Rule 497(e)
Registration No. 33-84842
THE BEAR STEARNS FUNDS
THE INSIDERS SELECT FUND
SUPPLEMENT DATED JULY 29, 1997
TO PROSPECTUS DATED JULY 29, 1997
CLASS A, C AND Y SHARES
Until September 15, 1997, Symphony Asset Management will act as sub-investment
adviser to The Insiders Select Fund. The following relates to "Description of
the Portfolio - Investment Strategy" on page 5 and describes Symphony Asset
Management and its investment strategy:
Symphony Asset Management ("Symphony"), a subsidiary of BARRA, Inc., will serve
as the Portfolio's sub-investment adviser and manage the Portfolio's day-to-day
investment activities. Symphony using its proprietary IntelliVest(TM) Model to
analyze transactions by corporate insiders, the behavior of financial analysts
and the corporate finance activities of the companies themselves to determine
which securities to purchase or sell short.
Symphony has developed a proprietary methodology (the "Intellivest(TM) Model")
for analyzing the behavior of (i) corporate insiders--officers, directors and
significant stockholders--through an analysis of their publicly filed reports of
their trading activities in the equity securities of the companies for which
they are insiders, (ii) financial analysts, through an analysis of their
published reports about covered companies, including predicted earnings and
revisions to predicted earnings, and (iii) the company itself, through an
analysis of its behavior as to corporate finance matters, such as stock
repurchase programs, dividend policies and new securities issuance.
Corporate insiders are believed by Symphony to be in the best position to
understand the near term prospects of their companies. Symphony believes that
insider behavior can be observed and analyzed, since insiders are required to
disclose transactions in their company's equity securities to the Securities and
Exchange Commission generally no later than the tenth day of the month following
the transaction. Each month many thousands of these disclosures are received.
Symphony believes that the laborious process of collecting, classifying and
analyzing these transactions using the IntelliVest(TM) Model provides valuable
investment management information.
Symphony believes that by monitoring changes in shares outstanding (in the hands
of the public), a useful signal can be extracted relating to the firm's beliefs
about its prospects. Similarly, the company's decision to sell securities to the
public or another firm can be an indication that the company believes that its
stock has reached a near-term high, a potentially useful sell signal.
Insiders, analysts and the company each send signals that can be analyzed using
the IntelliVest(TM) Model to produce valuable information about the prospects
for individual companies. Symphony believes that the most powerful analysis,
however, comes from the interaction of all three sources. While no one signal
alone determines whether a security will be purchased or sold, no security will
be considered for purchase or sale using the IntelliVest(TM) Model unless a
positive or negative signal, as the case may be, is received from insider
behavior. In its analysis, the IntelliVest(TM) Model uses only data that is
available to the public. Symphony obtains the data on insider trading activity
from CDA/Investnet, which compiles this information from publicly available
Securities and Exchange Commission filings. Symphony's research team has devoted
five years of research to developing the framework necessary to analyze the
behavior of each of these sources and the interaction among them.
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MANAGEMENT POLICIES
The Portfolio seeks to invest primarily in equity securities that, at the time
of purchase, are believed by Symphony, using data from the IntelliVest(TM)
Model, to provide opportunities for capital appreciation or gains through short
selling.
Symphony seeks to use the IntelliVest(TM) Model to select all the Portfolio's
securities. The IntelliVest(TM) Model, however, should not be expected to
provide data sufficient to permit the Portfolio's entire portfolio to be
invested in its selections. For its remaining assets invested in equity
securities, Symphony will use an analytic valuation model created by the active
strategies group of BARRA, Inc., Symphony's parent, to select from the universe
of U.S. equity securities those securities it believes, in the aggregate, will
approximate or exceed the total return performance of the Standard & Poor's 500
Stock Index.*
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* "Standard & Poor's," "S&P(R)" and "S&P 500(R)" are trademarks of The
McGraw-Hill Companies, Inc. The Portfolio is not sponsored, endorsed, sold
or promoted by Standard & Poor's or The McGraw-Hill Companies, Inc.
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