The investment objective of Bull & Bear U.S. and Overseas Fund ("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 percentage 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 investment 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 April 30, 1996, has been filed with the Securities
and Exchange Commission and is incorporated by reference in this prospectus. It
is available at no charge by calling 1-800-847-4200. Fund shares are not bank
deposits or obligations of, or guaranteed or endorsed by any bank or any
affiliate of any bank, and are not Federally insured by, obligations of or
otherwise supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
<PAGE>
EXPENSE TABLES. The tables and example below are designed to help you understand
the various costs and expenses that you will bear directly or indirectly as an
investor in the Fund. A $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
Sales Load Imposed on Purchases............ NONE
Sales Load Imposed on Reinvested Dividends. NONE
Deferred Sales Load........................ NONE
Redemption Fee within 30 days of purchase.. 1.00%
Redemption Fee after 30 days of purchase... NONE
Exchange Fees.............................. NONE
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after reimbursement)........... .0.70%
12b-1 Fees...................................... 1.00%
Other Expenses ................................. 1.85%
-----
Total Fund Operating Expenses................... 3.55%
EXAMPLE
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...........
1 year 3 years 5 years 10 years
- ------ ------- ------- --------
$36 $109 $184 $382
The example set forth above assumes reinvestment of all dividends and
distributions and assumes a 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, 1995. Without the Investment Manager's expense guarantee,
Management Fees and Total Fund Operating Expenses would have been 0.99% and
3.84% 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, 1995 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>
Years Ended December 31
1995 1994 1993 1992 1991 1990 1989 1988 1987*
---- ---- ---- ---- ---- ---- ---- ---- -----
PER SHARE DATA1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period............. $7.08 $8.71 $7.59 $8.37 $7.62 $8.46 $8.03 $7.46 $7.50
----- ----- ----- ----- ----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss).................... (0.23) (0.13) (0.20) 0.04 0.07 (0.01) (0.10) 0.03 0.01
Net realized and unrealized gain (loss) on 2.00 (1.01) 2.22 (0.25) 1.64 (0.72) 0.99 0.56 (0.05)
Investment ---- ------ ---- ------ ---- ------ ---- ---- ------
Total from investment operations............... 1.77 (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 (0.49) (0.49) (0.90) (0.57) (0.96) (0.11) (0.44) ----- -----
Investment ------ ------ ------ ------ ------ ------ ------ ----- -----
Net asset value at end of period................... $8.36 $7.08 $8.71 $7.59 $8.37 $7.62 $8.46 $8.03 $7.46
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN....................................... 25.11%(13.12)% 26.71% 2.57% 22.55%(8.61)% 11.10% 8.00% 0.60%
====== ======= ====== ===== ==== ======= ====== ===== =====
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted)........ $9,808 $8,454 $12,250 $9,229 $1,275 $1,158 $1,149 $1,250 $1,042
Ratio of expenses to average net assets(a)(b)...... 3.55% 3.53% 3.55% 3.56% 3.56% 3.50% 3.50% 3.02% 3.20%
Ratio of net investment income (loss) to average ne(2.85)% (1.65)% (2.36)% .51% .90% (.09)% (1.29)% .44% .57%
assets(c)..........................................
Portfolio turnover rate............................ 214% 212% 182% 175% 208% 270% 178% 140% 18%
</TABLE>
1 Per share net investment income (loss) and net realized and unrealized gain
(loss) on investments have been computed using the average number of shares
outstanding. 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. (a) Ratios before the Investment Manager's reimburse ment of
expenses were 3.84%, 3.59%, 3.69%, 4.09%, 13.35%, 11.98%, 14.36%, and 10.13%,
for the years ended December 31, 1995, 1994, 1993, 1992, 1991, 1990, 1989, and
1988, respectively. (b) Ratio after the reduction of custodian fees under a
custodian agreement was 3.49%. Prior to 1995, such reductions were reflected in
the expense ratios.(c) Ratios before the Investment Manager's reimbursement of
expenses were (3.14)%, (1.71)%, (2.50)%, (0.02)%, (8.89)%, (8.57)%, (12.15)%,
and (6.67)%, for the years ended December 31, 1995, 1994, 1993, 1992, 1991,
1990, 1989, and 1988, respectively.
INFORMATION RELATING TO OUTSTANDING DEBT DURING THE FISCAL PERIODS SHOWN BELOW:
<TABLE>
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> <C>
1995 $0 $47,539 1,182,551 $0.04
1994 0 22,355 1,234,685 0.02
1993 0 22,097 1,211,741 0.02
*Based on monthly averages.
</TABLE>
TABLE OF CONTENTS
Expense Tables......................2 Distributions and Taxes..............12
Financial Highlights................2 Determination of Net Asset Value.....13
General.............................3 Investment Manager...................13
The Fund's Investment Program.......4 Distribution of Shares...............13
How to Purchase Shares..............7 Performance Information..............14
Shareholder Services................8 Capital Stock........................14
How to Redeem Shares...............11 Custodian and Transfer Agent.........15
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 MANAGER. 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
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<PAGE>
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.
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 total assets in fixed income securities rated below
investment grade, although it has no current intention of investing more than 5%
of its total 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 Services 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 sub stantial 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
3
<PAGE>
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
concentrat ed 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.
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
charac teristics 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 primar ily 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 in which a Fund investment is denominated or which is temporarily held
by the Fund to facilitate portfolio transactions, the value of such Fund assets
(and 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 currency 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.
4
<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 1994 it was 212% and in
1995 it was 214%. Higher turnover may increase Fund brokerage costs and taxes
payable by shareholders. (See "Distributions and Taxes" and "Allocation of
Brokerage" in the Statement of Additional Information.)
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 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
5
<PAGE>
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 Investor
Service Center (see "Determination of Net Asset Value"). The minimum initial
investment is $1,000 for regular and Uniform Gifts/Transfers to Minors Act
custody accounts, and $500 for Bull & Bear retirement plans, which include
Individual Retirement Accounts ("IRAs"), simplified employee plan IRAs
("SEP-IRAs"), rollover IRAs, profit sharing and money purchase plans, and 403(b)
plans. 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 Investor Service Center, Box
419789, Kansas City, MO 64141-6789. Initial investments also may be made by
having your bank wire money, as set forth below, in order to avoid mail delays.
ADDITIONAL INVESTMENTS. Additional investments may be made conveniently at any
time by any one or more of the following methods:
o BULL & BEAR AUTOMATIC INVESTMENT PROGRAM. With the Bull & Bear Automatic
Investment Program, you can establish a convenient and affordable long
term investment program through one or more of the Plans explained below.
Each Plan is designed to facilitate an automatic monthly investment of
$100 or more into your Fund account.
The BULL & BEAR BANK TRANSFER PLAN lets you purchase Fund shares on a
certain day each month by transferring electronically a specified dollar
amount from your regular checking account, NOW account, or bank money
market deposit account.
In the BULL & BEAR SALARY INVESTING PLAN, part or all of your salary may
be invested electronically in 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 Investor Service Center, 1-800-847-4200. You
may modify or terminate the Bank Transfer Plan at any time by written notice
received at least 10 days prior to the scheduled investment date. To modify or
terminate the Salary Investing Plan or Government Direct Deposit Plan, you
should contact, respectively, your employer or the appropriate U.S. government
agency. The Fund reserves the right to redeem any account if participation in
the Program is terminated and the account's value is less than $500. The Program
and the Plans do not assure a profit or protect against loss in a declining
market, and you should consider your ability to make purchases when prices are
low.
o CHECK. Mail a check or other negotiable bank draft ($100 minimum), made
payable to U.S. and Overseas Fund, together with a Bull & Bear
FastDeposit form to Investor Service Center, Box 419789, Kansas City, MO
64141-6789. If you do not use that form, please send a letter indicating
the Fund and account number to which the subsequent investment is to be
credited, and name(s) of the regis tered owner(s).
o ELECTRONIC FUNDS TRANSFER (EFT). With EFT, you may purchase additional shares
of the Fund quickly and simply, just by calling Investor Service Center,
1-800-847-4200. We will contact the bank you designate on your Account
Application or Authorization Form to arrange for the EFT, which is done through
the Automated 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.
6
<PAGE>
o FEDERAL FUNDS WIRE. You may wire money, by following the procedures set forth
below, to receive that day's net asset value per share.
INVESTING BY WIRE. For an initial investment by wire, you must first telephone
Investor Service Center, 1- 800-847-4200, to give the name(s) under which the
account is to be registered, tax identification number, the name of the bank
sending the wire, and to be assigned a Bull & Bear 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 Investor Service
Center, Box 419789, Kansas City, MO 64141- 6789. This service is not available
on days when the Federal Reserve wire system is closed. Subsequent investments
by wire may be made at any time without having to call Investor Service Center
by simply following the same wiring procedures.
SHAREHOLDER ACCOUNTS. When you invest in the Fund, your account will be credited
with all full and fractional shares (to three decimal places), together with any
dividends and other distributions that are paid in additional shares (see
"Distributions and Taxes"). For joint tenant accounts, any account owner has the
authority to act on the account without notice to the other account owners.
Investor Service Center in its sole discretion and for its protection may, but
is not obligated to, require the written consent of all account owners of a
joint tenant account prior to acting upon the instructions of any account owner.
Stock certificates will be issued only for full shares when requested in
writing. In order to facilitate redemptions and exchanges and provide
safekeeping, we recommend that you do not request certificates. You will receive
transaction confirmations upon purchasing or selling shares, and quarterly
statements.
WHEN ORDERS ARE EFFECTIVE. The purchase price for Fund shares is their net asset
value next determined after receipt and acceptance by Investor 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 made payable to
U.S. and Overseas Fund and drawn in U.S. dollars on a U.S. bank. No third party
checks will be accepted and the Fund reserves the right to reject any order for
any reason. Accounts are charged $30 by the Transfer Agent for submitting checks
for investment which are not honored by the investor's bank. 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 Investor Service
Center, 1-800- 847-4200.
ELECTRONIC FUNDS TRANSFER (EFT). You automatically have the privilege of linking
your bank account designated on your Account Application or Authorization Form
and your Fund account through Bull & Bear's EFT service. With EFT, you use the
Automated Clearing House system to electronically transfer money quickly and
safely between your bank and Fund accounts. EFT may be used for purchasing and
redeeming Fund shares, direct deposit of dividends 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
shares of 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 Investor Service
Center, 1-800-847-4200. You may cancel this privilege by mailing written
notification to Investor Service Center, Box 419789, Kansas City, MO 64141-6789.
To select a new 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 dollar, share, or
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percentage amounts, subject to a minimum amount of $100. Under the Systematic
Withdrawal Plan, all dividends and other distributions, if any, are reinvested
in the Fund.
ASSIGNMENT. Fund shares may be transferred to another owner. Instructions are
available from Investor Service Center, 1-800-847-4200.
EXCHANGE PRIVILEGE. You may exchange at least $500 worth of 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 Investor 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:
o BULL & BEAR DOLLAR RESERVES is a high quality money market fund investing
in U.S. Government securities. Income is generally free from most state
and local income taxes. Free unlimited check writing ($250 minimum per
check). Pays monthly dividends.
o BULL & BEAR 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.
o 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.
o 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.
o BULL & BEAR SPECIAL EQUITIES FUND invests aggressively for maximum capital
appreciation.
o BULL & BEAR GOLD INVESTORS seeks long term capital appreciation in
investments with the potential to provide a hedge against inflation and
preserve the purchasing power of the dollar.
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 Investor Service Center at the above
telephone number you may, in emergencies, call 1- 212-363-1100 or communicate by
fax to 1-212-363-1103 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, an exchange is treated as a
redemption and purchase of shares. A free prospectus containing more complete
information including charges, expenses and performance, on any of the Funds
listed above is available from Investor Service Center, 1-800-847-4200. The
other Fund's prospectus should be read carefully before exchanging. You may give
exchange instructions to Investor Service Center by telephone without further
documentation. If you have requested share certificates, this procedure may be
utilized only if, prior to giving telephone instructions, you deliver the
certificates to the Transfer Agent for deposit into your account.
o BULL & BEAR SECURITIES (DISCOUNT BROKERAGE ACCOUNT) TRANSFERS. If you
have an account at Bull & Bear Securities, Inc., an affiliate of the
Investment Manager and a wholly owned subsidiary of Bull & Bear Group,
Inc. offering discount brokerage services, you may access your investment
in any Bull & Bear Fund to pay for securities purchased in your brokerage
account and have proceeds of securities sold in your brokerage account
used to purchase shares of any Bull & Bear Fund. You may request a
Discount Brokerage Account Application from Bull & Bear Securities, Inc.
by calling toll-free at 1-800- 262-5800.
TAX-ADVANTAGED RETIREMENT PLANS. These plans provide an opportunity to set aside
money for retirement in a tax-advantaged account in which earnings can be
compounded without incurring a tax liability until the money and earnings are
withdrawn. Contributions may be fully or partially deductible (or
non-deductible) for Federal income tax purposes as noted below. Information on
any of the plans described below is available from Investor Service Center,
1-800-847-4200.
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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.
|X| IRA AND SEP-IRA ACCOUNTS. Anyone with earned income who is less than age 70
1/2at 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 SEP-IRA 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 1996
tax year from January 1, 1996 through April 15, 1997.
BULL & BEAR NO-FEE IRA(R). The $10 annual fiduciary fee is waived if your Bull
& Bear IRA or Bull & Bear SEP-IRA has assets of $10,000 or more or if you
invest through the Bull & Bear Automatic Investment Program.
DEDUCTIBILITY. IRA contributions are fully deductible for many 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.
o IRA TRANSFER AND ROLLOVER ACCOUNTS. Special forms are available from Investor
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.
o 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.
|X| 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.
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HOW TO REDEEM SHARES
Generally, you may redeem by any of the methods explained below. Requests for
redemption should include the following information: your account registration
information including address, account number and taxpayer identification
number; dollar value, number or percentage of shares to be redeemed; how and to
where the proceeds are to be sent; if applicable, the bank's name, address, ABA
routing number, bank account registration and account number, and a contact
person's name and telephone number; and your daytime telephone number.
BY MAIL. You may request that the Fund redeem any amount of shares by submitting
a written request to Investor Service Center, Box 419789, Kansas City, MO
64141-6789, signed by the record owner(s). If the written request is sent to the
Fund, it will be forwarded to the above address. If stock certificates have been
issued for shares being redeemed, they must accompany the written request.
BY TELEPHONE. You may telephone Investor Service Center, 1-800-847-4200 to
expedite redemption of Fund shares if share certificates have not been issued.
You may redeem as little as $250 worth of shares by requesting Bull & Bear's
Electronic Funds Transfer (EFT) service. With EFT, you can redeem Fund shares
quickly and conveniently because Investor Service Center will contact the bank
designated on your Account Application or Authorization Form to arrange for
the electronic transfer of your redemption proceeds (through the Automated
Clearing House system) to your bank account. EFT proceeds are ordinarily
available in your bank account within two business days.
If you are redeeming $1,000 or more worth of shares, you may request that the
proceeds be mailed to your address of record or mailed or wired to your
authorized bank.
Telephone requests received on Fund business days by 4 p.m. eastern time will
be redeemed from your account that day, and if after, on the next Fund business
day. Any subsequent changes in bank account information must be submitted in
writing, signature guaranteed, with a voided check or deposit slip. If you are
unable to reach Investor Service Center at the above telephone number you may,
in emergencies, call 1-212-363-1100 or communicate by fax to 1-212-363-1103 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 PlusSM discount brokerage
accounts), and no limit on the number of checks that may be written. A signature
card, which should be submitted for the check writing privilege, and a free Bull
& Bear Dollar Reserves prospectus containing more complete information including
yield, charges and expenses is available from Investor Service Center, 1-
800-847-4200. Please read the prospectus carefully before exchanging.
REDEMPTION PRICE AND FEES. Fund shares may be redeemed at their net asset value
per share next determined after receipt of the redemption request in proper
form. The Fund is designed as a long term investment, and short term trading is
discouraged. Accordingly, if shares of the Fund held for 30 days or less are
redeemed or exchanged, the Fund will deduct a redemption fee equal to one
percent of the net asset value of shares redeemed or exchanged. The fee will be
retained by the Fund and used to offset the transaction costs that short term
trading imposes on the Fund and its shareholders. If an account contains shares
with different holding periods (i.e. some shares held 30 days or less, some
shares held 31 days or more), the shares with the longest holding period will be
redeemed first to determine if the Fund's redemption fee applies. Shares
acquired through the Dividend Sweep Privilege and the reinvestment of dividends
and other distributions or redeemed under the Systematic Withdrawal Plan are
exempt from the redemption fee. Registered broker/dealers, investment advisers,
banks, and insurance companies may open accounts and redeem shares by telephone
or wire and may impose a charge for handling purchases and redemptions when
acting on behalf of others.
REDEMPTION PAYMENT. Payment for shares redeemed will 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
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of securities owned by it or fairly to determine the value of its assets; or
(iii) as the SEC may otherwise permit. The mailing of proceeds on redemption
requests involving any shares purchased by personal, corporate, or government
check or EFT transfer is generally subject to a fifteen day delay to allow the
check or transfer to clear. The fifteen day clearing period does not affect the
trade date on which a purchase or redemption order is priced, or any dividends
and 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 Investor Service Center shall be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine and if it does not, it may be
liable for losses due to unauthorized or fraudulent transactions. These
procedures include requiring personal identification prior to acting upon
telephone instructions, providing written confirmation of such transactions, and
recording telephone conversations. The Fund may modify or terminate any
telephone privileges or shareholder services (except as noted) at any time
without notice.
SIGNATURE GUARANTEES. No signature guarantees are required when payment is to be
made to you at your address of record. If the redemption proceeds are to be paid
to a non-shareholder of record, or to an address other than your address of
record, or the shares are to be assigned, the Transfer Agent may require that
your signature be guaranteed by an entity acceptable to the Transfer Agent, such
as a commercial bank or trust company or member firm of a national securities
exchange or of the NASD. A notary public may not guarantee signatures. The
Transfer Agent may require further documentation, and may restrict the mailing
of redemption proceeds to your address of record within 60 days of such address
being changed unless you provide a signature guarantee as described above.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. The Fund pays dividends annually to its shareholders from its net
investment income, if any. The Fund also makes an annual distribution to its
shareholders out of any net realized capital gains, after offsetting any capital
loss carryover, and any net realized gains from foreign currency transactions.
Dividends and other distributions, if any, are declared, and payable to
shareholders of record, on a date in December of each year. Such distributions
may be paid in January of the following year, in which event they will be deemed
received by the shareholders on the preceding December 31 for tax purposes. The
Fund may also make an additional distribution following the end of its fiscal
year out of any undistributed income and capital gains. Dividends and other
distributions are made in additional Fund shares, unless you elect to receive
cash on the Account Application or so elect subsequently by calling Investor
Service Center, 1-800-847-4200. For Federal income tax purposes, dividends and
other distributions are treated in the same manner whether received in
additional Fund shares or in cash. Any election will remain in effect until you
notify Investor Service Center to the contrary.
TAXES. The Fund intends to continue to qualify for treatment as a 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
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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. Withholding at that rate also is required from
dividends and capital gain distributions payable to such shareholders who are
otherwise subject to backup withholding.
The foregoing is only a summary of some of the important Federal income tax
considerations generally affecting the Fund and its shareholders; see the
Statement of Additional Information for a further discussion. Since other 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.
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.
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 other affiliated investment companies. The Investment Manager may also
allocate transactions to broker/dealers that remit a portion of their
commissions as a credit against the Fund's expenses.
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, 1995, investment management
fees paid by the Fund represented approximately 0.70% 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 the Nasdaq Stock Market, is a New York based manager of mutual funds
and discount brokerage services. Bassett S. Winmill may be deemed a controlling
person of Group and, therefore, may be deemed a controlling person of the
Investment Manager.
DISTRIBUTION OF SHARES
Pursuant to a Distribution Agreement, Investor Service Center, Inc. (the
"Distributor"), 11 Hanover Square, New York, NY 10005, the Distributor acts as
the Fund's principal agent for the sale of its shares. The Investment Manager is
an affiliate of the Distributor. 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
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shareholders and maintenance of shareholder accounts. The distribution fee
portion is intended to cover all other activities and expenses primarily
intended to result in the sale of the Fund's shares. These fees may be retained
by the Distributor or passed through to brokers, banks and others who provide
services to their customers who are Fund shareholders or to the Distributor. The
Fund will pay the fees to the Distributor until either the Plan is terminated or
not renewed. In that event, the Distributor's expenses in excess of fees
received or accrued through the termination day will be the Distributor's sole
responsibility and not obligations of the Fund. During the period they are in
effect, the Distribution Agreement and Plan obligate the Fund to pay fees to the
Distributor as compensation for its service and distribution activities. If the
Distributor's expenses exceed the fees, the Fund will not be obligated to pay
any additional amount to the Distributor. If the Distributor's expenses are less
than such fees, it may realize a profit. Certain other advertising and sales
materials may be prepared to promote the sale of Fund shares and shares of one
or more other affiliated investment companies. In such cases, the expenses will
be allocated among the Funds involved based on the 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
affiliated investment companies 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
$10,000 investment in the Fund was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and other
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Total return is computed on a
per share basis, assumes the reinvestment of dividends and other distributions,
and is calculated by combining the income and principal changes for a specified
period and dividing by the net asset value per share at the beginning of the
period. Advertisements may show total return as a percentage rate or as the
value of a hypothetical investment at the end of the period. Although the Fund
imposes a 1% redemption fee on the redemption of shares held for 30 days or
less, all of the periods for which performance is quoted are longer than 30
days, and therefore the 1% fee is not reflected in the performance calculations.
In addition, there is no sales charge upon reinvestment of dividends or other
distributions. The Fund's performance may be compared to the performance of
broad groups of comparable mutual funds, or the performance of unmanaged indexes
of comparable securities. The Fund's total return is based upon historical
performance information and not intended to indicate future performance. The
Fund's annual report to shareholders contains information with respect to the
Fund's performance. The annual report is available upon request.
CAPITAL STOCK
The Fund is a series of Bull & Bear Funds I, Inc. (the "Corporation"), a
Maryland corporation organized in 1986. Prior to September 23, 1993, the
Corporation operated under the name Bull & Bear U.S. and Overseas Fund Ltd. The
Corporation is an open-end management investment company and is authorized to
issue up to 1,000,000,000 shares ($.01 par value). The Board of Directors has
designated 250,000,000 shares as shares of Bull & Bear U.S. and Overseas Fund.
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 office have been elected by shareholders. Shareholder meetings will be
held in years in which shareholder
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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 02109, acts as
custodian of the Fund's assets, performs certain accounting services for the
Fund, and may appoint one or more subcustodians provided such subcustodianship
is in compliance with the rules and regulations promulgated under the 1940 Act.
The Fund may maintain a portion of its assets in foreign countries pursuant to
such subcustodianships and related foreign depositories. Utilization by the Fund
of such foreign custodial arrangements and depositories will increase the Fund's
expenses.
The Fund's transfer and dividend disbursing agent is DST Systems, Inc., Box
419789, Kansas City, MO 64141-6789. The Distributor provides certain shareholder
administration services to the Fund and is reimbursed its cost by the Fund. The
costs of facilities, personnel and other related expenses are allocated among
the Fund and other affiliated investment companies based on the relative number
of inquiries and other factors. The Fund may also enter into agreements with
brokers, banks and others who would perform, on behalf of its customers, certain
shareholder services not otherwise provided by the Transfer Agent or the
Distributor.
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