover distributions" made from any retirement plan (other
than an IRA) that are not directly transferred to an "eligible retirement
plan," such as a Bull & Bear Rollover Account.
. PROFIT SHARING AND MONEY PURCHASE PLANS. These provide an opportunity to
accumulate earnings on a tax-deferred basis by permitting corporations,
self-employed individuals (including partners) and their employees
generally to contribute (and deduct) up to $30,000 annually or, if less,
25% (15% for profit sharing plans) of compensation or self-employment
earnings of up to $150,000. Corporations and partnerships, as well as all
self-employed persons, are eligible to establish these Plans. In addition,
a person who is both salaried and self-employed, such as a college
professor who serves as a consultant, may adopt these retirement plans
based on self-employment earnings.
. SECTION 403(B) ACCOUNTS. Section 403(b)(7) of the Internal Revenue Code of
1986, as amended ("Code"), permits the establishment of custodial accounts
on behalf of employees of public school systems and certain tax-exempt
organizations. A participant in such a plan does not pay taxes on any
contributions made by the participant's employer to the participant's
account pursuant to a salary reduction agreement, up to a maximum amount,
or "exclusion allowance." The exclusion allowance is generally computed by
multiplying the participant's years of service times 20% of the
participant's compensation included in gross income received from the
employer (reduced by any amount previously contributed by the employer to
any 403(b) account for the benefit of the participant and excluded from the
participant's gross income). However, the exclusion allowance may not
exceed the lesser of 25% of the participant's compensation (limited as
above) or $30,000. Contributions and subsequent earnings thereon are not
taxable until withdrawn, when they are received as ordinary income.
HOW TO REDEEM SHARES
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 Bull & Bear Service Center, P.O. 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 Bull & Bear 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 Bull & Bear 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
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<PAGE>
account information must be submitted in writing, signature guaranteed, with a
voided check or deposit slip. If you are unable to reach Bull & Bear 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 or cable to the address BULLNBEAR
NEWYORK. 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
($100 minimum for Bull & Bear Securities Performance Plus SM 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 Bull &
Bear Service Center, 1-800-847-4200. Please read the prospectus carefully
before exchanging.
REDEMPTION PRICE. The redemption price is the net asset value per share next
determined after receipt of the redemption request in proper form. Registered
broker/dealers, investment advisers, banks, and insurance companies may open
accounts and redeem shares by telephone or wire and may impose a charge for
handling purchases and redemptions when acting on behalf of others.
REDEMPTION PAYMENT. Payment for shares redeemed will be made as soon as
possible, ordinarily 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 ten day delay to allow the check or transfer to
clear. The ten day clearing period does not affect the trade date on which a
purchase or redemption order is priced, or any dividends and other 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 Bull & Bear Service Center shall be liable for
any loss or damage for acting in good faith upon instructions received by
telephone and believed to be genuine. The Fund employs reasonable procedures
to confirm that instructions communicated by telephone are genuine and if it
does not, it may be liable for 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 tape 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
30 days of such address being changed unless you provide a signature guarantee
as described above.
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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 made in additional Fund shares, unless
you elect to receive cash on the Account Application or so elect subsequently
by calling Bull & Bear 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 Fund shares or in cash. Any election will
remain in effect until you notify Bull & Bear Service Center to the contrary.
TAXES. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of Federal
income tax on that part of its investment company taxable income (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 Fund
shares) generally are taxable to shareholders, other than shareholders that
are not subject to tax on their income, as ordinary income to the extent of
the Fund's earnings and profits; a portion of those dividends may be eligible
for the corporate dividends-received deduction. Distributions by the Fund of
its net capital gain (whether paid in cash or in additional Fund shares), when
designated as such by the Fund, are taxable to those shareholders as long term
capital gains, regardless of how long they have held their Fund shares. The
Fund notifies its shareholders following the end of each calendar year of the
amounts of dividends and capital gain distributions paid (or deemed paid) that
year and of any portion of those dividends that qualifies for the corporate
dividends-received deduction. Any dividend or other distribution paid by the
Fund will reduce the net asset value of Fund shares by the amount of the
distribution. Furthermore, such distribution, although similar in effect to a
return of capital, will be subject to taxes.
The Fund is required to withhold 31% of all dividends, capital gain
distributions, and redemption proceeds payable to any individuals and certain
other noncorporate shareholders who do not provide the Fund with a correct
taxpayer identification number. Such withholding also is required with respect
to 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. Because 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 the Fund's 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, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
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Portfolio securities and other assets of the Fund are valued primarily on
the basis of market quotations, if readily available. Foreign securities 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.
THE INVESTMENT MANAGER
Bull & Bear Advisers, Inc. (the "Investment Manager") acts as general
manager of the Fund, being responsible for the various functions assumed by
it, including 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 by taking into account the
sales of shares of the Fund and the other Bull & Bear Funds. 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.
Until the Fund's net assets reach $5 million, the Investment Manager
receives no investment management fee for its services. Thereafter, 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. This fee is higher than that paid by most investment
companies. From time to time, the Investment Manager may waive all or part of
this fee to improve the Fund's total return or reimburse the Fund pursuant to
an expense guarantee. During the fiscal year ended December 31, 1994, the Fund
paid no fees after reimbursement by the Investment Manager pursuant to its
expense guarantee. The Investment Manager provides certain administrative
services to the Fund at cost. The Investment Manager is a wholly owned
subsidiary of Bull & Bear Group, Inc. ("Group"). Group, a publicly owned
company whose securities are listed on Nasdaq, is a New York based manager of
mutual funds and discount brokerage services. Bassett S. Winmill may be deemed
a controlling person of Group and, therefore, may be deemed a controlling
person of the Investment Manager.
DISTRIBUTION OF SHARES
Pursuant to a Distribution Agreement between the Fund and Bull & Bear
Service Center, Inc. (the "Distributor"), the Distributor acts as the Fund's
principal agent for the sale of Fund shares. The Fund has also adopted a plan
of distribution (the "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 at the rate of thirty-five basis points on
such customer balances. 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
Bull & Bear Funds. In such cases, the expenses will be allocated among the
Funds involved based on the inquiries resulting from the materials or other
factors deemed appropriate by the
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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.
PERFORMANCE INFORMATION
From time to time the Fund may advertise its "average annual total return" or
"total return" (which may be referred to as cumulative total return or
cumulative growth) over specified periods. Average annual total return is
calculated pursuant to a standardized formula which assumes a hypothetical
$10,000 investment in the Fund was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and distributions
during the period. The return is expressed as a percentage rate which, if
applied on a compounded annual basis, would result in the redeemable value of
the investment at the end of the period. The accompanying total return
performance graph compares results of a $10,000 investment in the Fund and in
the Standard & Poor's 500 Stock Index ("S&P 500"). The S&P 500 is unmanaged and
fully invested in common stocks. The Fund invests in common stocks and may also
own fixed income securities, and options. The performance graph begins October
1, 1993, the Fund's inception, and reflects reinvestment of dividends and other
distributions.
[GRAPH APPEARS HEAR]
<TABLE>
<CAPTION>
S&P 500 Fund
<S> <C> <C>
10/93 10207 9873
11/93 10110 9646
12/93 10232 9646
1/94 10580 9933
2/94 10295 9475
3/94 9842 8945
4/94 9968 8793
5/94 10130 9000
6/94 9887 8712
7/94 10211 8958
8/94 10629 9365
9/94 10374 9066
10/94 10606 9319
11/94 10224 8825
12/94 10376 8885
</TABLE>
Total return is computed on a per share basis, assumes the reinvestment of
dividends and distributions, and is calculated by combining the income and
principal changes for a specified period and dividing by the net asset value
per share at the beginning of the period. Advertisements may show total return
as a percentage rate or as the value of a hypothetical investment at the end
of the period. The Fund's performance may be compared to the performance of
broad groups of comparable mutual funds, or the performance of unmanaged
indexes of comparable securities. The Fund's total return is based upon
historical performance information and is not intended to indicate future
performance.
AVERAGE ANNUAL TOTAL RETURN FOR
PERIODS ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
One Year: (7.95)%
Life (from 10/1/93): (9.07)%
</TABLE>
The investment strategy of the Fund's Investment Manager in the rising
interest rate environment of 1994 was to remain invested in large, quality
growth companies whose stock prices are expected to move higher over time and
provide investment returns in excess of the market as a whole. In implementing
this strategy, the Fund favored large capitalization companies in various
certain sectors of the economy. These sector weightings, as well as specific
issue selection, contributed materially to the Fund's performance over the year.
In the first half of the year, the Fund's portfolio reflected higher weightings
in communications, food and beverage, pharmaceutical, retailing and technology
concerns. In the second half of the year, the Fund's focus shifted gradually
toward consumer products, multi-industry, and paper and chemicals, while
maintaining emphasis in technology.
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CAPITAL STOCK
The Fund is a series of Bull & Bear Funds I, Inc. (the "Corporation"), a
Maryland corporation organized in 1986. Prior to September 23, 1993, the
corporation operated under the name Bull & Bear U.S. and Overseas Fund Ltd.
The Corporation is a series investment company, and is authorized to issue up
to 1,000,000,000 shares ($.01 par value). The Board of Directors has
designated 250,000,000 shares as shares of Bull & Bear Quality Growth Fund and
250,000,000 shares as shares of Bull & Bear U.S. and Overseas Fund. The Board
of Directors of the Corporation may establish one or more other series,
although it has no current intention of doing so.
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.
In accordance with the provisions of the General Corporation Law of the
State of Maryland applicable to open-end investment companies incorporated in
Maryland and registered under the 1940 Act, as is the Fund, 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 10% 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 vote on the Fund's investment management agreement, plan of
distribution, or fundamental investment objective, policies or restrictions is
required by the 1940 Act.
CUSTODIAN AND TRANSFER AGENT
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111, acts as
custodian of the Fund's assets 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 by the Fund of such foreign custodial arrangements
and depositories will increase the Fund's expenses. The custodian also
performs certain accounting services for the Fund.
The Fund's transfer and dividend disbursing agent is DST Systems, Inc., P.O.
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. The costs of facilities, personnel and other related expenses are
allocated among the Bull & Bear Funds based on the relative number of
inquiries and other factors.
14
