As filed, via EDGAR, with the Securities and Exchange Commission on March 11,
1999.
File No.:33-53368
ICA No.: 811-07290
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
| | Preliminary proxy statement |_| Confidential, for Use of the
|X| Definitive proxy statement Commission Only(as permitted by
|_| Definitive additional materials Rule 14a-6(e)(2))
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
BEAR STEARNS INVESTMENT TRUST
-----------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount previously paid:
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(4) Date filed:
<PAGE>
BEAR STEARNS INVESTMENT TRUST
Emerging Markets Debt Portfolio
575 Lexington Avenue
New York, NY 10022
March 11, 1999
Dear Shareholder:
You are invited to attend a Special Meeting of Shareholders of the Bear
Stearns Investment Trust ("BSIT") to be held at the offices of BSIT, 575
Lexington Avenue, 9th Floor, New York, New York 10022, on April 15, 1999 at
10:00 A.M. Eastern time.
At this Special Meeting, you are being asked to consider and approve an
Agreement and Plan of Reorganization and Liquidation (the "Plan") providing for
the transfer of the assets and liabilities of the Emerging Markets Debt
Portfolio (the "Portfolio"), a series of BSIT, to the Emerging Markets Debt
Portfolio ("New Portfolio") a newly-created separate series of The Bear Stearns
Funds ("BSF"), with the same investment objective and policies as the Portfolio.
We refer to the transactions contemplated in the Plan as the "Reorganization."
You will not pay higher fees as a result of the Reorganization.
We anticipate that the proposed Reorganization will benefit
shareholders of your Portfolio by achieving economies of scale through the
elimination of costs associated with operating two separate entities (BSIT and
BSF), including having two separate boards and separate legal representation. We
believe that the Reorganization will ultimately reduce fund expenses, while
keeping the management of the Portfolio materially the same in all respects. The
Board of Trustees has given full and careful consideration to the proposed
Reorganization and has concluded that it is in the best interests of your
Portfolio and its shareholders. We urge you to approve the proposed Plan.
If you and the other shareholders of the Portfolio approve the proposed
Plan and certain other conditions are satisfied, you will receive, in exchange
for your shares in the Portfolio, the same number of shares of New Portfolio,
with the same value as of the date of the Reorganization.
<PAGE>
You will not be assessed any sales charge or other fee in connection
with the proposed Reorganization. BSIT expects to receive an opinion of counsel
stating that neither you nor your Portfolio will be liable for federal income
tax solely as a result of the Reorganization.
We welcome your attendance at the Special Meeting. If you are unable to
attend, please sign, date and return the enclosed proxy card promptly in order
to spare additional proxy solicitation expenses.
Sincerely,
Doni L. Fordyce
President
<PAGE>
THE BEAR STEARNS INVESTMENT TRUST
Emerging Markets Debt Portfolio
575 Lexington Avenue
New York, New York 10022
1-800-766-4111
Notice of Special Meeting of Shareholders
to be held April 15, 1999
A Special Meeting of Shareholders of the Emerging Markets Debt
Portfolio (the "Portfolio"), a separate non-diversified portfolio of the Bear
Stearns Investment Trust (the "Trust") will be held on April 15, 1999. The
Meeting will be held at the offices of the Trust, 575 Lexington Avenue, New
York, New York. At the Meeting, we will ask shareholders to vote on:
1. approving or disapproving an Agreement and Plan of Reorganization
and Liquidation (the "Plan") and the transactions contemplated in
the Plan to reorganize the Portfolio into Emerging Markets Debt
Portfolio ("New Portfolio"), a newly-created series of The Bear
Stearns Funds ("BSF") and to subsequently dissolve BSIT. A vote
to approve the Plan will also authorize the Portfolio to approve
an Investment Advisory Agreement between Bear Stearns Asset
Management Inc. ("BSAM") and BSF on behalf of New Portfolio.
2. any other business properly brought before the meeting.
Any shareholder who owned shares of the Portfolio on February 25, 1999
(the "Record Date") will receive notice of the Meeting and will be entitled to
vote at the Meeting or any adjournment of the Meeting. Please read the full text
of the Proxy Statement for a complete understanding of our proposal.
Dated: March 11, 1999 By Order of the Board of Trustees,
Stephen A. Bornstein
Secretary
<PAGE>
You can help avoid the necessity and expense of sending follow-up letters to
ensure a quorum by promptly returning the enclosed proxy. If you are unable to
attend the Meeting, please mark, sign, date, and return the enclosed proxy so
that the necessary quorum may be represented at the Meeting. The enclosed
envelope requires no postage if mailed in the United States.
<PAGE>
BEAR STEARNS INVESTMENT TRUST
Emerging Markets Debt Portfolio
575 Lexington Avenue
New York, New York 10022
1-800-766-4111
Proxy Statement
Dated March 5, 1999
Special Meeting of Shareholders
to be held
April 15, 1999
General Information
The Board of Trustees of Bear Stearns Investment Trust, a Massachusetts
Business Trust ("BSIT"), on behalf of the Emerging Markets Debt Portfolio (the
"Portfolio") has sent you this Proxy Statement to ask you to vote on a proposal
affecting your Portfolio. BSIT will hold a Special Meeting of Shareholders on
April 15, 1999 at 10:00 a.m., Eastern Time, at its offices located at 575
Lexington Avenue, New York, New York 10022 in order to consider the proposal
described below.
At the Special Meeting, you will be asked to approve or disapprove an
Agreement and Plan of Reorganization and Liquidation, and to consider any other
business that comes before the Special Meeting. We describe this Reorganization
proposal below.
The Board of Trustees has fixed the close of business on February 25,
1999 as the record date to determine the shareholders who are entitled to notice
of the Special Meeting and to vote their shares. Shareholders are entitled to
cast one vote for each full share, and a fractional vote for each fractional
share held. We are first mailing this Proxy Statement, Notice of Meeting and
Proxy Card on or about March 11, 1999.
The Bear Stearns Funds ("BSF") and BSIT are both required by federal
law to file reports, proxy statements and other information with the Securities
and Exchange Commission (the "SEC"). The SEC maintains a Web site that contains
information about BSIT and BSF. Any such proxy material, reports and other
information can be inspected and copied at the public reference facilities of
the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's New
York Regional Office, Seven World Trade Center, New York, NY 10048. Copies of
such materials can be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
-1-
<PAGE>
The Portfolio's most recent annual and semi-annual reports to
shareholders are available at no cost. To request a report, please call us
toll-free at 1-800-766-4111 or write to us at 575 Lexington Avenue, New York,
New York 10022.
Proposal 1
Approval or Disapproval of the
Agreement and Plan of Reorganization and Liquidation
Introduction
The purpose of this proposal is to reorganize your Portfolio to make it a
part of The Bear Stearns Funds. Your Portfolio's investment objective and
polices would not change. The amount of fees that your Portfolio pays would
not change. Neither you nor your Portfolio would be liable for federal
income tax solely as a result of the Reorganization.
The Proposed Reorganization
Your Portfolio is currently the only portfolio of Bear Stearns
Investment Trust ("BSIT"). Bear Stearns Asset Management Inc. ("BSAM"), the
investment adviser of your Portfolio, has proposed to reorganize your Portfolio
to make it a part of The Bear Stearns Funds ("BSF"). BSF currently consists of
10 distinct investment Portfolios. Your Portfolio has established four classes
of shares: Class A, Class B, Class C and Class Y, each with its own expense
structure and other features. Emerging Markets Debt Portfolio ("New Portfolio"),
a newly created portfolio of BSF, has also established Class A, Class B, Class C
and Class Y shares. If shareholders approve the Reorganization, you will receive
the same Class of shares of New Portfolio that you own at the time of the
Reorganization.
In order to accomplish this Reorganization, you are being asked to
approve an Agreement and Plan of Reorganization and Liquidation (the "Plan"). In
this Proxy Statement, we refer to the transactions contemplated in the Plan as
the "Reorganization." A copy of the Plan is attached as Exhibit A to this Proxy
Statement.
If shareholders approve the Plan, your Portfolio would reorganize and
become a separate portfolio of BSF. The Reorganization would occur approximately
on April 15, 1999. Your Portfolio will bear the expenses of the Reorganization,
however, because BSAM has voluntarily capped the Portfolio's expenses, BSAM
effectively bears the expenses of the Reorganization.
Among other things, the Plan provides that,
- On the Reorganization date, your Portfolio would transfer all its
assets and liabilities to New Portfolio, a newly-created portfolio of
BSF.
- In exchange, New Portfolio would issue to you Portfolio shares of
beneficial interest of New Portfolio. Your Portfolio would then
distribute to you the same number of shares (of the same Class of
shares) of New Portfolio that you own of your Portfolio as of the
reorganization date.
- You would then become a shareholder of New Portfolio.
- Your Portfolio, would then dissolve and BSIT would subsequently be
terminated.
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<PAGE>
New Portfolio was established to continue the operations of your
Portfolio at the time of the Reorganization. It currently has no operations.
The Plan also provides for your Portfolio to take certain actions that
are necessary for New Portfolio to commence operations. In particular, after
your Portfolio receives shares as part of the transaction, but before it
distributes those shares to you and its other shareholders, your Portfolio will
approve the new Investment Advisory Agreement between BSAM and BSF on behalf of
New Portfolio and take certain other actions.
You should know the following about the proposed Reorganization:
- New Portfolio is being created to continue the operations of your
Portfolio. It does not currently operate, and will begin operations
only when the Reorganization occurs.
- New Portfolio has the same investment objective and policies as your
Portfolio.
- New Portfolio has the same investment adviser, distributor,
administrator, custodian, transfer agent and auditors as that of your
Portfolio.
- You will not pay any commissions or fees as part of the
Reorganization.
- Neither you nor your Portfolio will be liable for any federal income
tax as a result of the Reorganization.
- The amount of fees and expenses that you pay as a shareholder of your
Portfolio will not change as a result of the Reorganization.
Why We Are Asking You to Approve the Reorganization
BSAM believes that reorganizing your Portfolio as part of BSF will
benefit shareholders.
Currently, BSIT and BSF operate as separate entities, each with a Board
of Trustees. BSAM believes that the Reorganization would streamline operations
and would eliminate certain duplicate costs. For example, BSIT and BSF each
retain separate legal counsel. By combining BSIT and BSF, BSAM believes that
duplicate legal costs would be reduced, resulting in savings to your Portfolio.
(BSAM currently waives a portion of its advisory fee so as to limit the
aggregate amount of fees and expenses that your Portfolio pays, so these savings
may not be apparent until your Portfolio grows in size).
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<PAGE>
Considerations by the Board of Trustees
On November 12, 1998, the Board of Trustees of BSIT approved the Plan.
The Board of Trustees concluded that the Reorganization would not result in any
dilution of interests of shareholders and would be in the best interests of
shareholders.
In approving the Plan, the Board of Trustees relied upon
representations of BSAM concerning the operation of your Portfolio. The Board of
Trustees considered a number of factors, including:
- New Portfolio has the same investment objective and policies as your
Portfolio.
- New Portfolio has the same investment adviser, distributor,
administrator, custodian, transfer agent and auditors as that of your
Portfolio.
- You will not pay any commissions or fees as part of the
Reorganization.
- Neither you nor your Portfolio will be liable for any federal income
tax as a result of the Reorganization.
- The amount of fees and expenses that you pay as a shareholder of your
Portfolio will not change as a result of the Reorganization.
Information About BSIT and BSF
BSIT and BSF are each organized as Massachusetts business trusts.
Shareholders of BSIT and BSF have substantially similar rights although there
are certain differences in the provisions of the Agreement and Declaration of
Trust of BSIT (BSIT Trust Agreement) and The Agreement and Declaration of Trust
of BSF (BSF Trust Agreement).
Under the BSIT Trust Agreement, shareholders of the Portfolio holding
20% of the shares entitled to vote can require the Trustees of BSIT to call a
special meeting of shareholders. Under the BSF Trust Agreement, shareholders of
the New Portfolio holding 30% of the shares entitled to vote can require the
Trustees of BSF to call a special meeting. However, under the Investment Company
Act of 1940, shareholders of either BSIT or BSF holding 10% of the shares
entitled to vote may call a special meeting for the purpose of voting on the
removal of a trustee.
In order to obtain a quorum at a shareholder's meeting, the BSIT Trust
Agreement requires that a majority of shares entitled to vote be present. The
BSF Trust Agreement requires that 30% of shares entitled to vote be present in
order to obtain a quorum.
Under the BSIT Trust Agreement, shareholders holding the lesser of (i)
50% of the outstanding shares of the Portfolio or (ii) 67% or more of the shares
present at a meeting at which more than 50% of the outstanding shares of the
Portfolio must approve any reorganization of the Portfolio that entails a
transfer of the Portfolio's assets. The Portfolio may be terminated by the
approval of not less than a majority of the outstanding shares of the Portfolio
or by the Trustees of BSIT on notice to shareholders stating that the
continuation of the Portfolio is not in the best interest of the Portfolio or
its shareholders as a result of factors or events adversely affecting the
ability of the Portfolio to conduct its business or operations in an
economically viable manner. The BSF Trust Agreement does not specifically
address the required shareholder vote for a reorganization of the New Portfolio.
The New Portfolio may be terminated either by shareholders holding a majority of
the outstanding shares of the New Portfolio or by the Trustees of BSF on notice
to shareholders.
Shareholders holding a majority of the shares of BSIT must approve
amendments to the BSIT Trust Agreement, except that shareholder approval is not
required for amendments that establish a new series of BSIT, terminate BSIT,
change the name of BSIT, correct ambiguities in the BSIT Trust Agreement, or do
not adversely affect the rights of shareholders. Shareholders holding a majority
of the shares of BSF must approve amendments to the BSF Trust Agreement except
that shareholder approval is not required for amendments that change the name of
BSF or correct ambiguities in the BSF Trust Agreement. The approval of
shareholders of series of classes that are not affected by a proposed amendment
to the BSF Trust Agreement is not required.
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<PAGE>
The Investment Adviser and Administrator
BSAM currently serves as investment adviser to your Portfolio and will
continue to serve as investment adviser to New Portfolio after the
reorganization. Bear Stearns Funds Management Inc. ("BSFM"), an affiliate of
BSAM, serves as Administrator of your Portfolio, and will serve as Administrator
of New Portfolio after the Reorganization.
Currently, BSAM is entitled to receive an investment management fee
computed daily and payable monthly, based on your Portfolio's average daily net
assets as follows:
Asset Level Investment Management Fee
- ----------- -------------------------
Up to $50 million 1.15%
More than $50 million up to $100 million 1.00%
More than $100 million 0.70%
As of February 25, 1999, your Portfolio had total net assets of
$33,672,830.
Currently, BSFM provides administrative services to your Portfolio
under a Delegation Agreement. BSAM, out of its investment management fee, pays
BSFM an administration fee at an annual rate of 0.15% (before fee waiver, if
any) of your Portfolio's average daily net assets. Your Portfolio does not pay
this fee directly.
If shareholders approve the Reorganization, BSAM will enter into a new
Investment Advisory Agreement with BSF on behalf of New Portfolio. The
Investment Advisory Agreement will provide that BSAM will be entitled to receive
an investment advisory fee, computed daily and payable monthly, based on New
Portfolio's average daily net assets as follows:
Asset Level Investment Advisory Fee
- ----------- -----------------------
Up to $50 million 1.00%
More than $50 million up to $100 million 0.85%
More than $100 million 0.55%
In addition, BSF, on behalf of New Portfolio, will enter into a
separate Administration Agreement with BSFM to provide administrative services
to New Portfolio that are identical to those it now provides to your Portfolio
under its Delegation Agreement with BSAM. BSFM will be entitled to receive the
same fee it now receives under the Delegation Agreement, except that New
Portfolio will pay this fee directly.
If shareholders approve Proposal 1, your Portfolio will be authorized
to approve the new Investment Advisory Agreement between BSAM and BSF, on behalf
of New Portfolio. A copy of the new Investment Advisory Agreement is attached as
Exhibit B to this Proxy Statement.
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<PAGE>
Distribution Plan
Your Portfolio has adopted a Distribution Plan on behalf of its Class
A, Class B and Class C shares. Under the Distribution Plan, your Portfolio pays
Bear, Stearns & Co. Inc., the Distributor, a fee for distribution of shares. The
Distributor may use all or part of this fee to pay for services principally
intended to result in the sale of shares, and to compensate third parties for
providing similar services. Your Portfolio pays an annual distribution fee,
calculated daily and paid monthly, based upon your Portfolio's average daily net
assets as follows:
Class of Shares Annual Distribution Fee
- --------------- -----------------------
Class A 0.10%
Class B 0.75%
Class C 0.75%
New Portfolio's Distribution Plan is the same as your Portfolio's
current Distribution Plan, and the fees paid under that Plan, will be the same
as your Portfolio now pays. Bear Stearns will continue to waive its distribution
fee to the extent that the fees would exceed the rules of the National
Association of Securities Dealers that limit the amount of asset-based sales
charges that an investment company may pay.
If shareholders approve Proposal 1, your Portfolio will be authorized
to approve New Portfolio's Distribution Plan.
Shareholder Servicing Plan
Your Portfolio has adopted a Shareholder Servicing Plan on behalf of
Class A, Class B and Class C shares, that allows your Portfolio to pay an annual
fee of up to 0.25% of the average daily net assets for services intended to
assist shareholders. These services include personal services provided by
financial institutions, and certain account maintenance and recordkeeping
services. Some or all of the shareholder servicing fee may be paid to financial
institutions that provide personal or account maintenance services under "mutual
fund supermarket" programs.
New Portfolio's Shareholder Servicing Plan and related agreements will
be the same as your Portfolio's current Shareholder Servicing Plan, and the fees
paid under that Plan, will be the same as your Portfolio is currently paying.
Fees and Expenses
The aggregate amount of fees and expenses that you pay as a shareholder
will not change as a result of the Reorganization. As described above, New
Portfolio will pay an investment advisory fee and an administrative fee that
together will equal the amount that your Portfolio now pays under a single
investment management fee.
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<PAGE>
Dividend Policy
Your Portfolio currently declares daily and pays monthly dividends to
shareholders effective January 1, 1999. New Portfolio will have the same policy.
Federal Income Tax Liability
Neither you nor your Portfolio will be liable for federal income taxes
solely as a result of the Reorganization. Your Portfolio will receive an opinion
of counsel concerning federal income taxes. This opinion, of course, is not
binding on the IRS or any court and does not preclude the IRS from adopting a
contrary position. You should consult your own tax adviser concerning the
potential tax consequences of the Reorganization, including any applicable state
and local income tax consequences.
Recommendation of the Board of Trustees
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
APPROVE THE PLAN.
Other Information
General information about proxy voting. The Board of Trustees of BSIT
is soliciting your proxy to vote on the matters described in this proxy
statement. We expect to solicit proxies primarily by mail, but representatives
of Bear, Stearns & Co. Inc. or its affiliates or others may communicate with you
by mail or by telephone or other electronic means to discuss your vote. We will
ask broker-dealers and other institutions that hold shares for the benefit of
their customers to send the proxy materials to the beneficial owners and to
obtain authorization to vote on their behalf.
Only shareholders of record of BSIT at the close of business on the
record date, February 25, 1999, may vote at the special meeting. As of the
record date, each Class of BSIT had the number of shares issued and outstanding
listed below, each share being entitled to one vote:
Class Total Shares Outstanding
----- ------------------------
Class A 3,394,283
Class B 162,657
Class C 249,854
Class Y -
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<PAGE>
As of February 25, 1999, the record date, the trustees and officers of
BSIT, as a group, owned less than 1% of the outstanding shares of BSIT. To the
best of the knowledge of BSIT, the following shareholders beneficially owned 5%
or more of the outstanding shares of the indicated class of BSIT as of February
25, 1999:
Percent of Class A
Name and Address Shares Outstanding
- ---------------- ------------------
Bear, Stearns Securities Corp. 12.9%
FBO 220-23312-17
1 Metrotech Center North
Brooklyn, NY 11201-3859
Bear, Stearns Securities Corp. 7.3%
FBO 102-06476-22
1 Metrotech Center North
Brooklyn, NY 11201-3859
Charles Schwab & Co. Inc. 5.4%
FBO Spec A/C for Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Northern Trust Co. 8.9%
FBO HELP
P. O. Box 92956
Chicago, IL 60675
Bear, Stearns Securities Corp. 7.7%
FBO 620-11116-17
1 Metrotech Center North
Brooklyn, NY 11201-3859
Percent of Class B
Name and Address Shares Outstanding
- ---------------- ------------------
Bear, Stearns Securities Corp. 5.9%
FBO 486-02704-14
1 Metrotech Center North
Brooklyn, NY 11201-3859
Lewco Securities Corp. 14.1%
FBO A C H10-684246-1-01
34 Exchange Place, 4th Floor
Jersey City, NJ 07311
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<PAGE>
You may cast one vote for each proposal for each whole share that you
own of BSIT. We count your fractional shares as fractional votes. If we receive
your proxy before the special meeting date, we will vote your shares as you
instruct the proxies. If you sign and return your proxy, but do not specify
instructions, we will vote your shares in favor of each proposal. You may revoke
your proxy at any time before the special meeting if you notify us in writing,
or if you attend the special meeting in person and vote in person.
If a broker or nominee returns a proxy indicating that it did not
receive voting instructions from the beneficial owner, or if the beneficial
owner marked an abstention, we will count those shares when we determine if a
quorum is present, but those proxies, in effect, will count as a vote "against".
If shareholders do not approve the Reorganization, then the
Reorganization will not proceed, and the Board of Trustees will consider other
alternatives. BSIT would continue operating as an investment company and would
not terminate.
Quorum and adjournments. BSIT requires that a quorum at the special
meeting be present, in person or by proxy, to conduct the Special Meeting. A
simple majority of all of the shares of the Portfolio outstanding on the record
date will be a quorum. If a quorum is not present at the special meeting, the
persons named as proxies may propose one or more adjournments of the special
meeting to permit further solicitation of proxies. An affirmative vote of a
majority of the shares of BSIT present at the Special Meeting may adjourn the
Special Meeting without further notice, until BSIT obtains a quorum. In the
event a quorum is present but sufficient votes to approve a proposal are not
received, the persons named as proxies may propose one or more adjournments to
permit further solicitation of proxies. If this should occur, we will vote
proxies for or against a motion to adjourn in the same proportion to the votes
received in favor or against the proposal.
Required Vote. Approval of the proposed Reorganization requires the
affirmative vote of a majority of the outstanding voting securities of the
Portfolio, which means more than 50% of all the outstanding shares of the
Portfolio. All classes of the Portfolio vote together on the proposed
Reorganization.
Other Business. The Board of Trustees of BSIT knows of no other
business to be brought before the Special Meeting. If any other matters come
before the Special Meeting, the named proxies intend to vote on other matters
according to their best judgment unless you have instructed the proxies to the
contrary.
Future Shareholder Proposals. BSIT is not required to hold annual
meetings, unless required to do so by law. If you have a proposal you wish to be
considered by shareholders, send your proposal to Bear Stearns Investment Trust,
575 Lexington Avenue, New York, New York 10022. We must receive your proposal in
sufficient time before the next meeting of shareholders for it to be included.
We do not guarantee that we will be able to include any proposal in a proxy
statement.
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<PAGE>
Financial Statements. Deloitte & Touche LLP, independent auditors of
BSIT, has audited the financial statements included in the Statement of
Additional Information for the year ended March 31, 1998.
Information About BSF
BSF is a business trust established under Massachusetts law. The
operations of BSF are governed by a Declaration of Trust dated September 29,
1994, as amended.
New Portfolio is a separate series of BSF. You should be aware of the
following features of BSF Funds:
o Shares of each class of BSF participate equally in dividends and other
distributions attributable to that class, including any distributions
in the event of a liquidation.
o Each share of each portfolio of BSF is entitled to one vote for all
purposes.
o Shares of all portfolios of BSF vote for the election of Trustees and
on any other matter that affects each BSF portfolio in substantially
the same manner, except as otherwise required by law.
o As to matters that affect each portfolio differently, such as approval
of an investment advisory agreement, shares of each portfolio vote as
separate portfolios.
o On matters that affect the classes of a portfolio differently, shares
of each class vote separately.
o Massachusetts law does not require registered investment companies,
such as BSF or its portfolios, to hold annual meetings of shareholders
and it is anticipated that shareholder meetings will be held only when
specifically required by federal or state law.
o Shareholders have available certain procedures for the removal of
Trustees.
o BSF is required to indemnify Trustees against any liability except by
reason of such persons willful misfeasance, bad faith, gross neligence
or reckless disregard of the duties involved in the conduct of such
person's office.
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<PAGE>
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN YOUR PROXY
CARD PROMPTLY
AND RETURN IT IN THE ENCLOSED ENVELOPE TO AVOID UNNECESSARY
EXPENSE AND DELAY.
NO POSTAGE IS NECESSARY.
By Order of the Board of Trustees,
Stephen A. Bornstein
Secretary
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<PAGE>
[Logo]
Bear Stearns Investment Trust
575 Lexington Avenue
New York, New York 10022
BEAR STEARNS INVESTMENT TRUST
Emerging Markets Debt Portfolio
SPECIAL MEETING OF SHAREHOLDERS SCHEDULED
TO BE HELD ON April 15, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF BEAR STEARNS INVESTMENT
TRUST (the "Trust") on behalf of the Emerging Markets Debt Portfolio (the
"Portfolio"), for use at a Special Meeting of Shareholders to be held at the
offices of the Trust, 575 Lexington Avenue, New York, New York, on April 15,
1999, at 10:00 a.m., eastern time. The undersigned hereby appoints Stephen A.
Bornstein and Jack L. Malick, and each of them with full power of substitution,
as Proxies of the undersigned to vote at the above-stated Special Meeting, and
at all adjournments thereof, all shares of beneficial interest of the Portfolio
that are held of record by the undersigned on the record date for the Special
Meeting upon the matter enumerated below.
IF THIS PROXY CARD IS RETURNED, AND NO CHOICE IS INDICATED AS TO ANY
MATTER,
THIS PROXY WILL BE VOTED AFFIRMATIVELY ON THE MATTERS PRESENTED.
THE BOARD OF
TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" THE FOLLOWING PROPOSALS.
Please sign exactly as your name appears on this card. When account is joint
tenants, all should sign. When signing as executor, administrator, trustee, or
guardian, please give title. If a corporation or partnership, sign entity's name
and by authorized person.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:|X|
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
<PAGE>
Emerging Markets Debt Portfolio
Vote On Proposals
For Against Abstain
1. To approve the Agreement and Plan [ ] [ ] [ ]
of Reorganization and Liquidation
as is more fully described in the
accompanying Proxy Statement
together with the transactions
contemplated thereby.
2. In their discretion the Proxies are
authorized to vote upon such other
business as may properly come
before the meeting.
- --------------------------------- ------- ------------------------ -----
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE>
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
This AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION ("Agreement")
is made as of this 12th day of November, 1998, between Bear Stearns Investment
Trust, a Massachusetts business trust ("Old Trust"), on behalf of its series
portfolio, the Emerging Markets Debt Portfolio ("Old Fund"), and The Bear
Stearns Funds, a Massachusetts business trust ("New Trust"), on behalf of its
series portfolio, the Emerging Markets Debt Portfolio ( "New Fund"). (Old Fund
and New Fund are sometimes referred to herein individually as a "Fund" and
collectively as the "Funds"; Old Trust and New Trust are sometimes referred to
herein individually as a "Trust" and collectively as the "Trusts.") All
agreements, representations, actions, and obligations described herein made or
to be taken or undertaken by a Fund are made and shall be taken or undertaken by
Old Trust on behalf of Old Fund and by New Trust on behalf of New Fund.
Old Fund intends to change its identity -- by converting from a series
of a Massachusetts business trust to a series of another Massachusetts business
trust -- through a reorganization within the meaning of section 368(a)(1)(F) of
the Internal Revenue Code of 1986, as amended ("Code"). Old Fund desires to
accomplish such conversion by transferring all its assets to New Fund (which is
being established solely for the purpose of acquiring such assets and continuing
Old Fund's business) in exchange solely for voting shares of beneficial interest
of New Fund ("New Fund Shares") and New Fund's assumption of Old Fund's
liabilities, followed by the constructive distribution of New Fund Shares pro
rata to the holders of shares of beneficial interest in Old Fund ("Old Fund
Shares") in exchange therefor, all on the terms and conditions set forth in this
Agreement (which is intended to be, and is adopted as, a "plan of
reorganization" for federal income tax purposes). All such transactions are
referred to herein as the "Reorganization."
Old Fund Shares currently are divided into four classes, designated
Class A, Class B, Class C and Class Y shares ("Class A Old Fund Shares," "Class
B Old Fund Shares," "Class C Old Fund Shares" and "Class Y Old Fund Shares,"
respectively). New Fund Shares will be divided into four classes, also
designated Class A, Class B, Class C and Class Y shares ("Class A New Fund
Shares," "Class B New Fund Shares," "Class C New Fund Shares" and "Class Y New
Fund Shares," respectively). The classes of New Fund Shares are substantially
identical to the correspondingly designated classes of Old Fund Shares.
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In consideration of the mutual promises herein contained, the parties
agree as follows:
1. Plan of Reorganization and Liquidation
1.1. At the Effective Time (as defined in paragraph 2.1) ,Old Fund
agrees to assign, sell, convey, transfer, and deliver all of its assets
described in paragraph 1.2 ("Assets") to New Fund. New Fund agrees in exchange
therefor --
(a) to issue and deliver to Old Fund the number of full and
fractional (rounded to the third decimal place) (i) Class A New Fund
Shares equal to the number of full and fractional Class A Old Fund
Shares then outstanding, (ii) Class B New Fund Shares equal to the
number of full and fractional Class B Old Fund Shares then
outstanding, (iii) Class C New Fund Shares equal to the number of full
and fractional Class C Old Fund Shares then outstanding; and (iv)
Class Y New Fund Shares equal to the number of full and fractional
Class Y Old Fund Shares then outstanding at the Effective Time; and
(b) to assume all of Old Fund's liabilities described in
paragraph 1.3 ("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph 2.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Old Fund's books, and other property owned by Old Fund at the
Effective Time.
1.3. The Liabilities shall include all of Old Fund's liabilities,
debts, obligations, and duties of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not determinable at the Effective
Time, and whether or not specifically referred to herein.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), Old Fund shall liquidate and constructively distribute New Fund
Shares received by it pursuant to paragraph 1.1 to Old Fund's shareholders of
record, determined as of the Effective Time (collectively, "Shareholders" and
each individually, a "Shareholder"), in exchange for their Old Fund Shares. Such
distribution shall be accomplished by New Trust's transfer agent ("Transfer
Agent") opening accounts on New Fund's share transfer books in the Shareholders'
names and transferring such New Fund Shares thereto. Each Shareholder's account
shall be credited with the respective pro rata number of full and fractional
(rounded to the third decimal place) New Fund Shares due that Shareholder, by
class (i.e., the account for a Shareholder of Class A Old Fund Shares shall be
credited with the respective pro rata number of Class A New Fund Shares due that
Shareholder, the account for a Shareholder of Class B Old Fund Shares shall be
credited with the respective pro rata number of Class B New Fund Shares due that
Shareholder, the account for a Shareholder of Class C Old Fund Shares shall be
credited with the respective pro rata number of Class C New Fund Shares due that
Shareholder, and the account for a
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Shareholder of Class Y Old Fund Shares shall be credited with the respective pro
rata number of Class Y New Fund Shares due that Shareholder). All outstanding
Old Fund Shares, including those represented by certificates, shall
simultaneously be canceled on Old Fund's share transfer books. New Fund shall
not issue certificates representing New Fund Shares in connection with the
Reorganization. However, certificates representing Old Fund Shares shall
represent New Fund Shares after the Reorganization.
1.5. As soon as reasonably practicable after distribution of New Fund
Shares pursuant to paragraph 1.4, Old Trust shall be de-registered under the
1940 Act and terminated under Massachusetts law and any further actions shall be
taken in connection therewith as required by applicable law.
1.6. Any transfer taxes payable on issuance of New Fund Shares in a
name other than that of the registered holder on Old Fund's books of Old Fund
Shares constructively exchanged therefor shall be paid by the person to whom
such New Fund Shares are to be issued, as a condition of such transfer.
1.7. Any reporting responsibility of Old Fund to a public authority is
and shall remain its responsibility up to and including the date on which it is
terminated.
2. Closing.
2.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Trusts' principal office on
_______ , 1999, or on such other date and at such other place upon which the
parties may agree. All acts taking place at the Closing shall be deemed to take
place simultaneously as of the Trusts' close of business on the date thereof or
at such other time as the parties may agree ("Effective Time").
2.2. Old Trust shall deliver to New Trust at the Closing a schedule of
the Assets as of the Effective Time, which shall set forth for all portfolio
securities included therein their adjusted tax basis and holding period by lot.
Old Fund's custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be transferred to
New Fund at the Effective Time and (b) all necessary taxes in conjunction with
the delivery of the Assets, including all applicable federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
2.3. The Transfer Agent shall deliver at the Closing a certificate as
to the opening on New Fund's share transfer books of accounts in the
Shareholders' names. New Trust shall issue and deliver a confirmation to Old
Trust evidencing New Fund Shares to be credited to Old Fund at the Effective
Time or provide evidence satisfactory to Old Trust that such shares have been
credited to Old Fund's account on such books. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts, or other documents as the other party or its counsel may
reasonably request.
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2.4. Each Trust shall deliver to the other at the Closing a certificate
executed in its name by its President or a Vice President in form and substance
satisfactory to the recipient and dated the Effective Time, to the effect that
the representations and warranties it made in this Agreement are true and
correct in all material respects at the Effective Time except as they may be
affected by the transactions contemplated by this Agreement with the same force
and effect as if made on and as of the Effective Time.
3. Representations and Warranties.
3.1. Old Fund represents and warrants as follows:
3.1.1. Old Trust is a voluntary association, the beneficial
interest in which is divided into transferable shares that is commonly
known as a "Massachusetts Business Trust", that is duly organized,
validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts, and its Agreement and Declaration of
Trust dated October 14, 1992 (the "Old Declaration of Trust") is on
file with the Secretary of the Commonwealth of Massachusetts.
3.1.2. Old Trust is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended ("1940 Act"), and such registration is in full force and
effect;
3.1.3. Old Fund is a duly established and designated series of
Old Trust;
3.1.4. At the Closing, Old Fund will have good and marketable
title to the Assets and full right, power, and authority to sell,
assign, transfer, and deliver the Assets free of any liens or other
encumbrances; and upon delivery and payment for the Assets, New Fund
will acquire good and marketable title thereto;
3.1.5. New Fund Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the
terms hereof;
3.1.6. Old Fund is a "fund" as defined in section 851(g)(2) of
the Code; it qualified for treatment as a regulated investment company
under Subchapter M of the Code ("RIC") for each past taxable year
since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year (and
the Assets will be invested at all times through the Effective Time in
a manner that ensures compliance with the foregoing); it has no
earnings and profits accumulated in any taxable year in which the
provisions of Subchapter M did not apply to it; and it has made all
distributions for each such past taxable year that are necessary to
avoid the imposition of federal excise tax or has paid or provided for
the payment of any excise tax imposed for any such year;
3.1.7. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by Old Fund's
shareholders;
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3.2. New Fund represents and warrants as follows:
3.2.1. New Trust is a voluntary association, the beneficial
interest in which is divided into transferrable shares that is
commonly known as a "Massachusetts business trust" duly organized,
validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts, and its Agreement and Declaration of
Trust dated September 29, 1994, as amended (the "New Trust Declaration
of Trust") has been duly filed in the office of the Secretary of State
thereof;
3.2.2. New Trust is duly registered as an open-end management
investment company under the 1940 Act, and such registration is in
full force and effect;
3.2.3. Before the Effective Time, New Fund will be a duly
established and designated series of New Trust;
3.2.4. New Fund has not commenced operations and will not
commence operations until after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by New
Fund; and
3.2.6. New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized and,
when issued and delivered as provided herein, will be duly and validly
issued and outstanding shares of New Fund, fully paid and
non-assessable by New Trust (recognizing that under Massachusetts law,
shareholders of the New Fund could, under certain circumstances, be
held personally liable for the obligations of the New Fund);
4. Conditions Precedent.
Each Fund's obligations hereunder shall be subject to (a) performance
by the other party of all its obligations to be performed hereunder at or before
the Effective Time, (b) all representations and warranties of the other party
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state securities
authorities) deemed necessary by either Trust to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain same would not involve a risk of a
material adverse effect on the assets or properties of either Fund, provided
that either Trust may for itself waive any of such conditions;
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4.2. Old Trust shall have called a meeting of Old Fund's shareholders
("Shareholders Meeting") to consider and act on this Agreement and the
transactions contemplated thereby, and at such meeting the Agreement and the
transactions contemplated thereby shall have been approved by the affirmative
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of the Old Fund;
4.3. Each party shall have received opinions as follows:
4.3.1. Old Trust shall have received at the Closing an opinion
of Kramer Levin Naftalis & Frankel LLP in form (including reasonable
and customary qualifications and assumptions) reasonably satisfactory
to Old Trust substantially to the effect that (i) New Trust is a
business trust duly created and operating pursuant to the New Trust
Declaration of Trust, is validly existing and is in good standing under
the laws of the Commonwealth of Massachusetts and is duly registered as
an open-end, management investment company under the 1940 Act, and New
Fund is a validly existing series of New Trust under the laws of the
Commonwealth of Massachusetts; (ii) the execution, delivery and
performance of this Agreement will not result in a violation of New
Trust Declaration of Trust or By-laws, each as amended to date; (iii)
the execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of New Trust and
New Fund, and this Agreement has been duly executed and delivered by
New Trust and is a valid and binding obligation of New Trust,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights or remedies and to general equity
principles (regardless of whether considered at a proceeding in law or
equity), equitable defenses or waivers and the discretion of the court
before which any proceeding for specific performance, injunctive and
other forms of equitable relief may be brought; and (iv) the New Fund
Shares to be issued and delivered pursuant to the terms of this
Agreement will have been duly authorized as of the Closing and, when so
issued and delivered, will be validly issued, fully paid and
non-assessable by the New Trust (recognizing that under Massachusetts
law, shareholders of the New Fund could, under certain circumstances,
be held personally liable for the obligations of the New Fund). In
rendering such opinion, Kramer Levin Naftalis & Frankel LLP may rely on
an opinion of Massachusetts counsel (with respect to matters of
Massachusetts law) and on certificates of officers or trustees of New
Trust, in each case reasonably acceptable to Old Trust.
4.3.2. New Trust shall have received at the Closing from
Mayer, Brown & Platt dated as of the Closing, in form (including
reasonable and customary qualifications and assumptions) reasonably
satisfactory to New Trust, substantially to the effect that: (i) Old
Trust is a business trust duly created and operating pursuant the Old
Trust Declaration of Trust, is validly existing and is in good standing
under the laws of the Commonwealth of Massachusetts and is duly
registered as an open-end, management investment company under the 1940
Act, and Old Fund is a validly existing series of shares of Old Trust
under the laws of the Commonwealth of Massachusetts; (ii) the
execution, delivery and performance of this Agreement will not result
in a violation of
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the Old Trust Declaration of Trust or By-laws, each as amended to date;
and (iii) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part of Old
Trust and Old Fund, and this Agreement has been duly executed and
delivered by Old Trust and is a valid and binding obligation of Old
Trust, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights or remedies and to general equity
principles (regardless of whether considered in a proceeding in law or
equity), equitable defenses or waivers and the discretion of the court
before which any proceeding for specific performance, injunctive and
other forms of equitable relief may be brought. In rendering such
opinion, Mayer, Brown & Platt may rely on an opinion of Massachusetts
counsel (with respect to matters of Massachusetts law) and on
certificates of officers or trustees of Old Trust, in each case
reasonably acceptable to New Trust;
4.4. The Trusts shall receive an opinion of Kramer Levin Naftalis &
Frankel LLP, dated the date of the Closing of the Reorganization, with respect
to each Fund, addressed to, and in form and substance satisfactory to, the
Trusts, to the effect that the Reorganization will constitute a reorganization
within the meaning the meaning of section 368(a)(1) of the Code, and each Fund
will be a "party to a reorganization" within the meaning of section 368(b) of
the Code. Each Trust agrees to make reasonable covenants and representations in
connection with the rendering of such opinion.
4.5. Immediately upon the delivery to the Old Fund of the New Fund
Shares, the Old Fund, as the then-sole shareholder of New Fund, shall (i)
approve an investment advisory agreement between New Trust on behalf of New Fund
and Bear Stearns Asset Management Inc., and, to the extent required under the
1940 Act, and other matters necessary for the New Fund to commence operations.
At any time prior to the Closing, any of the foregoing conditions
(except that set forth in paragraph 4.2) may be waived by the trustees of either
Trust if, in their judgment, such waiver will not have a material adverse effect
on the interests of Old Fund's shareholders.
5. Expenses.
Each Trust will be responsible for its own expenses incurred in
connection with the reorganization which will be reimbursed by BSAM.
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6. Entire Agreement; Survival.
Neither party has made any representation, warranty, or covenant not
set forth herein, and this Agreement constitutes the entire agreement between
the parties. The representations, warranties, and covenants contained herein or
in any document delivered pursuant hereto or in connection herewith shall
survive the Closing.
7. Amendment.
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
8. Termination.
This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by Old Fund's shareholders:
8.1. By either Fund (a) in the event of the other Fund's material
breach of any representation, warranty, or covenant contained herein to be
performed at or prior to the Effective Time, (b) if a condition to its
obligations has not been met and it reasonably appears that such condition will
not or cannot be met, or (c) if the Closing has not occurred on or before
_______, 1999; or
8.2. In the event of termination under this paragraph 8, there shall be
no liability for damages on the part of either Fund, or the trustees or officers
of either Trust, to the other Fund.
9. Miscellaneous.
9.1. This Agreement shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts; provided that, in
the case of any conflict between such laws and the federal securities laws, the
latter shall govern.
9.2. Nothing expressed or implied herein is intended or shall be
construed to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any rights or
remedies under or by reason of this Agreement.
9.3. The execution and delivery of this Agreement have been authorized
by each Trust's trustees, and this Agreement has been executed and delivered by
authorized officers of each Trust acting as such; neither such authorization by
such trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them or any shareholder of either Trust personally, but shall bind only the
assets and property of the respective Funds, as provided in Old Trust's Amended
and Restated Declaration of Trust and New Trust's Agreement and Declaration of
Trust.
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9.4 New Trust agrees to indemnify and hold harmless each trustee of Old
Trust at the time of the execution of this Agreement, whether or not such person
is or becomes a trustee of New Trust subsequent to the Reorganization, against
expenses, including reasonable attorneys' fees, judgments, fines and amounts
paid in settlement, actually and reasonably incurred by such trustee in
connection with any claim that is asserted against such trustee arising out of
such person's service as a trustee of Old Trust, provided that such
indemnification shall be limited to the full extent of the indemnification that
is available to the trustees of New Trust pursuant to the provisions of New
Trust's Declaration of Trust and applicable law.
9.5 For the period beginning at the time of the Reorganization and
ending not less than three years thereafter, New Trust shall provide for a
liability policy covering the actions of each trustee of Old Trust at the time
of the execution of this Agreement for the period they served as such, which may
be accomplished by causing such persons to be added as insured under the
liability policy of New Trust.
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed
and delivered by its duly authorized officers as of the day and year first
written above.
BEAR STEARNS INVESTMENT TRUST
on behalf of its series, Emerging Markets Debt
Portfolio
By:___________________________________
Title: ____________________________
THE BEAR STEARNS FUNDS
on behalf of its series, Emerging Markets Debt
Portfolio
By:___________________________________
Title: ____________________________
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SCHEDULE A
Acquired Portfolio Acquiring Portfolio
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Emerging Markets Debt Portfolio Emerging Markets Debt Portfolio of The
of Bear Stearns Investment Trust Bear Stearns Funds
A-11
<PAGE>
Exhibit B
INVESTMENT ADVISORY AGREEMENT
THE BEAR STEARNS FUNDS
575 Lexington Avenue
New York, New York 10022
Bear Stearns Asset Management Inc.
575 Lexington Avenue
New York, New York 10022
Dear Sirs:
The above-named investment company (the "Fund"), with respect to the
series named on Schedule 1 hereto, as such Schedule may be revised from time to
time (each, a "Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
in its charter documents and in its offering documents (Part A and Part B) as
from time to time in effect, copies of which have been or will be submitted to
you, and in such manner and to such extent as from time to time may be approved
by the Fund's Board. The Fund desires to employ you to act as its investment
adviser.
You may render services through your own employees or the employees of
one or more affiliated companies that are qualified to act as an investment
adviser to the Fund under applicable laws and are under your common control as
long as all such persons are functioning as part of an organized group of
persons, and such organized group of persons, with respect to the services used
by the Fund, is managed at all times by your authorized officers. You will be as
fully responsible to the Fund for the acts and omissions of such persons as you
are for your own acts and omissions. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the Fund's behalf in
any such respect.
Subject to the supervision and approval of the Fund's Board, you will
provide investment management of each Series' portfolio in accordance with such
Series' investment objectives and policies as stated in the Fund's offering
documents (Part A and Part B) as from time to time in effect. In connection,
therewith, you will obtain and provide investment research and will supervise
each Series' investments and conduct a continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of such Series assets. You
will furnish to the Fund such statistical information, with respect to the
investments which a Series may hold or contemplate purchasing, as the Fund may
reasonably request. The Fund wishes to be informed of important developments
materially affecting any Series' portfolio and shall expect you, on your own
initiative, to furnish to the Fund from time to time such information as you may
believe appropriate for this purpose.
You shall exercise your best judgment in rendering the services to be
provided to the Fund hereunder, and the Fund agrees as an inducement to your
undertaking the same that you shall not be liable hereunder for any error of
judgment or mistake of law or for any loss suffered by one or more Series,
provided that nothing herein shall be deemed to protect or purport to protect
you against any liability to the Fund or a Series or to its security holders to
which you would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence in the performance of your duties hereunder or by reason
of your reckless disregard of your obligations or duties hereunder (hereinafter
"Disabling Conduct") would otherwise be subject by reason of Disabling Conduct.
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In consideration of services rendered pursuant to this Agreement, the
Fund will pay you on the first business day of each month a fee at the rate set
forth opposite each Series' name on Schedule 1 hereto or will pay you in
accordance with the methodology described on additional Schedules hereto. Net
asset value shall be computed on such days and at such time or times as
described in the Fund's then-current Part A and Part B. The fee for the period
from the date of the commencement of sales of a Series' shares (after any sales
are made to you) to the end of the month during which such sales shall have been
commenced shall be pro-rated according to the proportion which such period bears
to the full monthly period, and upon any termination of this Agreement before
the end of any month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of each
Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of each Series' net assets.
You will bear all expenses in connection with the performance of your
services under this Agreement. All other expenses to be incurred in the
operation of the Fund will be borne by the Fund, except to the extent
specifically assumed by you. The expenses to be borne by the Fund include,
without limitation, the following: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory,
administration and fund accounting fees, charges of custodians, transfer and
dividend disbursing agents fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of independent
pricing services, costs of maintaining the Series' existence, costs attributable
to investor services (including, without limitation, telephone and personnel
expenses), costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders, costs of shareholders' reports and meetings, and any extraordinary
expenses.
The Fund understands that you now act, and that from time to time
hereafter you may act, as investment adviser to one or more other investment
companies and fiduciary or other managed accounts, and the Fund has no objection
to your so acting, provided that when the purchase or sale of securities of the
same issuer is suitable for the investment objectives of two or more companies
or accounts managed by you which have available funds for investment, the
available securities will be allocated in a manner believed by you to be
equitable to each company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by one or more Series
or the size of the position obtainable for or disposed of by one or more Series.
In addition, it is understood that the persons employed by you to
assist in the performance of your duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict your right or the right of any of your affiliates to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature.
Any person, even though also your officer, director, partner, employee
or agent, who may be or become an officer, Board member, employee or agent of
the Fund, shall be deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting solely for the
Fund and not as your officer, director, partner, employee, or agent or one under
your control or direction even though paid by you.
You shall place all orders for the purchase and sale of portfolio
securities for the Series with brokers or dealers selected by you, which may
include brokers or dealers affiliated with you to the extent permitted by the
1940 Act and the Fund's policies and procedures applicable to the Series. You
shall use your best efforts to seek to execute portfolio transactions at prices
which, under the circumstances, result in total costs or proceeds being the most
favorable to the Series. In assessing the best overall terms available for any
transaction, you shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, research services
provided to you, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In no event shall you be under
any duty to obtain the lowest commission or the best net price for any Series on
any particular transaction, nor shall you be under any duty to execute any order
in a fashion either preferential to any Series relative to other accounts
managed by you or otherwise materially adverse to such other accounts.
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In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to you and/or the other accounts over which you exercise
investment discretion. You are authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Series which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you determine in good faith that the total commission is reasonable in relation
to the value of the brokerage and research services provided by such broker or
dealer, viewed in terms of either that particular transaction or your overall
responsibilities with respect to accounts over which you exercise investment
discretion. You shall report to the Board of Trustees of the Fund regarding
overall commissions paid by the Series and their reasonableness in relation to
their benefits to the Series. Any transactions for the Series that are effected
through an affiliated broker-dealer on a national securities exchange of which
such broker-dealer is a member will be effected in accordance with Section 11(a)
of the Securities Exchange Act of 1934, as amended, and the regulations
promulgated thereunder. The Series hereby authorizes any such broker or dealer
to retain commissions for effecting such transactions and to pay out of such
retained commissions any compensation due to others in connection with
effectuating those transactions.
In executing portfolio transactions for the Series, you may, to the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be sold or purchased with those of other
portfolios or its other clients if, in your reasonable judgment, such
aggregation (i) will result in an overall economic benefit to the Series, taking
into consideration the advantageous selling or purchase price, brokerage
commission and other expenses, and trading requirements, and (ii) is not
inconsistent with the policies set forth in the Fund's registration statement
and the Series's Prospectus and Statement of Additional Information. In such
event, you will allocate the securities so purchased or sold, and the expenses
incurred in the transaction, in an equitable manner, consistent with your
fiduciary obligations to the Series and such other clients.
The Fund will indemnify you, your officers, directors, employees and
agents (each, an "indemnitee") against, and hold each indemnitee harmless from,
any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) not resulting from Disabling Conduct by
the indemnitee. Indemnification shall be made only following: (i) a final
decision on the merits by a court or other body before whom the proceeding was
brought that the indemnitee was not liable by reason of Disabling Conduct or
(ii) in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that the indemnitee was not liable by reason of Disabling
Conduct by (a) the vote of a majority of a quorum of Board members who are
neither "interested persons" of the Fund nor parties to the proceeding
("disinterested non-party Board members") or (b) an independent legal counsel in
a written opinion. Each indemnitee shall be entitled to advances from the Fund
for payment of the reasonable expenses incurred by it in connection with the
matter as to which it is seeking indemnification in the manner and to the
fullest extent permissible under the New York Business Corporation Law. Each
indemnitee shall provide to the Fund a written affirmation of its good faith
belief that the standard of conduct necessary for indemnification by the Fund
has been met and a written undertaking to repay any such advance if it should
ultimately be determined that the standard of conduct has not been met. In
addition, at least one of the following additional conditions shall be met: (a)
the indemnitee shall provide security in form and amount acceptable to the Fund
for its undertaking; (b) the Fund is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of disinterested non-party Board
members, or independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to the Fund at the time
the advance is proposed to be made, that there is reason to believe that the
indemnitee will ultimately be found to be entitled to indemnification. No
provision of this Agreement shall be construed to protect any Board member or
officer of the Fund, or any indemnitee, from liability in violation of Sections
17(h) and (i) of the Investment Company Act of 1940, as amended (the "1940
Act").
As to each Series, this Agreement shall continue until the date set
forth opposite such Series' name on Schedule 1 hereto (the "Reapproval Date")
and thereafter shall continue automatically for successive annual periods ending
on the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board; or (ii) vote of a majority (as defined
in the 1940 Act) of such Series' outstanding voting securities, provided that in
either event its continuance also is approved by a majority of the Fund's Board
members who are not "interested persons" (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. As to each Series, this Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board or by vote
of holders of a majority of such Series' shares or, upon not less than 90 days'
notice, by you. This Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in the 1940 Act).
B-3
<PAGE>
The Fund recognizes that from time to time your directors, officers and
employees may serve as trustees, directors, partners, officers and employees of
other business trusts, corporations, partnerships or other entities (including
other investment companies), and that such other entities may include the name
"Bear Stearns" as part of their name, and that your corporation or its
affiliates may enter into investment advisory or other agreements with such
other entities. If you cease to act as the Fund's investment adviser, the Fund
agrees that, at your request, the Fund will take all necessary action to change
the name of the Fund to a name not including "Bear Stearns" in any form or
combination of words.
This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and property
of the relevant Series and shall not be binding upon any Board member, officer
or shareholder of the Fund individually.
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
THE BEAR STEARNS FUNDS
By:___________________________
Title:
Accepted:
BEAR STEARNS ASSET MANAGEMENT INC.
By:____________________________
Title:
B-4
<PAGE>
SCHEDULE 1
Name of Series Annual Fee as a Percentage
- -------------- of Average Daily Net Assets
---------------------------
Emerging Markets Debt Portfolio 1.00% of assets up to $50 million;
0.85% of assets of more than $50
million but not more than $100
million; 0.55% of assets above $100
million
B-5
