<PAGE>
THE
BEAR STEARNS
FUNDS
FIXED INCOME FUNDS
- - Income Portfolio
- -
- -
- -
- - High Yield Total Return Portfolio
- -
- -
- -
- - Emerging Markets Debt Portfolio
Semi-Annual Report
September 30, 1999
[LOGO]
The
Bear Stearns
Funds
575 Lexington Avenue
New York, NY 10022
1.800.766.4111
Michael Minikes Chairman of the Board
Doni L. Fordyce President
Barry Sommers Executive Vice President
Peter M. Bren Trustee
Alan J. Dixon Trustee
John R. McKernan, Jr. Trustee
M.B. Oglesby, Jr. Trustee
Stephen A. Bornstein Vice President and Secretary
Frank J. Maresca Vice President and Treasurer
Vincent L. Pereira Assistant Treasurer
INVESTMENT ADVISER TRANSFER AND DIVIDEND
Bear Stearns Asset DISBURSEMENT AGENT
Management Inc. PFPC Inc.
575 Lexington Avenue Bellevue Corporate Center
New York, NY 10022 400 Bellevue Parkway
Wilmington, DE 19809
ADMINISTRATOR
Bear Stearns Funds INDEPENDENT AUDITORS
Management Inc. Deloitte & Touche LLP
575 Lexington Avenue Two World Financial Center
New York, NY 10022 New York, NY 10281
DISTRIBUTOR COUNSEL
Bear, Stearns & Co. Inc. Kramer Levin Naftalis &
245 Park Avenue Frankel LLP
New York, NY 10167 919 Third Avenue
New York, NY 10022
INCOME PORTFOLIO AND EMERGING MARKETS DEBT
HIGH YIELD TOTAL RETURN PORTFOLIO: PORTFOLIO:
CUSTODIAN CUSTODIAN
Custodial Trust Company Brown Brothers Harriman & Co.
101 Carnegie Center 40 Water Street
Princeton, NJ 08540 Boston, MA 02109
The financial information included herein is taken from the records of each
Portfolio without examination by independent auditors who do not express an
opinion thereof.
This report is submitted for the general information of the shareholders of
each Portfolio. It is not authorized for distribution to prospective
investors in each Portfolio unless it is preceded or accompanied by a current
prospectus which includes details regarding each Portfolio's objectives,
policies, sales commissions and other information. Total investment return is
based on historical results and is not intended to indicate future
performance. The investment return and principal value of an investment in
each Portfolio will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than original cost.
BSF-R-016-05
<PAGE>
THE BEAR STEARNS FUNDS
INCOME PORTFOLIO
HIGH YIELD TOTAL RETURN PORTFOLIO
EMERGING MARKETS DEBT PORTFOLIO
LETTER TO SHAREHOLDERS
October 30, 1999
Dear Shareholders:
We are pleased to present the semi-annual report to shareholders for the Income
Portfolio, High Yield Total Return Portfolio ("High Yield Portfolio") and
Emerging Markets Debt Portfolio ("Debt Portfolio"), for the six months ended
September 30, 1999. Detailed performance data for each class of shares of each
Portfolio can be found in the "Financial Highlights" of this report.
INCOME PORTFOLIO
For the six months ended September 30, 1999, the Income Portfolio's Class A
shares had a total return of (0.75)% (without giving effect to the sales charge)
and Class B and C shares had a total return of (1.07)% and (1.06)%,
respectively, (without giving effect to the contingent deferred sales
charges)(1). The Income Portfolio's benchmark index, the Salomon Smith Barney
Broad Investment Grade Bond Index, returned (0.21)% for the same period.
As interest rates rose during the six-month period, prices in most sectors and
maturities of the fixed income market suffered, making 1999 one of the bond
market's worst years in recent history. This downturn was a reflection of a
number of factors. Corporate bond issuance surged during the summer, putting
pressure on prices, and the Federal Reserve Board raised short-term interest
rates in June and August, resulting in a half-percentage point increase. Both
times, the market was ahead of the Fed, which has acted largely in response to
perceived inflationary pressures stemming from the increase in commodity and
energy prices and a tight labor market. Consequently, we regard the rise in
interest rates as a reaction to strong economic growth, not as a harbinger of a
long-term bear market.
Ongoing Y2K concerns heightened the skittishness that characterized both the
stock and bond markets during the six-month period. With the increase in
corporate issuance and increasing uncertainty -- always anathema to the
financial markets -- spreads widened in July and August to the levels of last
year's liquidity crunch. (The spread is the difference in yield between a
specific security and a Treasury bond with the same maturity.) This meant that
bond prices in most fixed income sectors fell more significantly than they did
in the Treasury market, where investors found greater comfort.
The high yield sector, which does best when corporate earnings growth is robust,
was particularly hard hit since rising interest rates can increase the cost of
borrowing and reduce earnings. However, it is important to remember that the Fed
has, so far this year, taken back only two-thirds of the easing it engineered
last fall -- an insurance policy the financial markets no longer need.
A FOCUS ON INCREASING YIELDS WHILE MAINTAINING QUALITY
Toward the end of the period, we increased the Income Portfolio's exposure to
agency bonds for their yield advantage over Treasury bonds and their comparable
credit quality. In the corporate sector, we are targeting those industries that
1
<PAGE>
are benefiting from the increase in commodity and energy prices such as oil
drillers, as well as multinationals, which stand to benefit from increased
economic growth abroad. We reduced our position in financial services as these
companies took the brunt of the increase in interest rates.
In the past six months, financial markets have reacted more strongly to interest
rate increases than earnings growth, which remains strong. This indicates that
volatility is likely to continue, especially until Y2K issues are behind us. We
will continue to invest in selected technology and technology-related issues
that we expect to do well in a world economy driven by rapid technological
advances.
HIGH YIELD TOTAL RETURN PORTFOLIO*
For the six months ended September 30, 1999, the High Yield Portfolio's Class A
shares had a total return of (2.44)% (without giving effect to the sales charge)
and both Class B and C shares had a total return of (2.76)% (without giving
effect to the contingent deferred sales charges)(2). Its broad-based securities
market index, the Credit Suisse First Boston Global High Yield Index, returned
(0.47)% for the same period. The High Yield Portfolio's index, the Lipper High
Yield Bond Fund Index, returned (1.13)% for the same period.
Rising interest rates have made 1999 a very difficult year for all sectors of
the fixed income markets. Given the ongoing strength in the U.S. economy and
renewed vigor abroad, the High Yield Portfolio suffered less than other fixed
income sectors in the first two calendar quarters of the year and spreads
narrowed. However, the Federal Reserve Board's two interest rate increases
during the summer changed all this.
INCREASED SUPPLY AND WEAK DEMAND CAUSED SPREADS TO WIDEN
Spreads widened considerably due to the rate hikes, rising default rates and
decreasing liquidity. By the end of the third quarter, default rates were
exceeding the long-term average of 3%. Moreover, new issue supply was heavy as
companies attempted to secure financing before the fourth calendar quarter began
in an effort to avoid Y2K complications. This increased supply as demand was
falling. As a result, inflows to high yield mutual funds were down significantly
over the first three quarters of the year compared to the same period in 1998.
All of these factors combined to erode the market for high yield securities.
CREATING ATTRACTIVE VALUATIONS
While this weakness may persist over the immediate future, we are optimistic
about the high yield market's prospects as we move into the new year. Default
rates, we believe, are lagging indicators of economic and market conditions and
still reflect last year's global economic problems. Currently, the U.S. economy
remains on solid footing and foreign economies are rebounding. Stronger
corporate earnings combined with a solid equity market and a healthy degree of
bank lending should help stem the rise in default rates. We also expect market
liquidity to improve as Y2K constraints on Wall Street traders are lifted.
Valuations in the high yield market are now very attractive as the market's
spread to Treasurys is well above recent averages. These above-average yields
should drive greater demand -- particularly among high yield portfolio managers
with large cash positions.
Given this backdrop, we have been increasing our exposure in industries likely
to benefit from a stronger global economy, such as chemicals and energy. We have
also increased our positions in the telecommunications sector, which should
benefit from ongoing merger-and-acquisition activity. Conversely, we have
reduced our exposure to many of the more defensive, domestically oriented
industries that are now fully priced. We are also repositioning the High Yield
Portfolio in an effort to overweight large benchmark issues that have sold off
significantly due to poor technical conditions in the market, since these
securities are likely to be the first to benefit in any broad market rally.
2
<PAGE>
EMERGING MARKETS DEBT PORTFOLIO**
For the six months ended September 30, 1999, the Debt Portfolio's Class A shares
had a total return of 1.93% (without giving effect to the sales charge) and
Class B and C shares had a total return of 1.68% and 1.69%, respectively,
(without giving effect to the contingent deferred sales charges)(3). The Debt
Portfolio's benchmark index, the Salomon Smith Barney Emerging Markets Debt
Mutual Fund Index, returned 3.95% for the same period.
Overall, the market for emerging market debt continued to strengthen during the
six months ended September 30, 1999, as many developing countries continued to
show signs of recovery from last year's problems. The Debt Portfolio benefited
from rising prices for oil and other commodities, and from stronger economic
growth in Europe and Japan. These developments contributed to upward revisions
in the outlook for economic and export growth in the emerging markets, which
tend to improve sovereign creditworthiness. Positive surprises on Brazilian
economic growth and fiscal adjustment continued, suggesting that the economic
slowdown in both Brazil and neighboring countries would be smaller and shorter
than originally feared.
This positive news was tempered by continued investor concerns over the U.S.
interest rate outlook. Uncertainty on this front contributed to selling of risk
assets, including corporate and high yield bonds, ahead of possible tightenings
by the Federal Reserve Board. Emerging market mutual funds experienced net
outflows, and broker-dealers reduced inventories of emerging market bonds,
adding to the selling. Doubts about the sustainability of the Argentine peso and
Chinese renminbi pegs raised perceptions of risk, as did Ecuador's lack of
progress on fiscal reform.
Debt returns by country varied considerably. While the debt of most countries in
the Debt Portfolio generated positive returns, significant declines in Russia
and Ecuador held back the Debt Portfolio as a whole. In the third calendar
quarter, for example, Russian debt fell 26% due to concerns that financial
assistance from multilateral organizations such as the International Monetary
Fund might be delayed due to investigations into the role of its banks in
questionable transactions; however, the market is still up nearly 70% year to
date.
STRAINS IN ECUADOR REMAIN CONTAINED
Ecuador debt fell 34% during the third calendar quarter, reflecting concerns
about the country's ability to service its debt and an eventual default on one
of its Brady bonds, which occurred at the end of September. This bond represents
0.97% of the Debt Portfolio's net assets. Also, with respect to the Debt
Portfolio's other holdings in Ecuador, which total 2.88% of net assets, the
market is treating them as being technically in default as well. We are
currently working with the bonds' fiscal agent and with others to evaluate our
options with respect to the Debt Portfolio's holdings in Ecuador as
restructuring negotiations get underway.
In some parts of Latin America, economies are holding up better than expected
earlier in the year, although weakness in domestic policies has led to currency
devaluations in Brazil, Ecuador and Chile, with spillover effects in Argentina
and Uruguay. Colombia's debt has been downgraded to below investment grade,
reflecting strains caused by the guerilla war and persistent weakness in the
banking system.
Economies in Eastern Europe are generally stronger than in Latin America, with
Poland the star of the lot. However, despite strong investment inflows and
significant local entrepreneurial activity, it still faces the hurdles of
reducing its budget and current account deficits. Asia, as a region, appears to
have the best near-term prospects, but positive economic growth numbers obscure
mixed results on much-needed structural reforms.
A FOCUS ON SECURITIES WITH LOW CORRELATION TO THE MARKET
We will continue to look for unusual opportunities, particularly those that are
cheap and less dependent on general market trends. We owned and took profit on a
bond issued by the government of El Salvador, which came to the market offering
a substantial yield premium to overcome investor concerns about the U.S. Federal
Reserve Board's
3
<PAGE>
actions. We currently own a dollar-denominated Chinese corporate bond issued by
a municipal government to raise funds for bridge and highway construction. Our
most recent purchase is a dollar-denominated bond issued by the government of
Kazakhstan, which is essentially an energy play and which we believe to be
undervalued.
It should be noted that the variety of policy responses to current challenges is
reducing correlations among sovereigns. Even with Ecuador, although this was the
first default on a Brady bond, the effect on other emerging markets was
negligible -- further evidence that the market is maturing and that problems in
one country are more contained.
YEAR 2000
As shareholders, you should be aware that The Bear Stearns Funds (the "Fund"),
like most computer-reliant businesses, could be negatively impacted if the
computer systems it uses do not properly process date-related information after
January 1, 2000. Consequently, we implemented a comprehensive Y2K program,
including system remediation and testing as well as other prudent measures, to
avoid such problems. As part of this program, we have contacted other system
providers and vendors that service the Fund to determine the Y2K status of their
systems. While there can be no guarantee that every system will work properly on
or after January 1, 2000, we believe that the Fund has taken the proper steps to
reduce the risk of a system interruption. The Fund is also aware that Y2K
problems may hurt the issuers whose securities the Fund holds, as well as the
securities markets in general.
In conclusion, we value the confidence you have placed in us and would be
pleased to address any questions or concerns you may have. Please feel free to
call us at 1-800-766-4111.
Sincerely,
[SIGNATURE]
Doni L. Fordyce
President
The Bear Stearns Funds
- -------
<TABLE>
<S> <C>
* Investing in high yield debt securities generally involves
greater risks than investing in more highly rated debt
securities such as the risk of greater price fluctuation and
the possible loss of principal and income.
** International investing involves risks such as currency
exchange-rate volatility, possible political, social, or
economic instability and differences in taxation and other
financial standards.
(1) For the six months ended September 30, 1999, the Income
Portfolio's Class A shares had a total return of (5.19)%,
including the initial 4.50% maximum sales charge, Class B
shares returned (6.04)%, including the 5.00% CDSC and
Class C shares returned (2.07)%, including the 1.00% CDSC.
(2) For the six months ended September 30, 1999, the High Yield
Portfolio's Class A shares had a total return of (6.87)%,
including the initial 4.50% maximum sales charge, Class B
shares returned (7.40)%, including the 5.00% CDSC and
Class C shares returned (3.68)%, including the 1.00% CDSC.
(3) For the six months ended September 30, 1999, the Debt
Portfolio's Class A shares had a total return of (2.69)%,
including the initial 4.50% maximum sales charge, Class B
shares returned (3.16)%, including the 5.00% CDSC and
Class C shares returned 0.72%, including the 1.00% CDSC.
CDSC Contingent deferred sales charge.
</TABLE>
Bear Stearns Asset Management Inc. has waived a portion of its advisory fee and
agreed voluntarily to reimburse a portion of each Portfolio's operating
expenses, as necessary, to maintain the expense limitation as set forth in the
notes to the financial statements. Total returns shown include fee waivers and
expense reimbursements, if any; total returns would have been lower had there
been no assumption of fees and expenses in excess of expense limitations.
4
<PAGE>
THE BEAR STEARNS FUNDS
INCOME PORTFOLIO
SEPTEMBER 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP INDUSTRY/SECTOR WEIGHTINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY/SECTOR NET ASSETS
- --------------------- ------------------------------------------------------------ ----------
<C> <S> <C>
1. U.S. Government Agency Obligations.......................... 24.49
2. Asset-Backed................................................ 16.82
3. U.S. Government Obligations................................. 14.30
4. Industrial.................................................. 14.02
5. Finance..................................................... 13.32
6. Utilities................................................... 6.93
7. Telecommunications.......................................... 4.96
</TABLE>
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY/SECTOR NET ASSETS
- --------------------- ----------------------------------------------- ---------------------------------- ----------
<C> <S> <C> <C>
1. Government National Mortgage Association....... U.S. Government Agency Obligations 17.32
2. U.S. Treasury Notes............................ U.S. Government Obligations 8.52
3. Fannie Mae..................................... U.S. Government Agency Obligations 7.17
4. U.S. Treasury Bonds............................ U.S. Government Obligations 5.78
5. Morgan Stanley Capital I Inc................... Asset-Backed 4.16
6. Lehman Brothers Holdings....................... Finance 4.15
7. Conti-Mortgage Home Equity Loan Trust.......... Asset-Backed 3.86
8. Western Resources Inc.......................... Utilities 2.93
9. Residential Asset Securities Corp.............. Asset-Backed 2.63
10. Green Tree Home Improvement Loan Trust......... Asset-Backed 2.23
</TABLE>
- -------
<TABLE>
<S> <C>
* The Portfolio's composition will change over time.
</TABLE>
5
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
SEPTEMBER 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN INDUSTRY WEIGHTINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
- --------------------- ------------------------------------------------------------ ----------
<C> <S> <C>
1. Competitive Local Exchange Companies........................ 7.58
2. Enhanced Service Mobile Radios & Personal Communication
Services.................................................... 5.98
3. Long Distance Telephone Services............................ 5.79
4. Steel - Metals - Mining..................................... 4.91
5. Chemicals................................................... 4.75
6. Gaming...................................................... 4.31
7. Retailers................................................... 4.07
8. Forest - Paper Products..................................... 3.64
9. Industrial Products......................................... 3.57
10. International Cable......................................... 3.41
</TABLE>
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
- --------------------- --------------------------------------------- ------------------------------------ ----------
<C> <S> <C> <C>
1. TeleCorp PCS, Inc............................ Enhanced Service Mobile Radios & 1.34
Personal Communication Services
2. Sterling Chemicals Holdings, Inc............. Chemicals 1.32
3. Isle of Capri Casinos, Inc................... Gaming 1.27
4. Packaging Corp. of America................... Forest - Paper Products 1.16
5. Oxford Health Plans Inc...................... Healthcare 1.12
6. Crown Castle International Corp.............. Cellular Communications 1.11
7. Lyondell Chemical Company.................... Chemicals 1.09
8. The AES Corporation.......................... Utilities 1.09
9. Triad Hospitals Holdings Inc................. Healthcare 1.08
10. Charter Communications Holdings LLC and
Charter Communications Holdings Capital
Corp....................................... North American Cable Services 1.07
</TABLE>
- -------
<TABLE>
<S> <C>
* The Portfolio's composition will change over time.
</TABLE>
6
<PAGE>
THE BEAR STEARNS FUNDS
EMERGING MARKETS DEBT PORTFOLIO
SEPTEMBER 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN COUNTRY WEIGHTINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK COUNTRY NET ASSETS
- --------------------- ------------------------------------------------------------ ----------
<C> <S> <C>
1. Brazil...................................................... 19.04
2. Argentina................................................... 15.47
3. Mexico...................................................... 14.95
4. Venezuela................................................... 5.08
5. Morocco..................................................... 4.94
6. Peru........................................................ 4.89
7. Bulgaria.................................................... 4.73
8. Panama...................................................... 4.72
9. Nigeria..................................................... 4.71
10. Philippines................................................. 4.41
</TABLE>
- --------------------------------------------------------------------------------
TOP TEN ISSUERS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY PERCENT OF
RANK ISSUER CURRENCIES TYPE NET ASSETS
- --------------------- ------------------------------ ------------------------ ---------------------- ----------
<C> <S> <C> <C> <C>
1. Federal Republic of Brazil.... U.S. dollar Brady bond 19.04
2. Republic of Argentina......... U.S. dollar Brady bond 15.47
3. United Mexican States......... U.S. dollar Brady bond 14.95
4. Republic of Venezuela......... U.S. dollar/Deutschemark Brady bond 5.08
5. The Kingdom of Morocco........ U.S. dollar Loan Participation 4.94
6. The Republic of Peru.......... U.S. dollar Brady/Government bonds 4.89
7. Republic of Bulgaria.......... U.S. dollar Brady bond 4.73
8. The Republic of Panama........ U.S. dollar Brady bond 4.72
9. Central Bank of Nigeria....... U.S. dollar Brady bond 4.71
10. Republic of the Philippines... U.S. dollar Brady bond 4.41
</TABLE>
- -------
<TABLE>
<S> <C>
* The Portfolio's composition will change over time.
</TABLE>
7
<PAGE>
THE BEAR STEARNS FUNDS
INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS -- 94.84%
CORPORATE OBLIGATIONS - 56.05%
ASSET-BACKED - 16.82%
$ 200 Aames Mortgage Trust, Series 1997-B, Class A4.............. 6.950% 11/15/25 $ 199,537
200 Conti-Mortgage Home Equity Loan Trust...................... 6.080 09/15/27 190,905
100 Conti-Mortgage Home Equity Loan Trust, Series 1998-1,
Class A4................................................. 6.280 01/15/13 99,579
225 Conti-Mortgage Home Equity Loan Trust, Series 1998-1,
Class A5................................................. 6.430 04/15/16 221,667
200 Delta Funding Home Equity Loan Trust, Series 1999-1,
Class A4F................................................ 6.390 02/15/28 194,627
100 Green Tree Home Improvement Loan Trust, Series 1997-A,
Class HEA6............................................... 7.160 03/15/28 103,342
200 Green Tree Home Improvement Loan Trust, Series 1998-D,
Class HEA3............................................... 6.130 08/15/29 191,841
540 Morgan Stanley Capital I Inc., Series 1997-C1, Class A-1B,
Commercial Mortgage Pass-Thru Certificates............... 7.460 03/01/04 551,580
150 Residential Asset Securities Corp., Series 1998-KS2,
Class A13................................................ 6.240 01/25/01 148,790
200 Residential Asset Securities Corp., Series 1999-RS2,
Class A13................................................ 7.525 01/25/01 200,469
125 UCFC Home Equity Loan, Series 1997-A1, Class A7............ 7.660 06/15/28 127,929
-----------
2,230,266
-----------
FINANCE - 13.32%
150 Associates Corp. North America, Subordinated Debentures.... 6.875 11/15/08 148,125
150 CIT Group Holdings, Inc., Notes............................ 7.250 08/15/05 150,750
150 Honda Auto Lease Trust, Series 1999-A, Class A4............ 6.450 09/16/02 149,940
550 Lehman Brothers Holdings, Notes............................ 7.250 10/15/03 550,687
175 Norwest Financial, Inc., Senior Notes...................... 6.750 06/01/05 173,031
150 Sawgrass Finance L.L.C., Series 1993-1, Class A............ 6.450 01/20/06 150,128
150 Transamerica Finance Corp., Notes.......................... 7.250 08/15/02 150,937
300 Washington Mutual Capital I, Subordinated Capital Income
Securities, Washington Mutual Inc. Guaranteed............ 8.375 06/01/27 293,625
-----------
1,767,223
-----------
INDUSTRIAL - 14.02%
150 Boyd Gaming Corporation, Senior Subordinated Notes......... 9.500 07/15/07 147,000
200 Isle of Capri Casinos, Inc., Senior Subordinated Notes,
Series B, Company Guaranteed............................. 8.750 04/15/09 184,000
250 LG-Caltex Oil Corporation, Unsecured Notes*................ 7.500 07/15/07 230,312
200 MedPartners, Inc., Senior Subordinated Notes............... 6.875 09/01/00 190,000
150 News America Inc., Senior Notes............................ 7.300 04/30/28 134,063
250 Panamerican Beverages, Inc., Senior Notes*................. 7.250 07/01/09 215,313
200 Safeway Inc., Notes........................................ 6.050 11/15/03 192,500
225 Smith International Inc., Senior Unsecured Notes........... 7.000 09/15/07 217,969
150 Textron Inc., Notes........................................ 6.750 09/15/02 150,000
200 Time Warner Inc., Pass-Thru Certificates, Asset Trust
Securities*.............................................. 6.100 12/30/01 198,000
-----------
1,859,157
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
THE BEAR STEARNS FUNDS
INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE(S) DATE(S) VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
TELECOMMUNICATIONS - 4.96%
$ 150 AT&T Corporation, Notes.................................... 6.500% 09/15/02 $ 149,812
150 Cox Communications Inc., Notes............................. 6.400 08/01/08 140,437
150 TCI Communications Inc., Senior Notes...................... 7.385 08/27/01 152,437
250 US West Communications, Debentures......................... 6.875 09/15/33 215,313
-----------
657,999
-----------
UTILITIES - 6.93%
250 Cleveland Electric Illuminating Co., Senior Notes,
Series D................................................. 7.880 11/01/17 246,563
150 Consolidated Natural Gas Co., Notes........................ 7.250 10/01/04 150,187
250 Empressa Electrica del Norte Grande S.A., Senior Loan
Participation Certificates*.............................. 7.750 03/15/06 133,116
400 Western Resources Inc., Senior Unsecured Notes............. 6.250 08/15/03 389,000
-----------
918,866
-----------
Total Corporate Obligations (cost - $7,751,901)............ 7,433,511
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 24.49%
FANNIE MAE - 7.17%
225 Benchmark Notes............................................ 5.250 01/15/03 218,316
375 Pass-Thru Pools............................................ 6.000 06/01/06 364,013
375 TBA........................................................ 7.000 10/01/25 368,672
-----------
951,001
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 17.32%
2,380 Pass-Thru Pools............................................ 6.000-7.000 12/06/05-02/15/29 2,296,564
-----------
Total U.S. Government Agency Obligations (cost -
$3,342,391).............................................. 3,247,565
-----------
U.S. GOVERNMENT OBLIGATIONS - 14.30%
U.S. TREASURYS - 14.30%
830 Bonds...................................................... 5.250-7.250 05/15/16-11/15/28 766,629
1,100 Notes...................................................... 6.500-7.000 05/15/05-10/15/06 1,129,250
-----------
Total U.S. Government Obligations (cost - $1,975,146)...... 1,895,879
-----------
Total Long-Term Debt Investments (cost - $13,069,438)...... 12,576,955
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
THE BEAR STEARNS FUNDS
INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 6.22%
DISCOUNT COMMERCIAL PAPER - 2.82%
$ 375 Ford Motor Credit Corp..................................... 5.290% 10/14/99 $ 374,284
-----------
U.S. GOVERNMENT AGENCY DISCOUNT NOTE - 3.02%
400 Freddie Mac, Discount Note(1).............................. 5.130 10/04/99 399,829
-----------
<CAPTION>
SHARES
------
<C> <S> <C> <C> <C>
INVESTMENT COMPANIES - 0.38%
42 Federated Automated Government Money Trust**............... -- -- 42
50,685 Federated Investors, Trust for Short-Term U.S. Government
Securities**............................................. -- -- 50,685
-----------
50,727
-----------
Total Short-Term Investments (cost - $824,840)............. 824,840
-----------
Total Investments -- 101.06%
(cost - $13,894,278)..................................... 13,401,795
Liabilities in excess of other assets -- (1.06)%........... (140,186)
-----------
Net Assets -- 100.00%...................................... $13,261,609
===========
</TABLE>
- ---------
<TABLE>
<S> <C>
* SEC Rule 144A security. Such securities are traded only
among qualified institutional buyers.
** Money market fund.
(1) A portion of which was segregated as collateral for TBA
securities.
TBA To Be Announced.
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS -- 90.71%
UNITED STATES - 76.96%
AEROSPACE - DEFENSE - 1.02%
$ 750 Compass Aerospace Corp., Senior Subordinated Notes*......... 10.125% 04/15/05 $ 705,000
500 Telecommunications Techniques Co., LLC, Senior Subordinated
Notes, Company Guaranteed................................. 9.750 05/15/08 475,000
------------
1,180,000
------------
AIRLINES - 0.84%
1,000 Amtran, Inc., Senior Notes, Company Guaranteed.............. 9.625 12/15/05 971,250
------------
ALTERNATIVE VIDEO PROVIDERS - 0.94%
250 21st Century Telecom Group, Inc., Senior Discount
Notes(2).................................................. 12.250 02/15/08 100,000
1,000 EchoStar DBS Corporation, Senior Notes...................... 9.375 02/01/09 988,750
------------
1,088,750
------------
AUTOMOBILE MANUFACTURING RELATED - 2.17%
495 Cambridge Industries, Inc., Senior Subordinated Notes,
Series B, Company Guaranteed.............................. 10.250 07/15/07 321,750
1,000 Dura Operating Corp., Senior Subordinated Notes*............ 9.000 05/01/09 950,000
1,250 Motors and Gears, Inc., Senior Notes, Series D.............. 10.750 11/15/06 1,234,375
------------
2,506,125
------------
BUILDING MATERIALS - 1.65%
1,000 Formica Corporation, Senior Subordinated Notes*............. 10.875 03/01/09 960,000
1,000 Nortek, Inc., Senior Notes, Series B........................ 8.875 08/01/08 950,000
------------
1,910,000
------------
CELLULAR COMMUNICATIONS - 1.11%
1,000 Crown Castle International Corp., Senior Discount
Notes(2).................................................. 10.625 11/15/07 705,000
1,000 Crown Castle International Corp., Senior Discount
Notes(2).................................................. 10.375 05/15/11 575,000
------------
1,280,000
------------
CHEMICALS - 4.75%
1,000 General Chemical Industrial Products Inc., Senior
Subordinated Notes*....................................... 10.625 05/01/09 980,000
1,000 Huntsman ICI Chemicals LLC, Senior Subordinated Notes*...... 10.125 07/01/09 977,500
1,200 LaRoche Industries Inc., Senior Subordinated Notes,
Series B.................................................. 9.500 09/15/07 744,000
1,250 Lyondell Chemical Company, Senior Subordinated Notes........ 10.875 05/01/09 1,262,500
750 Sterling Chemicals Holdings, Inc., Secured Notes*........... 12.375 07/15/06 708,750
2,400 Sterling Chemicals Holdings, Inc., Senior Secured Discount
Notes(2).................................................. 13.500 08/15/08 816,000
------------
5,488,750
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
COMPETITIVE LOCAL EXCHANGE COMPANIES - 6.56%
$ 500 e.spire Communications, Inc., Senior Discount Notes(2)...... 12.750% 04/01/06 $ 275,625
500 GST USA, Inc., Senior Discount Notes, Company
Guaranteed(2)............................................. 13.875 12/15/05 400,000
1,000 Hyperion Telecommunications, Inc., Senior Subordinated
Notes..................................................... 12.000 11/01/07 1,010,000
1,500 Intermedia Communications of Florida, Inc., Senior Discount
Notes(2).................................................. 12.500 05/15/06 1,226,250
1,750 KMC Telecom Holdings, Inc., Senior Discount Notes(2)........ 12.500 02/15/08 936,250
500 Logix Communications Enterprises, Inc., Senior Notes........ 12.250 06/15/08 431,250
1,000 McLeodUSA Incorporated, Senior Notes........................ 8.125 02/15/09 935,000
1,500 NEXTLINK Communications, Inc., Senior Discount Notes(2)..... 12.250 06/01/09 866,250
1,070 Time Warner Telecom LLC and Time Warner Telecom Inc., Senior
Notes..................................................... 9.750 07/15/08 1,079,362
500 WinStar Communications, Inc., Senior Subordinated Cash-Pay
Exchange Notes(1)(8)...................................... 11.000 03/15/08 417,583
------------
7,577,570
------------
CONVENIENCE & DRUG RETAILERS - 0.87%
500 Duane Reade Inc., Senior Subordinated Notes, Company
Guaranteed................................................ 9.250 02/15/08 487,500
500 Phar-Mor, Inc., Senior Notes................................ 11.720 09/11/02 515,625
------------
1,003,125
------------
DATA & INTERNET SERVICES - 1.65%
1,000 Covad Communications Group, Inc., Senior Notes.............. 12.500 02/15/09 947,500
1,000 PSINet Inc., Senior Notes, Series B......................... 10.000 02/15/05 960,000
------------
1,907,500
------------
ENHANCED SERVICE MOBILE RADIOS & PERSONAL COMMUNICATION
SERVICES - 2.90%
1,300 Nextel Communications, Inc., Senior Serial Redeemable
Discount Notes(2)......................................... 9.950 02/15/08 910,000
2,650 TeleCorp PCS, Inc., Senior Discount Notes*(2)............... 11.625 04/15/09 1,553,562
1,300 Triton PCS, Inc., Senior Subordinated Discount Notes,
Company Guaranteed(2)..................................... 11.000 05/01/08 880,750
------------
3,344,312
------------
EQUIPMENT RENTAL - 0.58%
750 Anthony Crane Rental, L.P. and Anthony Crane Capital
Corporation, Senior Notes, Series B, Company Guaranteed... 10.375 08/01/08 667,500
------------
EXPLORATION & PRODUCTION - 0.87%
1,000 Ocean Energy, Inc., Senior Subordinated Notes, Series B,
Company Guaranteed........................................ 8.875 07/15/07 1,007,500
------------
FABRICATED GLASS, PLASTICS & FIBERS - 0.55%
1,000 Globe Holdings, Inc., Senior Discount Notes,
Series B(2)(10)........................................... 14.000 08/01/09 320,010
500 Graham Packaging Company and GPC Capital Corp. I, Senior
Discount Notes, Series B(2)............................... 10.750 01/15/09 318,750
------------
638,760
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
FOOD, BEVERAGE & TOBACCO - 1.16%
$ 500 Packaged Ice, Inc., Senior Notes, Series B, Company
Guaranteed................................................ 9.750% 02/01/05 $ 441,250
1,475 Purina Mills, Inc., Senior Subordinated Notes(9)............ 9.000 03/15/10 295,000
750 Richmont Marketing Specialists, Inc., Senior Subordinated
Notes, Company Guaranteed................................. 10.125 12/15/07 609,375
------------
1,345,625
------------
FOREST - PAPER PRODUCTS - 2.61%
500 Bear Island Paper Company, L.L.C. and Bear Island Finance
Company II, Senior Secured Notes, Series B................ 10.000 12/01/07 490,000
500 MAXXAM Group Holdings Inc., Senior Secured Notes, Series B,
Company Guaranteed........................................ 12.000 08/01/03 508,750
1,000 Packaging Corp. of America, Senior Subordinated Notes*...... 9.625 04/01/09 1,012,500
1,000 Riverwood International Corporation, Senior Notes, Company
Guaranteed................................................ 10.625 08/01/07 1,003,750
------------
3,015,000
------------
GAMING - 4.31%
1,000 Boyd Gaming Corporation, Senior Subordinated Notes.......... 9.500 07/15/07 980,000
1,000 Hollywood Park, Inc., Senior Subordinated Notes, Series B,
Company Guaranteed........................................ 9.250 02/15/07 967,500
1,600 Isle of Capri Casinos, Inc., Senior Subordinated Notes,
Series B, Company Guaranteed.............................. 8.750 04/15/09 1,472,000
750 Las Vegas Sands, Inc. and Venetian Casino Resort, LLC,
Senior Subordinated Notes, Company Guaranteed(5).......... 10.000 11/15/05 577,500
1,000 Mohegan Tribal Gaming Authority, Senior Subordinated
Notes..................................................... 8.750 01/01/09 982,500
------------
4,979,500
------------
HEALTHCARE - 3.13%
1,250 Oxford Health Plans Inc., Senior Notes*..................... 11.000 05/15/05 1,293,750
1,050 Team Health Inc., Senior Subordinated Notes*................ 12.000 03/15/09 1,067,062
1,250 Triad Hospitals Holdings Inc., Senior Subordinated Notes*... 11.000 05/15/09 1,250,000
------------
3,610,812
------------
INDUSTRIAL PRODUCTS - 3.57%
1,000 Allied Waste North America, Inc., Senior Notes, Series B,
Company Guaranteed........................................ 7.875 01/01/09 885,000
750 AMTROL Inc., Senior Subordinated Notes...................... 10.625 12/31/06 740,625
750 Aqua-Chem, Inc., Senior Subordinated Notes.................. 11.250 07/01/08 495,000
250 Grove Holdings LLC and Grove Holdings Capital, Inc., Senior
Discount Debentures(2).................................... 11.625 05/01/09 75,000
500 Grove Worldwide LLC and Grove Holdings Capital, Inc., Senior
Subordinated Notes........................................ 9.250 05/01/08 310,000
1,000 Roller Bearing Company of America, Inc., Senior Subordinated
Notes, Series B, Company Guaranteed....................... 9.625 06/15/07 895,000
500 Steel Heddle Mfg. Co., Senior Subordinated Notes, Series B,
Company Guaranteed........................................ 10.625 06/01/08 275,000
500 Thermadyne Holdings Corporation, Senior Discount
Debentures(2)............................................. 12.500 06/01/08 242,500
250 Thermadyne Mfg. LLC and Thermadyne Capital Corp., Senior
Subordinated Notes, Company Guaranteed.................... 9.875 06/01/08 205,000
------------
4,123,125
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
INTERNATIONAL CABLE - 0.98%
$ 1,700 NTL Communications Corp., Senior Deferred Coupon Notes,
Series B(2)............................................... 12.375% 10/01/08 $ 1,134,750
------------
LONG DISTANCE TELEPHONE SERVICES - 3.74%
1,250 FaciliCom International, Inc., Senior Notes, Series B....... 10.500 01/15/08 1,031,250
1,050 Global Crossing Holdings Ltd., Senior Notes, Company
Guaranteed................................................ 9.625 05/15/08 1,081,500
500 Global TeleSystems Group, Inc., Senior Notes................ 9.875 02/15/05 480,000
750 Primus Telecommunications Group, Incorporated, Senior Notes,
Series B.................................................. 9.875 05/15/08 675,000
1,100 Viatel, Inc., Senior Notes.................................. 11.250 04/15/08 1,047,750
------------
4,315,500
------------
MOTION PICTURE EXHIBITION - 1.09%
1,250 Loews Cineplex Entertainment Corporation, Senior
Subordinated Notes........................................ 8.875 08/01/08 1,125,000
500 United Artists Theatre Company, Senior Subordinated Notes,
Series B.................................................. 9.750 04/15/08 135,000
------------
1,260,000
------------
NORTH AMERICAN CABLE SERVICES - 2.39%
500 Adelphia Communications Corporation, Senior Notes,
Series B.................................................. 9.875 03/01/07 507,500
500 Charter Communications Holdings LLC and Charter
Communications Holdings Capital Corp., Senior Discount
Notes*(2)................................................. 9.920 04/01/11 297,500
1,000 Charter Communications Holdings LLC and Charter
Communications Holdings Capital Corp., Senior Notes*...... 8.625 04/01/09 942,500
1,000 Insight Midwest LP and Insight Capital Inc., Senior
Notes*.................................................... 9.750 10/01/09 1,010,000
------------
2,757,500
------------
OIL SERVICES - 1.81%
500 EOTT Energy Partners, L.P., Senior Notes, Company
Guaranteed................................................ 11.000 10/01/09 510,000
1,000 R&B Falcon Corporation, Senior Notes........................ 12.250 03/15/06 1,052,500
500 RBF Finance Co., Senior Secured Notes, Company Guaranteed... 11.000 03/15/06 527,500
------------
2,090,000
------------
OTHER CONSUMER CYCLICALS - 1.35%
448 Boyds Collection, Ltd. (The), Senior Subordinated Notes,
Series B.................................................. 9.000 05/15/08 442,400
500 COMFORCE Operating Inc., Senior Notes, Series B............. 12.000 12/01/07 473,125
750 Hedstrom Corporation and Hedstrom Holdings, Inc., Senior
Subordinated Notes, Company Guaranteed.................... 10.000 06/01/07 645,000
------------
1,560,525
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
OTHER CONSUMER NON-CYCLICALS - 2.69%
$ 750 AKI, Inc., Senior Notes..................................... 10.500% 07/01/08 $ 724,688
750 AP Holdings, Inc., Senior Discount Notes(2)................. 11.250 03/15/08 417,188
750 Bell Sports, Inc., Senior Subordinated Notes, Series B,
Company Guaranteed........................................ 11.000 08/15/08 757,500
500 Evenflo Company, Inc., Senior Notes, Series B............... 11.750 08/15/06 490,000
750 Styling Technology Corporation, Senior Subordinated Notes,
Company Guaranteed........................................ 10.875 07/01/08 721,875
------------
3,111,251
------------
OTHER FINANCE - 1.00%
1,250 Metris Companies Inc., Senior Notes, Company Guaranteed..... 10.000 11/01/04 1,150,000
------------
OTHER MEDIA - 1.38%
500 Production Resource Group, L.L.C. and PRG Finance
Corporation, Senior Subordinated Notes.................... 11.500 01/15/08 475,000
750 Px Escrow Corp., Senior Subordinated Discount Exchange
Notes(2).................................................. 9.625 02/01/06 427,500
750 SFX Entertainment, Inc., Senior Subordinated Notes,
Series B, Company Guaranteed.............................. 9.125 02/01/08 690,000
------------
1,592,500
------------
PUBLISHING - 1.59%
1,000 Big Flower Press Holdings, Inc., Senior Subordinated
Notes..................................................... 8.625 12/01/08 960,000
500 Liberty Group Operating, Inc., Senior Subordinated Notes,
Company Guaranteed........................................ 9.375 02/01/08 477,500
250 Liberty Group Publishing, Inc., Senior Discount
Debentures(2)............................................. 11.625 02/01/09 142,188
250 Sullivan Graphics Inc., Senior Subordinated Notes........... 12.750 08/01/05 260,000
------------
1,839,688
------------
RADIO BROADCASTING - 2.15%
1,000 Citadel Broadcasting Company, Senior Subordinated Notes,
Company Guaranteed........................................ 9.250 11/15/08 987,500
250 Cumulus Media Inc., Senior Subordinated Notes, Company
Guaranteed................................................ 10.375 07/01/08 258,125
1,300 Emmis Communications Corporation, Senior Subordinated Notes,
Series B, Company Guaranteed.............................. 8.125 03/15/09 1,235,000
------------
2,480,625
------------
RECREATIONAL SERVICES - 0.80%
750 Premier Parks Inc., Senior Discount Notes(2)................ 10.000 04/01/08 489,375
450 Premier Parks Inc., Senior Notes............................ 9.750 06/15/07 436,500
------------
925,875
------------
RESTAURANTS - 0.53%
900 AmeriServ Food Distribution, Inc., Senior Subordinated
Notes, Company Guaranteed................................. 10.125 07/15/07 612,000
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
RETAILERS - 4.07%
$ 500 Advance Holding Corporation, Senior Discount Debentures,
Series B(2)............................................... 12.875% 04/15/09 $ 280,000
1,000 Advance Stores Company, Incorporated, Senior Subordinated
Notes, Series B, Company Guaranteed....................... 10.250 04/15/08 935,000
750 Big 5 Corp., Senior Notes, Series B......................... 10.875 11/15/07 735,000
750 CEX Holdings, Inc., Senior Subordinated Notes, Series B,
Company Guaranteed........................................ 9.625 06/01/08 795,000
1,000 Hollywood Entertainment Corporation, Senior Subordinated
Notes, Series B........................................... 10.625 08/15/04 945,000
1,000 Rent-A-Center, Inc, Senior Subordinated Notes, Company
Guaranteed................................................ 11.000 08/15/08 1,007,500
------------
4,697,500
------------
STEEL - METALS - MINING - 2.83%
500 Anker Coal Group, Inc., Senior Notes, Series B.............. 9.750 10/01/07 220,000
1,250 Metal Management, Inc., Senior Subordinated Notes, Company
Guaranteed................................................ 10.000 05/15/08 943,750
500 P&L Coal Holdings Corporation, Senior Subordinated Notes,
Series B.................................................. 9.625 05/15/08 480,000
750 Renco Steel Holdings, Inc., Senior Secured Notes,
Series B.................................................. 10.875 02/01/05 679,688
1,000 WHX Corporation, Senior Exchange Notes...................... 10.500 04/15/05 940,000
------------
3,263,438
------------
TECHNOLOGY - 3.24%
500 Anacomp, Inc., Senior Subordinated Notes, Series D.......... 10.875 04/01/04 507,500
750 Details Capital Corp., Senior Subordinated Discount Notes,
Series B.................................................. 10.000 11/15/05 711,563
1,050 Fairchild Semiconductor Corp., Senior Subordinated Notes*... 10.375 10/01/07 1,039,500
750 IPC Information Systems, Inc., Senior Discount Notes(2)..... 10.875 05/01/08 580,313
1,050 Viasystems, Inc., Senior Subordinated Notes................. 9.750 06/01/07 903,000
------------
3,741,876
------------
TELEVISION BROADCASTING - 2.20%
710 ACME Television, LLC and ACME Finance Corporation, Senior
Discount Notes, Series B, Company Guaranteed(2)........... 10.875 09/30/04 623,025
1,000 Sinclair Broadcast Group, Inc., Senior Subordinated Notes,
Company Guaranteed........................................ 8.750 12/15/07 942,500
1,000 Young Broadcasting Inc., Senior Subordinated Notes,
Series B, Company Guaranteed.............................. 8.750 06/15/07 980,000
------------
2,545,525
------------
TEXTILE - APPAREL - 0.79%
450 Consoltex Group Inc., Senior Subordinated Notes,
Series B.................................................. 11.000 10/01/03 454,500
750 Pillowtex Corporation, Senior Subordinated Notes, Series B,
Company Guaranteed........................................ 9.000 12/15/07 463,125
------------
917,625
------------
UTILITIES - 1.09%
1,250 AES Corporation (The), Senior Notes......................... 9.500 06/01/09 1,256,250
------------
Total United States (cost - $97,528,860).................... 88,897,632
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
ARGENTINA - 0.41%
SOVEREIGN - 0.41%
$ 650 Republic of Argentina, Discount Bonds,
Series L-GL(6)(7) (cost - $492,543)....................... 6.063% 03/31/23 $ 468,812
------------
AUSTRALIA - 1.34%
STEEL - METALS - MINING - 1.34%
1,000 Great Central Mines Limited, Senior Notes................... 8.875 04/01/08 885,000
750 Murrin Murrin Holdings PTY, Senior Yankee Notes(1).......... 9.375 08/31/07 665,625
------------
Total Australia (cost - $1,728,045)......................... 1,550,625
------------
BRAZIL - 0.39%
SOVEREIGN - 0.39%
717 Federal Republic of Brazil, Capitalization
Bonds(1)(3)(7) (cost - $497,145).......................... 8.000 04/15/14 448,678
------------
CANADA - 4.35%
ENHANCED SERVICE MOBILE RADIOS & PERSONAL COMMUNICATION
SERVICES - 2.01%
2,050 Clearnet Communications Inc., Senior Discount Yankee
Notes(2).................................................. 10.125 05/01/09 1,230,000
1,300 Microcell Telecommunications Inc., Senior Discount Yankee
Notes, Series B(2)........................................ 14.000 06/01/06 1,088,750
------------
2,318,750
------------
FOREST - PAPER PRODUCTS - 0.75%
1,000 Repap New Brunswick Inc., Senior Yankee Notes............... 10.625 04/15/05 870,000
------------
LONG DISTANCE TELEPHONE SERVICES - 0.85%
1,000 Worldwide Fiber Inc., Senior Notes*......................... 12.000 08/01/09 980,000
------------
STEEL - METALS - MINING - 0.74%
1,000 Algoma Steel Inc., 1st Mortgage Yankee Notes................ 12.375 07/15/05 850,000
------------
Total Canada (cost - $5,231,307)............................ 5,018,750
------------
ISRAEL - 0.49%
LONG DISTANCE TELEPHONE SERVICES - 0.49%
1,000 Barak I.T.C., Senior Discount Yankee Notes,
Series B(2) (cost - $703,049)............................. 12.500 11/15/07 567,500
------------
MEXICO - 0.38%
SOVEREIGN - 0.38%
600 United Mexican States, Secured Par Bonds,
Series W-A(7) (cost - $474,869)........................... 6.250 12/31/19 441,750
------------
NETHERLANDS - 1.69%
COMPETITIVE LOCAL EXCHANGE COMPANIES - 0.82%
1,000 Versatel Telecom International NV, Senior Yankee Notes...... 11.875 07/15/09 947,500
------------
INTERNATIONAL CABLE - 0.87%
1,000 United Pan-Europe Communications N.V., Senior Notes*........ 10.875 08/01/09 1,010,000
------------
Total Netherlands (cost - $1,992,843)....................... 1,957,500
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
SWEDEN - 0.76%
FREIGHT - CONTAINERS - SHIPPING - 0.76%
$ 1,250 Stena Line AB, Senior Yankee Notes (cost - $1,136,627)...... 10.625% 06/01/08 $ 875,000
------------
UNITED KINGDOM - 3.94%
ENHANCED SERVICE MOBILE RADIOS & PERSONAL COMMUNICATION
SERVICES - 1.07%
3,000 Dolphin Telecom plc, Senior Discount Notes*(2).............. 14.000 05/15/09 1,237,500
------------
INTERNATIONAL CABLE - 1.56%
1,000 Ono Finance plc, Units*..................................... 13.000 05/01/09 1,046,250
1,250 Telewest Communications plc, Senior Discount Notes*(2)...... 9.250 04/15/09 759,375
------------
1,805,625
------------
LONG DISTANCE TELEPHONE SERVICES - 0.66%
750 Esprit Telecom Group plc, Senior Yankee Notes............... 10.875 06/15/08 763,125
------------
PUBLISHING - 0.65%
750 Regional Independent Media Group plc, Senior Yankee Notes... 10.500 07/01/08 750,000
------------
Total United Kingdom (cost - $4,969,228).................... 4,556,250
------------
Total Long-Term Debt Investments (cost - $114,754,516)...... 104,782,497
------------
<CAPTION>
SHARES
------
<C> <S> <C> <C> <C>
LONG-TERM EQUITY INVESTMENTS -- 2.68%
PREFERRED STOCKS -- UNITED STATES - 2.63%
ALTERNATIVE VIDEO PROVIDERS - 0.13%
309 21st Century Telecom Group, Inc., Senior Cumulative
Exchangeable Preferred Stock(3)........................... 13.750 -- 149,021
------------
CELLULAR COMMUNICATIONS - 0.64%
515 Dobson Communications Corporation, Senior Exchangeable
Preferred Stock(3)........................................ 13.000 -- 485,373
296 Dobson Communications Corporation, Senior Exchangeable
Preferred Stock(3)........................................ 12.250 -- 249,358
------------
734,731
------------
COMPETITIVE LOCAL EXCHANGE COMPANIES - 0.19%
250 WinStar Communications, Inc., Senior Cumulative Exchangeable
Preferred Stock, Series C................................. 14.250 -- 217,927
------------
FOREST - PAPER PRODUCTS - 0.28%
300 Packaging Corp. of America, Senior Exchangeable Preferred
Stock*(3)................................................. 12.375 -- 328,802
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
INTEREST MATURITY
SHARES RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM EQUITY INVESTMENTS (CONTINUED)
NORTH AMERICAN CABLE SERVICES - 0.24%
2,500 Adelphia Communications Corporation, Cumulative Exchangeable
Preferred Stock, Series B(3).............................. 13.000% -- $ 278,125
------------
RADIO BROADCASTING - 0.55%
589 Cumulus Media Inc., Cumulative Exchangeable Redeemable
Preferred Stock, Series A(3).............................. 13.750 -- 639,726
------------
SUPERMARKETS & DISTRIBUTORS - 0.27%
883 Nebco Evans Holding Company, Senior Redeemable Exchangeable
Preferred Stock(3)........................................ 11.250 -- 309,602
------------
TELEVISION BROADCASTING - 0.00%
0 Paxson Communications Corporation(3)........................ 12.500 -- 283
------------
TEXTILES - APPAREL - 0.33%
8,428 Cluett American Corp., Senior Exchangeable Preferred Stock,
Series B(3)............................................... 12.500 -- 380,948
------------
Total Preferred Stocks -- United States (cost -
$4,295,875)............................................... 3,039,165
------------
COMMON STOCKS -- UNITED STATES - 0.05%
LONG DISTANCE TELEPHONE SERVICES - 0.05%
2,015 Viatel, Inc.(4)............................................. -- -- 59,568
------------
Total Long-Term Equity Investments (cost - $4,295,875)...... 3,098,733
------------
WARRANTS+ -- 0.01%
UNITED STATES - 0.01%
ALTERNATIVE VIDEO PROVIDERS - 0.00%
250 21st Century Telecom Group, Inc.*(4)........................ -- 02/15/10 500
------------
COMPETITIVE LOCAL EXCHANGE COMPANIES - 0.01%
750 KMC Telecom Holdings, Inc.*(4).............................. -- 04/15/08 3,758
250 MGC Communications, Inc.*(4)................................ -- 10/01/04 2,625
------------
6,383
------------
Total Warrants (cost - $10,000)............................. 6,883
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
THE BEAR STEARNS FUNDS
HIGH YIELD TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 4.76%
DISCOUNT COMMERCIAL PAPER - 4.72%
$ 5,450 Koch Industries, Inc........................................ 5.550% 10/01/99 $ 5,450,000
------------
<CAPTION>
SHARES
------
<C> <S> <C> <C> <C>
INVESTMENT COMPANIES - 0.04%
53,050 Federated Investors, Trust for Short-Term U.S. Government
Securities**.............................................. -- -- 53,050
------------
Total Short-Term Investments (cost - $5,503,050)............ 5,503,050
------------
Total Investments -- 98.16%
(cost - $124,563,441)..................................... 113,391,163
Other assets in excess of liabilities -- 1.84%.............. 2,123,078
------------
Net Assets -- 100.00%....................................... $115,514,241
============
</TABLE>
- ---------
<TABLE>
<S> <C>
* SEC Rule 144A security. Such securities are traded only
among qualified institutional buyers.
** Money market fund.
+ Included in the High Yield Portfolio are 750 warrants for
American Banknote Corporation, expiring 12/01/02, with no
market value.
(1) Pro-rata sinking fund has been established.
(2) Coupon rate is zero until step-up date. Step-up rate is
provided.
(3) Payment-in-kind; of which all or a portion of the coupon is
being capitalized at periodic intervals.
(4) Non-income producing security.
(5) Coupon rate is 10.00% until 11/99; thereafter 14.25% to
maturity.
(6) Adjustable rate; rate based on London Interbank Offered Rate
(LIBOR) plus 0.8125%.
(7) Brady bond.
(8) Coupon payment is deferred until 09/15/03.
(9) Coupon payment is in default. Company filed Chapter 11 on
10/28/99.
(10) With an additional 1,000 warrants, expiring 08/01/09, with
no market value.
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
THE BEAR STEARNS FUNDS
EMERGING MARKETS DEBT PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S)+ RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS -- 96.41%
ARGENTINA - 15.47%
SOVEREIGN
1,760 Republic of Argentina, Discount Bond, Series L-GL (a)(b).... 6.000% 03/31/23 $ 1,271,600
2,441 Republic of Argentina, FRB Bearer (a)(b).................... 6.813 03/31/05 2,145,248
205 Republic of Argentina, FRB Registered, Series L (a)(b)...... 6.813 03/31/05 179,792
2,710 Republic of Argentina, Par Bond, Series L-GP (b)(c)......... 6.000 03/31/23 1,754,725
-----------
Total Argentina (cost - $5,575,935)......................... 5,351,365
-----------
BRAZIL - 19.04%
SOVEREIGN
1,769 Federal Republic of Brazil, Capitalization Bond (b)(c)(d)... 8.000 04/15/14 1,126,636
1,275 Federal Republic of Brazil, DCB (a)(b)...................... 5.938 04/15/12 783,328
875 Federal Republic of Brazil, DCB, Series RG (a)(b)........... 5.938 04/15/12 537,578
1,340 Federal Republic of Brazil, Discount Bond (a)(b)............ 5.875 04/15/24 853,412
1,230 Federal Republic of Brazil, EI Bearer Bond, Series EI-L
(a)(b).................................................... 5.875 04/15/06 978,049
400 Federal Republic of Brazil, FLIRB Bearer (a)(b)............. 5.000 04/15/09 238,000
332 Federal Republic of Brazil, IDU Bond, Series A (a)(b)....... 6.500 01/01/01 322,967
540 Federal Republic of Brazil, NMB(a)(b)....................... 5.938 04/15/09 381,712
2,400 Federal Republic of Brazil, Par Bond (a)(b)(c).............. 5.750 04/15/24 1,366,500
-----------
Total Brazil (cost - $6,847,352)............................ 6,588,182
-----------
BULGARIA - 4.73%
SOVEREIGN
675 Republic of Bulgaria, Discount Bond, Series A (a)(b)........ 6.500 07/28/24 465,750
1,020 Republic of Bulgaria, FLIRB, Series A (a)(b)................ 2.750 07/28/12 642,600
40 Republic of Bulgaria, IAB Bearer (a)(b)..................... 6.500 07/28/11 28,525
700 Republic of Bulgaria, IAB Registered (a)(b)................. 6.500 07/28/11 499,187
-----------
Total Bulgaria (cost - $1,490,452).......................... 1,636,062
-----------
CHINA - 1.19%
CORPORATE
690 Zhuhai Highway Co. Ltd...................................... 11.500 07/01/08 358,800
100 Zhuhai Highway Co. Ltd.*.................................... 11.500 07/01/08 52,000
-----------
Total China (cost - $421,522)............................... 410,800
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
THE BEAR STEARNS FUNDS
EMERGING MARKETS DEBT PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S)+ RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
ECUADOR - 3.85%
SOVEREIGN
1,075 The Republic of Ecuador, Discount Bond (a)(b)(f)............ - 02/28/25 $ 335,937
1,700 The Republic of Ecuador, Par Bond, Registered (b)(c)(g)..... - 02/28/25 510,000
1,387 The Republic of Ecuador, PDI Bearer Bond (a)(b)(g).......... - 02/27/15 228,886
1,554 The Republic of Ecuador, PDI Bond, Registered (a)(b)(g)..... - 02/27/15 256,379
-----------
Total Ecuador (cost - $2,114,722)........................... 1,331,202
-----------
KAZAKHSTAN - 1.80%
SOVEREIGN
630 Republic of Kazakhstan* (cost - $622,881)................... 13.625% 10/18/04 622,881
-----------
MEXICO - 14.95%
SOVEREIGN
645 United Mexican States, Secured Par Bond, Series W-A (b)..... 6.250 12/31/19 475,284
6,375 United Mexican States, Secured Par Bond, Series W-B (b)..... 6.250 12/31/19 4,697,578
-----------
Total Mexico (cost - $5,444,479)............................ 5,172,862
-----------
MOROCCO - 4.94%
SOVEREIGN
2,008 The Kingdom of Morocco, Tranche A, Loan Participation
(a) (cost - $1,609,305)................................... 5.906 01/01/09 1,709,219
-----------
NIGERIA - 4.71%
SOVEREIGN
2,750 Central Bank of Nigeria, Par Bond (b)(c)(e) (cost -
$1,906,899)............................................... 6.250 11/15/20 1,629,375
-----------
PANAMA - 4.72%
SOVEREIGN
1,255 The Republic of Panama, IRB (a)(b).......................... 4.250 07/17/14 911,444
1,004 The Republic of Panama, PDI Bond (a)(b)..................... 6.500 07/17/16 723,608
-----------
Total Panama (cost - $1,781,870)............................ 1,635,052
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
THE BEAR STEARNS FUNDS
EMERGING MARKETS DEBT PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S)+ RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
PERU - 4.89%
SOVEREIGN
312 The Republic of Peru, Discount Bond (a)(b).................. 6.813% 03/08/27 $ 189,540
830 The Republic of Peru, FLIRB (b)(c).......................... 3.750 03/07/17 449,238
250 The Republic of Peru, FLIRB* (c)............................ 3.750 03/07/17 135,313
1,056 The Republic of Peru, PDI Bearer Bond (a)(b)................ 4.500 03/07/17 653,400
425 The Republic of Peru, PDI Bond* (a)......................... 4.500 03/07/17 262,969
-----------
Total Peru (cost - $1,731,115).............................. 1,690,460
-----------
PHILIPPINES - 4.41%
SOVEREIGN
1,150 Republic of the Philippines, FLIRB, Series B (a)(b)......... 6.000 06/01/08 1,068,063
540 Republic of the Philippines, Par Bond, Series B (b)(c)...... 6.500 12/01/17 456,300
-----------
Total Philippines (cost - $1,562,081)....................... 1,524,363
-----------
POLAND - 2.50%
SOVEREIGN
650 The Polish People's Republic, PDI Bearer Bond (b)(c)........ 5.000 10/27/14 573,625
450 The Polish People's Republic, RSTA Bond, Registered
(b)(c).................................................... 4.000 10/27/24 291,938
-----------
Total Poland (cost - $895,533).............................. 865,563
-----------
RUSSIA - 4.13%
SOVEREIGN
602 Chase Russian Ruble-linked Note (f)......................... - 01/21/04 17,738
3,430 Vneshconombank, IAN Series (f).............................. - 12/15/15 368,780
11,575 Vneshconombank, Principal Loan (f).......................... - 12/15/20 1,041,750
-----------
Total Russia (cost - $2,117,704)............................ 1,428,268
-----------
VENEZUELA - 5.08%
SOVEREIGN
607 Republic of Venezuela, DCB, Series DL (a)(b)................ 6.313 12/18/07 472,815
DEM 2,400 Republic of Venezuela, Discount Bond (a)(b)................. 3.438 03/31/20 784,106
571 Republic of Venezuela, FLIRB, Series B (a)(b)............... 6.875 03/31/07 433,926
100 Republic of Venezuela, Par Bond, Series W-A (b)............. 6.750 03/31/20 66,313
-----------
Total Venezuela (cost - $1,753,535)......................... 1,757,160
-----------
Total Long-Term Debt Investments (cost - $35,875,385)....... 33,352,814
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
THE BEAR STEARNS FUNDS
EMERGING MARKETS DEBT PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S)+ RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT -- 0.82%
GRAND CAYMAN - 0.82%
282 Brown Brothers Harriman & Co. (h) (cost - $282,000)......... 4.563% ** $ 282,000
-----------
Total Investments -- 97.23%
(cost - $36,157,385)...................................... 33,634,814
Other assets in excess of liabilities -- 2.77%.............. 959,036
-----------
Net Assets -- 100.00%....................................... $34,593,850
===========
</TABLE>
- ---------
<TABLE>
<S> <C>
+ Denominated in United States dollars unless otherwise
indicated.
* SEC Rule 144A security. Such securities are traded only
among qualified institutional buyers.
** Variable rate call account. Rate resets on a daily basis,
amounts available generally on the same business day.
(a) Adjustable rate; rate based on London Interbank Offered Rate
(LIBOR).
(b) Brady bond.
(c) Step-up coupon; coupon increases at periodic intervals.
(d) Payment-in-kind; of which all or a portion of the coupon is
being capitalized at periodic intervals.
(e) With additional 2,500 warrants attached, with no market
value.
(f) Instrument is in default.
(g) Instrument is in technical default as evidenced by current
market practice which dictates such instrument be traded
flat (i.e., without interest).
(h) A portion of which was segregated as collateral for open
forward foreign currency exchange contracts.
DCB Debt Conversion Bond.
DEM Deutschemarks.
EI Eligible Interest.
FLIRB Front Loaded Interest Reduction Bond.
FRB Floating Rate Bond.
IAB Interest Arrears Bond.
IAN Interest Arrears Note.
IDU Interest Due and Unpaid.
IRB Interest Reduction Bond.
NMB New Money Bond.
PDI Past Due Interest.
RSTA Revolving Trade Facility.
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
THE BEAR STEARNS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME HIGH YIELD TOTAL EMERGING MARKETS
PORTFOLIO RETURN PORTFOLIO DEBT PORTFOLIO
----------- ---------------- -----------------
<S> <C> <C> <C>
ASSETS
Investments, at value (cost - $13,894,278, $124,563,441
and $36,157,385, respectively).......................... $13,401,795 $113,391,163 $33,634,814
Interest and dividends receivable, if any................. 174,981 2,954,319 1,395,692
Receivable for investments sold........................... 250,769 1,277,722 322,465
Receivable for Portfolio shares sold...................... 44,398 318,088 62,067
Receivable from investment adviser........................ 29,169 -- 90,910
Deferred organization expenses and other assets........... 37,266 74,680 53,873
----------- ------------ -----------
Total assets........................................ 13,938,378 118,015,972 35,559,821
----------- ------------ -----------
LIABILITIES
Payable for investments purchased......................... 563,784 1,500,000 622,881
Dividends payable......................................... 20,858 351,279 105,704
Payable for Portfolio shares repurchased.................. -- 334,043 13,916
Distribution and service fees payable (Class A, B and C
shares)................................................. 14,161 191,557 37,575
Payable for open forward foreign currency exchange
contracts............................................... -- -- 17,752
Custodian fee payable..................................... 1,761 4,862 10,020
Administration fee payable................................ 1,624 14,235 4,227
Advisory fee payable...................................... -- 6,746 --
Accrued expenses.......................................... 74,581 99,009 153,896
----------- ------------ -----------
Total liabilities................................... 676,769 2,501,731 965,971
----------- ------------ -----------
NET ASSETS
Capital stock, $0.001 par value (unlimited shares of
beneficial interest authorized)......................... 1,133 10,945 3,858
Paid-in capital........................................... 13,842,691 131,188,942 42,426,819
Undistributed net investment income....................... -- 18,250 5,673
Accumulated net realized loss from investments and foreign
currency related transactions, if any................... (89,732) (4,531,618) (5,290,676)
Net unrealized depreciation on investments and foreign
currency related transactions, if any................... (492,483) (11,172,278) (2,551,824)
----------- ------------ -----------
Net assets.......................................... $13,261,609 $115,514,241 $34,593,850
=========== ============ ===========
CLASS A
Net assets................................................ $ 4,857,187 $ 61,730,816 $30,442,590
----------- ------------ -----------
Shares of beneficial interest outstanding................. 414,883 5,848,766 3,391,960
----------- ------------ -----------
Net asset value per share................................. $11.71 $10.55 $8.97
=========== ============ ===========
Maximum offering price per share (net asset value plus
sales charge of 4.50%* of the offering price)........... $12.26 $11.05 $9.39
=========== ============ ===========
CLASS B
Net assets................................................ $ 2,186,022 $ 26,778,864 $ 1,891,169
----------- ------------ -----------
Shares of beneficial interest outstanding................. 186,720 2,537,191 212,427
----------- ------------ -----------
Net asset value and offering price per share**............ $11.71 $10.55 $8.90
=========== ============ ===========
CLASS C
Net assets................................................ $ 2,100,267 $ 27,004,561 $ 2,260,091
----------- ------------ -----------
Shares of beneficial interest outstanding................. 179,395 2,558,597 253,662
----------- ------------ -----------
Net asset value and offering price per share**............ $11.71 $10.55 $8.91
=========== ============ ===========
CLASS Y
Net assets................................................ $ 4,118,133 -- --
----------- ------------ -----------
Shares of beneficial interest outstanding................. 351,752 -- --
----------- ------------ -----------
Net asset value, offering and redemption price per
share................................................... $11.71 -- --
=========== ============ ===========
</TABLE>
- ----------
<TABLE>
<S> <C>
* On investments of $50,000 or more, the offering price is
reduced.
** Redemption price per share is equal to the net asset value
per share less any applicable contingent deferred sales
charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
THE BEAR STEARNS FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME HIGH YIELD TOTAL EMERGING MARKETS
PORTFOLIO RETURN PORTFOLIO DEBT PORTFOLIO
--------- ---------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest.................................................. $ 416,240 $ 5,965,641 $ 2,048,791
Dividends................................................. -- 252,879 --
--------- ----------- -----------
416,240 6,218,520 2,048,791
--------- ----------- -----------
EXPENSES
Advisory fees............................................. 28,082 345,167 178,231
Transfer agent fees and expenses.......................... 69,332 60,390 49,906
Distribution and service fees - Class A................... 8,089 107,112 54,031
Distribution and service fees - Class B................... 8,454 129,431 8,693
Distribution and service fees - Class C................... 10,223 137,830 11,245
Accounting fees........................................... 48,047 67,950 47,264
Legal and auditing fees................................... 23,777 34,000 104,000
Administration fees....................................... 9,361 86,292 22,228
Federal and state registration fees....................... 26,665 32,650 25,618
Reports and notices to shareholders....................... 1,500 25,499 25,499
Custodian fees and expenses............................... 4,810 14,298 10,000
Amortization of organization expenses..................... 6,498 6,154 --
Trustees' fees and expenses............................... 1,610 2,399 7,499
Insurance expenses........................................ 2,910 3,192 3,080
Other..................................................... 676 4,550 2,739
--------- ----------- -----------
Total expenses before waivers and related
reimbursements...................................... 250,034 1,056,914 550,033
Less: waivers and related reimbursements.............. (195,195) (309,348) (231,287)
--------- ----------- -----------
Total expenses after waivers and related
reimbursements...................................... 54,839 747,566 318,746
--------- ----------- -----------
Net investment income..................................... 361,401 5,470,954 1,730,045
--------- ----------- -----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized gain/(loss) from:
Investments............................................. (82,746) (2,962,688) (1,212,309)
Foreign currency related transactions................... -- -- 31,324
Net change in unrealized depreciation on:
Investments............................................. (377,074) (5,652,406) 83,335
Foreign currency related transactions................... -- -- (49,352)
--------- ----------- -----------
Net realized and unrealized loss on investments........... (459,820) (8,615,094) (1,147,002)
--------- ----------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................. $ (98,419) $(3,144,140) $ 583,043
========= =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
THE BEAR STEARNS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCOME HIGH YIELD
PORTFOLIO TOTAL RETURN PORTFOLIO
------------------------------------- -------------------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR MONTHS ENDED FISCAL YEAR
SEPTEMBER 30, 1999 ENDED SEPTEMBER 30, 1999 ENDED
(UNAUDITED) MARCH 31, 1999 (UNAUDITED) MARCH 31, 1999
------------------- --------------- ------------------- ---------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income......... $ 361,401 $ 664,607 $ 5,470,954 $ 6,662,512
Net realized gain/(loss) from
investments and foreign
currency related
transactions, if any........ (82,746) 13,596 (2,962,688) (1,568,005)
Net change in unrealized
appreciation/(depreciation)
on investments and foreign
currency related
transactions, if any........ (377,074) (96,146) (5,652,406) (6,079,729)
----------- ----------- ------------ ------------
Net increase/(decrease) in net
assets resulting from
operations.................. (98,419) 582,057 (3,144,140) (985,222)
----------- ----------- ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income
Class A shares.............. (136,060) (266,618) (3,011,758) (3,726,455)
Class B shares.............. (44,227) (24,193) (1,190,269) (1,313,414)
Class C shares.............. (53,511) (91,424) (1,265,677) (1,607,643)
Class Y shares.............. (127,603) (282,372) -- --
----------- ----------- ------------ ------------
(361,401) (664,607) (5,467,704) (6,647,512)
----------- ----------- ------------ ------------
Net realized capital gains
Class A shares.............. -- (80,365) -- (192,941)
Class B shares.............. -- (13,288) -- (86,843)
Class C shares.............. -- (29,333) -- (103,478)
Class Y shares.............. -- (69,012) -- --
----------- ----------- ------------ ------------
-- (191,998) -- (383,262)
----------- ----------- ------------ ------------
SHARES OF BENEFICIAL INTEREST
Net proceeds from the sale of
shares...................... 3,222,282 11,220,359 29,031,315 100,285,539
Cost of shares repurchased.... (2,106,070) (7,794,237) (12,578,002) (26,732,714)
Shares issued in reinvestment
of dividends................ 235,891 531,644 2,846,500 3,677,043
----------- ----------- ------------ ------------
Net increase in net assets
derived from shares of
beneficial interest
transactions................ 1,352,103 3,957,766 19,299,813 77,229,868
----------- ----------- ------------ ------------
Total increase/(decrease) in
net assets.................. 892,283 3,683,218 10,687,969 69,213,872
NET ASSETS
Beginning of period........... 12,369,326 8,686,108 104,826,272 35,612,400
----------- ----------- ------------ ------------
End of period*................ $13,261,609 $12,369,326 $115,514,241 $104,826,272
=========== =========== ============ ============
<CAPTION>
EMERGING MARKETS
DEBT PORTFOLIO
-------------------------------------
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
SEPTEMBER 30, 1999 ENDED
(UNAUDITED) MARCH 31, 1999
------------------- ---------------
<S> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income......... $ 1,730,045 $ 3,820,573
Net realized gain/(loss) from
investments and foreign
currency related
transactions, if any........ (1,180,985) (4,064,351)
Net change in unrealized
appreciation/(depreciation)
on investments and foreign
currency related
transactions, if any........ 33,983 (5,363,799)
----------- ------------
Net increase/(decrease) in net
assets resulting from
operations.................. 583,043 (5,607,577)
----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income
Class A shares.............. (1,608,542) (3,336,429)
Class B shares.............. (84,295) (137,132)
Class C shares.............. (109,843) (321,807)
Class Y shares.............. -- --
----------- ------------
(1,802,680) (3,795,368)
----------- ------------
Net realized capital gains
Class A shares.............. -- (555,419)
Class B shares.............. -- (27,661)
Class C shares.............. -- (57,010)
Class Y shares.............. -- --
----------- ------------
-- (640,090)
----------- ------------
SHARES OF BENEFICIAL INTEREST
Net proceeds from the sale of
shares...................... 5,137,492 16,138,678
Cost of shares repurchased.... (3,523,709) (14,152,454)
Shares issued in reinvestment
of dividends................ 1,049,379 2,875,768
----------- ------------
Net increase in net assets
derived from shares of
beneficial interest
transactions................ 2,663,162 4,861,992
----------- ------------
Total increase/(decrease) in
net assets.................. 1,443,525 (5,181,043)
NET ASSETS
Beginning of period........... 33,150,325 38,331,368
----------- ------------
End of period*................ $34,593,850 $ 33,150,325
=========== ============
</TABLE>
- ---------
<TABLE>
<S> <C>
* High Yield Total Return Portfolio, includes undistributed
net investment income of $18,250 and $15,000, respectively,
for each period presented. Emerging Markets Debt Portfolio,
includes undistributed net investment income of $5,673 and
$78,308, respectively, for each period presented.
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
THE BEAR STEARNS FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for each class of shares
outstanding, total invesment returns, ratios to average net assets and other
supplemental data for each period indicated. This information has been derived
from information provided in the financial statements.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET NET DISTRIBUTIONS
ASSET REALIZED AND DIVIDENDS FROM NET
VALUE, NET UNREALIZED FROM NET REALIZED
BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT CAPITAL
OF PERIOD INCOME*(1) INVESTMENTS*(2) INCOME GAINS
--------- ---------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
INCOME PORTFOLIO
CLASS A
For the six months
ended September 30,
1999 (unaudited)..... $12.15 $0.35 $(0.44) $(0.35) --
For the fiscal year
ended March 31,
1999................. 12.37 0.74 (0.03) (0.74) $(0.19)
For the fiscal year
ended March 31,
1998................. 12.03 0.76 0.36 (0.76) (0.02)
For the fiscal year
ended March 31,
1997................. 12.26 0.73 (0.20) (0.73) (0.03)
For the period
April 5, 1995**
through March 31,
1996................. 12.00 0.71 0.30 (0.71) (0.04)
CLASS B
For the six months
ended September 30,
1999 (unaudited)..... 12.15 0.31 (0.44) (0.31) --
For the fiscal year
ended March 31,
1999................. 12.37 0.65 (0.03) (0.65) (0.19)
For the period
February 2, 1998***
through March 31,
1998................. 12.47 0.10 (0.10) (0.10) --
CLASS C
For the six months
ended September 30,
1999 (unaudited)..... 12.15 0.31 (0.44) (0.31) --
For the fiscal year
ended March 31,
1999................. 12.37 0.65 (0.03) (0.65) (0.19)
For the fiscal year
ended March 31,
1998................. 12.03 0.70 0.36 (0.70) (0.02)
For the fiscal year
ended March 31,
1997................. 12.26 0.68 (0.20) (0.68) (0.03)
For the period
April 5, 1995**
through March 31,
1996................. 12.00 0.67 0.30 (0.67) (0.04)
CLASS Y
For the six months
ended September 30,
1999 (unaudited)..... 12.15 0.37 (0.44) (0.37) --
For the fiscal year
ended March 31,
1999................. 12.37 0.78 (0.03) (0.78) (0.19)
For the fiscal year
ended March 31,
1998................. 12.03 0.80 0.36 (0.80) (0.02)
For the fiscal year
ended March 31,
1997................. 12.26 0.77 (0.20) (0.77) (0.03)
For the period
September 8, 1995***
through March 31,
1996................. 12.35 0.41 (0.05) (0.41) (0.04)
HIGH YIELD TOTAL RETURN
PORTFOLIO
CLASS A
For the six months
ended September 30,
1999 (unaudited)..... 11.36 0.54 (0.81) (0.54) --
For the fiscal year
ended March 31,
1999................. 12.73 1.11 (1.32) (1.11) (0.05)
For the period
January 2, 1998**
through March 31,
1998................. 12.00 0.26 0.73 (0.26) --
CLASS B
For the six months
ended September 30,
1999 (unaudited)..... 11.36 0.51 (0.81) (0.51) --
For the fiscal year
ended March 31,
1999................. 12.73 1.04 (1.32) (1.04) (0.05)
For the period
January 2, 1998**
through March 31,
1998................. 12.00 0.24 0.73 (0.24) --
CLASS C
For the six months
ended September 30,
1999 (unaudited)..... 11.36 0.51 (0.81) (0.51) --
For the fiscal year
ended March 31,
1999................. 12.73 1.04 (1.32) (1.04) (0.05)
For the period
January 2, 1998**
through March 31,
1998................. 12.00 0.24 0.73 (0.24) --
EMERGING MARKETS DEBT
PORTFOLIO
CLASS A
For the six months
ended September 30,
1999 (unaudited)..... 9.27 0.48 (0.30) (0.48) --
For the fiscal year
ended March 31,
1999................. 12.00 1.05 (2.60) (1.01) (0.17)
For the fiscal year
ended March 31,
1998................. 11.14 0.91 1.17 (0.92) (0.30)
For the fiscal year
ended March 31,
1997................. 9.02 0.85 2.10 (0.83) --
For the fiscal year
ended March 31,
1996................. 6.90 0.91 2.13 (0.92) --
For the fiscal year
ended March 31,
1995................. 8.98 0.79 (1.85) (0.77) (0.25)
For the period May 3,
1993** through
March 31, 1994....... 9.55 0.66 (0.55) (0.65) (0.03)
CLASS B
For the six months
ended September 30,
1999 (unaudited)..... 9.19 0.44 (0.29) (0.44) --
For the fiscal year
ended March 31,
1999................. 11.95 0.98 (2.60) (0.97) (0.17)
For the period
January 12, 1998***
through March 31,
1998................. 11.33 0.21 0.61 (0.20) --
CLASS C
For the six months
ended September 30,
1999 (unaudited)..... 9.20 0.44 (0.29) (0.44) --
For the fiscal year
ended March 31,
1999................. 11.95 0.98 (2.59) (0.97) (0.17)
For the fiscal year
ended March 31,
1998................. 11.14 0.97 1.04 (0.90) (0.30)
For the fiscal year
ended March 31,
1997................. 9.04 0.84 2.07 (0.81) --
For the period
July 26, 1995***
through March 31,
1996................. 7.81 0.59 1.32 (0.68) --
</TABLE>
- ----------
* Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on the actual shares outstanding on the dates of distributions.
** Commencement of investment operations.
*** Commencement of initial public offering.
(1) Reflects waivers and related reimbursments.
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
<TABLE>
<CAPTION>
NET NET RATIO OF RATIO OF NET INCREASE/(DECREASE)
ASSET ASSETS, EXPENSES TO INVESTMENT REFLECTED IN EXPENSE RATIOS
VALUE, TOTAL END OF AVERAGE INCOME TO AND NET INVESTMENT INCOME PORTFOLIO
END OF INVESTMENT PERIOD NET AVERAGE DUE TO WAIVERS AND TURNOVER
PERIOD RETURN(3) (000'S OMITTED) ASSETS (1) NET ASSETS (1) RELATED REIMBURSEMENTS RATE
------ ---------- --------------- ----------- -------------- --------------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME PORTFOLIO
CLASS A
For the six months
ended September 30,
1999 (unaudited)..... $11.71 (0.75)% $ 4,857 0.80%(5) 5.88%(5) 3.13%(5) 47.75%
For the fiscal year
ended March 31,
1999................. 12.15 5.77 4,775 0.80 5.83 2.98 107.21
For the fiscal year
ended March 31,
1998................. 12.37 9.43 2,926 0.80 6.13 1.86 244.78
For the fiscal year
ended March 31,
1997................. 12.03 4.40 3,367 0.80 5.99 1.73 262.95
For the period
April 5, 1995**
through March 31,
1996................. 12.26 8.54 4,467 0.80(5) 5.76(5) 2.87(5) 107.35
CLASS B
For the six months
ended September 30,
1999 (unaudited)..... 11.71 (1.07) 2,186 1.45(5) 5.20(5) 3.12(5) 47.75
For the fiscal year
ended March 31,
1999................. 12.15 5.09 1,121 1.45 5.16 2.81 107.21
For the period
February 2, 1998***
through March 31,
1998................. 12.37 (0.04)(4) 18 1.45(5) 5.22(4)(5) 0.48(4)(5) 244.78
CLASS C
For the six months
ended September 30,
1999 (unaudited)..... 11.71 (1.06) 2,101 1.45(5) 5.22(5) 3.12(5) 47.75
For the fiscal year
ended March 31,
1999................. 12.15 5.08 2,067 1.45 5.28 3.18 107.21
For the fiscal year
ended March 31,
1998................. 12.37 8.92 1,403 1.28 5.60 1.80 244.78
For the fiscal year
ended March 31,
1997................. 12.03 3.99 1,018 1.20 5.57 1.74 262.95
For the period
April 5, 1995**
through March 31,
1996................. 12.26 8.13 1,775 1.25(5) 5.38(5) 2.95(5) 107.35
CLASS Y
For the six months
ended September 30,
1999 (unaudited)..... 11.71 (0.57) 4,118 0.45(5) 6.25(5) 3.13(5) 47.75
For the fiscal year
ended March 31,
1999................. 12.15 6.13 4,406 0.45 6.27 3.23 107.21
For the fiscal year
ended March 31,
1998................. 12.37 9.81 4,339 0.45 6.39 1.78 244.78
For the fiscal year
ended March 31,
1997................. 12.03 4.77 13,486 0.45 6.34 1.73 262.95
For the period
September 8, 1995***
through March 31,
1996................. 12.26 2.92(4) 12,199 0.45(5) 5.93(4)(5) 2.89(4)(5) 107.35
HIGH YIELD TOTAL RETURN
PORTFOLIO
CLASS A
For the six months
ended September 30,
1999 (unaudited)..... 10.55 (2.44) 61,731 1.00(5) 9.83(5) 0.54(5) 30.14
For the fiscal year
ended March 31,
1999................. 11.36 (1.57) 55,367 1.00 9.37 0.74 101.75
For the period
January 2, 1998**
through March 31,
1998................. 12.73 8.30 18,301 1.00(5) 9.14(5) 1.67(5) 139.61
CLASS B
For the six months
ended September 30,
1999 (unaudited)..... 10.55 (2.76) 26,779 1.65(5) 9.17(5) 0.54(5) 30.14
For the fiscal year
ended March 31,
1999................. 11.36 (2.21) 23,395 1.65 8.76 0.73 101.75
For the period
January 2, 1998**
through March 31,
1998................. 12.73 8.13 6,013 1.65(5) 8.46(5) 1.68(5) 139.61
CLASS C
For the six months
ended September 30,
1999 (unaudited)..... 10.55 (2.76) 27,004 1.65(5) 9.18(5) 0.54(5) 30.14
For the fiscal year
ended March 31,
1999................. 11.36 (2.21) 26,064 1.65 8.73 0.73 101.75
For the period
January 2, 1998**
through March 31,
1998................. 12.73 8.13 11,298 1.65(5) 8.46(5) 1.67(5) 139.61
EMERGING MARKETS DEBT
PORTFOLIO
CLASS A
For the six months
ended September 30,
1999 (unaudited)..... 8.97 1.93 30,443 1.75(5) 10.00(5) 1.33(5) 35.14
For the fiscal year
ended March 31,
1999................. 9.27 (12.40) 29,526 1.75 10.38 1.28 82.47
For the fiscal year
ended March 31,
1998................. 12.00 19.31 33,448 1.75 7.70 1.01 128.91
For the fiscal year
ended March 31,
1997................. 11.14 33.48 33,185 2.00 7.95 0.80 223.41
For the fiscal year
ended March 31,
1996................. 9.02 46.13 28,860 2.00 10.64 1.18 266.46
For the fiscal year
ended March 31,
1995................. 6.90 (13.07) 28,049 2.00 8.86 0.53 35.01
For the period May 3,
1993** through
March 31, 1994....... 8.98 0.36 45,691 2.00(5) 7.24(5) 0.33(5) 100.85
CLASS B
For the six months
ended September 30,
1999 (unaudited)..... 8.90 1.68 1,891 2.40(5) 9.37(5) 1.38(5) 35.14
For the fiscal year
ended March 31,
1999................. 9.19 (13.08) 1,459 2.40 9.73 1.43 82.47
For the period
January 12, 1998***
through March 31,
1998................. 11.95 7.29(4) 566 2.40(5) 7.13(4)(5) 2.25(4)(5) 128.91
CLASS C
For the six months
ended September 30,
1999 (unaudited)..... 8.91 1.69 2,260 2.40(5) 9.36(5) 1.33(5) 35.14
For the fiscal year
ended March 31,
1999................. 9.20 (12.99) 2,165 2.40 9.73 1.16 82.47
For the fiscal year
ended March 31,
1998................. 11.95 18.66 4,317 2.40 7.31 1.05 128.91
For the fiscal year
ended March 31,
1997................. 11.14 32.97 2,583 2.40 7.59 0.64 223.41
For the period
July 26, 1995***
through March 31,
1996................. 9.04 25.45(4) 202 2.40(5) 8.72(4)(5) 3.42(4)(5) 266.46
</TABLE>
- ----------
(2) The amounts shown for a share outstanding throughout the respective periods
are not in accord with the changes in the aggregate gains and losses on
investments during the respective periods because of the timing of sales
and repurchases of Portfolio shares in relation to fluctuating net assets
values during the respective periods. For Emerging Markets Debt Portfolio
net realized and unrealized gain/(loss) on investments include forward
foreign currency exchange contracts and translation of foreign currency
related transactions.
(3) Total investment return does not consider the effects of sales charges or
contingent deferred sales charges. Total investment return is calculated
assuming a purchase of shares on the first day and a sale on the last day
of each period reported and includes reinvestment of dividends and
distributions, if any. Total investment return is not annualized.
(4) The total investment return and ratios for a class of shares are not
necessarily comparable to those of any other outstanding class of shares,
due to timing differences in the commencement of the intial public
offerings.
(5) Annualized.
29
<PAGE>
THE BEAR STEARNS FUNDS
INCOME PORTFOLIO
HIGH YIELD TOTAL RETURN PORTFOLIO
EMERGING MARKETS DEBT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS -- (UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Bear Stearns Funds (the "Fund") was organized as a Massachusetts business
trust on September 29, 1994 and is registered with the Securities and Exchange
Commission (the "Commission") under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), as an open-end management investment
company. The Fund currently consists of eleven separate portfolios: seven
diversified portfolios, Prime Money Market Portfolio, Large Cap Value Portfolio,
Small Cap Value Portfolio, International Equity Portfolio, Balanced Portfolio,
High Yield Total Return Portfolio ("High Yield Portfolio") and Income Portfolio,
and four non-diversified portfolios, Emerging Markets Debt Portfolio ("Debt
Portfolio"), The Insiders Select Fund, Focus List Portfolio and S&P STARS
Portfolio. As of the date hereof, the Income Portfolio, High Yield Portfolio and
Debt Portfolio (each a "Portfolio" and collectively, the "Portfolios") offer
four classes of shares, which have been designated as Class A, B, C and Y
shares. Class Y shares of the High Yield Portfolio and Debt Portfolio have yet
to commence its initial public offering. Each Portfolio is treated as a separate
entity for certain matters under the Investment Company Act, and for other
purposes, and a shareholder of one Portfolio is not deemed to be a shareholder
of any other Portfolio.
At a Special Meeting of Shareholders held on April 29, 1999, the shareholders of
the Bear Stearns Investment Trust (the "Trust") approved the reorganization and
liquidation of the Trust on behalf of the Emerging Markets Debt Portfolio
pursuant to the Agreement and Plan of Reorganization and Liquidation previously
approved by the Board of Trustees. It provided for the transfer of the assets
and liabilities of the Emerging Markets Debt Portfolio to a newly created
separate series of the Fund with the same name and materially the same
investment objective and policies as the Emerging Markets Debt Portfolio. Such
transaction was effected on July 29, 1999.
ORGANIZATIONAL MATTERS -- Prior to commencing investment operations on April 5,
1995 and January 2, 1998, the Income Portfolio and High Yield Portfolio,
respectively, did not have any transactions other than those relating to
organizational matters and the sale of shares of beneficial interest of the
Income Portfolio and High Yield Portfolio to Bear, Stearns & Co. Inc. ("Bear
Stearns" or the "Distributor") as follows:
<TABLE>
<CAPTION>
PORTFOLIOS CLASS A CLASS B CLASS C
- ---------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Income Portfolio........................ 1,041 -- 1,041
High Yield Portfolio.................... 1 1 1
</TABLE>
Costs of $76,571 and $56,234 which were incurred by the Income Portfolio and
High Yield Portfolio, respectively, in connection with the organization of its
shares, have been deferred and are being amortized using the straight-line
method over the period of benefit not exceeding sixty months, beginning with the
commencement of investment operations of each Portfolio. In the event that Bear
Stearns or any transferee thereof redeems any of its original shares prior to
the end of the sixty-month period, the proceeds of the redemption payable in
respect of such shares shall be reduced by the pro rata share (based on the
proportionate share of the original shares redeemed to the total number of
original shares outstanding at the time of the redemption) of the unamortized
deferred organization expenses as of the date of such redemption. In the event
that any of the Portfolios are liquidated prior to the end of the sixty-month
period, Bear Stearns or any transferee thereof shall bear the unamortized
deferred organization expenses.
30
<PAGE>
MANAGEMENT ESTIMATES -- The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
certain estimates and assumptions that may affect the reported amounts and
disclosures in the financial statements. Actual results could differ from those
estimates.
PORTFOLIO VALUATION -- Each Portfolio calculates the net asset value of and
completes orders to purchase or repurchase its shares of beneficial interest on
each business day, with the exception of those days on which the New York Stock
Exchange is closed.
For the Income Portfolio and High Yield Portfolio, substantially all of the
investments (including short-term investments) are valued at each business day
by one or more independent pricing services (the "Service") approved by the
Fund's Board of Trustees. Securities valued by the Service for which quoted bid
prices in the judgment of the Service are readily available and are
representative of the bid side of the market are valued at the mean between the
quoted bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation of the
market for such securities).
The assets of the Debt Portfolio are generally not listed on security exchanges
or traded on other regulated markets. Therefore, in the absence of reported
sales prices on a valuation date, assets generally will be valued at the mean of
the last bid and offer quotations. In the absence of reported bid and offer
quotations on such valuation date, such assets will be valued from the broker
bids of at least one market maker. Any assets which are denominated in a foreign
currency are converted into U.S. dollars at the prevailing market rates for
purposes of calculating net asset value.
In the absence of current broker bids or if such broker bids are not indicative
of the fair value for such assets by reason of the illiquidity of a particular
security or investment, or other factors, the value of such assets will be
recorded at their fair value determined in good faith by the Valuation
Committee. In making this determination the Valuation Committee will follow
procedures adopted by the Board of Trustees, such procedures are among other
things, publicly available information regarding the issuer, market conditions
and values ascribed to comparable companies.
The amortized cost method of valuation is used with respect to debt obligations
with 60 days or less remaining to maturity, unless this method does not
represent fair value. Expenses and fees, including the respective investment
advisory, administration and distribution fees, are accrued daily and taken into
account for the purpose of determining the net asset value of each Portfolio's
shares. Because of the differences in operating expenses incurred by each class,
the per share net asset value of each class may differ.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME -- Investment transactions are
recorded on the trade date (the date on which the order to buy or sell is
executed). Realized gains and losses from security and foreign currency
transactions are calculated on the identified cost basis. Interest income is
recorded on an accrual basis. Dividend income is recorded on the ex-dividend
date. Discounts are treated as adjustments to interest income and identified
costs of investments over the lives of the respective investments. The
Portfolios' net investment income (other than distribution fees) and unrealized
and realized gains or losses are allocated daily to each class of shares based
upon the relative proportion of the settled shares value of each class at the
beginning of the day.
FOREIGN CURRENCY TRANSLATION -- The books and records of the Portfolios are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities and other assets and liabilities stated in foreign
currencies are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the rate
of exchange prevailing on the respective dates of such transactions. The
resulting exchange gains and losses are included in the Statement of Operations.
The Portfolios do not generally isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market prices of
investments. However, the Portfolios do isolate the effect of fluctuations in
foreign exchange rates when determining the gain or loss upon the sale or
maturity of foreign currency-denominated debt obligations pursuant to U.S.
federal income tax regulations; such amount is categorized as foreign exchange
gain or loss for both financial reporting and income tax reporting purposes.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Portfolios are permitted to
enter into forward foreign currency exchange contracts solely for the purpose of
protecting against adverse changes in foreign currency exchange rates.
31
<PAGE>
The Portfolios may enter into contracts to purchase foreign currencies to
protect against a rise in the U.S. dollar price of securities it has purchased
pending final settlement, or it may enter into contracts to sell foreign
currencies to protect against the decline in value of its non-dollar denominated
securities due to a decline in the value of foreign currencies against the U.S.
dollar. When a Portfolio enters into a forward foreign currency exchange
contract to buy a foreign currency, it will place cash or readily marketable
securities in a segregated account in an amount equal to the value of its total
assets committed to the consummation of the forward contract. If the value of
the securities placed in the segregated account declines, additional cash or
securities will be placed in the account so that the value of the account will
equal the amount of the Portfolio's commitment with respect to the contract.
Investors should be aware that the forward currency market for the purchase of
U.S. dollars in many emerging countries is not highly developed and that in
certain emerging countries no forward market for foreign currencies currently
exists or that such market may be closed to investment by each Portfolio.
The Portfolios had no open forward foreign currency exchange contracts at
September 30, 1999, except for the Debt Portfolio, which had the following open
contract:
<TABLE>
<CAPTION>
DELIVERY VALUE SETTLEMENT
CURRENCY (LOCAL CURRENCY) DATE COMMITMENT
- -------------------------------------------------------------------- -------------------- ------------- ---------------
<S> <C> <C> <C>
SALE:
European Euro....................................................... 786,000 10/15/99 $ 819,326
<CAPTION>
UNREALIZED
CURRENCY VALUE LOSS
- -------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
SALE:
European Euro....................................................... $ 837,078 $ (17,752)
===========
</TABLE>
U.S. FEDERAL TAX STATUS -- Each Portfolio intends to distribute substantially
all of its taxable income and to comply with the other requirements of the
Internal Revenue Code of 1986, as amended, applicable to regulated investment
companies. Accordingly, no provision for U.S. federal income taxes is required.
In addition, by distributing during each calendar year substantially all of its
ordinary income and capital gains, if any, each Portfolio intends not to be
subject to a U.S. federal excise tax.
At March 31, 1999, the High Yield Portfolio and Debt Portfolio had capital loss
carryforwards of $175,885 and $780,615, respectively, available as a reduction
to the extent provided in regulations of any future net capital gains realized
before the end of fiscal year 2007. To the extent that the capital loss
carryforwards are used to offset future capital gains, it is probable that the
gains so offset will not be distributed to shareholders.
For U.S. federal income tax purposes, net realized capital losses incurred after
October 31, 1998, within the prior fiscal year are deemed to arise on the first
day of the current fiscal year. The Income Portfolio, High Yield Portfolio and
Debt Portfolio incurred and elected to defer net realized losses of $8,565,
$1,393,045 and $2,952,624, respectively.
DIVIDENDS AND DISTRIBUTIONS -- The Portfolios declare dividends from net
investment income on each day the New York Stock Exchange is open for business.
These dividends are paid usually on or about the twentieth day of each month.
Distribution of net realized gains, if any, will be declared and paid at least
annually by each Portfolio. Dividends and distributions to shareholders are
recorded on the ex-dividend date. Income and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within
capital accounts based on their U.S. federal tax-basis treatment; temporary
differences do not require reclassification.
FOREIGN WITHHOLDING TAXES -- Income received from sources outside of the United
States may be subject to withholding and other taxes imposed by countries other
than the United States.
OTHER -- Securities denominated in currencies other than U.S. dollars are
subject to changes in value due to fluctuations in exchange rates. Some
countries in which the Portfolios invest require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad. The securities
exchanges of certain foreign markets are substantially smaller, less liquid and
more volatile than the major securities markets in the United States.
32
<PAGE>
TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
For the six months ended September 30, 1999, Bear Stearns Asset Management Inc.
("BSAM" or the "Adviser"), a wholly-owned subsidiary of The Bear Stearns
Companies Inc., served as investment adviser pursuant to an Investment Advisory
Agreement with respect to each Portfolio. Under the terms of the Investment
Advisory Agreement, the Income Portfolio and High Yield Portfolio has agreed to
pay BSAM a monthly fee at an annual rate of 0.45% and 0.60%, respectively, of
each Portfolio's average daily net assets. The Debt Portfolio has agreed to pay
BSAM a monthly fee at an annual rate of 1.00% of average daily net assets up to
$50 million, 0.85% of average daily net assets of more than $50 million but not
in excess of $100 million and 0.55% of average daily net assets above
$100 million.
For the six months ended September 30, 1999, Bear Stearns Funds Management Inc.
("BSFM" or the "Administrator") served as administrator to each Portfolio
pursuant to an Administration Agreement. BSFM is entitled to receive from each
Portfolio a monthly fee equal to an annual rate of 0.15% of each Portfolio's
average daily net assets.
Under the terms of an Administrative Services Agreement with the Portfolios,
PFPC provides certain accounting and administrative services to each Portfolio.
For providing these services, PFPC is entitled to receive from the Portfolios a
monthly fee equal to an annual rate of 0.10% of each Portfolio's average daily
net assets up to $200 million, 0.075% of the next $200 million, 0.05% of the
next $200 million and 0.03% of the net assets above $600 million, subject to a
minimum annual fee of $138,000 for each Portfolio.
For the six months ended September 30, 1999, BSAM voluntarily undertook to limit
each Portfolio's total operating expenses to a maximum annual level as a percent
of each Portfolio's average daily net assets as follows:
<TABLE>
<CAPTION>
PORTFOLIO CLASS A SHARES CLASS B SHARES
- ----------------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Income Portfolio............................................................. 0.80% 1.45%
High Yield Portfolio......................................................... 1.00 1.65
Debt Portfolio............................................................... 1.75 2.40
<CAPTION>
PORTFOLIO CLASS C SHARES CLASS Y SHARES
- ----------------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Income Portfolio............................................................. 1.45% 0.45%
High Yield Portfolio......................................................... 1.65 0.65
Debt Portfolio............................................................... 2.40 1.40
</TABLE>
As necessary, this limitation is effected by waivers by the Adviser of its
advisory fees and reimbursements of expenses exceeding the advisory fee. For the
six months ended September 30, 1999, the advisory fee waivers and reimbursements
of expenses (in order to maintain the voluntary expense limitation) were as
follows:
<TABLE>
<CAPTION>
PORTFOLIO ADVISORY WAIVERS
- -------------------------------------------------------------------------------------------------------- --------------------
<S> <C> <C>
Income Portfolio........................................................................................ $ 28,082
High Yield Portfolio.................................................................................... 309,348
Debt Portfolio.......................................................................................... 126,930
<CAPTION>
PORTFOLIO EXPENSE REIMBURSEMENTS
- -------------------------------------------------------------------------------------------------------- --------------------------
<S> <C>
Income Portfolio........................................................................................ $ 167,113
High Yield Portfolio.................................................................................... --
Debt Portfolio.......................................................................................... 104,357
</TABLE>
The Portfolios will not pay BSAM at a later time for any amounts BSAM may waive,
nor will the Portfolios reimburse BSAM for any amounts BSAM may assume.
Custodial Trust Company, a wholly-owned subsidiary of The Bear Stearns Companies
Inc. and an affiliate of BSAM and BSFM, serves as custodian to the Income
Portfolio and High Yield Portfolio.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICING PLAN
The Fund, on behalf of the Portfolios, has entered into a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act. Under the Distribution
Plan, the Portfolios paid Bear Stearns a fee at an annual rate of 0.10% for
Class A shares and 0.75% for both Class B and C shares. The Fund, on behalf of
the Portfolios, has adopted a Shareholder Servicing Plan whereby the Portfolios
paid fees of up to 0.25% of its Class A, B and C shares.
Fees are based on the average daily net assets in each class of each Portfolio
and are accrued daily and paid quarterly or at such other intervals as the Board
of Trustees may determine. For the six months ended September 30, 1999, Bear
Stearns earned $16,318, $231,050 and $30,389 for the Income Portfolio, High
Yield Portfolio and Debt Portfolio, respectively, in distribution fees. The fees
paid to Bear Stearns under the Distribution Plan are payable without regard to
actual expenses
33
<PAGE>
incurred. Bear Stearns uses these fees to pay broker/dealers whose clients hold
each Portfolio's shares and other distribution-related activities. For the same
period, Bear Stearns earned $10,448, $143,323 and $43,580 for the Income
Portfolio, High Yield Portfolio and Debt Portfolio, respectively, in shareholder
servicing fees. Bear Stearns pays broker/ dealers and other financial
institutions whose clients hold Portfolio shares primarily for shareholder
liaison and other account maintenance services.
In addition, as Distributor of the Portfolios, Bear Stearns collects the sales
charges imposed on sales of each Portfolio's Class A shares, and reallows a
portion of such charges to dealers through which the sales are made. Effective
December 24, 1997, the Distributor has increased the reallowance to all
authorized dealers on net asset value transfers from 1.00% to 1.25%. In
addition, Bear Stearns advanced 4.25% and 1.00% in sales commissions on the sale
of Class B and C shares, respectively, to dealers at the time of such sales.
For the six months ended September 30, 1999, Bear Stearns has advised each
Portfolio that it received approximately $12,400, $143,600 and $34,100 in
front-end sales charges resulting from sales of Class A shares of the Income
Portfolio, High Yield Portfolio and Debt Portfolio, respectively. From these
fees, Bear Stearns paid sales charges to dealers which in turn paid commissions
to salespersons. In addition, Bear Stearns has advised the Income Portfolio,
High Yield Portfolio and Debt Portfolio that during the six months ended
September 30, 1999, it received approximately $300 from the High Yield Portfolio
in contingent deferred sales charges ("CDSC") upon certain redemptions by
Class A shareholders, approximately $3,400, $52,400 and $3,300 from each
Portfolio, respectively, in CDSC upon certain redemptions by Class B
shareholders and approximately $200, $9,000 and $40 from each Portfolio,
respectively, in CDSC upon certain redemptions by Class C shareholders.
INVESTMENTS IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at
September 30, 1999, were $13,894,278, $124,563,441 and $36,495,762 for the
Income Portfolio, High Yield Portfolio and Debt Portfolio, respectively.
Accordingly, the net unrealized depreciation on investments for each Portfolio
were as follows:
<TABLE>
<CAPTION>
GROSS GROSS NET
PORTFOLIO APPRECIATION DEPRECIATION DEPRECIATION
- ------------------------------ ------------ ------------ ------------------
<S> <C> <C> <C>
Income Portfolio.............. $ 18,252 $(510,735) $ (492,483)
High Yield Portfolio.......... 512,550 (11,684,828) (11,172,278)
Debt Portfolio................ 737,411 (3,598,359) (2,860,948)
</TABLE>
For the six months ended September 30, 1999, aggregate purchases and sales of
investment securities (excluding short-term investments) for each Portfolio were
as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- ------------------------------ ----------- -----------
<S> <C> <C>
Income Portfolio.............. $ 7,145,964 $ 5,837,832
High Yield Portfolio.......... 49,420,344 32,182,830
Debt Portfolio................ 14,676,844 11,430,206
</TABLE>
SHARES OF BENEFICIAL INTEREST
Each Portfolio offers Class A, B, C and Y shares. Class A shares are sold with a
front-end sales charge of up to 4.50% for each Portfolio. Class B shares are
sold with a CDSC of up to 5.00% within six years of purchase. Class C shares are
sold with a CDSC of 1.00% within the first year of purchase. There is no sales
charge or CDSC on Class Y shares, which are offered primarily to institutional
investors.
At September 30, 1999, there was an unlimited amount of $0.001 par value shares
of beneficial interest authorized for each Portfolio, of which Bear Stearns
owned 1,168 of Class A shares and 1,156 Class C shares of the Income Portfolio
and 1 each
34
<PAGE>
of Class A, B and C shares of the High Yield Portfolio. The Income Portfolio's
shares owned by Bear Stearns include 127 Class A shares and 115 Class C shares
which were acquired through dividend reinvestment. Transactions in shares of
beneficial interest for each Portfolio were as follows:
<TABLE>
<CAPTION>
INCOME PORTFOLIO HIGH YIELD PORTFOLIO DEBT PORTFOLIO
-------------------------------- --------------------------------------- -------------------------------------
SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS
---------- ---------- -------- ------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
Shares....... 103,118 87,292 6,000 1,372,996 542,141 143,068 450,582 344,437 99,572
Value........ $1,216,872 $1,028,197 $71,289 $ 15,361,093 $ 5,982,524 $1,580,463 $ 4,198,016 $ 3,112,659 $ 909,559
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares....... 652,813 512,338 16,075 4,591,690 1,328,105 173,523 1,353,990 1,217,322 262,381
Value........ $8,140,024 $6,375,966 $199,578 $ 55,352,368 $ 15,720,812 $2,039,096 $13,884,104 $11,562,827 $ 2,415,066
CLASS B
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
Shares....... 101,726 10,174 2,851 654,673 230,183 53,594 57,953 9,669 5,455
Value........ $1,204,796 $ 120,392 $33,728 $ 7,289,672 $ 2,515,343 $ 591,977 $ 533,213 $ 86,322 $ 49,421
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares....... 95,133 6,176 1,917 1,698,449 172,814 61,079 134,300 36,459 13,490
Value........ $1,180,901 $ 75,940 $23,739 $ 20,280,591 $ 2,036,035 $ 709,943 $ 1,458,377 $ 329,735 $ 119,962
CLASS C
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
Shares....... 39,133 33,262 3,363 573,565 371,257 60,949 44,412 35,960 9,966
Value........ $ 465,604 $ 395,527 $39,909 $ 6,380,550 $ 4,080,135 $ 674,060 $ 406,263 $ 324,728 $ 90,399
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares....... 125,661 76,187 7,293 2,098,034 769,764 79,488 77,215 240,138 37,052
Value........ $1,564,198 $ 942,593 $90,493 $ 24,652,580 $ 8,975,867 $ 928,004 $ 796,197 $ 2,259,892 $ 340,740
CLASS Y*
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
Shares....... 28,532 47,172 7,661 -- -- -- -- -- --
Value........ $ 335,010 $ 561,954 $90,965 -- -- -- -- -- --
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares....... 27,127 32,617 17,555 -- -- -- -- -- --
Value........ $ 335,236 $ 399,738 $217,834 -- -- -- -- -- --
</TABLE>
- ----------
* Class Y shares have yet to commence its initial public
offering for the High Yield Portfolio and Debt Portfolio.
CREDIT AGREEMENT
The Fund, on behalf of each Portfolio, had entered into a credit agreement with
BankBoston, N.A. Small Cap Value Portfolio, Large Cap Value Portfolio, The
Insiders Select Fund, S&P STARS Portfolio, Prime Money Market Portfolio,
Balanced Portfolio, International Equity Portfolio and Focus List Portfolio were
also parties to the credit agreement. This agreement provided that each party to
the credit agreement was permitted to borrow in an amount equal to the lesser of
$25 million or 25% of the net assets of a Portfolio. At no time did the
aggregate outstanding principal amount of all loans to any of the Portfolios
exceed $25 million. Each Portfolio as a fundamental policy was permitted to
borrow in an amount up to 33 1/3% of the value of such Portfolio's assets.
However, each Portfolio intended to borrow money only for temporary or emergency
(not leveraging) purposes in an amount up to 15% of its net assets. The line of
credit bore interest at the greater of: (i) the annual rate of interest
announced from time to time from the bank at its head office as its Base Rate,
or (ii) the Federal Funds Effective Rate plus 0.50%, or at the borrower's
option, the rate quoted by BankBoston, N.A. Such agreement terminated on
September 30, 1999. Effective October 1, 1999, the Fund entered into a demand
promissory note arrangement with The Chase Manhattan Bank (the "Bank") to
provide an uncommitted credit facility to the Fund (on behalf of the
Portfolios). The credit facility bears interest at the greater of: (i) the rate
otherwise in effect for such loan plus 2%, or (ii) that rate of interest from
time to time announced by the Bank at its principal office as its prime
commercial lending rate plus 2%, with such interest to be payable on demand and
upon payment in full of such principal.
35
<PAGE>
Each loan is payable on demand or upon termination of this credit agreement or,
for money market loans, on the last day of the interest period and, in any
event, not later than 14 days from the date the loan was advanced.
Amounts outstanding under the line of credit agreement during the six months
ended September 30, 1999, were as follows:
<TABLE>
<CAPTION>
MAXIMUM
AVERAGE LOAN AVERAGE
LOAN AMOUNTS INTEREST
PORTFOLIO BALANCE OUTSTANDING RATE
- ------------------------------ -------- ----------- --------
<S> <C> <C> <C>
Income Portfolio.............. $ 1,672 $ 50,000 7.73%
High Yield Portfolio.......... 14,797 616,000 7.31
</TABLE>
The Portfolios had no amounts outstanding under the line of credit agreement at
September 30, 1999. The Debt Portfolio had no amounts outstanding under the line
of credit agreement during the six months ended September 30, 1999.
CONCENTRATION OF RISK -- HIGH YIELD PORTFOLIO
Lower-rated debt securities (commonly known as "junk bonds") possess speculative
characteristics and are subject to greater market fluctuations and risk of lost
income and principal than higher-rated debt securities for a variety of reasons.
Also, during an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
adversely affect their ability to service their principal and interest payment
obligations, to meet projected business goals and to obtain additional
financing. In addition, periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices of lower-rated debt
securities and the High Yield Portfolio's net asset value.
CONCENTRATION OF RISK -- DEBT PORTFOLIO
Investments in emerging markets debt involve special risks. The issuer of the
debt of the governmental authorities that control the repayment of the debt may
be unable or unwilling to repay principal or interest when due in accordance
with the terms of such debt, and the Debt Portfolio may have limited legal
recourse in the event of a default.
Certain emerging countries may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging country's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. The Debt Portfolio
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the application
to the Debt Portfolio of any restrictions on investments.
Most securities markets in emerging market countries may have substantially less
volume and are subject to less government supervision than U.S. securities
markets. Securities of many issuers in emerging market countries may be less
liquid and more volatile than securities of comparable domestic issuers. In
addition, there is less regulation of securities exchanges, securities dealers,
and listed and unlisted companies in emerging market countries than in the
United States.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in exchange rates.
In addition, forward contracts are subject to the risk that the counterparty to
the contract will default on its obligations. A default on the contract would
deprive the Debt Portfolio of unrealized profits, the benefits of a currency
hedge, increase transaction costs or force the Debt Portfolio to cover its
purchase or sale commitments, if any, at the current market price. The Debt
Portfolio will not enter into such transactions unless the credit quality of the
unsecured senior debt or the claims-paying ability of the counterparty is
considered to be investment grade by BSAM.
36
<PAGE>
THE BEAR STEARNS FUNDS
EMERGING MARKETS DEBT PORTFOLIO
RESULTS OF SPECIAL MEETING OF SHAREHOLDERS -- (UNAUDITED)
On April 29, 1999, a special meeting of the shareholders of the Emerging Markets
Debt Portfolio (the "Debt Portfolio"), a separate non-diversified portfolio of
Bear Stearns Investment Trust (the "Trust"), was held and the following matter
was voted upon:
(1) Vote on a proposal approving or disapproving an Agreement and Plan of
Reorganization and Liquidation (the "Plan") and the transactions
contemplated in the Plan to reorganize the Debt Portfolio into Emerging
Markets Debt Portfolio ("New Portfolio"), a newly created series of The
Bear Stearns Funds ("BSF") and to subsequently dissolve the Trust. A vote
to approve the Plan would also authorize the Debt Portfolio to approve an
Investment Advisory Agreement between Bear Stearns Asset Management Inc.
and BSF on behalf of the New Portfolio.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTES
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
2,003,045 24,694 31,494 1,747,561
</TABLE>
37
