<PAGE>
[LOGO]
The
Bear Stearns
Funds
575 LEXINGTON AVENUE
NEW YORK, NY 10022
1.800.766.4111
<TABLE>
<S> <C>
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 COUNSEL
Bear Stearns Asset Kramer Levin
Management Inc. Naftalis & Frankel LLP
575 Lexington Avenue 919 Third Avenue
New York, NY 10022 New York, NY 10022
SUB-ADVISER DISTRIBUTOR
INTERNATIONAL EQUITY Bear, Stearns & Co. Inc.
PORTFOLIO 245 Park Avenue
Marvin & Palmer New York, NY 10167
Associates, Inc. TRANSFER AND DIVIDEND
1201 N. Market Street DISBURSEMENT AGENT
Suite 2300 PFPC Inc.
Wilmington, DE 19801 Bellevue Corporate Center
ADMINISTRATOR 400 Bellevue Parkway
Bear Stearns Funds Wilmington, DE 19809
Management Inc. INDEPENDENT AUDITORS
575 Lexington Avenue Deloitte & Touche LLP
New York, NY 10022 Two World Financial Center
CUSTODIAN New York, NY 10281
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540
</TABLE>
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.
"Standard & Poor's-Registered Trademark-", "S&P-Registered Trademark-", and
"STARS-Registered Trademark-" are trademarks of The McGraw-Hill Companies, Inc.
and have been licensed for use by Bear, Stearns & Co. Inc. S&P STARS Portfolio
is not sponsored, managed, advised, sold or promoted by Standard & Poor's.
BSF-R-015-04
S&P STARS
Portfolio
The Insiders
Select Fund
Large Cap
Value Portfolio
Small Cap
Value Portfolio
Focus List
Portfolio
Balanced Portfolio
International Equity
Portfolio
Annual Report
March 31, 1999
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
The Insiders Select Fund
Large Cap Value Portfolio
Small Cap Value Portfolio
Focus List Portfolio
Balanced Portfolio
International Equity Portfolio
LETTER TO SHAREHOLDERS
April 30, 1999
Dear Shareholders:
We are pleased to present the annual report to shareholders for the S&P STARS
Portfolio ("S&P STARS"), The Insiders Select Fund ("Insiders Select"), Large Cap
Value Portfolio ("Large Cap"), Small Cap Value Portfolio ("Small Cap"), Focus
List Portfolio ("Focus List"), Balanced Portfolio ("Balanced") and International
Equity Portfolio ("International Equity") (each a "Portfolio" and collectively
the "Portfolios") for the fiscal year ended March 31, 1999. Detailed performance
data for each class of shares of each Portfolio can be found in the "Financial
Highlights" and in the line graph sections of this report.
The twelve months ended March 31, 1999, were an extremely volatile period for
the world's financial markets. The specter of ailing economies in Asia had
haunted the markets since the summer of 1997, so that when Russia devalued its
currency and defaulted on its debt in August 1998, nervous markets fell
precipitously worldwide. In a classic "flight to quality" investors sought the
safest investment they could find, namely U.S. Treasury bonds. The situation was
made worse by fears of a major hedge fund collapse a month later. Stock markets
worldwide plummeted in September and October, but then began a rapid recovery as
central banks lowered interest rates and these problems were viewed as
contained.
The U.S. market rally that started in the fall was fueled by investor appetite
for growth stocks, particularly technology, communications and Internet-related
stocks. On March 29, 1999 the Dow Jones Industrial Average closed above 10,000
for the first time and the broader averages flirted with their all-time highs.
However, market activity was narrow. Roughly one-third of the performance of the
Standard & Poor's 500 Composite Index, ("S&P 500 Index"), came from just two
stocks, Microsoft Corp. and America Online Inc. The divergence between large-
and small-cap stocks widened dramatically -- as indicated by the Russell 2000
Index's decline of more than 16% for the twelve month period and value stocks
continued to languish.
Despite concerns about the market's lofty valuations, these new levels are
supported by good economic news that is getting better. The U.S. economy is
growing at a healthy 3-3 1/2% annual rate, and unemployment remains at
near-historical lows with only a trace of inflation. Consumer spending, which
accounts for two-thirds of Gross Domestic Product growth, is high, and so far in
1999 corporate profits have been much stronger than had been expected.
In addition to the supportive domestic backdrop, the international environment
has improved. Brazil, which appeared on the verge of financial collapse early
this year when it devalued its currency, has kept its head above water. Best of
all, Asia appears to be on the mend. Japan is beginning to implement structural
reforms that lead us to believe it may be able to pull itself out of recession,
which provides support for other countries in Asia -- which, in turn, is good
news for U.S. companies that do business overseas.
S&P STARS PORTFOLIO
For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had a
total return of 27.46% (without giving effect to the sales charge), and Class B
and C shares had a total return of 26.75% (without giving effect to the
contingent deferred sales charge, or "CDSC")(1). The Portfolio's benchmark, the
S&P 500 Index, returned 18.46% for the same period.
1
<PAGE>
With a firm belief in the vital role technology will play in shaping business
and economic growth, we were well represented in computer software and systems,
communications and Internet stocks throughout the period. As of March 31, 1999,
our largest holdings included Cisco Systems, Inc. (6.28% of net assets), EMC
Corp. (4.41%), MCI Worldcom, Inc. (3.49%) and Sprint Corp. (PCS Group) (3.71%).
While they did not have the "sizzle" of technology and Internet-related issues,
health care and pharmaceutical stocks were also strong performers over the
twelve months. However, given the uncertainty about exposure to currency
problems in world markets, the financial sector underperformed. Throughout the
period, we reduced or reallocated exposures here toward companies with a more
domestic orientation such as Staples, Inc. (2.96%) and Eaton Vance Corp.
(0.74%).
MAINTAINING A FOCUS ON "GROWTH AT A REASONABLE PRICE"
Small and mid-cap stocks, regardless of their fundamental strengths or growth
prospects, were left behind in the market rally. At the period's end, the
small-cap sector was the cheapest it has been relative to large caps in decades.
Our small-cap holdings included Consolidated Products, Inc. (1.08%), RehabCare
Group, Inc. (0.82%) and the Gartner Group, Inc. (0.95%) -- all of which
represent our strategy of investing in companies that have projected long-term
growth rates well above that of the S&P 500 Index, but which are inexpensive by
standard valuation measures.
Without a dramatic shift in sentiment, mid-cap and smaller issues are likely to
perform better than large growth stocks in the immediate future. We believe that
domestic economic growth and corporate earnings will be higher than anticipated,
which should favor value stocks. On the other hand, well positioned large-cap
growth issues will continue to offer investors relative predictability and
consistent cash flow. Although we will continue to emphasize large-cap growth
stocks, we will build additional positions in the small-cap sector, where we
expect to to find more compelling opportunities that represent growth at a
reasonable price.
THE INSIDERS SELECT FUND
For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had a
total return of 0.29% (without giving effect to the sales charge), and Class B
and C shares had a total return of (0.16)% (without giving effect to the
CDSC)(2). The Portfolio's benchmark, the S&P MidCap 400 Index, returned 0.43%
for the same period.
Throughout the first half of the Portfolio's fiscal year, volatility and
weakness in mid- and small-cap stocks made it somewhat difficult to find
companies with attractive insider situations. The financial sector was
particularly hard hit as investors worried about the impact of a slowing economy
and exposure to emerging markets. But as the stock market firmed in the fall,
confidence returned and we bought Citigroup Inc. (3.78% of net assets). Our
positions in technology and manufacturing companies such as United Technologies
Corp. (4.45%) recovered and gained ground.
FINDING VALUE IN MARKET LAGGARDS
The tone of insider buying was generally mixed over the course of the
Portfolio's fiscal year. While the August-September market correction created
dramatically lower valuations, buying enthusiasm was dampened by market
volatility. Moreover, sentiment throughout the period favored large-cap growth
stocks -- and mid-cap value stocks lagged. As a result, many attractive
situations in neglected sectors grew even more attractive as the period
progressed.
As large-cap growth stocks led the market to new highs by the end of March,
investors began to question valuations in some of these issues. While a powerful
buying trend in value stocks and mid-cap stocks has not materialized, interest
in these holdings has become far greater than it had been in some time.
Consequently, having focused on companies with strong fundamentals and solid
growth prospects, the Fund benefited from the strong relative performance of
many of its larger holdings including WPP Group plc (5.69% of net assets), The
Dun & Bradstreet Corp. (5.07%), United Technologies Corp., American Express Co.
(4.38%) and Johnson & Johnson (4.11%) -- all of which posted strong gains in the
first quarter of 1999.
We will continue to maintain our discipline of purchasing mid-to-large-cap value
stocks with positive fundamentals and compelling insider buying and/or share
repurchases. These stocks generally have much lower valuations than their
respective index and tend to provide a defensive position in volatile markets.
We believe this strategy will be particularly effective considering that the
U.S. economy is expected to slow over the next few years.
2
<PAGE>
LARGE CAP VALUE PORTFOLIO
For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had a
total return of 3.68% (without giving effect to the sales charge) and Class B
and Class C shares had a total return of 3.21% and 3.22%, respectively, (without
giving effect to the CDSC)(3). The Portfolio's benchmark, the S&P 500 Index,
returned 18.46% for the same period.
When Large Cap's fiscal year ended, leading stock market indices were very near
their all-time highs. However, these levels primarily reflected a continuation
of the pattern set in early 1998: Bigger is better, and big technology stocks
are best of all. Investors favored these growth stocks despite their
historically high valuations and ignored stocks with more favorable
fundamentals. As a result, with technology representing roughly 20% of the S&P
500 Index at period's end, our underweighted position in this sector held back
performance.
We have adhered to our strategy of seeking out stocks of companies exhibiting
above-average growth that trade at discounts to the market of 25% or more, since
we believe the market will ultimately reward these stocks with prices that
reflect their inherent worth. While we have confidence in our approach, our
performance has lagged the market by forces affecting all value managers.
In general, Large Cap has benefited from the relatively strong performance of
its holdings in the financial services sector, which began to rally last fall
when the Federal Reserve lowered interest rates. Given the high levels of
employment and consumer confidence, our consumer-oriented stocks also had strong
returns. For example, McDonald's Corp. (3.57% of net assets) performed well in
the first quarter of 1999, reflecting the effects of a change in management
eighteen months ago that has resulted in tighter cost controls, increased cash
flow, an aggressive share repurchase program as well as an improved product --
all of which have enhanced shareholder value.
Although shares of The Bank of New York Co., Inc. (3.33%), one of our largest
holdings, declined during the latest quarter due to acquisition costs, one of
its purchases -- the Royal Bank of Scotland's custody unit -- makes The Bank of
New York Co., Inc. the world's largest custodian. It is because of the bank's
dominant position in its business and the kind of strong numbers we like to see,
such as a lower expense ratio than its peers and bottom-line growth above the
market's, that we are optimistic about its prospects.
A FOCUS ON EARNINGS GROWTH THAT EXCEEDS THE MARKET'S
As we begin the next fiscal year, we remain overweighted in financial stocks, a
sector that we expect to generate earnings growth in excess of the market's over
the next 12 to 24 months while selling at relative valuations well below its
historic averages. In addition to The Bank of New York Co., Inc., examples
include Citigroup Inc. (2.96%), which is beginning to see the benefits of the
merger of Citicorp and Travelers, and PNC Bank Corp. (2.91%), a well-run
regional bank selling at a discount to the market. We also remain biased toward
consumer stocks, particularly those companies undergoing positive changes in
their businesses, such as the auto makers, or those experiencing accelerating
earnings growth, such as restaurants.
Although the Portfolio remains underweighted in technology, we expect that given
the high valuations and volatility in this sector we will have opportunities to
increase our exposure at more attractive valuations before year-end.
SMALL CAP VALUE PORTFOLIO*
For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had a
total return of (20.26)% (without giving effect to the sales charge), and Class
B and C shares had a total return of (20.63)% and (20.67)%, respectively,
(without giving effect to the CDSC)(4). The Portfolio's benchmark, the Russell
2000 Index returned (16.20)% for the same period, and the Russell 2000 Value
Index returned (22.03)%.
Although small-capitalization stocks rallied late last year, they still lag far
behind large-capitalization issues. In fact, while the S&P 500 Index, which is
dominated by large-cap growth stocks, rose by nearly 5% in the three months
ending March 31, 1999, the Russell 2000 Index fell by more than 5%. These
numbers highlight both the narrowness of the overall stock market and the
growing disparity between large- and small-cap issues.
When components of the indices are broken out, the disparities between the
growth and value sectors are apparent as well. For example, during the last
quarter, the Russell 2000 Growth Index was down nearly 2% while the Russell 2000
Value Index dropped almost 10%. So although we have confidence in our holdings,
the Portfolio has been pulled down by factors affecting all value managers,
particularly those investing in small-cap stocks.
3
<PAGE>
The same big question remains, just as it did last year: How long will these
disparities continue, fueled as they are by investors' willingness to pay for
earnings multiples in the high 20's for large/mega-cap stocks, while ignoring
small caps -- particularly small-cap value stocks with roughly half these
earnings multiples?
FUNDAMENTALS FAVOR SMALL-CAP STOCKS
We believe that the gap will close this year. However, a specific catalyst other
than valuation remains elusive. As the Dow Jones Industrial Average broke
through the 10,000-level, the concentration of strong performers seemed to beg
for a broadening of gains by other types of companies. As we said in our last
report, standard valuation measures show small-cap stocks at 20-year lows
compared to large caps. These yardsticks include price-to-cash flow,
price-to-earnings (both trailing and forward), price-to-book, and price-to-sales
ratios. Ironically, this has occurred while two measures of internal operations
and fundamentals and not market valuations -- return on equity and operating
margins -- show a favorable trend for small-caps relative to large caps.
Our strategy continues to focus on investing in a limited number of high-quality
small-cap companies with value characteristics combined with a catalyst that we
believe should lead to higher stock prices. The Portfolio consists of 35 to 45
companies, with a concentration in the largest positions. These, our favorite
holdings, include U.S. Franchise System, Inc. (6.92% of net assets), Steiner
Leisure Ltd. (6.06%), Butler International, Inc. (5.36%) and Cox Radio, Inc.
(3.89%). We have brought up our weighting in the technology sector by taking
advantage of companies with positive fundamentals and outlook, but whose stocks
are trading at multiples we believe do not value the companies at an appropriate
price.
FOCUS LIST PORTFOLIO
For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had a
total return of 29.47% (without giving effect to the sales charge), and Class B
and C shares had a total return of 28.61% and 28.69%, respectively (without
giving effect to the CDSC)(5). The Portfolio's benchmark, the S&P 500 Index
returned 18.46% for the same period.
During the past twelve months, market sentiment favored the biggest and
best-known growth stocks, particularly technology and Internet issues, which led
the market to record levels at the end of March. The Portfolio's performance
benefited from its holdings in these sectors, including America Online, Inc.
(17.96% of net assets), EMC Corp. (8.22%) and Intel Corp. (3.33%). The Portfolio
also participated in the rally in media and telecommunications stocks with
positions in several of the largest players including Time Warner Inc. in the
U.S. (4.87%) and Vodafone Group plc (5.12%), a leading global wireless network
operator based in the U.K.
Lacking the size and glamour of these issues, virtually all other sectors
lagged. Investors continued to favor growth and were willing to pay for it. By
period's end, valuations in the market's favorites were stretched, and we expect
to see interest in sectors beyond the favored few revive as the corporate profit
recovery we have seen this year gathers steam.
MARKETS ON FIRMER FOOTING IN 1999
We are more optimistic about the prospects for the world's markets in 1999 than
we were in 1998. Asian markets are on the rebound, and Brazil's financial
problems have been contained. Although commodity prices are rising, we view this
as a sign that economies are reviving, rather than as a harbinger of inflation.
As a result, toward the end of the period, we added positions in energy and
basic materials, two sectors with the potential to surprise on the upside as the
climate improves.
BALANCED PORTFOLIO
For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had a
total return of 4.07% (without giving effect to the sales charge), and Class B
and C shares had a total return of 3.56% (without giving effect to the CDSC)(6).
The Portfolio's benchmarks, the Lipper Balanced Fund Index and S&P 500 Index,
returned 8.36% and 18.46%, respectively, for the same period. Following its
balanced approach to investing, the Portfolio typically allocates between 40%
and 60% of its assets to both equity and fixed income investments, with the
exact percentage determined by an analysis of current economic and market
conditions.
As a result of price appreciation in many holdings as the stock market rallied,
the Portfolio maintained its bias toward stocks during the six months ending
March 31, 1999. Large growth companies, particularly those in technology,
remained the market leaders. As a result, our underweighted position in this
sector held back performance. While earnings growth in this group will
undoubtedly continue to outpace the market's, this positive outlook appears to
be built into current valuations without taking into consideration the inherent
volatility of earnings and prices.
4
<PAGE>
Also affecting performance were declines in holdings such as Philip Morris Cos.
Inc. (0.95% of net assets), which lost two unexpectedly large lawsuits in early
1999, and The Bank of New York Co., Inc. (1.47%), whose share price weakened on
the announcement of several acquisitions. The largest, Royal Bank of Scotland's
custody unit, makes The Bank of New York Co., Inc. the world's largest
custodian. We are optimistic about the stock's prospects because of the bank's
dominant position in its business and its strong numbers -- a higher efficiency
ratio than its peers and bottom-line growth above the market's coupled with a
lower P/E multiple.
Partially offsetting these disappointments was our overweighting in other
sectors including consumer stocks, which generally performed well. McDonald's
Corp. (1.83%), for example, had a strong quarter, reflecting the effects of a
management change 18 months ago that has resulted in tighter cost controls,
increased cash flow, an aggressive share repurchase program and an improved
product, which have enhanced shareholder value.
FINDING VALUE IN FINANCIAL STOCKS
We have overweighted the stock portion of the Portfolio with financials, a
sector we expect to generate earnings growth in excess of the market's over the
next 12 to 24 months while selling at relative valuations well below their
historical averages. We also remain biased toward consumer stocks, with an
emphasis on companies undergoing positive changes in their businesses or
experiencing accelerating earnings growth. While the Portfolio remains
underweighted in technology, we expect that the sector's high valuations and its
inherent volatility will create opportunities that meet our value criteria
before year-end.
Toward the end of the period, the fixed income portion of the Portfolio
benefited from its overweighting in agency and corporate issues, resulting from
purchases we made last fall when spreads had widened substantially. These
sectors have recovered as relative calm returned to the financial markets. We
expect to continue to find opportunities as spreads narrow, although there
probably will not be the same exaggerated upside potential as before. In
general, we will continue to seek opportunities that build yield, while
maintaining high credit quality and minimizing volatility.
INTERNATIONAL EQUITY PORTFOLIO**
For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had a
total return of 9.97%(7) (without giving effect to the sales charge), and Class
B and C shares had a total return of 9.48% (without giving effect to the
CDSC)(7). The Portfolio's benchmark, the Morgan Stanley Capital International
Europe, Australasia, Far East (EAFE) Index returned 6.06% for the same period.
The twelve month period ended March 31, 1999, was especially volatile for
investors in international markets, which were clouded by lingering currency
troubles in Asia and then battered by the summer meltdown of the Russian
economy. This was followed later in the year by fears that the "Asian flu" would
spread to Latin America. By year-end 1998, equity prices had declined
significantly -- and no market was spared.
However, stability began to return in the fall and winter due to interest rate
cuts by central banks worldwide. This helped ease pressures on Asian economies
and also indicated the central banks' willingness to act to spur economic
growth. In addition, an aid package from the International Monetary Fund
provided Brazil with relief, and the Japanese government began to implement
structural reforms.
During the twelve month period, we remained heavily invested in Europe, which as
a region, was the most stable and had the most solid growth prospects. However,
our industry emphasis shifted -- for example, away from large banks with heavy
international exposure -- as conditions changed. In addition, as stability
returned to the Asian markets, we gradually built exposure there.
CONFIDENCE BUILDS IN JAPAN
Over the period, we increased our holdings in Japan from approximately 3% to
more than 20% by the end of March. We added to holdings in Fujitsu Ltd. (1.56%
of net assets), a global supplier of information technology products, and Sony
Corp. (1.99%) and added Softbank Corp. (0.47%), which markets computer software,
networking products and services. As in other markets worldwide, technology and
technology-related issues like these led the Japanese market higher. Markets in
Singapore and Hong Kong also revived in early 1999. Given the healthier
environment, we will consider building positions in Asia on a market-by-market
basis.
By contrast, economic growth forecasts were lowered in Europe over the past
twelve months. Early in the period, a strong consolidation trend and attractive
valuations had created a positive environment, particularly for the financial
sector, until the
5
<PAGE>
Russian crisis hit last summer. This caused us to turn our attention to more
domestically oriented sectors such as telecommunications, and we built positions
in such companies as Vodafone Group plc (3.60%) and COLT Telecom Group plc
(2.30%) in the U.K., France Telecom SA (1.03%) and Swisscom AG (0.54%).
As markets elsewhere strengthened, European markets did not recover as quickly.
This was primarily due to concerns about the socialist posture of many European
governments and to slowing economic growth resulting from the downturn in Asia.
With the climate less positive as 1999 began, we reduced holdings in a number of
the pharmaceutical and telecommunications issues that had performed so strongly
in the recent past. With the ouster of the German Minister of Finance in March,
the German market and others across the continent stabilized.
Looking ahead, we are optimistic that the environment in Europe will continue to
improve as the consolidation trend in such industries as financial services and
telecommunications continues. We also believe that the prospects for Asia are
positive. Historically, however, the markets have not ignored conflicts or
external events. Any expansion or escalation of the military action in
Yugoslavia could have negative repercussions, not only in the European markets
but worldwide.
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,
/s/ Doni L. Fordyce
Doni L. Fordyce
President
The Bear Stearns Funds
- -------
* Small-cap funds typically carry additional risks, since smaller companies
generally have a higher risk of failure than well-established larger
companies. Historically, stocks of smaller companies have experienced a
greater degree of market volatility than stocks on average.
**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 fiscal year ended March 31, 1999, the Portfolio's Class A shares had
a total return of 20.46%, including the initial 5.50% maximum sales charge
and Class B shares returned 21.75% including the 5.00% CDSC and Class C
shares returned 25.75%, including the 1.00% CDSC.
(2) For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had
a total return of (5.22)%, including the initial 5.50% maximum sales charge
and Class B shares returned (4.90)%, including the 5.00% CDSC and Class C
shares returned (1.11)%, including the 1.00% CDSC.
(3) For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had
a total return of (2.02)%, including the initial 5.50% maximum sales charge
and Class B shares returned (1.51)%, including the 5.00% CDSC and Class C
shares returned 2.27% including the 1.00% CDSC.
(4) For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had
a total return of (24.66)%, including the initial 5.50% maximum sales charge
and Class B shares returned (24.40)%, including the 5.00% CDSC and Class C
shares returned (21.43)%, including the 1.00% CDSC.
(5) For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had
a total return of 22.35%, including the initial 5.50% maximum sales charge
and Class B shares returned 23.61%, including the 5.00% CDSC and Class C
shares returned 27.69%, including the 1.00% CDSC.
(6) For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had
a total return of (1.63)%, including the initial 5.50% maximum sales charge
and Class B shares returned (1.44)%, including the 5.00% CDSC and Class C
shares returned 2.56%, including the 1.00% CDSC.
(7) For the fiscal year ended March 31, 1999, the Portfolio's Class A shares had
a total return of 3.93%, including the initial 5.50% maximum sales charge
and Class B shares returned 4.48%, including the 5.00% CDSC and Class C
shares returned 8.48%, including the 1.00% CDSC.
Bear Stearns Asset Management Inc. waived all or 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.
6
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CLASS A AND C SHARES(1)(2)(3)(6) VS. ITS BROAD-BASED INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES S&P 500 COMPOSITE INDEX
<S> <C> <C> <C>
Apr. 5 1995 $9,525.00 $10,000.00 $10,000.00
$10,571.43 $11,083.33 $10,848.00
Sept. 30, 1995 $11,444.45 $11,975.00 $11,709.00
$11,644.82 $12,170.34 $12,411.00
Mar. 31, 1996 $12,158.20 $12,691.32 $13,074.00
$12,304.88 $12,836.51 $13,659.00
Sept. 30, 1996 $13,282.76 $13,835.76 $14,076.00
$14,878.37 $15,471.38 $15,247.00
Mar. 31, 1997 $14,208.88 $14,763.54 $15,653.00
$16,411.13 $17,034.15 $18,384.00
Sept. 30, 1997 $19,353.33 $20,058.56 $19,757.00
$17,555.43 $18,171.88 $20,323.94
Mar. 31, 1998 $20,394.52 $21,081.93 $23,158.89
$21,569.24 $22,260.41 $23,923.00
Sept. 30, 1998 $19,056.42 $19,647.04 $21,544.00
$24,523.71 $25,254.31 $26,131.00
Mar. 31, 1999 $25,999.13 $26,722.00 $27,433.00
Past performance is not predictive of future performance.
S&P STARS PORTFOLIO
Class A shares $25,999
Class C shares 26,722
S&P 500 Composite Index 27,433
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED AVERAGE
MARCH 31, 1999 ANNUAL(4)
------------------- -------------------
<S> <C> <C>
S&P STARS Portfolio(2)
Class A shares(5).............. 20.46% 27.04%
Class B shares(6).............. 21.75 31.99
Class C shares(7).............. 25.75 27.92
Class Y shares(3).............. 28.02 26.60
S&P 500 Composite Index(1)......... 18.46 28.76
</TABLE>
- ---------
(1) The chart assumes a hypothetical $10,000 initial investment in the Portfolio
and reflects all Portfolio expenses. Investors should note that the
Portfolio is a professionally managed mutual fund while the index is
unmanaged, does not incur sales charges or expenses and is not available for
investment.
(2) Bear Stearns Asset Management Inc. waived its advisory fee and agreed to
voluntarily reimburse a portion of the Portfolio's operating expenses, if
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.
(3) The return of Class Y shares (for which August 7, 1995 was the initial
public offering date) would have been higher than Class A and C shares if
operations were commenced on the same day. The higher return is due to the
fact that there is no sales load, CDSC or 12b-1 fee charged to Class Y
shares.
(4) For the period of April 5, 1995 (commencement of investment operations)
through March 31, 1999 for Class A and C shares.
(5) Reflects the initial maximum sales charge in effect, 5.50% and 4.75%,
respectively, for each period shown. Without the applicable sales charge,
the total returns would have been 27.46% and 28.61%, respectively, for each
period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total returns would have been 26.75% and
35.01%, respectively, for each period shown. Assuming no redemption of
shares at the end of the period, the return of Class B shares (for which
January 5, 1998 was the initial public offering date) would have been higher
than Class A shares and would have been substantially the same as Class C
shares if operations were commenced on the same day. The higher return is
due to the fact that there is no initial sales charge on Class B shares.
(7) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total return for the one year ended March 31,
1999 would have been 26.75%.
CDSC -- Contingent Deferred Sales Charge.
7
<PAGE>
THE BEAR STEARNS FUNDS
The Insiders Select Fund
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CLASS A AND C SHARES(1)(2)(3)(6) VS. ITS BROAD-BASED INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES S&P MIDCAP 400 INDEX (1)
<S> <C> <C> <C>
June 16, 1995 $9,525.00 $10,000.00 $10,000.00
$9,579.40 $10,066.67 $10,134.00
Sept 30, 1995 $10,468.20 $10,975.00 $11,123.00
$10,801.00 $11,316.67 $11,280.00
Mar 31, 1996 $11,118.70 $11,633.30 $11,974.00
$11,682.50 $12,200.00 $12,319.00
Sept 30, 1996 $12,206.70 $12,733.33 $12,681.00
$13,109.80 $13,662.60 $13,448.00
Mar 31, 1997 $13,155.00 $13,691.00 $13,249.00
$15,194.10 $15,799.50 $15,197.00
Sept 30, 1997 $16,755.00 $17,387.90 $17,639.00
$16,995.90 $17,614.80 $17,785.00
Mar 31, 1998 $19,209.00 $19,874.30 $19,743.00
$19,122.56 $19,772.94 $19,319.00
Sept 30, 1998 $15,963.51 $16,478.77 $16,525.00
$18,573.54 $19,151.63 $21,181.00
Mar 31, 1999 $19,264.48 $19,839.17 $19,828.00
Past performance is not predictive of future performance.
THE INSIDERS SELECT FUND
Class A shares $19,264
Class C shares 19,839
S&P Midcap 400 Index 19,828
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED AVERAGE
MARCH 31, 1999 ANNUAL(4)
------------------- -------------------
<S> <C> <C>
The Insiders Select Fund(2)
Class A shares(5).............. (5.22)% 18.86%
Class B shares(6).............. (4.90) 6.72
Class C shares(7).............. (1.11) 19.79
Class Y shares(3).............. 0.85 20.71
S&P MidCap 400 Index(1)............ 0.43 19.77
</TABLE>
- ---------
(1) The chart assumes a hypothetical $10,000 initial investment in the Portfolio
and reflects all Portfolio expenses. Investors should note that the
Portfolio is a professionally managed mutual fund while the index is
unmanaged, does not incur sales charges or expenses and is not available for
investment.
(2) Bear Stearns Asset Management Inc. waived its advisory fee and agreed to
voluntarily reimburse a portion of the Portfolio's operating expenses, if
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; total returns would have been lower had there been
no assumption of fees and expenses in excess of expense limitations.
(3) The return of Class Y shares (for which June 20, 1995 was the initial public
offering date) would have been higher than Class A and C shares if
operations were commenced on the same day. The higher return is due to the
fact that there is no sales load, CDSC or 12b-1 fee charged to Class Y
shares.
(4) For the period of June 16, 1995 (commencement of investment operations)
through March 31, 1999 for Class A and C shares.
(5) Reflects the initial maximum sales charge in effect, 5.50% and 4.75%,
respectively, for each period shown. Without the applicable sales charge,
the total returns would have been 0.29% and 20.40%, respectively, for each
period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total returns would have been (0.16)% and
9.90%, respectively, for each period shown. Assuming no redemption of shares
at the end of the period, the return of Class B shares (for which January 6,
1998 was the initial public offering date) would have been higher than Class
A shares and substantially the same as Class C shares if operations were
commenced on the same day. The higher return is due to the fact that there
is no initial sales charge on Class B shares.
(7) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total return for the one year ended March 31,
1999 would have been (0.16)%.
CDSC -- Contingent Deferred Sales Charge.
8
<PAGE>
THE BEAR STEARNS FUNDS
Large Cap Value Portfolio
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CLASS A AND C SHARES(1)(2)(3)(6) VS. ITS BROAD-BASED INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES S&P 500 COMPOSITE INDEX
<S> <C> <C> <C>
Apr. 4 1995 $9,525.00 $10,000.00 $10,000.00
$10,191.75 $10,683.33 $10,800.00
Sept. 30, 1995 $11,295.06 $11,825.00 $11,700.00
$11,915.10 $12,462.52 $12,375.00
Mar. 31, 1996 $12,034.41 $12,570.89 $13,075.00
$12,042.36 $12,562.55 $13,150.00
Sept. 30, 1996 $12,257.12 $12,770.96 $14,095.00
$13,626.63 $14,178.46 $15,400.00
Mar. 31, 1997 $13,892.10 $14,440.30 $15,763.00
$16,335.50 $16,955.40 $18,600.00
Sept. 30, 1997 $17,524.90 $18,162.20 $19,895.00
$17,858.50 $18,481.30 $20,467.00
Mar. 31, 1998 $20,008.60 $20,785.20 $23,321.00
$20,220.69 $20,976.42 $24,091.21
Sept. 30, 1998 $17,646.60 $18,280.95 $21,694.71
$20,584.76 $21,289.99 $26,314.47
Mar. 31, 1999 $20,763.85 $21,453.93 $27,626.52
Past performance is not predictive of future performance.
LARGE CAP VALUE PORTFOLIO
Class A shares $20,764
Class C shares 21,454
S&P 500 Composite Index 27,627
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED AVERAGE
MARCH 31, 1999 ANNUAL(4)
------------------- -------------------
<S> <C> <C>
Large Cap Value Portfolio(2)
Class A shares(5).............. (2.02)% 20.14%
Class B shares(6).............. (1.51) 11.31
Class C shares(7).............. 2.27 21.04
Class Y shares(3).............. 4.29 19.98
S&P 500 Composite Index(1)......... 18.46 28.94
</TABLE>
- ---------
(1) The chart assumes a hypothetical $10,000 initial investment in the Portfolio
and reflects all Portfolio expenses. Investors should note that the
Portfolio is a professionally managed mutual fund while the index is
unmanaged, does not incur sales charges or expenses and is not available for
investment.
(2) Bear Stearns Asset Management Inc. waived its advisory fee and agreed to
voluntarily reimburse a portion of the Portfolio's operating expenses, if
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; total returns would have been lower had there been
no assumption of fees and expenses in excess of expense limitations.
(3) The return of Class Y shares (for which September 11, 1995 was the initial
public offering date) would have been higher than Class A and C shares if
operations were commenced on the same day. The higher return is due to the
fact that there is no sales load, CDSC or 12b-1 fee charged to Class Y
shares.
(4) For the period of April 4, 1995 (commencement of investment operations)
through March 31, 1999 for Class A and C shares.
(5) Reflects the initial maximum sales charge in effect, 5.50% and 4.75%,
respectively, for each period shown. Without the applicable sales charge,
the total returns would have been 3.68% and 21.62%, respectively, for each
period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total returns would have been 3.21% and 14.62%,
respectively, for each period shown. Assuming no redemption of shares at the
end of the period, the return of Class B shares (for which January 28, 1998
was the initial public offering date) would have been higher than Class A
shares and substantially the same as Class C shares if operations were
commenced on the same day. The higher return is due to the fact that there
is no initial sales charge on Class B shares.
(7) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total return for the one year ended March 31,
1999 would have been 3.22%.
CDSC -- Contingent Deferred Sales Charge.
9
<PAGE>
THE BEAR STEARNS FUNDS
Small Cap Value Portfolio
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CLASS A AND C SHARES(1)(2)(3)(6) VS. ITS BROAD-BASED INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES RUSSELL 2000 INDEX
<S> <C> <C> <C>
Apr. 3 1995 $9,525.00 $10,000.00 $10,000.00
$10,342.56 $10,841.67 $10,901.00
Sept. 30, 1995 $12,057.06 $12,625.00 $11,969.00
$12,127.79 $12,673.20 $12,231.00
Mar. 31, 1996 $12,797.08 $13,358.47 $12,852.00
$14,240.48 $14,847.44 $13,511.00
Sept. 30, 1996 $14,248.54 $14,822.06 $13,556.00
$14,001.67 $14,552.87 $14,248.00
Mar. 31, 1997 $14,294.60 $14,844.60 $13,512.00
$16,600.07 $16,433.30 $15,697.00
Sept. 30, 1997 $18,669.70 $19,337.30 $18,028.00
$18,570.10 $19,212.30 $17,416.11
Mar. 31, 1998 $20,993.50 $21,687.80 $19,213.00
$20,300.71 $20,948.25 $18,334.00
Sept. 30, 1998 $15,000.19 $15,461.90 $14,260.00
$18,306.23 $18,834.14 $17,025.00
Mar. 31, 1999 $16,739.39 $17,204.10 $16,100.00
Past performance is not predictive of future performance.
SMALL CAP VALUE PORTFOLIO
Class A shares $16,739
Class C shares 17,204
Russell 2000 Index 16,100
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED AVERAGE
MARCH 31, 1999 ANNUAL(4)
------------------- -------------------
<S> <C> <C>
Small Cap Value Portfolio(2)
Class A shares(5)......... (24.66)% 13.76%
Class B shares(6)......... (24.40) (8.58)
Class C shares(7)......... (21.43) 14.54
Class Y shares(3)......... (19.84) 13.97
Russell 2000 Index(1)......... (16.20) 12.65
</TABLE>
- ---------
(1) The chart assumes a hypothetical $10,000 initial investment in the Portfolio
and reflects all Portfolio expenses. Investors should note that the
Portfolio is a professionally managed mutual fund while the index is
unmanaged, does not incur sales charges or expenses and is not available for
investment.
(2) Bear Stearns Asset Management Inc. waived its advisory fee and agreed to
voluntarily reimburse a portion of the Portfolio's operating expenses, if
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; total returns would have been lower had there been
no assumption of fees and expenses in excess of expense limitations.
(3) The return of Class Y shares (for which June 22, 1995 was the initial public
offering date) would have been higher than Class A and C shares if
operations were commenced on the same day. The higher return is due to the
fact that there is no sales load, CDSC or 12b-1 fee charged to Class Y
shares.
(4) For the period of April 3, 1995 (commencement of investment operations)
through March 31, 1999 for Class A and C shares.
(5) Reflects the initial maximum sales charge in effect, 5.50% and 4.75%,
respectively, for each period shown. Without the applicable sales charge,
the total returns would have been (20.26)% and 15.15%, respectively, for
each period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total returns would have been (20.63)% and
(5.56)% respectively, for each period shown. Assuming no redemption of
shares at the end of the period, the return of Class B shares (for which
January 21, 1998 was the initial public offering date) would have been
higher than Class A shares and substantially the same as Class C shares if
operations were commenced on the same day. The higher return is due to the
fact that there is no initial sales charge on Class B shares.
(7) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total return for the one year ended March 31,
1999 would have been (20.67)%
CDSC -- Contingent Deferred Sales Charge.
10
<PAGE>
THE BEAR STEARNS FUNDS
Focus List Portfolio
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CLASS A, B AND C SHARES(1)(2)(3) VS. ITS BROAD-BASED INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C S&P 500
<S> <C> <C> <C> <C>
shares shares shares Composite Index
12/31/97 $9,450.00 $10,000.00 $10,000.00 $10,000.00
03/31/98 $10,551.20 $11,150.00 $11,150.00 $11,394.88
09/30/98 $9,512.34 $10,024.89 $10,024.89 $10,600.00
03/31/99 $13,660.57 $13,940.00 $14,348.15 $13,497.90
Past performance is not predictive of future performance.
Focus List Portfolio
Class A shares $13,661
Class B shares 13,940
Class C shares $14,348
S&P 500 Composite Index 13,498
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED AVERAGE
MARCH 31, 1999 ANNUAL(3)
------------------- -------------------
<S> <C> <C>
Focus List Portfolio(2)
Class A shares(4)................ 22.35% 28.22%
Class B shares(5)................ 23.61 30.31
Class C shares(6)................ 27.69 33.34
S&P 500 Composite Index(1)......... 18.46 27.00
</TABLE>
- ---------
(1) The chart assumes a hypothetical $10,000 initial investment in the Portfolio
and reflects all Portfolio expenses. Investors should note that the Focus
List Portfolio is a professionally managed mutual fund while the index is
unmanaged, does not incur sales charges or expenses and is not available for
investment.
(2) Bear Stearns Asset Management Inc. waived its advisory fee and agreed to
voluntarily reimburse a portion of the Portfolio's operating expenses to
maintain the expense limitation, as set forth in the notes to the financial
statements. Total returns shown include fee waivers and expense
reimbursements; total returns would have been lower had there been no
assumption of fees and expenses in excess of expense limitations.
(3) For the period of December 29, 1997 (commencement of investment operations)
through March 31, 1999.
(4) Reflects the initial maximum sales charge in effect at the beginning of the
period (5.50%). Without the applicable sales charge, the total returns would
have been 29.47% and 34.14%, respectively, for each period shown.
(5) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge total returns would have been 28.61% and 33.28%,
respectively, for each period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total return for the one year ended March 31,
1999 would have been 28.69%.
11
<PAGE>
THE BEAR STEARNS FUNDS
Balanced Portfolio
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CLASS A, B AND C SHARES(1)(2)(3) VS. VARIOUS INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Class A shares Class B shares Class C shares
12/31/97 $9,450.00 $10,000.00 $10,000.00
03/31/98 $10,209.78 $10,791.86 $10,791.86
09/30/98 $9,792.26 $10,325.17 $10,325.17
03/31/99 $10,625.00 $10,776.00 $11,176.00
Past performance is not predictive of future performance.
Balanced Portfolio
Class A shares $10,625
Class B shares 10,776
Class C shares 11,176
S&P 500 Composite Index 13,498
Lipper Balanced Fund Index 11,693
<CAPTION>
S&P 500 LIPPER BALANCED
<S> <C> <C>
Composite Index Fund Index
12/31/97 $10,000.00 $10,000.00
03/31/98 $11,384.88 $10,791.06
09/30/98 $10,600.09 $10,321.13
03/31/99 $13,497.90 $11,693.30
Past performance is not predictive of future performance.
Balanced Portfolio
S&P 500 Composite Index
Lipper Balanced Fund Index
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED AVERAGE
MARCH 31, 1999 ANNUAL(3)
------------------- -------------------
<S> <C> <C>
Balanced Portfolio(2)
Class A shares(4)................ (1.63)% 4.95%
Class B shares(5)................ (1.44) 6.14
Class C shares(6)................ 2.56 9.27
Class Y shares(7)................ 4.59 10.22
Lipper Balanced Fund Index(1)...... 8.36 13.27
S&P 500 Composite Index (1)........ 18.46 27.00
</TABLE>
- ---------
(1) The chart assumes a hypothetical $10,000 initial investment in the Portfolio
and reflects all Portfolio expenses. Investors should note that the Balanced
Portfolio is a professionally managed mutual fund while the indices are
unmanaged, do not incur sales charges or expenses and are not available for
investment.
(2) Bear Stearns Asset Management Inc. waived its advisory fee and agreed to
voluntarily reimburse a portion of the Portfolio's operating expenses to
maintain the expense limitation, as set forth in the notes to the financial
statements. Total returns shown include fee waivers and expense
reimbursements; total returns would have been lower had there been no
assumption of fees and expenses in excess of expense limitations.
(3) For the period of December 29, 1997 (commencement of investment operations)
through March 31, 1999 for Class A, B and C shares.
(4) Reflects the initial maximum sales charge in effect at the beginning of the
period (5.50%). Without the applicable sales charge, the total returns would
have been 4.07% and 9.80%, respectively, for each period shown.
(5) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, total returns would have been 3.56% and 9.27%,
respectively, for each period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total return for the one year ended March 31,
1999 would have been 3.56%.
(7) The return of Class Y shares (for which January 6, 1998 was the initial
public offering date) would have been higher than Class A and C shares if
operations were commenced on the same day. The higher return is due to the
fact that there is no sales load, CDSC or 12b-1 fee charged to Class Y
shares.
CDSC - Contingent Deferred Sales Charge.
12
<PAGE>
THE BEAR STEARNS FUNDS
International Equity Portfolio
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CLASS A, B AND C SHARES(1)(2)(3) VS. ITS BROAD-BASED INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
Dec. 29, 1997 $9,450.00 $10,000.00 $10,000.00
Dec. 31, 1997 $9,450.00 $10,000.00 $10,000.00
Mar. 31, 1998 $10,842.53 $11,458.33 $11,458.33
Sept. 30, 1998 $10,197.42 $10,750.60 $10,749.00
Mar. 31, 1999 $11,924.34 $12,144.00 $12,542.09
Past performance is not predictive of future performance
<CAPTION>
MSCI EAFE INDEX
<S> <C>
Dec. 29, 1997 $10,000.00
Dec. 31, 1997 $10,000.00
Mar. 31, 1998 $11,430.00
Sept. 30, 1998 $9,835.00
Mar. 31, 1999 $11,945.00
Past performance is not predictive of future performance
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED
MARCH 31, 1999 AVERAGE ANNUAL(3)
------------------- -------------------
<S> <C> <C>
International Equity Portfolio(2)
Class A shares(4)................ 3.93% 15.05%
Class B shares(5)................ 4.48 16.74
Class C shares(6)................ 8.48 19.80
MSCI EAFE Index(1)................. 6.06 16.92
</TABLE>
- ---------
(1) The chart assumes a hypothetical $10,000 initial investment in the Portfolio
and reflects all Portfolio expenses. Investors should note that the
International Equity Portfolio is a professionally managed mutual fund while
the index is unmanaged, does not incur sales charges or expenses and is not
available for investment.
(2) Bear Stearns Asset Management Inc. waived its advisory fee and agreed to
voluntarily reimburse a portion of the Portfolio's operating expenses to
maintain the expense limitation, as set forth in the notes to the financial
statements. Total returns shown include fee waivers and expense
reimbursements; total returns would have been lower had there been no
assumption of fees and expenses in excess of expense limitations.
(3) For the period of December 29, 1997 (commencement of investment operations)
through March 31, 1999.
(4) Reflects the initial maximum sales charge in effect at the beginning of the
period (5.50%). Without the applicable sales charge, the total returns would
have been 9.97% and 20.37%, respectively, for each period shown.
(5) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total returns would have been 9.48% and 19.80%,
respectively, for each period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total return for the one year ended March 31,
1999 would have been 9.48%.
13
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN INDUSTRY WEIGHTINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
- ------------------------------------------------------ -------------
<C> <S> <C>
1. Telecommunications................................ 14.50
2. Drugs & Hospital Supplies......................... 8.35
3. Networking Products............................... 6.28
4. Banks............................................. 5.79
5. Multimedia........................................ 4.87
6. Cable TV.......................................... 4.55
7. Computer Software................................. 4.55
8. Computers - Memory Devices........................ 4.41
9. Retail - Grocery Stores........................... 4.01
10. Diversified Operations............................ 3.97
</TABLE>
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
- ------------------------------------------------- ---------------------------------------- -------------
<C> <S> <C> <C>
1. Cisco Systems, Inc........................... Networking Products 6.28
2. EMC Corp..................................... Computers - Memory Devices 4.41
3. Pfizer Inc................................... Drugs & Hospital Supplies 4.11
4. Sprint Corp. (PCS Group)..................... Telecommunications 3.71
5. MCI Worldcom, Inc............................ Telecommunications 3.49
6. Sterling Software, Inc....................... Computer Software 3.22
7. Lilly, (Eli) & Co............................ Drugs & Hospital Supplies 3.14
8. BankAmerica Corp............................. Banks 3.13
9. Time Warner Inc.............................. Multimedia 2.98
10. Staples, Inc................................. Retail - Office Supplies 2.96
</TABLE>
- -------
* The Portfolio's holdings will change over time.
14
<PAGE>
THE BEAR STEARNS FUNDS
The Insiders Select Fund
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN INDUSTRY WEIGHTINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
- ------------------------------------------------------ -------------
<C> <S> <C>
1. Credit & Finance.................................. 7.12
2. Banks............................................. 6.92
3. Financial Services................................ 6.60
4. Diversified Operations............................ 6.56
5. Advertising Agencies.............................. 5.69
6. Telecommunications................................ 5.29
7. Commercial Services............................... 5.07
8. Aerospace & Defense............................... 4.45
9. Drugs & Hospital Supplies......................... 4.11
10. Multi-line Insurance.............................. 3.96
</TABLE>
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
- ------------------------------------------------- ---------------------------------------- -------------
<C> <S> <C> <C>
1. WPP Group plc - ADR.......................... Advertising Agencies 5.69
2. Dun & Bradstreet Corp. (The)................. Commercial Services 5.07
3. United Technologies Corp..................... Aerospace & Defense 4.45
4. American Express Co.......................... Credit & Finance 4.38
5. Johnson & Johnson............................ Drugs & Hospital Supplies 4.11
6. American International Group, Inc............ Multi-line Insurance 3.96
7. Viad Corp.................................... Diversified Operations 3.84
8. Citigroup Inc................................ Financial Services 3.78
9. Wendy's International, Inc................... Retail - Restaurants 3.43
10. Winsloew Furniture, Inc...................... Office Furnishings 2.94
</TABLE>
- -------
* The Portfolio's holdings will change over time.
15
<PAGE>
THE BEAR STEARNS FUNDS
Large Cap Value Portfolio
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN INDUSTRY WEIGHTINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
- ------------------------------------------------------ -------------
<C> <S> <C>
1. Banks............................................. 8.50
2. Retail - Restaurants.............................. 7.19
3. Oil Companies - Integrated........................ 7.18
4. Life/Health Insurance............................. 7.05
5. Diversified Operations............................ 6.36
6. Financial Services................................ 5.79
7. Credit & Finance.................................. 5.46
8. Advertising Agencies.............................. 4.81
9. Drugs & Hospital Supplies......................... 4.53
10. Commercial Services............................... 4.46
</TABLE>
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
- ------------------------------------------------- ---------------------------------------- -------------
<C> <S> <C> <C>
1. WPP Group plc - ADR.......................... Advertising Agencies 4.81
2. Dun & Bradstreet Corp. (The)................. Commercial Services 4.46
3. Wendy's International, Inc................... Retail - Restaurants 3.62
4. McDonald's Corp.............................. Retail - Restaurants 3.57
5. United Technologies Corp..................... Aerospace & Defense 3.45
6. Bank of New York Co., Inc. (The)............. Banks 3.33
7. Atlantic Richfield Co........................ Oil Companies - Integrated 3.25
8. Citigroup Inc................................ Financial Services 2.96
9. Equitable Companies Inc. (The)............... Life/Health Insurance 2.92
10. PNC Bank Corp................................ Banks 2.91
</TABLE>
- -------
* The Portfolio's holdings will change over time.
16
<PAGE>
THE BEAR STEARNS FUNDS
Small Cap Value Portfolio
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN INDUSTRY WEIGHTINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
- ------------------------------------------------------ -------------
<C> <S> <C>
1. Commercial Services............................... 11.52
2. Hotels & Motels................................... 6.92
3. Radio............................................. 6.38
4. Building & Housing................................ 5.98
5. Drugs & Hospital Supplies......................... 5.69
6. Human Resources................................... 5.36
7. Communications.................................... 4.62
8. Diversified Operations............................ 4.32
9. Real Estate Investment Trust...................... 3.80
10. Transport......................................... 3.72
</TABLE>
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
- ------------------------------------------------- -------------------------------------------------- -------------
<C> <S> <C> <C>
1. U.S. Franchise System, Inc................... Hotels & Motels 6.92
2. Steiner Leisure Ltd.......................... Commercial Services 6.06
3. Butler International, Inc.................... Human Resources 5.36
4. Global Pharmaceutical Corp................... Drugs & Hospital Supplies 4.94
5. Data Transmission Network Corp............... Communications 4.62
6. Cox Radio, Inc., Class A..................... Radio 3.89
7. Bally Total Fitness Holding Corp............. Recreational Centers 3.41
8. Elcor Corp................................... Building & Housing 3.37
9. Furniture Brands International, Inc.......... Home Furnishings 3.27
10. Duff & Phelps Credit Rating Co............... Commercial Services 3.22
</TABLE>
- -------
* The Portfolio's holdings will change over time.
17
<PAGE>
THE BEAR STEARNS FUNDS
Focus List Portfolio
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN INDUSTRY WEIGHTINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
- ------------------------------------------------------ -------------
<C> <S> <C>
1. Technology: Internet/News Media................... 17.96
2. Technology: Computer Services..................... 9.53
3. Media/Telecommunications: European
Telecommunication Services........................ 9.50
4. Technology: Computers & Office Equipment.......... 8.22
5. Media Communications: Broadcasting................ 4.87
6. Health Care: Medical Products..................... 4.69
7. Media Communications: Broadcasting Television..... 4.58
8. Consumer: Wholesale Distribution.................. 4.17
9. Technology: Electronic Components................. 4.07
10. Technology: Computer Sciences..................... 3.90
</TABLE>
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
- ------------------------------------------------- ---------------------------------------- -------------
<C> <S> <C> <C>
1. America Online, Inc.......................... Technology: Internet/News Media 17.96
2. EMC Corp..................................... Technology: Computers & Office Equipment 8.22
3. National Data Corp........................... Technology: Computer Services 5.28
4. Vodafone Group plc -- ADR.................... Media Telecommunications: European 5.12
Telecommunication Services
5. Time Warner Inc.............................. Media Communications: Broadcasting 4.87
6. Biomet, Inc.................................. Health Care: Medical Products 4.69
7. CBS Corp..................................... Media Communications: Broadcasting 4.58
Television
8. Telecom Italia SpA -- ADR.................... Media Telecommunications: European 4.38
Telecommunication Services
9. BISYS Group Inc. (The)....................... Technology: Computer Services 4.25
10. McKesson HBOC, Inc........................... Consumer: Wholesale Distribution 4.17
</TABLE>
- -------
* The Portfolio's holdings will change over time.
18
<PAGE>
THE BEAR STEARNS FUNDS
Balanced Portfolio
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP INDUSTRY WEIGHTINGS
EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
- ------------------------------------------------------ -------------
<C> <S> <C>
1. Diversified Operations............................ 3.98
2. Oil Companies - Integrated........................ 3.74
3. Life/Health Insurance............................. 3.69
4. Retail - Restaurants.............................. 3.69
5. Financial Services................................ 3.26
LONG-TERM DEBT
- ---------------------------------------------------------------------
1. U.S. Government Agency Obligations................ 20.85
2. Corporate Obligations............................. 18.16
3. U.S. Government Obligations....................... 5.57
</TABLE>
- --------------------------------------------------------------------------------
TOP FIVE HOLDINGS*
EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
- ------------------------------------------------- ---------------------------------------- ----------
<C> <S> <C> <C>
1. WPP Group plc - ADR.......................... Advertising Agencies 1.99
2. United Technologies Corp..................... Aerospace & Defense 1.98
3. Wendy's International, Inc................... Retail - Restaurants 1.86
4. McDonald's Corp.............................. Retail - Restaurants 1.83
5. Dun & Bradstreet Corp. (The)................. Commercial Services 1.74
LONG-TERM DEBT
- -------------------------------------------------------------------------------------------------------
1. Fannie Mae................................... U.S. Government Agency Obligations 8.46
2. Government National Mortgage Association..... U.S. Government Agency Obligations 6.94
3. U.S. Treasury Notes.......................... U.S. Government Obligations 5.57
4. Freddie Mac.................................. U.S. Government Agency Obligations 5.45
5. Dow Chemical Co.............................. Corporate Obligations 1.55
</TABLE>
- -------
* The Portfolio's holdings will change over time.
19
<PAGE>
THE BEAR STEARNS FUNDS
International Equity Portfolio
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
TOP TEN INDUSTRY WEIGHTINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
- ------------------------------------------------------ -------------
<C> <S> <C>
1. Medical - Drugs................................... 12.20
2. Cellular Telecommunications....................... 8.50
3. Telecommunication Equipment....................... 7.80
4. Telecommunication Services........................ 5.41
5. Multi-line Insurance.............................. 5.12
6. Computer Services................................. 4.77
7. Computer - Integrated Systems..................... 4.53
8. Telephone - Integrated............................ 4.28
9. Cosmetics & Toiletries............................ 3.71
10. Electronic Components - Semiconductors............ 3.47
</TABLE>
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
- ------------------------------------------------- ---------------------------------------- -------------
<C> <S> <C> <C>
1. Nokia Oyj.................................... Telecommunication Equipment 5.49
2. Vodafone Group plc........................... Cellular Telecommunications 3.60
3. Glaxo Wellcome plc........................... Medical - Drugs 3.15
4. Roche Holding AG............................. Medical - Drugs 3.06
5. Mannesmann AG................................ Machinery - General Industry 2.76
6. Cap Gemini SA................................ Computer Services 2.72
7. Takeda Chemical Industries................... Medical - Drugs 2.70
8. Kao Corp..................................... Cosmetics & Toiletries 2.61
9. COLT Telecom Group plc....................... Telecommunication Services 2.31
10. Cable & Wireless plc......................... Telecommunication Services 2.24
</TABLE>
- -------
* The Portfolio's holdings will change over time.
20
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 99.89%
BANKS - 5.79%
180,000 BankAmerica Corp. .............................. $ 12,712,500
300,000 Bank of New York Co., Inc. (The) ............... 10,781,250
---------------
23,493,750
---------------
CABLE TV - 4.55%
130,000 Cablevision Systems Corp.* ..................... 9,636,250
140,000 Comcast Corp., Special Class A ................. 8,811,250
---------------
18,447,500
---------------
CHEMICALS - SPECIALTY - 0.97%
250,000 Crompton & Knowles Corp.+ ...................... 3,937,500
---------------
COMMERCIAL SERVICES - 1.06%
250,000 Convergys Corp.* ............................... 4,281,250
---------------
COMPUTER SERVICES - 1.08%
120,000 Ceridian Corp.* ................................ 4,387,500
---------------
COMPUTER SOFTWARE - 4.55%
60,000 Microsoft Corp.* ............................... 5,377,500
550,000 Sterling Software, Inc. ........................ 13,062,500
---------------
18,440,000
---------------
COMPUTERS - INTEGRATED SYSTEMS - 1.78%
280,000 Cadence Design Systems, Inc.* .................. 7,210,000
---------------
COMPUTERS - MEMORY DEVICES - 4.41%
140,000 EMC Corp. ...................................... 17,885,000
---------------
CONSULTING SERVICES - 0.95%
170,000 Gartner Group, Inc., Class A*++ ................ 3,835,625
---------------
CREDIT & FINANCE - 2.61%
90,000 American Express Co. ........................... 10,575,000
---------------
DATA PROCESSING/MANAGEMENT - 1.08%
230,000 Reynolds & Reynolds Co. (The)++ ................ 4,370,000
---------------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED OPERATIONS - 3.97%
100,000 General Electric Co.++ ......................... $ 11,062,500
70,000 Tyco International Ltd. ........................ 5,022,500
---------------
16,085,000
---------------
DRUGS & HOSPITAL SUPPLIES - 8.35%
70,000 Bristol-Myers Squibb Co. ....................... 4,501,875
150,000 Lilly, (Eli) & Co.+ ............................ 12,731,250
120,000 Pfizer Inc. .................................... 16,650,000
---------------
33,883,125
---------------
ELECTRIC UTILITIES - 0.59%
60,000 CMS Energy Corp. ............................... 2,403,750
---------------
ELECTRONIC COMPONENTS - 1.60%
105,000 Applied Materials, Inc.* ....................... 6,477,188
---------------
ELECTRONICS - 1.32%
45,000 Intel Corp. .................................... 5,360,625
---------------
INVESTMENT MANAGEMENT/ADVISOR SERVICE - 0.74%
149,600 Eaton Vance Corp.+ ............................. 3,010,700
---------------
MULTIMEDIA - 4.87%
260,000 News Corp. Ltd. (The) .......................... 7,670,000
170,000 Time Warner Inc.+ .............................. 12,080,625
---------------
19,750,625
---------------
NETWORK SOFTWARE - 0.83%
110,000 Network Associates, Inc.* ...................... 3,375,625
---------------
NETWORKING PRODUCTS - 6.28%
232,500 Cisco Systems, Inc.* ........................... 25,473,281
---------------
OIL & GAS DRILLING - 0.72%
250,000 Global Marine Inc.++ ........................... 2,937,500
---------------
ONLINE SERVICES - 2.66%
74,000 America Online, Inc. ........................... 10,804,000
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PHYSICAL THERAPY/REHABILITATION CENTERS - 1.97%
450,000 HEALTHSOUTH Corp.*+ ............................ $ 4,668,750
220,000 RehabCare Group, Inc.*+ ........................ 3,313,750
---------------
7,982,500
---------------
PUBLISHING - BOOKS - 1.81%
150,000 Scholastic Corp.* .............................. 7,331,250
---------------
RETAIL - DEPARTMENT STORES - 1.64%
100,000 Dayton Hudson Corp. ............................ 6,662,500
---------------
RETAIL - DRUG STORES - 2.11%
180,000 CVS Corp. ...................................... 8,550,000
---------------
RETAIL - GROCERY STORES - 4.01%
100,000 Kroger Co. ..................................... 5,987,500
200,000 Safeway Inc.*+ ................................. 10,262,500
---------------
16,250,000
---------------
RETAIL - OFFICE SUPPLIES - 3.92%
450,000 OfficeMax, Inc.*+ .............................. 3,881,250
365,000 Staples, Inc.* ................................. 11,999,375
---------------
15,880,625
---------------
RETAIL - RESTAURANTS - 3.26%
250,000 Consolidated Products, Inc.*++ ................. 4,390,625
270,000 Outback Steakhouse, Inc.* ...................... 8,842,500
---------------
13,233,125
---------------
TELECOMMUNICATIONS - 14.50%
70,000 AirTouch Communications, Inc.*+ ................ 6,763,750
190,000 ECI Telecommunications Ltd. .................... 6,650,000
160,000 MCI Worldcom, Inc.* ............................ 14,170,000
140,000 Northern Telecom Ltd. .......................... 8,697,500
60,000 QUALCOMM, Inc.* ................................ 7,462,500
340,000 Sprint Corp. (PCS Group)* ...................... 15,066,250
---------------
58,810,000
---------------
TELEPHONE - LONG DISTANCE - 1.57%
80,000 AT&T Corp. ..................................... 6,385,000
---------------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
TELEVISION - 1.23%
100,000 Univision Communications, Inc. - Class A*+ ..... $ 5,000,000
---------------
TRANSPORT - AIR FREIGHT - 1.53%
200,000 Airborne Freight Corp.+ ........................ 6,225,000
---------------
TRANSPORT - TRUCK - 1.22%
150,000 USFreightways Corp.+ ........................... 4,931,250
---------------
WIRELESS EQUIPMENT - 0.36%
92,100 DSP Communications, Inc.*+++ ................... 1,462,088
---------------
Total Common Stocks
(cost - $296,111,015) ........................ 405,127,882
---------------
SHORT-TERM INVESTMENT -- 1.06%
INVESTMENT COMPANY - 1.06%
4,326,483 Federated Investors, Trust for Short-Term U.S.
Government Securities**+++
(cost - $4,326,483) .......................... 4,326,483
---------------
Total Investments -- 100.95%
(cost - $300,437,498) ........................ 409,454,365
Liabilities in excess of other
assets - (0.95)% ............................. (3,868,616)
---------------
Net Assets -- 100.00% .......................... $ 405,585,749
---------------
---------------
</TABLE>
- ---------
Unless otherwise indicated, all common stocks are ranked as five stars.
+ Currently ranked as four stars.
++ Currently ranked as three stars.
+++ Not ranked by stars.
* Non-income producing security.
** Money market fund.
S&P STARS RANKING:
Five stars - Buy - Expect to be among best performers over next 12 months and to
rise in price.
Four stars - Accumulate - Expect to be an above average performer.
Three stars - Hold - Expect to be an average performer.
Two stars - Avoid - Expected to be a below average performer.
One star - Sell - Expect to be well below average performer and to fall in
price.
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
THE BEAR STEARNS FUNDS
The Insiders Select Fund
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 93.29%
ADVERTISING AGENCIES - 5.69%
30,000 WPP Group plc - ADR .............................. $ 2,595,000
-----------
AEROSPACE & DEFENSE - 4.45%
15,000 United Technologies Corp. ........................ 2,031,562
-----------
AUTOMOTIVE PARTS & EQUIPMENT - 2.50%
30,000 Dana Corp. ....................................... 1,140,015
-----------
BANKS - 6.92%
14,000 BankAmerica Corp. ................................ 988,750
18,000 PNC Bank Corp. ................................... 1,000,124
30,000 Summit Bancorp. .................................. 1,170,000
-----------
3,158,874
-----------
CHEMICALS - DIVERSIFIED - 1.71%
45,000 Solutia Inc. ..................................... 781,875
-----------
COMMERCIAL SERVICES - 5.07%
65,000 Dun & Bradstreet Corp. (The) ..................... 2,315,625
-----------
COMPUTERS & OFFICE EQUIPMENT - 2.10%
15,000 Pitney Bowes, Inc. ............................... 956,250
-----------
COMPUTERS - MEMORY DEVICES - 2.32%
58,800 Quantum Corp.* ................................... 1,058,400
-----------
CONSULTING SERVICES - 2.47%
50,000 Gartner Group, Inc. * ............................ 1,128,125
-----------
CREDIT & FINANCE - 7.12%
17,000 American Express Co. ............................. 1,997,500
30,000 SLM Holding Corp. ................................ 1,252,500
-----------
3,250,000
-----------
DIVERSIFIED OPERATIONS - 6.56%
55,000 Raychem Corp. .................................... 1,240,937
63,000 Viad Corp. ....................................... 1,752,187
-----------
2,993,124
-----------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
DRUGS & HOSPITAL SUPPLIES - 4.11%
20,000 Johnson & Johnson ................................ $ 1,873,750
-----------
FINANCIAL SERVICES - 6.60%
27,000 Citigroup Inc. ................................... 1,724,625
27,200 H & R Block, Inc. ................................ 1,288,600
-----------
3,013,225
-----------
HEALTH CARE SERVICES - 2.89%
20,000 Mckesson HBOC, Inc. .............................. 1,320,000
-----------
HOUSEHOLD PRODUCTS - 2.26%
30,000 Dial Corp. (The) ................................. 1,031,250
-----------
LIFE/HEALTH INSURANCE - 1.73%
25,000 Torchmark Corp. .................................. 790,625
-----------
MACHINERY - ELECTRICAL - 2.36%
25,000 Grainger (W.W.), Inc. ............................ 1,076,562
-----------
MEDICAL SERVICES - 2.08%
50,000 Columbia/HCA Healthcare Corp. .................... 946,875
-----------
MULTI-LINE INSURANCE - 3.96%
15,000 American International Group, Inc. ............... 1,809,375
-----------
OFFICE FURNISHINGS - 2.94%
45,000 Winsloew Furniture, Inc.* ........................ 1,341,563
-----------
OIL COMPANIES - INTEGRATED - 2.24%
18,000 Texaco Inc. ...................................... 1,021,500
-----------
PROPERTY/CASUALTY INSURANCE - 1.42%
18,600 Mercury General Corp. ............................ 648,675
-----------
RETAIL - DEPARTMENT STORES - 2.22%
25,000 J.C. Penney Co., Inc. ............................ 1,012,500
-----------
RETAIL - RESTAURANTS - 3.43%
55,000 Wendy's International, Inc. ...................... 1,564,063
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
THE BEAR STEARNS FUNDS
The Insiders Select Fund
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
COMMON STOCKS (CONTINUED)
<TABLE>
<C> <S> <C>
TELECOMMUNICATIONS - 5.29%
55,000 Cincinnati Bell, Inc. ............................ $ 1,234,062
25,000 SBC Communications, Inc. ......................... 1,178,124
-----------
2,412,186
-----------
TOYS - 2.85%
45,000 Hasbro, Inc. ..................................... 1,302,187
-----------
Total Common Stocks
(cost - $35,765,192)............................ 42,573,186
-----------
SHORT-TERM INVESTMENTS -- 6.34%
INVESTMENT COMPANIES -- 0.10%
2,228 Federated Automated Government
Money Trust**................................... 2,228
42,711 Federated Investors, Trust for Short-Term U.S.
Government Securities**......................... 42,711
-----------
Total Investment Companies
(cost - $44,939)................................ 44,939
-----------
<CAPTION>
- ------------------------------------------------------------------------------
PRINCIPAL
AMOUNT (000'S) VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY OBLIGATION - 6.24%
$2,850 Freddie Mac, Discount Notes, 4.800%, 04/01/99
(cost - $2,850,000) ............................ $ 2,850,000
-----------
Total Short-Term Investments
(cost - $2,894,939) ............................ 2,894,939
-----------
Total Investments 99.63%
(cost - $38,660,131) ........................... 45,468,125
Other assets in excess of liabilities -- 0.37% ... 168,967
-----------
Net Assets -- 100.00%............................. $45,637,092
-----------
-----------
</TABLE>
- ---------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
THE BEAR STEARNS FUNDS
Large Cap Value Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 99.25%
ADVERTISING AGENCIES - 4.81%
12,000 WPP Group plc - ADR .............................. $ 1,038,000
-----------
AEROSPACE & DEFENSE - 3.45%
5,500 United Technologies Corp. ........................ 744,906
-----------
AUTOMOBILES - 3.73%
7,000 Ford Motor Co. ................................... 397,250
4,700 General Motors Corp. ............................. 408,312
-----------
805,562
-----------
AUTOMOTIVE PARTS & EQUIPMENT - 2.43%
18,200 Genuine Parts Co. ................................ 524,387
-----------
BANKS - 8.50%
20,000 Bank of New York Co., Inc. (The) ................. 718,750
6,900 BankAmerica Corp. ................................ 487,313
11,300 PNC Bank Corp. ................................... 627,856
-----------
1,833,919
-----------
CHEMICALS - DIVERSIFIED - 1.69%
21,000 Solutia Inc. ..................................... 364,875
-----------
COMMERCIAL SERVICES - 4.46%
27,000 Dun & Bradstreet Corp. (The) ..................... 961,875
-----------
COMPUTERS - 2.38%
2,900 International Business Machines Corp. ............ 514,025
-----------
COMPUTERS & OFFICE EQUIPMENT - 2.23%
9,000 Xerox Corp. ...................................... 480,375
-----------
CONTAINERS - METAL/GLASS - 1.44%
10,900 Crown Cork & Seal Co., Inc. ...................... 311,331
-----------
CREDIT & FINANCE - 5.46%
8,400 Fannie Mae ....................................... 581,700
14,300 SLM Holding Corp. ................................ 597,025
-----------
1,178,725
-----------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED OPERATIONS - 6.36%
3,500 General Electric Co. ............................. $ 387,187
17,000 Raychem Corp. .................................... 383,562
21,600 Viad Corp. ....................................... 600,750
-----------
1,371,499
-----------
DRUGS & HOSPITAL SUPPLIES - 4.53%
7,400 Baxter International Inc. ........................ 488,400
7,600 Bristol-Myers Squibb Co. ......................... 488,775
-----------
977,175
-----------
ELECTRIC - INTEGRATED - 1.48%
6,000 FPL Group, Inc. .................................. 319,500
-----------
ELECTRICAL EQUIPMENT - 1.80%
9,000 Grainger (W.W.), Inc. ............................ 387,563
-----------
FINANCIAL SERVICES - 5.79%
10,000 Citigroup Inc. ................................... 638,750
12,900 H & R Block, Inc. ................................ 611,138
-----------
1,249,888
-----------
HOUSEHOLD PRODUCTS - 2.02%
12,700 Dial Corp. (The) ................................. 436,563
-----------
LIFE/HEALTH INSURANCE - 7.05%
6,850 Aon Corp. ........................................ 433,263
9,000 Equitable Companies Inc. (The) ................... 630,000
14,500 Torchmark Corp. .................................. 458,563
-----------
1,521,826
-----------
OIL COMPANIES - INTEGRATED - 7.18%
9,600 Atlantic Richfield Co. ........................... 700,800
4,300 Exxon Corp. ...................................... 303,419
9,600 Texaco Inc. ...................................... 544,800
-----------
1,549,019
-----------
PAPER & PAPER RELATED PRODUCTS - 2.67%
12,000 Kimberly-Clark Corp. ............................. 575,250
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
THE BEAR STEARNS FUNDS
Large Cap Value Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAIL - DEPARTMENT STORES - 2.16%
11,500 J.C. Penney Co., Inc. ............................ 465,750
-----------
RETAIL - RESTAURANTS - 7.19%
17,000 McDonald's Corp. ................................. $ 770,313
27,500 Wendy's International, Inc. ...................... 782,031
-----------
1,552,344
-----------
SAVINGS & LOAN - 2.42%
12,785 Washington Mutual, Inc. .......................... 522,587
-----------
TELECOMMUNICATIONS - 1.31%
6,000 SBC Communications Inc. .......................... 282,750
-----------
TELEPHONE - LOCAL - 2.40%
10,000 Bell Atlantic Corp. .............................. 516,875
-----------
TOBACCO - 2.16%
13,250 Philip Morris Cos. Inc. .......................... 466,234
-----------
TOYS - 2.15%
16,000 Hasbro, Inc. ..................................... 463,000
-----------
Total Common Stocks
(cost - $16,069,853) ........................... 21,415,803
-----------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS -- 1.97%
INVESTMENTS COMPANIES - 1.97%
3,883 Federated Automated Government Money Trust * ..... $ 3,883
421,103 Federated Investors, Trust for Short-Term U.S.
Government Securities* ......................... 421,103
-----------
Total Short-Term Investments
(cost - $424,986) .............................. 424,986
-----------
Total Investments -- 101.22%
(cost - $16,494,839) ........................... 21,840,789
Liabilities in excess of other assets --
(1.22)% ........................................ (262,274)
-----------
Net Assets -- 100.00% ............................ $21,578,515
-----------
-----------
</TABLE>
- ---------
ADR American Depositary Receipts.
* Money market fund.
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
THE BEAR STEARNS FUNDS
Small Cap Value Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<C> <S> <C>
EQUITY SECURITIES -- 99.37%
COMMON STOCKS -- 95.15%
BOOKS, PUBLISHING & PRINTING - 0.86%
40,000 Big Entertainment Inc ............................ $ 485,000
-----------
BROADCASTING - 1.93%
181,200 Four Media Co.* .................................. 1,087,200
-----------
BUILDING & HOUSING - 5.98%
54,100 Elcor Corp. ...................................... 1,903,644
85,500 Giant Cement Holding, Inc.* ...................... 1,469,531
-----------
3,373,175
-----------
CHEMICALS & FERTILIZERS - 1.42%
178,200 U.S. Home & Garden Inc.* ......................... 801,900
-----------
COMMERCIAL PRINTING - 2.07%
100,000 Bowne & Co., Inc. ................................ 1,168,750
-----------
COMMERCIAL SERVICES - 11.52%
56,250 COMARCO, Inc.* ................................... 1,265,625
34,700 Duff & Phelps Credit Rating Co. .................. 1,817,412
111,200 Steiner Leisure Ltd.* ............................ 3,419,400
-----------
6,502,437
-----------
COMMUNICATIONS - 4.62%
109,300 Data Transmission Network Corp.* ................. 2,609,537
-----------
COMPUTER SERVICES - 2.55%
67,300 Computer Task Group, Inc.* ....................... 1,438,537
-----------
COMPUTER SOFTWARE - 1.13%
19,300 Actuate Software Corp. ........................... 636,900
-----------
DIVERSIFIED OPERATIONS - 4.32%
143,800 Alyn Corp.* ...................................... 413,425
29,000 Crane Co. ........................................ 701,437
33,700 SPS Technologies, Inc.* .......................... 1,322,725
-----------
2,437,587
-----------
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------------
<C> <S> <C>
DRUGS & HOSPITAL SUPPLIES - 3.20%
30,000 Dura Pharmaceuticals, Inc.* ...................... $ 423,750
441,575 Global Pharmaceutical Corp.* ..................... 1,380,478
-----------
1,804,228
-----------
ELECTRONICS - 0.76%
26,100 Cubic Corp. ...................................... 427,387
-----------
FINANCIAL SERVICES - 2.60%
35,900 Bank United Corp., Class A ....................... 1,467,413
-----------
FOOD - MEAT PRODUCTS - 0.93%
105,000 Hibernia Foods plc - ADR* ........................ 525,000
-----------
HOME FURNISHINGS - 3.27%
83,400 Furniture Brands International, Inc.* ............ 1,845,225
-----------
HOTELS & MOTELS - 6.92%
267,000 U.S. Franchise System, Inc.* ..................... 3,904,875
-----------
HUMAN RESOURCES - 5.36%
164,750 Butler International, Inc.* ...................... 3,027,281
-----------
LIFE INSURANCE - 0.60%
13,700 Penn Treaty American Corp.* ...................... 339,931
-----------
MACHINERY - CONSTRUCTION & MINING - 1.00%
23,500 Terex Corp. ...................................... 566,938
-----------
MISCELLANEOUS INDUSTRIALS - 2.55%
125,100 Kemet Corp. ...................................... 1,438,650
3,802 Meicom Computers & Communications, Ltd. (Fully
Paid).*++ ...................................... 380
5,704 Meicom Computers & Communications, Ltd. (Partial
Paid).*++ ...................................... 285
-----------
1,439,315
-----------
NETWORKING PRODUCTS - 1.68%
50,000 FORE Systems, Inc.* .............................. 945,313
-----------
NON-FERROUS METALS - 1.71%
45,950 Chase Industries, Inc.* .......................... 350,369
27,500 Mueller Industries, Inc.* ........................ 615,313
-----------
965,682
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
THE BEAR STEARNS FUNDS
Small Cap Value Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
COMMON STOCKS (CONTINUED)
<TABLE>
<C> <S> <C>
OIL & GAS DRILLING - 1.10%
52,600 Global Marine Inc.* .............................. $ 618,050
-----------
RADIO - 6.38%
42,800 Cox Radio, Inc., Class A* ........................ 2,193,500
18,500 Jacor Communications, Inc. * ..................... 1,406,000
-----------
3,599,500
-----------
REAL ESTATE INVESTMENT TRUST - 3.80%
32,300 Glenborough Realty Trust, Inc. ................... 549,100
82,500 U.S. Restaurant Properties, Inc. ................. 1,593,281
-----------
2,142,381
-----------
RECREATIONAL CENTERS - 3.41%
80,700 Bally Total Fitness Holding Corp.* ............... 1,926,713
-----------
RENTAL/AUTO EQUIPMENT - 3.19%
63,100 United Rentals, Inc.* ............................ 1,798,350
-----------
RETAIL - RESTAURANTS - 3.03%
67,000 Foodmaker, Inc.* ................................. 1,708,500
-----------
STEEL - 2.49%
237,000 Universal Stainless & Alloy Products, Inc.* ...... 1,407,188
-----------
TRANSPORT - 3.72%
36,000 Celadon Group, Inc.* ............................. 292,500
82,250 Varlen Corp. ..................................... 1,809,500
-----------
2,102,000
-----------
WIRELESS EQUIPMENT - 1.05%
37,500 DSP Communications, Inc.* ........................ 595,313
-----------
Total Common Stocks
(cost - $50,229,212) ........................... 53,697,606
-----------
PREFERRED STOCKS - 4.22%
DRUGS & HOSPITAL SUPPLIES - 2.49%
9,000 Global Pharmaceutical Corp. Convertible Series C*
(a) ............................................ 1,406,250
-----------
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------------
<C> <S> <C>
FOOD - MEAT PRODUCTS - 1.73%
7,000 Hibernia Foods plc - ADR Convertible Series A*
(b) ............................................ $ 972,222
-----------
Total Preferred Stocks
(cost - $1,600,000) ............................ 2,378,472
-----------
<CAPTION>
PRINCIPAL
AMOUNT
(000'S)
- ---------------
<C> <S> <C>
CORPORATE NOTE -- 0.83%
$ 466 Meicom Computers & Communications, Ltd. 6.00%,
07/07/03+,++
(cost - $466,000) .............................. 466,000
-----------
<CAPTION>
SHARES
- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENT -- 0.41%
234,211 Federated Investors, Trust for Short-Term U.S.
Government Securities**
(cost - $234,211) .............................. 234,211
-----------
Total Investments -- 100.61%
(cost - $52,529,423) ........................... 56,776,289
Liabilities in excess of other assets --
(0.61)% ........................................ (341,575 )
-----------
Net Assets -- 100.00% ............................ $56,434,714
-----------
-----------
</TABLE>
- ---------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund.
(a) Includes 225,000 shares of Series C warrants, with no market value.
(b) Includes 70,000 shares of Class E and Class F warrants, with no
market value.
+ As of March 31, 1999 the Porfolio committed to investing an
additional $699,000 of capital in Meicom Computers & Communications,
Ltd. Such investment will be made in equal payments of $233,000 on
the ninth, fifteenth and twenty-first month from the closing date
(July 28,1998).
++ Restricted and illiquid. See notes to financial statements.
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
THE BEAR STEARNS FUNDS
Focus List Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 95.05%
CONSUMER: WHOLESALE DISTRIBUTION - 4.17%
9,032 McKesson HBOC, Inc. .............................. $ 596,112
-----------
ENERGY: MAJOR OIL COMPANIES - 3.41%
12,000 Shell Transport & Trading Co. - ADR .............. 487,500
-----------
FINANCIAL SERVICES: GOVERNMENT-SPONSORED ENTERPRISES - 3.10%
6,400 Fannie Mae ....................................... 443,200
-----------
FINANCIAL SERVICES: LIFE INSURANCE - 2.85%
24,000 Clark/Bardes Holdings, Inc. * .................... 408,000
-----------
FINANCIAL SERVICES: MID-CAP BANKS - 2.45%
9,000 Summit Bancorp.+ ................................. 351,000
-----------
FOOD-MISCELLANEOUS/DIVERSIFIED - 0.05%
600 Vlasic Foods International Inc.*+ ................ 7,762
-----------
HEALTH CARE: MEDICAL PRODUCTS - 4.69%
16,000 Biomet, Inc. ..................................... 671,000
-----------
MEDIA COMMUNICATIONS: BROADCASTING - 4.87%
9,800 Time Warner Inc. ................................. 696,412
-----------
MEDIA COMMUNICATIONS: BROADCASTING
TELEVISION - 4.58%
16,000 CBS Corp.* ....................................... 655,000
-----------
MEDIA TELECOMMUNICATIONS: EUROPEAN TELECOMMUNICATION SERVICES -
9.50%
6,000 Telecom Italia SpA - ADR ......................... 626,250
3,900 Vodafone Group plc - ADR ......................... 732,225
-----------
1,358,475
-----------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
PHARMACEUTICALS - 3.19%
6,900 Warner-Lambert Co.+ .............................. $ 456,694
-----------
RETAIL - SPECIALTY DISCOUNT - 1.75%
10,000 Rite Aid Corp.+ .................................. 250,000
-----------
TECHNOLOGY: COMPUTER SCIENCES - 3.90%
12,200 Affiliated Computer Services, Inc. Class A* ...... 558,150
-----------
TECHNOLOGY: COMPUTER SERVICES - 9.53%
10,800 BISYS Group Inc. (The)* .......................... 607,500
18,000 National Data Corp. .............................. 756,000
-----------
1,363,500
-----------
TECHNOLOGY: COMPUTERS & OFFICE
EQUIPMENT - 8.22%
9,200 EMC Corp.* ....................................... 1,175,300
-----------
TECHNOLOGY: ELECTRONIC COMPONENTS - 4.07%
12,000 Solectron Corp. * ................................ 582,750
-----------
TECHNOLOGY: ENTERPRISE SOFTWARE - 3.43%
20,000 Project Software & Development, Inc.*+ ........... 490,000
-----------
TECHNOLOGY: INTERNET/NEWS MEDIA - 17.96%
17,600 America Online, Inc. * ........................... 2,569,600
-----------
TECHNOLOGY: SEMI CONDUCTORS - 3.33%
4,000 Intel Corp. ...................................... 476,500
-----------
Total Common Stocks (cost - $9,435,138) 13,596,955
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
THE BEAR STEARNS FUNDS
Focus List Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS -- 7.50%
INVESTMENT COMPANIES - 0.16%
3,264 Federated Automated Government Money Trust **+ ... $ 3,264
20,067 Federated Investors, Trust for Short-Term U.S.
Government Securities**+ ....................... 20,067
-----------
Total Investment Companies
(cost - $23,331)................................ 23,331
-----------
<CAPTION>
PRINCIPAL
AMOUNT
(000'S)
- ---------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY OBLIGATION - 7.34%
$1,050 Freddie Mac, Discount Notes, 4.800%, 04/01/99+
(cost - $1,050,000) ............................ 1,050,000
-----------
Total Short-Term Investments (cost -
$1,073,331)..................................... 1,073,331
-----------
Total Investments -- 102.55% (cost -
$10,508,469).................................... 14,670,286
Liabilities in excess of other assets -- (2.55)%.. (364,334)
-----------
Net Assets -- 100.00%............................. $14,305,952
-----------
-----------
</TABLE>
- ---------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund.
+ Not a Focus List Selection at March 31, 1999.
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
THE BEAR STEARNS FUNDS
Balanced Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
EQUITY SECURITIES -- 54.54%
ADVERTISING AGENCIES - 1.99%
4,100 WPP Group plc - ADR .............................. $ 354,650
-----------
AEROSPACE & DEFENSE - 1.98%
2,600 United Technologies Corp. ........................ 352,137
-----------
AUTOMOBILES - 2.20%
3,700 Ford Motor Co. ................................... 209,975
2,100 General Motors Corp. ............................. 182,437
-----------
392,412
-----------
AUTOMOTIVE PARTS & EQUIPMENT - 1.23%
7,600 Genuine Parts Co. ................................ 218,975
-----------
BANKS - 2.74%
7,300 Bank of New York Co., Inc. (The) ................. 262,344
3,200 BankAmerica Corp. ................................ 226,000
-----------
488,344
-----------
BROADCASTING - 0.17%
5,000 Four Media Co. ** ................................ 30,000
-----------
BUILDING & HOUSING - 0.10%
1,000 Giant Cement Holding, Inc.** ..................... 17,187
-----------
CHEMICALS - DIVERSIFIED - 1.10%
11,300 Solutia Inc. ..................................... 196,337
-----------
COMMERCIAL SERVICES - 2.38%
8,700 Dun & Bradstreet Corp. (The) ..................... 309,937
3,700 Steiner Leisure Ltd.* ............................ 113,775
-----------
423,712
-----------
COMMUNICATIONS - 0.58%
4,300 Data Transmission Network Corp.* ................. 102,662
-----------
COMPUTERS & OFFICE EQUIPMENT - 1.44%
4,800 Xerox Corp. ...................................... 256,200
-----------
CONSULTING SERVICES - 0.55%
4,300 Gartner Group, Inc.* ............................. 97,019
-----------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
CONTAINERS - METAL/GLASS - 1.04%
6,500 Crown Cork & Seal Co., Inc. ...................... $ 185,656
-----------
CREDIT & FINANCE - 2.54%
3,100 Fannie Mae ....................................... 214,675
5,700 SLM Holding Corp. ................................ 237,975
-----------
452,650
-----------
DIVERSIFIED OPERATIONS - 3.98%
2,300 General Electric Co. ............................. 254,437
7,000 Raychem Corp. .................................... 157,937
1,500 SPS Technologies, Inc.* .......................... 58,875
8,500 Viad Corp. ....................................... 236,406
-----------
707,655
-----------
DRUGS & HOSPITAL SUPPLIES - 2.78%
4,000 Baxter International, Inc. ....................... 264,000
3,600 Bristol-Myers Squibb Co. ......................... 231,525
-----------
495,525
-----------
ELECTRIC HOUSEWARES & FANS - 0.51%
13,000 Windmere-Durable Holdings Inc.* .................. 91,000
-----------
ELECTRICAL EQUIPMENT - 1.33%
5,500 Grainger (W.W.), Inc. ............................ 236,844
-----------
ELECTRICITY - 0.66%
2,200 FPL Group, Inc. .................................. 117,150
-----------
FINANCIAL SERVICES - 3.26%
4,700 Citigroup Inc. ................................... 300,212
5,900 H&R Block, Inc. .................................. 279,512
-----------
579,724
-----------
HOTELS & MOTELS - 0.81%
9,800 U. S. Franchise System, Inc.* .................... 143,325
-----------
HOUSEHOLD PRODUCTS - 1.39%
7,200 Dial Corp. (The) ................................. 247,500
-----------
HUMAN RESOURCES - 0.45%
4,400 Butler International, Inc.* ...................... 80,850
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
THE BEAR STEARNS FUNDS
Balanced Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
EQUITY SECURITIES (CONTINUED)
<TABLE>
<C> <S> <C>
LIFE/HEALTH INSURANCE - 3.69%
2,700 Aon Corp. ........................................ $ 170,775
4,100 Equitable Companies Inc. (The) ................... 287,000
6,300 Torchmark Corp. .................................. 199,238
-----------
657,013
-----------
NON-FERROUS METALS - 0.43%
3,400 Mueller Industries, Inc.* ........................ 76,075
-----------
OIL COMPANIES - INTEGRATED - 3.74%
3,000 Atlantic Richfield Co. ........................... 219,000
2,800 Exxon Corp. ...................................... 197,575
4,400 Texaco, Inc. ..................................... 249,700
-----------
666,275
-----------
PAPER & PAPER RELATED PRODUCTS - 1.51%
5,600 Kimberly-Clark Corp. ............................. 268,450
-----------
RADIO - 1.14%
1,000 Cox Radio, Inc., Class A* ........................ 51,250
2,000 Jacor Communications, Inc.* ...................... 152,000
-----------
203,250
-----------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
RETAIL - RESTAURANTS - 3.69%
7,200 McDonald's Corp. ................................. $ 326,250
11,600 Wendy's International, Inc. ...................... 329,875
-----------
656,125
-----------
SAVINGS & LOAN - 1.48%
6,450 Washington Mutual, Inc. .......................... 263,644
-----------
TELECOMMUNICATIONS - 1.35%
5,100 SBC Communications, Inc. ......................... 240,338
-----------
TELEPHONE - LONG DISTANCE - 1.35%
3,000 AT&T Corp. ....................................... 239,438
-----------
TOBACCO - 0.95%
4,800 Philip Morris Cos. Inc. .......................... 168,900
-----------
Total Equity Securities
(cost - $8,626,451) ............................ 9,707,022
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE DATE
- --------------- ------------- ------------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS -- 44.58%
CORPORATE OBLIGATIONS - 18.16%
BANKS - 2.04%
$ 100 Firstar Bank Milwaukee, Senior Notes ............. 6.250% 12/01/02 102,000
250 NationsBank Corp., Senior Notes .................. 7.000 05/15/03 260,938
-----------
362,938
-----------
FINANCIAL - 1.44%
100 Associates Corp. N.A., Senior Notes .............. 6.625 06/15/05 103,000
75 International Lease Finance Corp. ................ 6.125 11/01/99 75,352
75 Morgan Stanley Dean Witter ....................... 6.750 03/04/03 77,250
-----------
255,602
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
THE BEAR STEARNS FUNDS
Balanced Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE(S) DATE(S) VALUE
- -------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
</TABLE>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
<TABLE>
<C> <S> <C> <C> <C>
FOOD & BEVERAGES - 3.57%
$ 75 Anheuser Busch Cos. Inc. ......................... 6.750% 06/01/05 $ 76,313
200 Heinz (H. J.) Co. ................................ 6.000 03/15/08 200,750
150 Hershey Foods Co. ................................ 6.700 10/01/05 157,313
200 Sara Lee Corp. ................................... 6.150 06/19/08 201,500
-----------
635,876
-----------
INDUSTRIAL - 10.25%
200 American Home Products ........................... 7.900 02/15/05 218,000
250 Dow Chemical Co. ................................. 8.625 04/01/06 275,938
250 Du Pont (E. I.) de Nemours Co. ................... 6.750 09/01/07 263,125
200 Enron Oil & Gas .................................. 6.700 11/15/06 204,750
100 Gap, Inc. ........................................ 6.900 09/15/07 105,875
75 Hoechst-Celanese Corp. ........................... 6.125 02/01/04 76,219
75 Pepsico Inc. ..................................... 5.750 01/02/03 75,094
200 Tribune Co. ...................................... 5.500 10/06/08 184,500
150 Union Camp Corp. ................................. 6.500 11/15/07 151,875
250 Wheeling Pittsburgh Corp. ........................ 9.375 11/15/03 268,438
-----------
1,823,814
-----------
UTILITY - ELECTRIC - 0.86%
75 Central Power & Light Co., Series 93-G ........... 6.875 02/01/03 77,531
75 Pacific Gas & Electric Co., Series FF ............ 6.250 03/01/04 76,219
-----------
153,750
-----------
Total Corporate Obligations (cost -
$3,265,549) ...................................... 3,231,980
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 20.85%
FANNIE MAE - 8.46%
1,493 Fannie Mae ....................................... 6.000-8.000 12/01/08-06/01/28 1,506,944
-----------
FREDDIE MAC - 5.45%
974 Freddie Mac ...................................... 5.125-7.000 08/22/05-05/01/26 969,200
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 6.94%
1,203 Government National Mortgage Association ......... 6.000-8.500 07/15/17-06/15/28 1,235,022
-----------
Total U.S. Government Agency Obligations (cost -
$3,736,109) ...................................... 3,711,166
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
THE BEAR STEARNS FUNDS
Balanced Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE(S) DATE(S) VALUE
- -------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
</TABLE>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
<TABLE>
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 5.57%
U.S. TREASURY NOTES - 5.57%
$ 950 U.S. Treasury Notes (cost - $979,563) ............ 5.625-6.500% 02/15/06-08/15/23 $ 990,266
-----------
Total Long-Term Debt Investments (cost -
$7,981,221) ...................................... 7,933,412
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENT -- 2.41%
INVESTMENT COMPANY - 2.41%
428,831 Federated Investors, Trust for Short-Term U.S. Government Securities** (cost -
$428,831) .......................................................................... 428,831
-----------
Total Investments -- 101.53% (cost - $17,036,503) .................................... 18,069,265
Liabilities in excess of other assets -- (1.53)% ..................................... (271,595)
-----------
Net Assets -- 100.00% ................................................................ $17,797,670
-----------
-----------
</TABLE>
- ---------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund.
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
THE BEAR STEARNS FUNDS
International Equity Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 101.83%
AUSTRALIA - 4.47%
BREWERY - 0.97%
47,500 Foster's Brewing Group Ltd. ...................... $ 139,213
-----------
COMMERCIAL BANKS-PACIFIC RIM - 1.57%
12,500 National Australia Bank Ltd. ..................... 226,156
-----------
FINANCE-OTHER SERVICES - 1.24%
14,000 Lend Lease Corp. Ltd.+ ........................... 177,625
-----------
RETAIL-MISCELLANEOUS/DIVERSIFIED - 0.69%
18,400 Coles Myer Ltd. .................................. 99,429
-----------
Total Australia (cost - $619,858) ................ 642,423
-----------
FINLAND - 6.46%
TELECOMMUNICATION EQUIPMENT - 5.49%
4,900 Nokia Oyj, Class A ............................... 788,736
-----------
TELEPHONE-INTEGRATED - 0.97%
8,400 Sonera Group Oyj* ................................ 139,655
-----------
Total Finland (cost - $558,302) 928,391
-----------
FRANCE - 16.54%
COMPUTER-INTEGRATED SYSTEMS - 1.22%
2,300 Equant NV* ....................................... 174,807
-----------
COMPUTER SERVICES - 2.72%
2,333 Cap Gemini SA .................................... 390,647
-----------
COSMETICS & TOILETRIES - 1.10%
250 L'OREAL .......................................... 158,159
-----------
DIVERSIFIED OPERATIONS - 1.88%
1,100 Vivendi .......................................... 270,642
-----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS - 1.31%
1,900 STMicroelectronics NV* ........................... 188,609
-----------
FOOD-RETAIL - 0.64%
150 Promodes ......................................... 91,657
-----------
MEDICAL-DRUGS - 1.74%
1,100 Sanofi SA ........................................ 185,257
300 Synthelabo SA .................................... 65,261
-----------
250,518
-----------
MONEY CENTER BANKS - 0.37%
600 Banque Nationale de Paris ........................ 52,209
-----------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
FRANCE (CONTINUED)
<TABLE>
<C> <S> <C>
MULTI-LINE INSURANCE - 1.75%
1,900 Axa .............................................. $ 251,889
-----------
OIL COMPANIES-INTEGRATED - 0.38%
400 Elf Aquitaine SA ................................. 54,325
-----------
TELEPHONE-INTEGRATED - 1.03%
1,835 France Telecom SA ................................ 148,380
-----------
TELEVISION - 1.63%
800 Canal Plus ....................................... 234,486
-----------
WATER - 0.77%
600 Suez Lyonnaise des Eaux SA ....................... 111,025
-----------
Total France (cost - $2,219,488) ................. 2,377,353
-----------
GERMANY - 3.75%
DIVERSIFIED OPERATIONS - 0.36%
100 Preussag AG ...................................... 52,144
-----------
MACHINERY - GENERAL INDUSTRY - 2.76%
3,200 Mannesmann AG .................................... 396,943
-----------
REINSURANCE - 0.01%
8 Muenchener Rueckversicherungs-Gesellschaft AG-New
Registered Shares* ............................. 1,576
8 Muenchener Rueckversicherungs-Gesellschaft AG
Registered Shares .............................. 1,596
8 Muenchener Rueckversicherungs-Gesellschaft AG,
Warrants* ...................................... 292
-----------
3,464
-----------
TELEPHONE-INTEGRATED - 0.62%
2,200 Deutsche Telekom AG .............................. 88,472
-----------
Total Germany (cost - $413,847) .................. 541,023
-----------
HONG KONG - 3.48%
DIVERSIFIED OPERATIONS - 0.44%
8,000 Hutchison Whampoa Ltd. ........................... 62,971
-----------
MONEY CENTER BANKS - 1.57%
7,200 HSBC Holdings plc ................................ 225,768
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
THE BEAR STEARNS FUNDS
International Equity Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
COMMON STOCKS (CONTINUED)
HONG KONG (CONTINUED)
<TABLE>
<C> <S> <C>
REAL ESTATE DEVELOPMENT - 1.47%
14,000 Cheung Kong (Holdings) Ltd. ...................... $ 106,587
14,000 Sun Hung Kai Properties Ltd. ..................... 104,780
-----------
211,367
-----------
Total Hong Kong (cost - $463,562) ................ 500,106
-----------
IRELAND - 1.77%
COMMERCIAL BANKS-EUROPE - 1.33%
9,200 Bank of Ireland .................................. 191,958
-----------
DRUG DELIVERY SYSTEMS - 0.44%
900 Elan Corp. plc, ADR .............................. 62,775
-----------
Total Ireland (cost - $239,116) .................. 254,733
-----------
ITALY - 4.49%
CELLULAR TELECOMMUNICATIONS - 1.16%
24,800 Telecom Italia Mobile SpA ........................ 166,801
-----------
GAS-DISTRIBUTION - 0.73%
21,600 Italgas SpA ...................................... 104,936
-----------
MONEY CENTER BANKS - 0.27%
2,404 Instituto Bancario San Paolo di Torino ........... 39,060
-----------
MULTI-LINE INSURANCE - 1.14%
4,100 Assicurazioni Generali SpA ....................... 164,216
-----------
TELEVISION - 1.19%
18,100 Mediaset SpA* .................................... 170,198
-----------
Total Italy (cost - $608,440) 645,211
-----------
JAPAN - 22.81%
AUDIO/VIDEO PRODUCTS - 1.99%
3,100 Sony Corp. ....................................... 286,625
-----------
AUTO-CARS/LIGHT TRUCKS - 0.31%
1,000 Honda Motor Co., Ltd. ............................ 45,174
-----------
BREWERY - 0.57%
7,000 Kirin Brewery Co., Ltd. .......................... 82,040
-----------
CELLULAR TELECOMMUNICATIONS - 2.06%
600 NTT Mobile Communications Network, Inc. .......... 296,378
-----------
COMPUTER-INTEGRATED SYSTEMS - 1.56%
14,000 Fujitsu Ltd. ..................................... 224,842
-----------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
JAPAN (CONTINUED)
<TABLE>
<C> <S> <C>
COSMETICS & TOILETRIES - 2.61%
17,000 Kao Corp. ........................................ $ 375,369
-----------
DISTRIBUTION/WHOLESALE - 0.47%
600 Softbank Corp. ................................... 67,280
-----------
ELECTRONIC COMPONENTS-MISCELLANEOUS - 2.74%
6,000 Murata Manufacturing Co., Ltd. ................... 319,176
11,000 Toshiba Corp. .................................... 75,141
-----------
394,317
-----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS - 2.16%
6,000 Tokyo Electron, Ltd. ............................. 310,563
-----------
ELECTRONIC MEASUREMENT INSTRUMENTS - 0.31%
300 Keyence Corp. .................................... 44,837
-----------
FINANCE-INVESTMENT BANKING/BROKERAGE - 0.39%
12,000 The Nikko Securities Co., Ltd. ................... 55,729
-----------
MEDICAL-DRUGS - 2.70%
10,000 Takeda Chemical Industries ....................... 387,571
-----------
MONEY CENTER BANKS - 0.58%
6,000 Bank of Tokyo-Mitsubishi, Ltd. ................... 82,682
-----------
OPTICAL SUPPLIES - 0.79%
2,000 Hoya Corp. ....................................... 113,485
-----------
PHOTO EQUIPMENT & SUPPLIES - 0.42%
5,000 Nikon Corp. ...................................... 60,795
-----------
REAL ESTATE DEVELOPMENT - 0.38%
6,000 Mitsui Fudosan Co., Ltd. ......................... 54,057
-----------
RETAIL-MISCELLANEOUS/DIVERSIFIED - 0.89%
2,000 Ito Yokado Co., Ltd. ............................. 128,684
-----------
TELECOMMUNICATION EQUIPMENT - 1.88%
4,000 Matsushita Electric Industrial Co., Ltd. ......... 270,539
-----------
Total Japan (cost - $2,926,124) .................. 3,280,967
-----------
NETHERLANDS - 6.72%
BREWERY - 0.95%
2,700 Heineken NV ...................................... 136,125
-----------
COMPUTER-INTEGRATED SYSTEMS - 1.75%
5,500 ASM Lithography Holding NV* ...................... 251,463
-----------
FOOD-RETAIL - 0.50%
1,900 Koninkllijke Ahold NV ............................ 72,818
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
THE BEAR STEARNS FUNDS
International Equity Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
COMMON STOCKS (CONTINUED)
NETHERLANDS (CONTINUED)
<TABLE>
<C> <S> <C>
MULTI-LINE INSURANCE - 1.88%
2,000 Aegon NV ......................................... $ 182,558
2,300 Fortis (NL) NV ................................... 88,272
-----------
270,830
-----------
PUBLISHING-PERIODICALS - 1.64%
1,300 Wolters Kluwer NV ................................ 235,782
-----------
Total Netherlands (cost - $945,100) .............. 967,018
-----------
SINGAPORE - 1.13%
PUBLISHING-NEWSPAPERS - 0.77%
10,000 Singapore Press Holdings Ltd. .................... 110,501
-----------
REAL ESTATE DEVELOPMENT - 0.36%
10,000 City Developments Ltd. ........................... 52,069
-----------
Total Singapore (cost - $155,421) ................ 162,570
-----------
SPAIN - 0.33%
ELECTRIC-INTEGRATED - 0.33%
1,900 Endesa SA (cost - $52,332) ....................... 47,957
-----------
SWEDEN - 0.95%
RETAIL-APPAREL/SHOE - 0.52%
1,000 Hennes & Mauritz AB .............................. 75,398
-----------
TELECOMMUNICATION EQUIPMENT - 0.43%
2,600 Telefonaktiebolaget LM Ericsson, ADR ............. 61,912
-----------
Total Sweden (cost - $148,992) ................... 137,310
-----------
SWITZERLAND - 3.60%
MEDICAL-DRUGS - 3.06%
36 Roche Holding AG ................................. 439,010
-----------
TELEPHONE-INTEGRATED - 0.54%
200 Swisscom AG* ..................................... 78,100
-----------
Total Switzerland (cost - $475,529) .............. 517,110
-----------
UNITED KINGDOM - 24.47%
CABLE TV - 1.49%
49,300 TeleWest Communications plc Ord 10p* ............. 213,886
-----------
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
UNITED KINGDOM (CONTINUED)
<TABLE>
<C> <S> <C>
CELLULAR TELECOMMUNICATIONS - 5.28%
17,200 Orange plc Ord 20p* .............................. $ 240,594
27,900 Vodafone Group plc Ord 5p ........................ 518,402
-----------
758,996
-----------
COMPUTER SERVICES - 2.05%
28,500 Logica plc Ord 10p ............................... 294,220
-----------
DIVERSIFIED OPERATIONS - 0.51%
3,600 Granada Group plc Ord 25p ........................ 72,935
-----------
FOOD-MISCELLANEOUS/DIVERSIFIED - 0.57%
5,700 Cadbury Schweppes plc Ord 25p .................... 82,722
-----------
MUTI-LINE INSURANCE - 0.35%
3,800 Allied Zurich plc Ord 25p ........................ 51,222
-----------
MEDICAL-DRUGS - 4.70%
13,500 Glaxo Wellcome plc Ord 25p ....................... 452,426
15,500 SmithKline Beecham plc Ord 6.25p ................. 223,570
-----------
675,996
-----------
MULTIMEDIA - 1.01%
9,900 Reuters Group plc Ord 25p ........................ 145,433
-----------
RETAIL-CONSUMER ELECTRONICS - 1.27%
8,600 Dixons Group plc Ord 10p ......................... 182,285
-----------
RETAIL-MAJOR DEPARTMENT STORES - 0.97%
11,100 Kingfisher plc Ord 25p ........................... 139,946
-----------
TELECOMMUNICATION SERVICES - 4.55%
6,400 Cable & Wireless Communications plc Ord 25p* ..... 72,579
20,000 Cable & Wireless plc Ord 25p ..................... 249,895
18,400 COLT Telecom Group plc Ord 25p* .................. 331,489
-----------
653,963
-----------
TELEPHONE-INTEGRATED - 1.12%
9,900 British Telecommunications plc Ord 25p ........... 161,575
-----------
TELEVISION - 0.60%
8,700 Carlton Communications plc Ord 5p ................ 85,882
-----------
Total United Kingdom (cost - $2,869,317) ......... 3,519,061
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
THE BEAR STEARNS FUNDS
International Equity Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
COMMON STOCKS (CONTINUED)
<TABLE>
<C> <S> <C>
UNITED STATES - 0.86%
TELECOMMUNICATION SERVICES - 0.86%
2,200 Global TeleSystems Group, Inc.* (cost -
$140,945) ...................................... $ 123,062
-----------
Total Investments -- 101.83%
(cost - $12,836,373) ........................... 14,644,295
Liabilities in excess of other assets --
(1.83)% ........................................ (262,701)
-----------
Net Assets -- 100.00% ............................ $14,381,594
-----------
-----------
</TABLE>
- ---------
ADR American Depositary Receipts.
* Non-income producing security.
+ Not readily marketable security.
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
THE BEAR STEARNS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1999
<TABLE>
<CAPTION>
LARGE CAP SMALL CAP INTERNATIONAL
S&P STARS THE INSIDERS VALUE VALUE FOCUS LIST BALANCED EQUITY
PORTFOLIO SELECT FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost -
$300,437,498, $38,660,131,
$16,494,839, $52,529,423,
$10,508,469, $17,036,503 and
$12,836,373, respectively)... $409,454,365 $45,468,125 $21,840,789 $56,776,289 $14,670,286 $18,069,265 $14,644,295
Receivable for Portfolio shares
sold......................... 4,145,215 65,757 7,686 120,349 65,481 399,216 12,049
Receivable for investments
sold......................... -- 349,034 209,420 361,535 -- 494,394 65,152
Dividends, interest and
reclaims receivable, if
any.......................... 138,348 24,149 29,254 33,776 570 129,924 66,328
Receivable from investment
adviser...................... -- 9,266 19,883 2,087 42,591 12,845 18,127
Deferred organization expenses
and other assets............. 78,081 85,921 63,271 44,992 59,534 70,910 86,620
------------ ------------ ----------- ----------- ----------- ----------- -------------
Total assets............. 413,816,009 46,002,252 22,170,303 57,339,028 14,838,462 19,176,554 14,892,571
------------ ------------ ----------- ----------- ----------- ----------- -------------
LIABILITIES
Payable for investments
purchased.................... 6,594,616 -- -- 223,110 -- 245,766 90,169
Payable for Portfolio shares
repurchased.................. 804,320 199,547 495,156 509,658 438,592 1,040,013 263,818
Distribution and service fees
payable (Class A, B and C
shares)...................... 523,031 82,171 30,203 64,200 5,795 13,654 25,034
Administration fee payable..... 48,776 5,783 2,385 7,269 13,277 21,994 1,853
Advisory fee payable........... 89,454 -- -- -- -- -- --
Custodian fee payable.......... 3,012 1,990 1,860 2,048 1,984 2,715 2,715
Accrued expenses............... 167,051 75,669 62,184 98,029 72,862 54,742 127,388
------------ ------------ ----------- ----------- ----------- ----------- -------------
Total liabilities........ 8,230,260 365,160 591,788 904,314 532,510 1,378,884 510,977
------------ ------------ ----------- ----------- ----------- ----------- -------------
NET ASSETS
Capital stock, $0.001 par value
(unlimited shares of
beneficial interest
authorized).................. 16,677 2,700 1,096 3,150 830 1,356 952
Paid-in capital................ 297,448,381 38,381,782 15,587,297 51,922,283 10,796,725 16,896,112 12,550,363
Undistributed net investment
income....................... -- 9,925 17,215 -- -- 36,656 --
Accumulated net realized
gain/(loss) from investments,
securities sold short,
options and foreign currency
related transactions, if
any.......................... (896,176) 434,691 626,957 262,415 (653,420) (169,216) 23,183
Net unrealized appreciation on
investments and foreign
currency related
transactions, if any......... 109,016,867 6,807,994 5,345,950 4,246,866 4,161,817 1,032,762 1,807,096
------------ ------------ ----------- ----------- ----------- ----------- -------------
Net assets............... $405,585,749 $45,637,092 $21,578,515 $56,434,714 $14,305,952 $17,797,670 $14,381,594
------------ ------------ ----------- ----------- ----------- ----------- -------------
------------ ------------ ----------- ----------- ----------- ----------- -------------
CLASS A
Net assets..................... $206,129,846 $24,395,124 $ 9,676,843 $18,520,271 $ 6,541,656 $ 4,494,523 $ 8,299,250
------------ ------------ ----------- ----------- ----------- ----------- -------------
Shares of beneficial interest
outstanding.................. 8,452,791 1,433,442 490,131 1,032,811 377,779 342,738 548,148
------------ ------------ ----------- ----------- ----------- ----------- -------------
Net asset value per share...... $24.39 $17.02 $19.74 $17.93 $17.32 $13.11 $15.14
------------ ------------ ----------- ----------- ----------- ----------- -------------
------------ ------------ ----------- ----------- ----------- ----------- -------------
Maximum offering price per
share (net asset value plus
sales charge. of 5.50%* of
the offering price) $25.81 $18.01 $20.89 $18.97 $18.33 $13.87 $16.02
------------ ------------ ----------- ----------- ----------- ----------- -------------
------------ ------------ ----------- ----------- ----------- ----------- -------------
CLASS B
Net assets..................... $ 49,319,024 $ 8,426,271 $ 1,910,667 $ 2,715,882 $ 4,460,389 $ 1,810,940 $ 3,156,097
------------ ------------ ----------- ----------- ----------- ----------- -------------
Shares of beneficial interest
outstanding.................. 2,045,745 503,013 97,921 153,345 259,683 138,506 209,734
------------ ------------ ----------- ----------- ----------- ----------- -------------
Net asset value and offering
price per share**............ $24.11 $16.75 $19.51 $17.71 $17.18 $13.07 $15.05
------------ ------------ ----------- ----------- ----------- ----------- -------------
------------ ------------ ----------- ----------- ----------- ----------- -------------
CLASS C
Net assets..................... $ 97,653,820 $11,902,023 $ 5,250,027 $11,111,814 $ 3,303,907 $ 1,089,141 $ 2,926,247
------------ ------------ ----------- ----------- ----------- ----------- -------------
Shares of beneficial interest
outstanding.................. 4,052,356 710,975 268,231 627,714 192,252 83,326 194,435
------------ ------------ ----------- ----------- ----------- ----------- -------------
Net asset value and offering
price per share**............ $24.10 $16.74 $19.57 $17.70 $17.19 $13.07 $15.05
------------ ------------ ----------- ----------- ----------- ----------- -------------
------------ ------------ ----------- ----------- ----------- ----------- -------------
CLASS Y
Net assets..................... $ 52,483,059 $ 913,674 $ 4,740,978 $24,086,747 -- $10,403,066 --
------------ ------------ ----------- ----------- ----------- ----------- -------------
Shares of beneficial interest
outstanding.................. 2,126,974 52,708 239,739 1,336,066 -- 790,505 --
------------ ------------ ----------- ----------- ----------- ----------- -------------
Net asset value, offering and
redemption price per share... $24.68 $17.33 $19.78 $18.03 -- $13.16 --
------------ ------------ ----------- ----------- ----------- ----------- -------------
------------ ------------ ----------- ----------- ----------- ----------- -------------
</TABLE>
- ------------
*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.
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
THE BEAR STEARNS FUNDS
STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
LARGE CAP SMALL CAP INTERNATIONAL
S&P STARS THE INSIDERS VALUE VALUE FOCUS LIST BALANCED EQUITY
PORTFOLIO SELECT FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ---------- ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends...................... $ 1,860,735 $ 635,657 $ 404,467 $ 386,833 $ 56,372 $ 132,157 $ 169,273
Interest....................... 188,648 225,148 52,123 212,916 25,252 469,275 64,793
Less: Foreign taxes
withheld................. (13,168) (1,432) (389) -- -- (106) (28,803)
----------- ------------ ---------- ------------ ---------- ---------- --------------
2,036,215 859,373 456,201 599,749 81,624 601,326 205,263
----------- ------------ ---------- ------------ ---------- ---------- --------------
EXPENSES
Advisory fees.................. 2,007,915 365,355 165,850 497,109 63,550 101,976 114,148
Distribution and service fees -
Class A...................... 682,524 124,069 46,716 111,413 21,863 23,454 30,684
Distribution and service fees -
Class B...................... 193,055 68,310 12,841 21,972 31,426 14,094 26,946
Distribution and service fees -
Class C...................... 714,370 130,390 55,531 151,596 22,616 9,368 25,834
Transfer agent fees and
expenses..................... 312,232 153,830 105,546 147,323 88,287 88,841 76,008
Accounting fees................ 256,593 127,397 100,173 147,784 50,847 64,618 55,768
Administration fees............ 401,582 68,666 33,079 99,413 14,665 23,533 17,122
Federal and state registration
fees......................... 89,021 40,052 45,244 67,262 83,256 83,156 80,168
Legal and auditing fees........ 132,727 48,966 44,610 49,874 37,178 32,852 20,133
Custodian fees and expenses.... 46,170 24,999 11,001 28,711 13,555 15,817 27,725
Amortization of organization
expenses..................... 40,719 36,120 15,695 21,604 8,080 11,757 12,202
Reports and notices to
shareholders................. 81,501 11,819 10,132 19,999 -- 1,038 289
Insurance expenses............. 7,531 6,911 6,080 6,326 6,261 6,263 6,261
Trustees' fees and expenses.... 4,991 3,941 4,055 3,001 4,103 3,311 3,450
Other.......................... 75,673 3,219 3,094 6,488 393 323 666
----------- ------------ ---------- ------------ ---------- ---------- --------------
Total expenses before
waivers and related
reimbursements........... 5,046,604 1,214,044 659,647 1,379,875 446,080 480,401 497,404
Less: waivers and related
reimbursements........... (716,763) (364,596) (322,961) (429,559) (281,791) (326,219) (271,159)
----------- ------------ ---------- ------------ ---------- ---------- --------------
Total expenses after
waivers and related
reimbursements........... 4,329,841 849,448 336,686 950,316 164,289 154,182 226,245
----------- ------------ ---------- ------------ ---------- ---------- --------------
Net investment income/(loss)... (2,293,626) 9,925 119,515 (350,567) (82,665) 447,144 (20,982)
----------- ------------ ---------- ------------ ---------- ---------- --------------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) from:
Investments.................. 4,870,089 446,891 1,012,884 279,839 (653,420) (169,216) 42,889
Option transactions.......... 1,430,342 -- -- -- -- -- --
Securities sold short........ (1,205,082) (12,202) -- (17,427) -- -- --
Foreign currency related
transactions............... -- -- -- -- -- -- (26,898)
Net change in unrealized
appreciation on:
Investments.................. 69,260,476 (424,713) (291,673) (15,312,529) 3,662,162 426,454 896,709
Foreign currency related
transactions............... -- -- -- -- -- -- (48,161)
----------- ------------ ---------- ------------ ---------- ---------- --------------
Net realized and unrealized
gain/(loss) on investments... 74,355,825 9,976 721,211 (15,050,117) 3,008,742 257,238 864,539
----------- ------------ ---------- ------------ ---------- ---------- --------------
NET INCREASE/(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS...................... $72,062,199 $ 19,901 $ 840,726 $(15,400,684) $2,926,077 $ 704,382 $ 843,557
----------- ------------ ---------- ------------ ---------- ---------- --------------
----------- ------------ ---------- ------------ ---------- ---------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
(This page has been left blank intentionally.)
41
<PAGE>
THE BEAR STEARNS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
S&P STARS PORTFOLIO THE INSIDERS SELECT FUND LARGE CAP VALUE PORTFOLIO
------------------------------- ------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1999 MARCH 31, 1998
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE)
IN NET ASSETS FROM
OPERATIONS
Net investment
income/(loss)... $ (2,293,626) $ (1,516,182) $ 9,925 $ (31,926) $ 119,515 $ 81,316
Net realized
gain/(loss) on
investments..... 5,095,349 20,429,272 434,689 6,125,491 1,012,884 2,468,368
Net change in
unrealized
appreciation.... 69,260,476 37,801,568 (424,713) 4,989,395 (291,673) 4,011,497
-------------- -------------- -------------- -------------- -------------- --------------
Net
increase/(decrease)
in net assets
resulting from
operations...... 72,062,199 56,714,658 19,901 11,082,960 840,726 6,561,181
-------------- -------------- -------------- -------------- -------------- --------------
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment
income
Class A
shares........ -- -- -- -- (52,112) (6,738)
Class B
shares........ -- -- -- -- (4,736) --
Class C
shares........ -- -- -- -- (3,697) --
Class Y
shares........ -- -- -- -- (58,015) (66,694)
-------------- -------------- -------------- -------------- -------------- --------------
-- -- -- -- (118,560) (73,432)
-------------- -------------- -------------- -------------- -------------- --------------
Net realized
capital gains
Class A
shares........ (6,112,211) (12,011,452) (1,358,815) (2,877,613) (807,345) (1,061,580)
Class B
shares........ (944,991) -- (434,161) -- (114,321) --
Class C
shares........ (3,004,046) (7,215,795) (675,728) (1,511,446) (474,805) (688,493)
Class Y
shares........ (1,819,866) (3,784,124) (54,124) (272,772) (487,820) (1,872,935)
-------------- -------------- -------------- -------------- -------------- --------------
(11,881,114) (23,011,371) (2,522,828) (4,661,831) (1,884,291) (3,623,008)
-------------- -------------- -------------- -------------- -------------- --------------
SHARES OF BENEFICIAL
INTEREST
Net proceeds from
the sale of
shares.......... 370,960,712 85,871,383 26,721,919 13,066,709 9,602,484 8,081,705
Cost of shares
repurchased..... (250,991,253) (46,357,215) (18,667,292) (11,007,952) (9,537,890) (7,019,459)
Shares issued in
reinvestment of
dividends....... 11,062,277 21,279,449 2,358,103 4,312,328 1,621,941 3,045,286
-------------- -------------- -------------- -------------- -------------- --------------
Net
increase/(decrease)
in net assets
derived from
shares of
beneficial
interest
transactions.... 131,031,736 60,793,617 10,412,730 6,371,085 1,686,535 4,107,532
-------------- -------------- -------------- -------------- -------------- --------------
Total
increase/(decrease)
in net assets... 191,212,821 94,496,904 7,909,803 12,792,214 524,410 6,972,273
NET ASSETS
Beginning of
period.......... 214,372,928 119,876,024 37,727,289 24,935,075 21,054,105 14,081,832
-------------- -------------- -------------- -------------- -------------- --------------
End of period**... $ 405,585,749 $214,372,928 $ 45,637,092 $37,727,289 $21,578,515 $ 21,054,105
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
</TABLE>
- ----------
* Commencement of operations.
** Includes undistributed net investment income as follows:
<TABLE>
<CAPTION>
FOR THE FISCAL
YEAR/PERIOD ENDED
MARCH 31, 1999 MARCH 31, 1998
---------------- ----------------
<S> <C> <C>
The Insiders Select Fund............ $ 9,925 --
Large Cap Value Portfolio........... 17,215 $ 16,260
Balanced Portfolio.................. 36,656 16,766
International Equity Portfolio...... -- 2,461
</TABLE>
The accompanying notes are an integral part of the financial statements.
42
<PAGE>
<TABLE>
<CAPTION>
FOCUS LIST PORTFOLIO BALANCED PORTFOLIO
SMALL CAP VALUE PORTFOLIO ------------------------------- -------------------------------
------------------------------- FOR THE PERIOD FOR THE PERIOD
FOR THE FOR THE FOR THE DECEMBER 29, FOR THE DECEMBER 29,
FISCAL YEAR FISCAL YEAR FISCAL YEAR 1997* FISCAL YEAR 1997*
ENDED ENDED ENDED THROUGH ENDED THROUGH
MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1999 MARCH 31, 1998
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE)
IN NET ASSETS FROM
OPERATIONS
Net investment
income/(loss)... $ (350,567) $ (363,627) $ (82,665) $ (5,316) $ 447,144 $ 47,628
Net realized
gain/(loss) on
investments..... 262,412 8,869,769 (653,420) 22,342 (169,216) 12,323
Net change in
unrealized
appreciation.... (15,312,529) 13,475,276 3,662,162 499,655 426,454 606,308
-------------- -------------- -------------- -------------- -------------- --------------
Net
increase/(decrease)
in net assets
resulting from
operations...... (15,400,684) 21,981,418 2,926,077 516,681 704,382 666,259
-------------- -------------- -------------- -------------- -------------- --------------
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment
income
Class A
shares........ -- -- -- -- (121,594) (10,210)
Class B
shares........ -- -- -- -- (32,964) (2,353)
Class C
shares........ -- -- -- -- (21,505) (1,857)
Class Y
shares........ -- -- -- -- (251,191) (16,442)
-------------- -------------- -------------- -------------- -------------- --------------
-- -- -- -- (427,254) (30,862)
-------------- -------------- -------------- -------------- -------------- --------------
Net realized
capital gains
Class A
shares........ (1,150,703) (1,714,612) (7,560) -- (3,931) --
Class B
shares........ (141,517) -- (5,323) -- (1,206) --
Class C
shares........ (714,120) (1,249,650) (4,143) -- (703) --
Class Y
shares........ (1,268,782) (1,869,317) -- -- (6,483) --
-------------- -------------- -------------- -------------- -------------- --------------
(3,275,122) (4,833,579) (17,026) -- (12,323) --
-------------- -------------- -------------- -------------- -------------- --------------
SHARES OF BENEFICIAL
INTEREST
Net proceeds from
the sale of
shares.......... 45,379,051 26,127,616 7,301,185 7,046,653 8,698,719 10,954,435
Cost of shares
repurchased..... (48,453,172) (13,322,599) (3,208,556) (275,794) (2,836,127) (166,905)
Shares issued in
reinvestment of
dividends....... 2,949,510 4,344,751 16,732 -- 230,561 16,785
-------------- -------------- -------------- -------------- -------------- --------------
Net
increase/(decrease)
in net assets
derived from
shares of
beneficial
interest
transactions.... (124,611) 17,149,768 4,109,361 6,770,859 6,093,153 10,804,315
-------------- -------------- -------------- -------------- -------------- --------------
Total
increase/(decrease)
in net assets... (18,800,417) 34,297,607 7,018,412 7,287,540 6,357,958 11,439,712
NET ASSETS
Beginning of
period.......... 75,235,131 40,937,524 7,287,540 -- 11,439,712 --
-------------- -------------- -------------- -------------- -------------- --------------
End of period**... $ 56,434,714 $ 75,235,131 $ 14,305,952 $ 7,287,540 $ 17,797,670 $ 11,439,712
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
-------------------------------
FOR THE PERIOD
FOR THE DECEMBER 29,
FISCAL YEAR 1997*
ENDED THROUGH
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
INCREASE/(DECREASE)
IN NET ASSETS FROM
OPERATIONS
Net investment
income/(loss)... $ (20,982) $ 2,461
Net realized
gain/(loss) on
investments..... 15,991 (117,110)
Net change in
unrealized
appreciation.... 848,548 958,548
-------------- --------------
Net
increase/(decrease)
in net assets
resulting from
operations...... 843,557 843,899
-------------- --------------
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment
income
Class A
shares........ (1,421) --
Class B
shares........ (530) --
Class C
shares........ (510) --
Class Y
shares........ -- --
-------------- --------------
(2,461) --
-------------- --------------
Net realized
capital gains
Class A
shares........ -- --
Class B
shares........ -- --
Class C
shares........ -- --
Class Y
shares........ -- --
-------------- --------------
-- --
-------------- --------------
SHARES OF BENEFICIAL
INTEREST
Net proceeds from
the sale of
shares.......... 8,180,925 7,265,097
Cost of shares
repurchased..... (2,716,280) (34,440)
Shares issued in
reinvestment of
dividends....... 1,297 --
-------------- --------------
Net
increase/(decrease)
in net assets
derived from
shares of
beneficial
interest
transactions.... 5,465,942 7,230,657
-------------- --------------
Total
increase/(decrease)
in net assets... 6,307,038 8,074,556
NET ASSETS
Beginning of
period.......... 8,074,556 --
-------------- --------------
End of period**... $ 14,381,594 $ 8,074,556
-------------- --------------
-------------- --------------
</TABLE>
43
<PAGE>
THE BEAR STEARNS FUNDS
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------
Contained below is per share operating performance data for each class of shares
outstanding, total investment 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 NET
ASSET NET REALIZED AND DIVIDENDS FROM NET ASSET
VALUE, INVESTMENT UNREALIZED FROM NET REALIZED VALUE,
BEGINNING INCOME/ GAIN/(LOSS) ON INVESTMENT CAPITAL END OF
OF PERIOD (LOSS)**(1) INVESTMENTS**(2) INCOME GAINS PERIOD
--------- ---------- ---------------- ---------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
S&P STARS PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ $19.97 $(0.12) $ 5.46 $ -- $(0.92) $24.39
For the fiscal year
ended March 31,
1998................ 16.13 (0.13) 6.69 -- (2.72) 19.97
For the fiscal year
ended March 31,
1997................ 14.92 (0.09) 2.63 -- (1.33) 16.13
For the period April
3, 1995* through
March 31, 1996...... 12.00 -- 3.31 -- (0.39) 14.92
CLASS B
For the fiscal year
ended March 31,
1999................ 19.86 (0.12) 5.29 -- (0.92) 24.11
For the period January
5, 1998* through
March 31, 1998...... 17.37 (0.04) 2.53 -- -- 19.86
CLASS C
For the fiscal year
ended March 31,
1999................ 19.85 (0.22) 5.39 -- (0.92) 24.10
For the fiscal year
ended March 31,
1998................ 16.06 (0.22) 6.65 -- (2.64) 19.85
For the fiscal year
ended March 31,
1997................ 14.86 (0.17) 2.62 -- (1.25) 16.06
For the period April
3, 1995* through
March 31, 1996...... 12.00 (0.06) 3.28 -- (0.36) 14.86
CLASS Y
For the fiscal year
ended March 31,
1999................ 20.11 (0.05) 5.54 -- (0.92) 24.68
For the fiscal year
ended March 31,
1998................ 16.23 (0.05) 6.74 -- (2.81) 20.11
For the fiscal year
ended March 31,
1997................ 14.97 (0.02) 2.66 -- (1.38) 16.23
For the period August
7, 1995* through
March 31, 1996...... 14.13 0.07 1.20 (0.03) (0.40) 14.97
THE INSIDERS SELECT FUND
CLASS A
For the fiscal year
ended March 31,
1999................ 17.88 -- (0.01) -- (0.85) 17.02
For the fiscal year
ended March 31,
1998................ 14.58 -- 6.30 -- (3.00) 17.88
For the fiscal year
ended March 31,
1997................ 14.00 0.02 2.48 (0.01) (1.91) 14.58
For the period June
16, 1995* through
March 31, 1996...... 12.00 0.03 1.98 (0.01) -- 14.00
CLASS B
For the fiscal year
ended March 31,
1999................ 17.69 -- (0.09) -- (0.85) 16.75
For the period January
6, 1998* through
March 31, 1998...... 15.72 0.01 1.96 -- -- 17.69
CLASS C
For the fiscal year
ended March 31,
1999................ 17.68 -- (0.09) -- (0.85) 16.74
For the fiscal year
ended March 31,
1998................ 14.48 (0.07) 6.21 -- (2.94) 17.68
For the fiscal year
ended March 31,
1997................ 13.96 (0.06) 2.47 -- (1.89) 14.48
For the period June
16, 1995* through
March 31, 1996...... 12.00 (0.01) 1.97 -- -- 13.96
CLASS Y
For the fiscal year
ended March 31,
1999................ 18.09 -- 0.09 -- (0.85) 17.33
For the fiscal year
ended March 31,
1998................ 14.66 0.07 6.36 -- (3.00) 18.09
For the fiscal year
ended March 31,
1997................ 14.02 0.08 2.49 (0.02) (1.91) 14.66
For the period June
20, 1995* through
March 31, 1996...... 12.12 0.07 1.87 (0.04) -- 14.02
</TABLE>
- ------------
* Commencement of operations.
** Calculated based on the 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.
(1) Reflects waivers and reimbursements.
(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 asset
values during the respective periods.
The accompanying notes are an integral part of the financial statements.
44
<PAGE>
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
REFLECTED IN
EXPENSE RATIOS AND
NET RATIO OF NET NET
ASSETS, RATIO OF INVESTMENT INVESTMENT
TOTAL END OF EXPENSES TO INCOME/(LOSS) INCOME/(LOSS) PORTFOLIO
INVESTMENT PERIOD AVERAGE NET TO AVERAGE DUE TO WAIVERS AND TURNOVER
RETURN(3) (000'S OMITTED) ASSETS(1) NET ASSETS(1) REIMBURSEMENTS RATE
----------- --------------- ----------- ------------- ------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
S&P STARS PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ 27.46% $206,130 1.50% (0.73)% 0.27% 76.17%
For the fiscal year
ended March 31,
1998................ 43.53 109,591 1.50(7) (0.83)(6) 0.38 172.78(7)
For the fiscal year
ended March 31,
1997................ 16.87 67,491 1.50(7) (0.59)(6) 0.70 220.00(7)
For the period April
3, 1995* through
March 31, 1996...... 27.68 45,049 1.50(5)(7) (0.01)(5)(6) 0.89(5) 295.97(7)
CLASS B
For the fiscal year
ended March 31,
1999................ 26.75 49,319 2.00 (1.23) 0.27 76.17
For the period January
5, 1998* through
March 31, 1998...... 14.34(4) 5,800 2.00(5) (1.47)(4)(5) 0.53(4)(5) 172.78(7)
CLASS C
For the fiscal year
ended March 31,
1999................ 26.75 97,654 2.00 (1.23) 0.27 76.17
For the fiscal year
ended March 31,
1998................ 42.80 63,330 2.00(7) (1.32)(6) 0.38 172.78(7)
For the fiscal year
ended March 31,
1997................ 16.33 37,622 2.00(7) (1.09) 0.70 220.00(7)
For the period April
3, 1995* through
March 31, 1996...... 26.91 28,081 2.00(5)(7) (0.45)(4)(5)(6) 0.92(5) 295.97(7)
CLASS Y
For the fiscal year
ended March 31,
1999................ 28.02 52,483 1.00 (0.23) 0.27 76.17
For the fiscal year
ended March 31,
1998................ 44.22 35,652 1.00(7) (0.32)(6) 0.38 172.78(7)
For the fiscal year
ended March 31,
1997................ 17.48 14,763 1.00(7) (0.10)(6) 0.70 220.00(7)
For the period August
7, 1995* through
March 31, 1996...... 9.09(4) 8,779 1.00(5)(7) 0.82(4)(5)(6) 0.99(4)(5) 295.97(7)
THE INSIDERS SELECT FUND
CLASS A
For the fiscal year
ended March 31,
1999................ 0.29 24,395 1.65 0.02 0.81 99.71
For the fiscal year
ended March 31,
1998................ 46.02 21,912 1.65 0.03 1.09 115.64
For the fiscal year
ended March 31,
1997................ 18.31 13,860 1.65 0.11 1.82 128.42
For the period June
16, 1995* through
March 31, 1996...... 16.75 12,132 1.65(5) 0.38(5) 1.87(5) 93.45
CLASS B
For the fiscal year
ended March 31,
1999................ (0.16) 8,426 2.15 0.03 0.81 99.71
For the period January
6, 1998* through
March 31, 1998...... 12.53(4) 2,253 2.15(5) (0.95)(4)(5) 1.82(4)(5) 115.64
CLASS C
For the fiscal year
ended March 31,
1999................ (0.16) 11,902 2.15 0.02 0.81 99.71
For the fiscal year
ended March 31,
1998................ 45.17 12,297 2.15 (0.46) 1.10 115.64
For the fiscal year
ended March 31,
1997................ 17.69 9,519 2.15 (0.38) 1.81 128.42
For the period June
16, 1995* through
March 31, 1996...... 16.33 9,928 2.15(5) (0.12)(5) 1.92(5) 93.45
CLASS Y
For the fiscal year
ended March 31,
1999................ 0.85 914 1.15 0.02 0.81 99.71
For the fiscal year
ended March 31,
1998................ 46.68 1,265 1.15 0.55 1.07 115.64
For the fiscal year
ended March 31,
1997................ 18.81 1,557 1.15 0.60 1.81 128.42
For the period June
20, 1995* through
March 31, 1996...... 15.98(4) 1,293 1.15(5) 0.97(4)(5) 2.04(4)(5) 93.45
</TABLE>
- ------------
(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 of shares 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.
(6) Includes S&P STARS' share of S&P STARS Master Series' expenses for the
period prior to June 25, 1997.
(7) Portfolio turnover rate is related to S&P STARS Master Series for the
period prior to June 25, 1997.
45
<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 NET
ASSET NET REALIZED AND DIVIDENDS FROM NET ASSET
VALUE, INVESTMENT UNREALIZED FROM NET REALIZED VALUE,
BEGINNING INCOME/ GAIN/(LOSS) ON INVESTMENT CAPITAL END OF
OF PERIOD (LOSS)**(1) INVESTMENTS**(2) INCOME GAINS PERIOD
--------- ---------- ---------------- ---------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
LARGE CAP VALUE
PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ $20.83 $ 0.11 $ 0.59 $(0.11) $(1.68) $19.74
For the fiscal year
ended March 31,
1998................ 17.17 0.05 7.15 (0.02) (3.52) 20.83
For the fiscal year
ended March 31,
1997................ 15.13 0.04 2.28 (0.10) (0.18) 17.17
For the period April
3, 1995* through
March 31, 1996...... 12.00 0.06 3.10 (0.02) (0.01) 15.13
CLASS B
For the fiscal year
ended March 31,
1999................ 20.66 0.08 0.52 (0.07) (1.68) 19.51
For the period January
28, 1998* through
March 31, 1998...... 18.17 (0.01) 2.50 -- -- 20.66
CLASS C
For the fiscal year
ended March 31,
1999................ 20.66 0.07 0.53 (0.01) (1.68) 19.57
For the fiscal year
ended March 31,
1998................ 17.11 (0.03) 7.10 -- (3.52) 20.66
For the fiscal year
ended March 31,
1997................ 15.08 (0.02) 2.25 (0.02) (0.18) 17.11
For the period April
3, 1995* through
March 31, 1996...... 12.00 (0.01) 3.10 -- (0.01) 15.08
CLASS Y
For the fiscal year
ended March 31,
1999................ 20.84 0.17 0.65 (0.20) (1.68) 19.78
For the fiscal year
ended March 31,
1998................ 17.18 0.26 7.05 (0.13) (3.52) 20.84
For the fiscal year
ended March 31,
1997................ 15.12 0.23 2.17 (0.16) (0.18) 17.18
For the period
September 11, 1995*
through March 31,
1996................ 13.98 0.07 1.16 (0.08) (0.01) 15.12
SMALL CAP VALUE
PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ 23.65 (0.13) (4.65) -- (0.94) 17.93
For the fiscal year
ended March 31,
1998................ 17.48 (0.14) 8.06 -- (1.75) 23.65
For the fiscal year
ended March 31,
1997................ 15.87 (0.10) 1.95 -- (0.24) 17.48
For the period April
3, 1995* through
March 31, 1996...... 12.00 (0.07) 4.17 -- (0.23) 15.87
CLASS B
For the fiscal year
ended March 31,
1999................ 23.48 (0.16) (4.67) -- (0.94) 17.71
For the period January
21, 1998* through
March 31, 1998...... 19.95 -- 3.53 -- -- 23.48
CLASS C
For the fiscal year
ended March 31,
1999................ 23.48 (0.26) (4.58) -- (0.94) 17.70
For the fiscal year
ended March 31,
1998................ 17.38 (0.24) 8.00 -- (1.66) 23.48
For the fiscal year
ended March 31,
1997................ 15.79 (0.18) 1.93 -- (0.16) 17.38
For the period April
3, 1995* through
March 31, 1996...... 12.00 (0.10) 4.11 -- (0.22) 15.79
CLASS Y
For the fiscal year
ended March 31,
1999................ 23.65 (0.02) (4.66) -- (0.94) 18.03
For the fiscal year
ended March 31,
1998................ 17.47 (0.04) 8.06 -- (1.84) 23.65
For the fiscal year
ended March 31,
1997................ 15.85 (0.05) 1.97 -- (0.30) 17.47
For the period June
22, 1995* through
March 31, 1996...... 13.09 -- 3.05 -- (0.29) 15.85
FOCUS LIST PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ 13.40 (0.07) 4.01 -- (0.02) 17.32
For the period
December 29, 1997*
through March 31,
1998................ 12.00 (0.01) 1.41 -- -- 13.40
CLASS B
For the fiscal year
ended March 31,
1999................ 13.38 (0.13) 3.95 -- (0.02) 17.18
For the period
December 29, 1997*
through March 31,
1998................ 12.00 (0.01) 1.39 -- -- 13.38
CLASS C
For the fiscal year
ended March 31,
1999................ 13.38 (0.13) 3.96 -- (0.02) 17.19
For the period
December 29, 1997*
through March 31,
1998................ 12.00 (0.01) 1.39 -- -- 13.38
</TABLE>
- ----------
* Commencement of operations.
** Calculated based on the 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.
(1) Reflects waivers and reimbursements.
(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 asset
values during the respective periods.
The accompanying notes are an integral part of the financial statements.
46
<PAGE>
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
REFLECTED IN
EXPENSE RATIOS AND
NET RATIO OF NET NET
ASSETS, RATIO OF INVESTMENT INVESTMENT
TOTAL END OF EXPENSES TO INCOME/(LOSS) INCOME/(LOSS) PORTFOLIO
INVESTMENT PERIOD AVERAGE NET TO AVERAGE DUE TO WAIVERS AND TURNOVER
RETURN(3) (000'S OMITTED) ASSETS(1) NET ASSETS(1) REIMBURSEMENTS RATE
----------- --------------- ----------- ------------- ------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
LARGE CAP VALUE
PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ 3.68% $ 9,677 1.50% 0.54% 1.46% 38.27%
For the fiscal year
ended March 31,
1998................ 44.59 8,358 1.50 0.32 1.73 61.75
For the fiscal year
ended March 31,
1997................ 15.44 4,987 1.50 0.43 1.58 136.67
For the period April
3, 1995* through
March 31, 1996...... 26.35 3,616 1.50(5) 0.46(5) 4.34(5) 45.28
CLASS B
For the fiscal year
ended March 31,
1999................ 3.21 1.911 2.00 0.08 1.46 38.27
For the period January
28, 1998* through
March 31, 1998...... 13.70(4) 446 2.00(5) (0.73)(4)(5) 1.05(4)(5) 61.75
CLASS C
For the fiscal year
ended March 31,
1999................ 3.22 5,250 2.00 0.08 1.46 38.27
For the fiscal year
ended March 31,
1998................ 43.94 4,987 2.00 (0.19) 1.73 61.75
For the fiscal year
ended March 31,
1997................ 14.87 2,986 2.00 (0.08) 1.61 136.67
For the period April
3, 1995* through
March 31, 1996...... 25.71 3,520 2.00(5) (0.06)(5) 4.39(5) 45.28
CLASS Y
For the fiscal year
ended March 31,
1999................ 4.29 4,741 1.00 1.08 1.46 38.27
For the fiscal year
ended March 31,
1998................ 45.27 7,263 1.00 0.83 1.76 61.75
For the fiscal year
ended March 31,
1997................ 16.04 6,109 1.00 1.00 1.50 136.67
For the period
September 11, 1995*
through March 31,
1996................ 8.75(4) 3,413 1.00(5) 0.76(4)(5) 4.41(4)(5) 45.28
SMALL CAP VALUE
PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ (20.26) 18,520 1.50 (0.60) 0.65 84.12
For the fiscal year
ended March 31,
1998................ 46.86 25,111 1.50 (0.71) 0.76 90.39
For the fiscal year
ended March 31,
1997................ 11.71 13,143 1.50 (0.81) 1.00 56.88
For the period April
3, 1995* through
March 31, 1996...... 34.36 6,474 1.50(5) (0.66)(5) 2.32(5) 40.79
CLASS B
For the fiscal year
ended March 31,
1999................ (20.63) 2,716 2.00 (1.10) 0.65 84.12
For the period January
21, 1998* through
March 31, 1998...... 17.69(4) 901 2.00(5) (1.49)(4)(5) 1.31(4)(5) 90.39
CLASS C
For the fiscal year
ended March 31,
1999................ (20.67) 11,112 2.00 (1.10) 0.65 84.12
For the fiscal year
ended March 31,
1998................ 46.10 18,082 2.00 (1.21) 0.76 90.39
For the fiscal year
ended March 31,
1997................ 11.12 11,071 2.00 (1.31) 0.99 56.88
For the period April
3, 1995* through
March 31, 1996...... 33.59 6,753 2.00(5) (1.09)(5) 2.39(5) 40.79
CLASS Y
For the fiscal year
ended March 31,
1999................ (19.84) 24,087 1.00 (0.10) 0.65 84.12
For the fiscal year
ended March 31,
1998................ 47.54 31,141 1.00 (0.21) 0.77 90.39
For the fiscal year
ended March 31,
1997................ 12.19 16,724 1.00 (0.31)(4)(5) 1.00 56.88
For the period June
22, 1995* through
March 31, 1996...... 23.52(4) 8,989 1.00(5) -- 2.45(4)(5) 40.79
FOCUS LIST PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ 29.47 6,542 1.40 (0.57) 2.89 84.49
For the period
December 29, 1997*
through March 31,
1998................ 11.67 3,201 1.40(5) (0.30)(5) 5.01(5) 28.91
CLASS B
For the fiscal year
ended March 31,
1999................ 28.61 4,460 1.90 (1.07) 2.89 84.49
For the period
December 29, 1997*
through March 31,
1998................ 11.50 2,399 1.90(5) (0.78)(5) 5.27(5) 28.91
CLASS C
For the fiscal year
ended March 31,
1999................ 28.69 3,304 1.90 (1.07) 2.89 84.49
For the period
December 29, 1997*
through March 31,
1998................ 11.50 1,687 1.90(5) (0.62)(5) 5.52(5) 28.91
</TABLE>
- ----------
(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 of shares 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.
47
<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 NET
ASSET NET REALIZED AND DIVIDENDS FROM NET ASSET
VALUE, INVESTMENT UNREALIZED FROM NET REALIZED VALUE,
BEGINNING INCOME/ GAIN ON INVESTMENT CAPITAL END OF
OF PERIOD (LOSS)**(1) INVESTMENTS**(2) INCOME GAINS PERIOD
--------- ---------- ---------------- ---------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
BALANCED PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ $12.93 $ 0.34 $ 0.18 $(0.33) $(0.01) $13.11
For the period
December 29, 1997*
through March 31,
1998................ 12.00 0.06 0.91 (0.04) -- 12.93
CLASS B
For the fiscal year
ended March 31,
1999................ 12.92 0.29 0.16 (0.29) (0.01) 13.07
For the period
December 29, 1997*
through March 31,
1998................ 12.00 0.05 0.90 (0.03) -- 12.92
CLASS C
For the fiscal year
ended March 31,
1999................ 12.92 0.29 0.16 (0.29) (0.01) 13.07
For the period
December 29, 1997*
through March 31,
1998................ 12.00 0.05 0.90 (0.03) -- 12.92
CLASS Y
For the fiscal year
ended March 31,
1999................ 12.95 0.37 0.21 (0.36) (0.01) 13.16
For the period January
6, 1998* through
March 31, 1998...... 12.05 0.06 0.88 (0.04) -- 12.95
INTERNATIONAL EQUITY
PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ 13.77 (0.03) 1.40 --+ -- 15.14
For the period
December 29, 1997*
through March 31,
1998................ 12.00 0.01 1.76 -- -- 13.77
CLASS B
For the fiscal year
ended March 31,
1999................ 13.75 (0.02) 1.32 --+ -- 15.05
For the period
December 29, 1997*
through March 31,
1998................ 12.00 -- 1.75 -- -- 13.75
CLASS C
For the fiscal year
ended March 31,
1999................ 13.75 (0.02) 1.32 --+ -- 15.05
For the period
December 29, 1997*
through March 31,
1998................ 12.00 -- 1.75 -- -- 13.75
</TABLE>
- ----------
* Commencement of operations.
** Calculated based on the 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.
+ Amount is less than $0.01 per share.
(1) Reflects waivers and reimbursements.
(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 asset
values during the respective periods.
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
REFLECTED IN
EXPENSE
NET RATIO OF NET RATIOS AND NET
ASSETS, RATIO OF INVESTMENT INVESTMENT
TOTAL END OF EXPENSES TO INCOME/(LOSS) INCOME/(LOSS) PORTFOLIO
INVESTMENT PERIOD AVERAGE NET TO AVERAGE DUE TO WAIVERS AND TURNOVER
RETURN(3) (000'S OMITTED) ASSETS(1) NET ASSETS(1) REIMBURSEMENTS RATE
----------- --------------- ----------- ------------- ------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCED PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ 4.07% $ 4,495 1.20% 2.65% 2.08% 45.98%
For the period
December 29, 1997*
through March 31,
1998................ 8.04 3,852 1.20(5) 2.47(5) 3.25(5) 12.72
CLASS B
For the fiscal year
ended March 31,
1999................ 3.56 1,811 1.70 2.15 2.08 45.98
For the period
December 29, 1997*
through March 31,
1998................ 7.92 1,044 1.70(5) 1.96(5) 3.30(5) 12.72
CLASS C
For the fiscal year
ended March 31,
1999................ 3.56 1,089 1.70 2.15 2.08 45.98
For the period
December 29, 1997*
through March 31,
1998................ 7.92 858 1.70(5) 1.95(5) 3.33(5) 12.72
CLASS Y
For the fiscal year
ended March 31,
1999................ 4.59 10,403 0.70 3.15 2.08 45.98
For the period January
6, 1998* through
March 31, 1998...... 7.80(4) 5,685 0.70(5) 2.98(4)(5) 3.12(4)(5) 12.72
INTERNATIONAL EQUITY
PORTFOLIO
CLASS A
For the fiscal year
ended March 31,
1999................ 9.97 8,299 1.75 0.05 2.38 114.68
For the period
December 29, 1997*
through March 31,
1998................ 14.75 3,765 1.75(5) 0.53(5) 4.06(5) 3.26
CLASS B
For the fiscal year
ended March 31,
1999................ 9.48 3,156 2.25 (0.45) 2.38 114.68
For the period
December 29, 1997*
through March 31,
1998................ 14.58 2,137 2.25(5) (0.06)(5) 4.04(5) 3.26
CLASS C
For the fiscal year
ended March 31,
1999................ 9.48 2,926 2.25 (0.45) 2.38 114.68
For the period
December 29, 1997*
through March 31,
1998................ 14.58 2,173 2.25(5) (0.06)(5) 4.04(5) 3.26
</TABLE>
- ----------
(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 of shares 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 Class Y shares are not
necessarily comparable to those of Class A and C shares due to timing
differences in the commencement of the intial public offering of Class Y
shares.
(5) Annualized.
49
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
The Insiders Select Fund
Large Cap Value Portfolio
Small Cap Value Portfolio
Focus List Portfolio
Balanced Portfolio
International Equity Portfolio
NOTES TO FINANCIAL STATEMENTS
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 has ten separate portfolios in operation: seven
diversified portfolios, Large Cap Value Portfolio ("Large Cap"), Small Cap Value
Portfolio ("Small Cap"), Balanced Portfolio ("Balanced"), International Equity
Portfolio ("International Equity"), High Yield Total Return Portfolio, Income
Portfolio and Prime Money Market Portfolio and three non-diversified portfolios,
S&P STARS Portfolio ("S&P STARS"), The Insiders Select Fund ("Insiders Select")
and Focus List Portfolio ("Focus List") (each a "Portfolio" and collectively,
the "Portfolios"). 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. As of the date hereof, each Portfolio offers four classes of shares,
which have been designated as Class A, B, C and Y shares (except the Prime Money
Market Portfolio, which only offers shares designated as Class Y). Class Y
shares of Focus List and International Equity have yet to commence their initial
public offerings.
ORGANIZATIONAL MATTERS -- Prior to commencing investment operations, each
Portfolio as indicated below did not have any transactions other than those
relating to organizational matters and the issuance of shares of beneficial
interest of the Portfolios to Bear, Stearns & Co. Inc. ("Bear Stearns" or the
"Distributor") as follows:
<TABLE>
<CAPTION>
SHARES OF BENEFICIAL INTEREST
------------------------------------------------------------
COMMENCEMENT OF
PORTFOLIO OPERATIONS CLASS A CLASS B CLASS C CLASS Y
- ------------------------------ --------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
S&P STARS..................... April 3, 1995 5,209 -- 5,209 --
Insiders Select............... June 16, 1995 1 -- 1 --
Large Cap..................... April 3, 1995 1,042 -- 1,042 --
Small Cap..................... April 3, 1995 1,042 -- 1,042 --
Focus List.................... December 29, 1997 1 1 1 1
Balanced...................... December 29, 1997 1 1 1 1
International Equity.......... December 29, 1997 1 1 1 1
</TABLE>
Costs of $203,596, $181,965, $99,875, $107,203, $39,619, $54,795 and $61,015
which were incurred by S&P STARS, Insiders Select, Large Cap, Small Cap, Focus
List, Balanced and International Equity, respectively, in connection with the
organization, registration with the Commission and initial public offering 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.
50
<PAGE>
In the event that the Distributor or any transferee of the Distributor redeems
any of its original shares in a particular Portfolio 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 a
particular Portfolio is liquidated prior to the end of the sixty month period,
the Distributor or the transferee of the Distributor shall bear the unamortized
deferred organization expenses.
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. Net asset value per share is determined as of the close of
regular trading on the floor of the New York Stock Exchange on each business
day. Portfolio securities, including covered call options written by the
Portfolios, are valued at the last sale price on the securities exchange or
national securities market on which such securities primarily are traded.
Securities not listed on an exchange or national securities market, or
securities in which there were no transactions, are valued at the average of the
most recent bid and asked prices, except in the case of open short positions
where the asked price is used for valuation purposes. Bid price is used when no
asked price is available. Securities which mature in 60 days or less are valued
at amortized cost, which approximates market value, unless this method does not
represent fair value. Any securities or other assets for which recent market
quotations are not readily available are valued at fair value as determined in
good faith by the Fund's 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.
Expenses and fees, including the investment advisory, administration and
distribution fees, are accrued daily and taken into account for the purpose of
determining the net asset value of a Portfolio's shares. Because of the
differences in operating expenses incurred by each class, the per share net
asset value of each class will 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 securities and foreign currency
related transactions, if any, are calculated on the identified cost basis.
Discounts are treated as adjustments to interest income and identified costs of
investments over the lives of the respective investments. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on an accrual
basis. Amortization is recorded on a straight-line basis. Each 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 net assets of each class at the beginning of the day
(after adjusting for current capital share activity of the respective classes).
OPTIONS WRITTEN -- When a Portfolio writes an option, an amount equal to the
premium received by the Portfolio is recorded as a liability and is subsequently
adjusted to the current market value of the option written. Premiums received
from writing options which expire unexercised are recorded by the Portfolio on
the expiration date as realized gains from option transactions. The difference
between the premium and the amount paid on effecting a closing purchase
transaction, including brokerage commissions, is also treated as a realized
gain, or if the premium is less than the amount paid for the closing purchase
transaction, as a realized loss. If a call option is exercised, the premium is
added to the proceeds from the sale of the underlying securities in determining
whether the Portfolio has a realized gain or loss. If a put option is exercised,
the premium reduces the cost basis of the securities purchased by the Portfolio.
The use of written options involves, to varying degrees, elements of market risk
in excess of the amount recognized in the statement of assets and liabilities.
The contractual or notional amounts reflect the extent of the Portfolio's
involvement in these financial instruments. In writing an option, the Portfolio
bears the market risk of an unfavorable change in the price of the security
underlying the written option. Exercise of an option written by the Portfolio
could result in the Portfolio selling or buying a security at a price different
from the current market value. Each Portfolio's activities in written options
are conducted through regulated exchanges which do not result in counterparty
credit risks. The Portfolios had no other transactions except for those listed
below.
51
<PAGE>
Option activity for the fiscal year ended March 31, 1999 was as follows:
<TABLE>
<CAPTION>
S&P STARS
----------------------------------------------
CALL OPTIONS PUT OPTIONS
----------------------- ---------------------
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
--------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Outstanding at beginning of
year......................... -- -- -- --
Options written............... 5,600 $ 2,371,262 -- --
Options purchased............. -- -- 3,500 $1,217,695
Options closed or expired..... (5,600) (2,371,262) (3,500) (1,217,695)
--------- ----------- --------- ---------
Outstanding at end of year.... -- -- -- --
--------- ----------- --------- ---------
--------- ----------- --------- ---------
</TABLE>
SHORT SELLING -- S&P STARS, Insiders Select, Large Cap and Small Cap may engage
in short selling of securities. Of the Portfolios that may engage in short
selling only S&P STARS, Insiders Select and Small Cap engaged in short sales
during the fiscal year ended March 31, 1999. Short sales are transactions in
which a Portfolio sells a security it does not own in anticipation of a decline
in the market value of that security. When a Portfolio makes a short sale, an
amount equal to the proceeds received by a Portfolio is recorded as a liability
and is subsequently adjusted to the current market value of the short sale.
Short sales represent obligations of a Portfolio to make future delivery of
specific securities and, correspondingly, create an obligation to purchase the
security at market prices prevailing at the later delivery date (or to deliver
the security if already owned by a Portfolio). Upon termination of a short sale,
a Portfolio will recognize a gain, limited to the price at which the Portfolio
sold the security short, if the market price is less than the proceeds
originally received. The Portfolio will recognize a loss, unlimited in
magnitude, if the market price at termination is greater than the proceeds
originally received. As a result, short sales create the risk that the
Portfolio's ultimate obligation to satisfy the delivery requirements may exceed
the amount of the proceeds initially received or the liability recorded in the
financial statements. Focus List, Balanced and International Equity may only
engage in short sales "against the box", a transaction in which a Portfolio
enters into a short sale of a security which a Portfolio owns. Focus List,
Balanced and International Equity did not engage in any short sales "against the
box" during the fiscal year ended March 31, 1999. The Portfolios had no open
short sales at March 31, 1999.
SECURITIES LENDING -- Loans of securities are required at all times to be
secured by collateral at least equal to 102% of the market value of the
securities on loan. However, in the event of default or bankruptcy by the other
party to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings. In the event that the borrower fails to return
securities, and cash collateral being maintained by the borrower is insufficient
to cover the value of loaned securities and provided such collateral
insufficiency is not the result of investment losses, the lending agent has
agreed to pay the amount of the shortfall to the Portfolios. At March 31, 1999,
none of the Portfolios had securities out on loan. During the fiscal year ended
March 31, 1999, income from securities lending of $34,462 was earned by S&P
STARS. Such income from securities lending is included under the caption
INTEREST in the Statements of Operations.
FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in foreign currencies,
if any, are recorded in a Portfolio's records at the current prevailing exchange
rates. Asset and liability accounts that are denominated in a foreign currency
are adjusted daily to reflect current exchange rates. Transaction gains or
losses resulting from changes in exchange rates during the reporting period or
upon settlement of the foreign currency transaction are reported in the
Statements of Operations for the current period. It is not practical to isolate
that portion of both realized and unrealized gains and losses on investments in
the Statements of Operations that result from fluctuations in foreign currency
exchange rates. Each Portfolio reports certain foreign currency related
transactions, if any, as components of realized gains/(losses) for financial
reporting purposes, whereas such components are treated as ordinary
income/(loss) for U.S. federal income tax purposes.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- A Portfolio may enter into
forward foreign currency exchange contracts ("forward currency contracts") to
hedge against adverse changes in the relationship of the U.S. dollar to foreign
currencies. The Portfolios may enter into these contracts to fix the U.S. dollar
value of a security that it has agreed to buy or sell for the period between the
date the trade was entered into and the date the security is delivered and paid
for. The Portfolios may also use these contracts to hedge the U.S. dollar value
of securities it already owns denominated in foreign
52
<PAGE>
currencies. Forward currency contracts are valued at the forward rate, and are
marked-to-market daily. The change in market value is recorded by the Portfolio
as an unrealized gain or loss. When the contract is closed, the Portfolio
records a realized gain or loss equal to the difference between the value of the
current contract at the time it was opened and the value at the time it was
closed. The use of forward currency contracts does not eliminate fluctuations in
the underlying prices of the Portfolio's securities, but it does establish a
rate of exchange that can be achieved in the future. Although forward currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of currency increase. In addition, the Portfolio could be exposed to risks if
the counterparties to the contracts are unable to meet the terms of their
contracts. For the fiscal year ended March 31, 1999, none of the Portfolios had
open forward currency contracts.
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 Statements 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.
U.S. FEDERAL TAX STATUS -- Each Portfolio intends to distribute substantially
all of its taxable income and to comply or continue 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.
For U.S. federal income tax purposes, realized capital losses incurred after
October 31, 1998, within the fiscal year are deemed to arise on the first day of
the following fiscal year. Balanced incurred and elected to defer such losses of
$163,370. At March 31, 1999, Focus List and Balanced have a capital loss
carryforward of $653,420 and $5,846, respectively, which expires in 2007.
DIVIDENDS AND DISTRIBUTIONS -- Each Portfolio, except Balanced, intends to
distribute at least annually to shareholders substantially all of its net
investment income. Balanced declares and pays quarterly, as dividends to
shareholders, substantially all of its net investment income. Distribution of
net realized gains, if any, will be declared and paid at least annually.
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. At March 31, 1999, S&P STARS, Small Cap, Focus List and
International Equity reclassified within the composition of net assets, net
investment losses of $2,293,626, $350,567, $82,665 and $20,982, respectively to
paid-in capital. In addition, at March 31, 1999, International Equity
reclassified within the composition of net assets, net realized losses from
foreign currency transactions of $124,302, to paid-in capital.
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.
53
<PAGE>
TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
For the fiscal year ended March 31, 1999, Bear Stearns Asset Management Inc.
("BSAM" or the "Adviser"), a wholly-owned subsidiary of The Bear Stearns
Companies Inc., served as the investment adviser pursuant to an Investment
Advisory Agreement with respect to each Portfolio. Under the terms of the
Investment Advisory Agreement, each Portfolio, except Insiders Select, has
agreed to pay BSAM a monthly fee at the annual rate of 0.75% of average daily
net assets for S&P STARS, Large Cap and Small Cap, 0.65% of average daily net
assets for Focus List and Balanced, and 1.00% of average daily net assets for
International Equity.
For Insiders Select, BSAM is entitled to receive from the Portfolio a monthly
fee equal to an annual rate of 1.00% of the Portfolio's average daily net
assets. In addition, starting in the thirteenth month of operation, BSAM is
entitled to a monthly performance adjustment fee which may increase or decrease
the total advisory fee by up to 0.50% per year of the value of Insider Select's
average daily net assets. The performance adjustment fee reduced the total
advisory fee by $108,270 or 0.24% of the value of Insider's average daily net
assets due to underperformance in comparison to the S&P MidCap 400 Index, the
Portfolio's benchmark index, effective February 1, 1998, for the fiscal year
ended March 31, 1999.
BSAM has engaged Marvin & Palmer Associates, Inc. ("Marvin & Palmer") as the
International Equity's sub-investment adviser to manage the Portfolio's
day-to-day investment activities. Marvin & Palmer is entitled to receive a
monthly fee from BSAM calculated on an annual basis equal to 0.20% of the
Portfolio's total average daily net assets to the extent the International
Equity's average daily net assets are in excess of $25 million and below $50
million at the relevant month end, 0.45% of the International Equity's total
average daily net assets to the extent the International Equity's average daily
net assets are in excess of $50 million and below $65 million at the relevant
month end and 0.60% of the International Equity's total average daily net assets
to the extent the International Equity's net assets in excess of $65 million at
the relevant month end. During the fiscal year ended March 31, 1999, Marvin &
Palmer did not earn a fee since the International Equity's net assets were below
$25 million.
For the fiscal year ended March 31, 1999, Bear Stearns Funds Management Inc.
("BSFM" or the "Administrator") served as administrator to each Portfolio
pursuant to an Administration Agreement. The Administrator 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 each Portfolio,
PFPC Inc. provides certain accounting and administrative services to each
Portfolio. For providing these services, PFPC Inc. is entitled to receive from
each Portfolio a monthly fee equal to an annual rate of 0.10% of the 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 net assets above $600 million,
subject to a minimum annual fee of $138,000 for each Portfolio. During the
fiscal year ended March 31, 1999, PFPC has voluntarily waived a portion of its
fee in all Portfolios except S&P STARS.
For the fiscal year ended March 31, 1999, BSAM voluntarily undertook to limit
each Portfolio's total operating expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary items) 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 CLASS C SHARES CLASS Y SHARES
- ------------------------------ -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
S&P STARS..................... 1.50% 2.00% 2.00% 1.00%
Insiders Select............... 1.65 2.15 2.15 1.15
Large Cap..................... 1.50 2.00 2.00 1.00
Small Cap..................... 1.50 2.00 2.00 1.00
Focus List.................... 1.40 1.90 1.90 0.90
Balanced...................... 1.20 1.70 1.70 0.70
International Equity.......... 1.75 2.25 2.25 1.25
</TABLE>
54
<PAGE>
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
fiscal year ended March 31, 1999, the investment advisory fee waivers and
reimbursements of expenses (in order to maintain the voluntary expense
limitation) were as follows:
<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE WAIVERS EXPENSE REIMBURSEMENTS
- ------------------------------ -------------------- ----------------------
<S> <C> <C>
S&P STARS..................... $716,763 --
Insiders Select............... 321,688 $ 42,908
Large Cap..................... 165,850 157,111
Small Cap..................... 400,694 28,865
Focus List.................... 63,550 218,241
Balanced...................... 101,976 224,243
International Equity.......... 114,148 157,011
</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.
For the fiscal year ended March 31, 1999, Bear Stearns, an affiliate of the
Adviser and the Administrator, earned approximately $500,570, $15,902, $1,602,
$3,540, $23,472, and $5,688 in brokerage commissions from portfolio transactions
executed on behalf of S&P STARS, Insiders Select, Large Cap, Small Cap, Focus
List and Balanced, respectively.
Custodial Trust Company, a wholly-owned subsidiary of The Bear Stearns Companies
Inc. and an affiliate of the Adviser and the Administrator, serves as custodian
to each of the Portfolios.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICING PLAN
The Portfolios listed below have entered into a Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act and a Shareholder Servicing Plan
which are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------- -------------------------- -----------------------------
DISTRIBUTION SHAREHOLDER DISTRIBUTION SHAREHOLDER DISTRIBUTION SHAREHOLDER
PORTFOLIO PLAN SERVICING PLAN SERVICING PLAN SERVICING
- ---------------------------------------- ------------- ------------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
S&P STARS............................... 0.25%(a) 0.25%(a) 0.75% 0.25% 0.75%(a) 0.25%(a)
Insiders Select......................... 0.25(a) 0.25(a) 0.75 0.25 0.75(a) 0.25(a)
Large Cap............................... 0.25(a) 0.25(a) 0.75 0.25 0.75(a) 0.25(a)
Small Cap............................... 0.25(a) 0.25(a) 0.75 0.25 0.75(a) 0.25(a)
Focus List.............................. 0.25 0.25 0.75 0.25 0.75 0.25
Balanced................................ 0.25 0.25 0.75 0.25 0.75 0.25
International Equity.................... 0.25 0.25 0.75 0.25 0.75 0.25
</TABLE>
- -------
(a) Prior to February 10, 1999, fees for shareholder servicing were paid through
the Distribution Plan.
Such fees are based on the average daily net assets in each class of the
respective Portfolios and are accrued daily and paid quarterly or at such
intervals as the Board of Trustees may determine. The fees paid to Bear Stearns
under the Distribution Plan are payable without regard to actual expenses
incurred. Bear Stearns uses the distribution fee to pay broker/dealers whose
clients hold each Portfolio's shares and other distribution-related activities.
Bear Stearns uses shareholder servicing fees to pay broker-dealers and other
financial institutions whose clients hold portfolio shares primarily for
shareholder liaison and other account maintenance services.
55
<PAGE>
For the fiscal year ended March 31, 1999, the distribution and shareholder
servicing fees paid to Bear Stearns under each Plan were as follows:
<TABLE>
<CAPTION>
PORTFOLIO DISTRIBUTION FEES SHAREHOLDER SERVICING FEES
- ------------------------------ ------------------- --------------------------
<S> <C> <C>
S&P STARS..................... $1,021,830 $568,119
Insiders Select............... 211,061 111,708
Large Cap..................... 74,636 40,452
Small Cap..................... 185,883 99,098
Focus List.................... 51,462 24,443
Balanced...................... 29,321 17,595
International Equity.......... 54,926 28,538
</TABLE>
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 fiscal year ended March 31, 1999, Bear Stearns has advised each
Portfolio that it received the approximate amounts noted below in front-end
sales charges resulting from sales of Class A shares (from which Bear Stearns
paid such sales charges to dealers who in turn paid commissions to sales
persons) and contingent deferred sales charges ("CDSC") upon certain redemptions
by Class B and C shareholders, respectively. The amounts were as follows:
<TABLE>
<CAPTION>
FRONT-END SALES CHARGES CDSC CDSC
PORTFOLIO CLASS A SHARES CLASS B SHARES CLASS C SHARES
- ------------------------------ ----------------------- -------------- --------------
<S> <C> <C> <C>
S&P STARS..................... $2,061,054 $68,256 $24,498
Insiders Select............... 389,116 69,780 14,431
Large Cap..................... 86,248 9,006 4,492
Small Cap..................... 165,298 14,163 7,586
Focus List.................... 111,817 30,273 656
Balanced...................... 43,060 1,463 6
International Equity.......... 92,733 6,730 706
</TABLE>
INVESTMENTS IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned, gross
appreciation, gross depreciation and net unrealized appreciation of investments
at March 31, 1999 for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS GROSS NET
PORTFOLIO COST APPRECIATION DEPRECIATION APPRECIATION
- ------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
S&P STARS................ $ 301,419,926 $ 120,704,551 $ (12,670,112) $108,034,439
Insiders Select.......... 38,664,138 8,093,128 (1,289,141) 6,803,987
Large Cap................ 16,494,839 6,157,467 (811,517) 5,345,950
Small Cap................ 53,001,292 9,901,033 (6,126,036) 3,774,997
Focus List............... 10,508,469 4,617,326 (455,509) 4,161,817
Balanced................. 17,036,503 1,671,551 (638,789) 1,032,762
International Equity..... 12,836,373 1,996,524 (188,602) 1,807,922
</TABLE>
56
<PAGE>
For the fiscal year ended March 31, 1999, aggregate purchases and sales of
investment securities (excluding short-term securities) for each Portfolio were
as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- ------------------------------ ------------ ------------
<S> <C> <C>
S&P STARS..................... $322,357,313 $204,943,223
Insiders Select............... 50,254,609 40,811,454
Large Cap..................... 9,129,370 8,083,398
Small Cap..................... 52,248,962 52,009,599
Focus List.................... 11,497,703 7,927,577
Balanced...................... 13,207,979 6,494,385
International Equity.......... 18,638,669 11,920,753
</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 5.50% 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% during the first year. There is no sales charge or
CDSC on Class Y shares, which are offered primarily to institutional investors.
At March 31, 1999, there was an unlimited amount of $0.001 par value shares of
beneficial interest authorized for each Portfolio, of which Bear Stearns owned
the following shares including reinvestment of dividends and distributions, if
any:
<TABLE>
<CAPTION>
SHARES OF BENEFICIAL
INTEREST
--------------------------
PORTFOLIO CLASS A CLASS B
- ---------------------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
S&P STARS........................................................................................... 5,436 --
Insiders Select..................................................................................... 1 --
Large Cap........................................................................................... 1,359 --
Small Cap........................................................................................... 1,190 --
Focus List.......................................................................................... 41,736 41,737
Balanced............................................................................................ 55,557 55,557
International Equity................................................................................ 138,890 138,917
<CAPTION>
PORTFOLIO CLASS C CLASS Y
- ---------------------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
S&P STARS........................................................................................... 5,438 --
Insiders Select..................................................................................... -- --
Large Cap........................................................................................... 1,353 --
Small Cap........................................................................................... 1,186 --
Focus List.......................................................................................... 41,737 --
Balanced............................................................................................ 57,016 1
International Equity................................................................................ 138,890 --
</TABLE>
57
<PAGE>
Transactions in each Portfolio's share of beneficial interest were as follows:
<TABLE>
<CAPTION>
INSIDERS
S&P STARS SELECT
--------------------------------------------------- --------------
SALES REPURCHASES REINVESTMENTS SALES
--------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares............................................... 13,356,673 10,653,471 260,562 822,035
Value................................................ $ 285,940,228 $ 225,975,249 $ 5,518,701 $ 14,004,050
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares............................................... 2,206,598 1,533,370 632,794 420,704
Value................................................ $ 42,537,872 $ 29,585,256 $ 10,791,624 $ 7,036,800
CLASS B*
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares............................................... 1,816,976 105,953 42,628 489,490
Value................................................ $ 39,716,007 $ 2,329,507 $ 894,326 $ 8,243,946
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares............................................... 292,094 -- -- 127,400
Value................................................ $ 5,301,891 -- -- $ 2,149,181
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares............................................... 1,500,923 775,235 136,180 258,790
Value................................................ $ 32,744,043 $ 15,847,614 $ 2,855,694 $ 4,440,849
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares............................................... 1,125,588 680,009 402,739 201,834
Value................................................ $ 22,151,823 $ 12,920,388 $ 6,834,482 $ 3,338,014
CLASS Y
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares............................................... 593,967 324,017 83,772 1,825
Value................................................ $ 12,560,434 $ 6,838,883 $ 1,793,556 $ 33,074
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares............................................... 849,614 199,060 213,147 32,037
Value................................................ $ 15,879,797 $ 3,851,571 $ 3,653,343 $ 542,714
<CAPTION>
REPURCHASES REINVESTMENTS
--------------- -----------------
<S> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares............................................... 693,757 79,376
Value................................................ $ 11,455,485 $ 1,261,278
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares............................................... 312,605 167,184
Value................................................ $ 5,267,810 $ 2,629,805
CLASS B*
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares............................................... 140,589 26,712
Value................................................ $ 2,267,701 $ 418,312
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares............................................... -- --
Value................................................ -- --
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares............................................... 283,301 40,088
Value................................................ $ 4,567,478 $ 627,381
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares............................................... 254,946 91,147
Value................................................ $ 4,287,656 $ 1,420,978
CLASS Y
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares............................................... 22,222 3,166
Value................................................ $ 376,628 $ 51,132
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares............................................... 84,697 16,449
Value................................................ $ 1,452,486 $ 261,545
</TABLE>
- ---------
* Class B shares commenced its initial public offering for the S&P STARS and
Insiders Select on January 5, 1998 and January 6, 1998, respectively.
58
<PAGE>
<TABLE>
<CAPTION>
LARGE CAP SMALL CAP
------------------------------------------------- --------------
SALES REPURCHASES REINVESTMENTS SALES
------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................. 236,435 182,475 34,912 1,836,377
Value................................................... $ 4,771,728 $ 3,596,602 $ 665,076 $ 33,847,374
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................. 115,448 50,777 46,162 492,900
Value................................................... $ 2,229,250 $ 998,486 $ 853,530 $ 9,966,068
CLASS B*
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................. 88,188 17,993 6,120 142,362
Value................................................... $ 1,751,063 $ 331,830 $ 115,353 $ 2,826,045
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................. 21,870 264 -- 38,387
Value................................................... $ 441,820 $ 5,391 -- $ 830,356
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................. 72,424 69,436 23,811 174,437
Value................................................... $ 1,462,648 $ 1,367,701 $ 450,271 $ 3,524,703
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................. 64,169 33,086 35,761 270,017
Value................................................... $ 1,249,264 $ 611,649 $ 656,208 $ 5,553,946
CLASS Y
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................. 83,237 212,477 20,538 284,559
Value................................................... $ 1,617,045 $ 4,241,757 $ 391,241 $ 5,180,929
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................. 202,742 292,994 83,137 469,788
Value................................................... $ 4,161,371 $ 5,403,933 $ 1,535,548 $ 9,777,246
<CAPTION>
REPURCHASES REINVESTMENTS
--------------- -----------------
<S> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................. 1,923,838 58,402
Value................................................... $ 35,242,367 $ 1,063,921
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................. 253,678 70,857
Value................................................... $ 5,138,087 $ 1,453,284
CLASS B*
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................. 34,784 7,380
Value................................................... $ 613,558 $ 133,000
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................. -- --
Value................................................... -- --
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................. 351,849 34,901
Value................................................... $ 6,472,733 $ 629,311
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................. 191,822 54,988
Value................................................... $ 3,883,351 $ 1,121,735
CLASS Y
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................. 326,429 61,415
Value................................................... $ 6,124,514 $ 1,123,278
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................. 196,994 86,372
Value................................................... $ 4,301,161 $ 1,769,732
</TABLE>
- ---------
* Class B shares commenced its initial public offering for the Large Cap and
Small Cap on January 28, 1998 and January 21, 1998, respectively.
59
<PAGE>
<TABLE>
<CAPTION>
FOCUS LIST* BALANCED*
------------------------------------------------- -------------
SALES REPURCHASES REINVESTMENTS SALES
------------- --------------- ----------------- -------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................... 273,095 134,732 508 203,116
Value..................................................... $ 3,857,601 $ 1,822,606 $ 7,297 $ 2,584,096
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................... 261,602 22,694 -- 297,413
Value..................................................... $ 3,226,172 $ 275,794 -- $ 3,630,397
CLASS B
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................... 166,081 86,025 371 58,838
Value..................................................... $ 2,369,877 $ 1,237,419 $ 5,300 $ 751,354
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................... 179,256 -- -- 80,740
Value..................................................... $ 2,256,277 -- -- $ 977,533
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................... 76,706 10,820 289 15,231
Value..................................................... $ 1,073,707 $ 148,531 $ 4,135 $ 196,638
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................... 126,077 -- -- 66,284
Value..................................................... $ 1,564,204 -- -- $ 800,467
CLASS Y**
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................... -- -- -- 394,174
Value..................................................... -- -- -- $ 5,166,631
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................... -- -- -- 451,987
Value..................................................... -- -- -- $ 5,546,038
<CAPTION>
REPURCHASES REINVESTMENTS
--------------- -----------------
<S> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................... 162,878 4,677
Value..................................................... $ 2,121,980 $ 59,462
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................... 167 577
Value..................................................... $ 1,965 $ 7,404
CLASS B
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................... 2,483 1,358
Value..................................................... $ 31,916 $ 17,255
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................... -- 53
Value..................................................... -- $ 682
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................... 49 1,718
Value..................................................... $ 640 $ 21,785
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................... -- 142
Value..................................................... -- $ 1,819
CLASS Y**
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares.................................................... 53,105 10,358
Value..................................................... $ 681,591 $ 132,059
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares.................................................... 13,445 536
Value..................................................... $ 164,940 $ 6,880
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY*
-------------
SALES
-------------
<S> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................................................................................... 436,615
Value.................................................................................................... $ 6,455,599
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares................................................................................................... 273,821
Value.................................................................................................... $ 3,433,979
CLASS B
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................................................................................... 69,803
Value.................................................................................................... $ 1,039,099
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares................................................................................................... 155,378
Value.................................................................................................... $ 1,882,062
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................................................................................... 46,356
Value.................................................................................................... $ 686,227
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares................................................................................................... 160,283
Value.................................................................................................... $ 1,949,056
<CAPTION>
REPURCHASES
---------------
<S> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................................................................................... 162,043
Value.................................................................................................... $ 2,355,819
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares................................................................................................... 291
Value.................................................................................................... $ 3,918
CLASS B
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................................................................................... 15,483
Value.................................................................................................... $ 212,361
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares................................................................................................... --
Value.................................................................................................... --
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................................................................................... 9,943
Value.................................................................................................... $ 148,100
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares................................................................................................... 2,269
Value.................................................................................................... $ 30,522
<CAPTION>
REINVESTMENTS
-------------------
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................................................................................... 46
Value.................................................................................................... $ 660
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares................................................................................................... --
Value.................................................................................................... --
CLASS B
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................................................................................... 36
Value.................................................................................................... $ 527
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares................................................................................................... --
Value.................................................................................................... --
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................................................................................... 8
Value.................................................................................................... $ 110
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Shares................................................................................................... --
Value.................................................................................................... --
</TABLE>
- ---------
* Commenced operations on December 29, 1997.
** Commenced its initial public offering on January 6, 1998.
60
<PAGE>
RESTRICTED SECURITIES
Certain of the Small Cap Portfolio's investments are restricted as to resale and
are valued at the direction of the Portfolio's Board of Trustees in good faith,
at fair value, after taking into consideration appropriate indications of value.
The table below shows the number of shares or notes held, the acquisition dates,
aggregate costs, fair value as of March 31, 1999, per share value of the
securities and percentage of net assets which the security comprises.
<TABLE>
<CAPTION>
NUMBER ACQUISITION FAIR VALUE AT
COMMON STOCK OF SHARES DATE COST MARCH 31, 1999
- -------------------------------------------------------------------- ----------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Meicom Computers & Communications, Ltd.............................. 9,506 07/07/98 $ 665 $ 665
<CAPTION>
PRINCIPAL
AMOUNT ACQUISITION FAIR VALUE AT
CORPORATE NOTES (000'S) DATES COST MARCH 31, 1999
- -------------------------------------------------------------------- ----------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Meicom Computers & Communications, Ltd.............................. $233 07/07/98 $ 233,000 $ 233,000
Meicom Computers & Communications, Ltd.............................. 233 10/26/98 233,000 233,000
<CAPTION>
VALUE PERCENTAGE OF
COMMON STOCK PER SHARE NET ASSETS
- -------------------------------------------------------------------- ------------ -----------------
<S> <C> <C>
Meicom Computers & Communications, Ltd.............................. $ 0.07 0.00%
VALUE PERCENTAGE OF
CORPORATE NOTES PER NOTE NET ASSETS
- -------------------------------------------------------------------- ------------ -----------------
<S> <C> <C>
Meicom Computers & Communications, Ltd.............................. $ 1.00 0.415 %
Meicom Computers & Communications, Ltd.............................. 1.00 0.415
</TABLE>
CREDIT AGREEMENT
The Fund, on behalf of the Portfolios, has entered into a credit agreement with
BankBoston, N.A. Bear Stearns Investment Trust, which consists of the Emerging
Markets Debt Portfolio, is also a party to the credit agreement. The agreement
provides that each party to the credit agreement is permitted to borrow in an
amount equal to the lesser of $25 million or 25% of the net assets of each
Portfolio. At no time shall the aggregate outstanding principal amount of all
loans to any of the Portfolios exceed $25 million. Each Portfolio as a
fundamental policy is permitted to borrow in an amount up to 331/3% of the value
of such Portfolio's assets. However, each Portfolio currently intends 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 will bear 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.
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 fiscal year
ended March 31, 1999, were as follows:
<TABLE>
<CAPTION>
MAXIMUM LOAN AMOUNTS
PORTFOLIO AVERAGE LOAN BALANCE OUTSTANDING
- --------------------------------------------------------------------- -------------------------- ----------------------------
<S> <C> <C>
S&P STARS............................................................ $ 957,676 $ 11,000,000
Insiders Select...................................................... 2,555 259,300
Large Cap............................................................ 15,368 623,400
Small Cap............................................................ 34,164 1,377,300
Focus List........................................................... 5,685 641,700
Balanced............................................................. 137 50,000
International Equity................................................. 1,314 203,000
<CAPTION>
PORTFOLIO AVERAGE INTEREST RATE
- --------------------------------------------------------------------- ---------------------------
<S> <C>
S&P STARS............................................................ 6.55%
Insiders Select...................................................... 8.58
Large Cap............................................................ 6.47
Small Cap............................................................ 6.65
Focus List........................................................... 6.90
Balanced............................................................. 8.62
International Equity................................................. 6.92
</TABLE>
The Portfolios had no amounts outstanding under the line of credit agreement at
March 31, 1999 (except for International Equity Portfolio which had $76,700
outstanding under the line of credit agreement).
61
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
The Insiders Select Fund
Large Cap Value Portfolio
Small Cap Value Portfolio
Focus List Portfolio
Balanced Portfolio
International Equity Portfolio
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders,
S&P STARS Portfolio
The Insiders Select Fund
Large Cap Value Portfolio
Small Cap Value Portfolio
Focus List Portfolio
Balanced Portfolio
International Equity Portfolio:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of S&P STARS Portfolio, The Insiders Select Fund,
Large Cap Value Portfolio, Small Cap Value Portfolio, Focus List Portfolio,
Balanced Portfolio and International Equity Portfolio (collectively, the
"Portfolios") as of March 31, 1999, and the related statements of operations,
changes in net assets and the financial highlights for the periods presented.
These financial statements and financial highlights are the responsibility of
the Portfolios' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1999 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of S&P STARS Portfolio,
The Insiders Select Fund, Large Cap Value Portfolio, Small Cap Value Portfolio,
Focus List Portfolio, Balanced Portfolio and International Equity Portfolio as
of March 31, 1999, the results of their operations, the changes in their net
assets and the financial highlights for each of the periods presented in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
May 14, 1999
62
<PAGE>
S&P STARS Portfolio
The Insiders Select Fund
Large Cap Value Portfolio
Small Cap Value Portfolio
Focus List Portfolio
Balanced Portfolio
International Equity Portfolio
SHAREHOLDER TAX INFORMATION - (UNAUDITED)
Each Portfolio is required by Subchapter M of the Internal Revenue Code of 1986,
as amended, to advise its shareholders within 60 days of each Portfolio's fiscal
year end (March 31, 1999) as to the U.S. federal tax status of distributions
received by the Portfolio's shareholders in respect of such fiscal year. During
the fiscal year ended March 31, 1999, the following dividends and distributions
per share were paid by each of the Portfolios:
<TABLE>
<CAPTION>
INTERNATIONAL
S&P STARS THE INSIDERS LARGE CAP SMALL CAP FOCUS LIST EQUITY
PORTFOLIO SELECT FUND VALUE PORTFOLIO VALUE PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- --------------- --------------- ----------- ---------------
Payment Date: 12/23/98 12/23/98 12/23/98 12/23/98 12/23/98 12/23/98
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income:
Class A -- -- $ 0.1086 -- -- $ 0.0028
Class B -- -- 0.0697 -- -- 0.0028
Class C -- -- 0.0131 -- -- 0.0028
Class Y -- -- 0.2001 -- -- --
Short-Term Capital Gains:
Class A -- $ 0.1274 $ 0.2629 $ 0.5200 $ 0.0237 --
Class B -- 0.1274 0.2629 0.5200 0.0237 --
Class C -- 0.1274 0.2629 0.5200 0.0237 --
Class Y -- 0.1274 0.2629 0.5200 -- --
Long-Term Capital Gains:
Class A $ 0.9231 $ 0.7247 $ 1.4196 $ 0.4226 -- --
Calss B 0.9231 0.7247 1.4196 0.4226 -- --
Class C 0.9231 0.7247 1.4196 0.4226 -- --
Class Y 0.9231 0.7247 1.4196 0.4226 -- --
<CAPTION>
BALANCED PORTFOLIO
--------------------------------------------------------------
Payment Date: 06/23/98 09/22/98 12/22/98 3/22/99
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income:
Class A $ 0.0700 $ 0.0850 $ 0.1100 $ 0.0600
Class B 0.0650 0.0800 0.0900 0.0550
Class C 0.0650 0.0800 0.0900 0.0550
Class Y 0.0800 0.0900 0.1200 0.0700
Short-Term Capital Gains:
Class A -- -- $ 0.0100 --
Class B -- -- 0.0100 --
Class C -- -- 0.0100 --
Class Y -- -- 0.0100 --
</TABLE>
Ordinary income dividends, which include short-term capital gain distributions,
should be reported as dividend income on Form 1040. Dividends from net
investment income are taxable as ordinary income, as are short-term capital gain
distributions.
63
<PAGE>
INCOME PERCENTAGES BY SECURITY TYPE FOR FISCAL YEAR ENDED MARCH 31, 1999:
Per share distributions from net investment income for the Balanced Portfolio
(referenced above) were derived from the following security types:
<TABLE>
<S> <C>
Corporate Obligations 32.83%
Fannie Mae 13.98
Freddie Mac 10.40
Government National Mortgage
Association 18.71
U.S. Treasury Obligations 24.08
------
Total 100.00%
------
------
</TABLE>
Because each Portfolio's fiscal year is not the calendar year, another
notification will be sent with respect to calendar year 1999. The second
notification, which will reflect the amount to be used by calendar year
taxpayers on their U.S. federal income tax returns, will be made in conjunction
with Form 1099-DIV and will be mailed in January 2000.
Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of their dividend. They will generally not be entitled to a foreign tax
credit or deduction for the withholding taxes paid by the Portfolios, if any.
In general, dividends received by tax-exempt recipients (e.g., IRAs and Keoghs)
need not be reported as taxable income for U.S. federal income tax purposes.
However, some retirement trusts (e.g., corporate, Keogh and 403(b)(7) plans) may
need this information for their annual information reporting.
Shareholders are advised to consult their own tax advisers with respect to the
tax consequences of their investment in the Portfolios.
64
