<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, 2000
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") for the fiscal year
ended March 31, 2000. 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.
S&P STARS PORTFOLIO
For the fiscal year ended March 31, 2000, the Portfolio's Class A shares had
a total return of 50.82% (without giving effect to the sales charge), and
Class B and C shares had a total return of 50.13% and 50.15%(1), respectively
(without giving effect to the contingent deferred sales charge, or CDSC). The
Portfolio's benchmark, the S&P 500 Index, returned 17.94% for the same period.
A YEAR OF PYRO"TECH"NICS
The technology-led climb of growth stocks over the past twelve months
surprised virtually everyone by its magnitude and duration. Investor
enthusiasm carried these stocks higher despite rising interest rates and
concern about inflationary pressures in a rapidly expanding economy. Yet, as
valuations rose, investors had to take on ever more risk in the hope of
reaping excess returns. The result was an extremely volatile market,
particularly in the past quarter.
In this environment, large technology companies were the clear winners, and
we had built sizable positions in some of the market leaders. For example, in
the Internet infrastructure sector, Cisco (6.11% of net assets), EMC Corp.
(1.60%), Sun Microsystems (1.17%) and Time Warner (1.94%) were very strong
performers. Nortel (2.27%), Qualcomm (1.97%), Sprint PCS (4.34%) and Vodafone
(0.85%) were among the standouts in the wireless arena.
Beyond the technology and telecommunications sectors, however, the year was a
disappointment. While the fundamentals of many sectors were strong, few had
the "sizzle" to compete with "new economy" issues. In fact, the Portfolio's
performance was helped by its underweighting in the financial and more
traditional economic sectors. Nonetheless, because our primary focus is on
issues that offer growth at a reasonable price -- and the technology sector
had become expensive on that basis for the first time in over a decade -- we
started putting fresh money elsewhere as the period drew to a close. In
addition, historically, technology issues have been more adversely affected
by rising interest rates than many other sectors.
1
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Despite the volatility in the market, we remain optimistic about the
prospects for the economy, the financial markets and established growth
stocks. Clearly, with economic growth exceeding Federal Reserve Board
targets, further interest rate increases are ahead. Nonetheless, the earnings
outlook remains strong and prospects for growth companies, particularly those
in the technology arena, are still very bright. While we are making
investments with rate hikes in mind, we continue to emphasize growth over
value, with slightly more emphasis on small-and mid-cap stocks. As always,
however, growth at a reasonable price remains our critical selection
criterion.
THE INSIDERS SELECT FUND
For the fiscal year ended March 31, 2000, the Portfolio's Class A shares had
a total return of 0.40% (without giving effect to the sales charge), and
Class B and C shares had a total return of (0.13)% and (0.07)%(2),
respectively (without giving effect to the CDSC). The Portfolio's benchmark,
the S&P MidCap 400 Index, returned 38.09% for the same period.
In an extremely volatile period for the stock market, both small-cap and
mid-cap stocks outperformed large-cap issues for the twelve-month period that
ended March 31, 2000. However, it was technology and technology-related
stocks that drove these segments of the market higher. Since our focus is on
undervalued companies with strong insider ownership, the Portfolio's
performance suffered.
As technology continued to dominate the market, valuations of many good
stocks in other sectors fell. We took advantage of the market's volatility to
add shares in financial services, health care and consumer products that met
our criteria for strong insider buying, share repurchases and low relative
valuations. In particular, we have been building a large position in
financial services based on the sector's valuations, earnings prospects and
high degree of insider ownership.
FINDING VALUE IN FINANCIAL STOCKS
During the period, we sold underperformers in this sector such as Bank of
America, Torchmark and Washington Mutual, but added American General (1.66%
of net assets) and MBIA, Inc. (2.26%). American General is a large provider
of retirement services, life insurance and consumer loans and is aggressively
repurchasing its stock. Its shares have a price-earnings ratio roughly half
that of the overall market and expected earnings growth of approximately 12%.
MBIA is a leading insurer of municipal bonds whose president owns a large
percentage of the company's stock.
Other purchases included Abbott Laboratories (2.12%) and McDonald's (3.42%).
Abbott is selling at a discount of approximately 20% to the market, but has
an expected long-term earnings growth rate of 12%-14%. McDonald's shares sold
off after the company reported an unimpressive fourth quarter last year, but
its growth prospects are solid as it expands its international franchise. The
company is also actively buying back its shares.
We continued to selectively increase the Fund's exposure to technology and
communications stocks whose valuations had fallen within our investing
parameters. We bought Emerson Electric (3.62%), whose sales of electronics
and telecommunications equipment are accelerating worldwide, and AT&T
(2.16%), which is expanding aggressively in wireless communications.
We expect the returns from technology and non-technology stocks to continue
to converge as the market broadens. If the economy slows as expected,
corporate profit growth could decline from the mid-double digits to about 10%
by year-end. When stock market returns pull back to 10%-12%, companies with
steady earnings growth of 10% or more should become increasingly attractive
to investors.
LARGE CAP VALUE PORTFOLIO
For the twelve months ended March 31, 2000, the Portfolio's Class A shares
had a total return of (4.91)% (without giving effect to the sales charge) and
Class B and C shares had a total return of (5.41)% and (5.39)%(3),
respectively, (without giving effect to the CDSC). The Portfolio's benchmark,
the S&P 500 Index, returned 17.94% for the same period.
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With technology stocks driving the market's performance, the twelve-month
period that ended March 31, 2000, was a very difficult one for value
managers. For most of 1999 and early 2000, the flight to ultra-high growth
"new economy" stocks continued, as investors turned a blind eye to such
fundamentals as price-to-earnings and price-to-cash flow ratios. Our
investment style, which emphasizes companies with low relative valuations,
generally steers us away from such richly valued stocks.
One consequence of soaring prices for technology stocks has been their
increasing weight in the S&P 500 Index. This large weighting, along with the
sector's inherent volatility, has made the index a less relevant benchmark
for value managers over short time periods. With technology accounting for
roughly 30% of the index, its returns have masked the fact the most stocks
have actually fallen in price. In addition, the S&P's return has not
reflected the dramatic shift in investor psychology that occurred in March,
when investors switched abruptly from technology to traditional companies
with real earnings and cash flow. This benefited the kinds of stocks we favor
-- those of companies with sound businesses, above-average growth prospects
and discounted valuations.
MARKET PSYCHOLOGY TILTS TOWARD VALUE
The turning point in market sentiment occurred when Procter & Gamble
announced an unexpected earnings shortfall in early March that caused its
stock to plummet and triggered a decline in many other "old economy" stocks.
In the wake of this sell-off valuations in many sectors, such as financial
services and pharmaceuticals, had become too good to ignore. We took
advantage of this retreat to buy quality companies with depressed valuations,
including Procter & Gamble (1.95% of net assets), which has an improving
product line and an expected long-term earnings growth rate of 10%-12%, and
Abbott Laboratories (2.09%), which is selling at a discount of approximately
20% to the market but has an expected long-term earnings growth rate of
12%-14%.
We had started building a large position in the financial services sector
last year, and Fannie Mae (3.53%), Citigroup (3.31%) and Washington Mutual
(3.09%) are among our largest holdings. As we have stated before, we believe
these types of companies are poised for significant growth in an increasingly
deregulated and competitive global market, especially now that long-term
interest rates appear to have peaked.
We have continued to selectively increase the Portfolio's exposure to
technology and communications stocks whose valuations have fallen within our
investing parameters. Last fall, we added Hewlett Packard (2.55%) and Intel
(3.03%), which had low valuations relative to other leading technology
companies and strong earnings growth potential. This year, we bought AT&T
(3.14%), which is expanding aggressively in wireless communications.
We expect the returns from technology and non-technology stocks to continue
to converge as the market broadens. Given the expected slowing of the
economy, we expect corporate profit growth to decline from the mid-double
digits to about 10% by year-end. When stock market returns pull back to
10%-12%, companies with steady earnings growth of 10% or more should become
increasingly attractive to investors.
SMALL CAP VALUE PORTFOLIO*
For the fiscal year ended March 31, 2000, the Portfolio's Class A shares had
a total return of 38.21% (without giving effect to the sales charge), and
Class B and C shares had a total return of 37.53% and 37.54%(4),
respectively, (without giving effect to the CDSC). The Portfolio's benchmark,
the Russell 2000 Index, returned 37.29% for the same period, and the Russell
2000 Value Index returned 13.26%.
Despite their on-again, off-again participation in the broader stock market's
rally, small-cap stocks staged a dramatic turnaround during the Portfolio's
fiscal year. This is evident in the Russell 2000's return of 37.29% for the
twelve-month period through March 31, 2000, more than twice the S&P 500's
return of 17.94%.
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PARTICIPATING INDIRECTLY IN TECHNOLOGY'S POTENTIAL
Driven by the Portfolio's technology holdings and by companies that became
acquisition targets, the Portfolio turned in a strong performance for the
period. Our emphasis has been on companies that support or supply the more
expensive, high-valuation technology groups but trade at much lower, more
reasonable multiples to their earnings. For example, the wireless
telephony/data sector have produced outstanding gains, but at a
correspondingly high price-earnings multiple, with its relatively high
volatility and risk. Three of our larger holdings have participated
indirectly in the potential of this sector as suppliers to the major players
in the industry.
For example, KEMET Corp. (4.30% of net assets) and Vishay Intertechnology
(4.90%) supply passive resistors to wireless manufacturers and other
electronic companies, and over the last six months their earnings per share
estimates have been revised upward dramatically. COMARCO (3.70%) makes field
measurement products for the wireless communications industry and a small
power adapter that works with numerous electronic devices.
As the valuation disparity between large- and small-cap stocks reached
historically wide levels in 1999, small-cap companies became attractive
acquisition targets and mergers continued at a record pace. The Portfolio has
participated in this trend. A number of our holdings have been acquired,
including Varlen Corp. and Fore Systems in 1999; during the first quarter of
this year, Data Transmission Network (4.90%), announced that it would be
acquired.
Toward the end of the Portfolio's fiscal year, investors began to adjust
their portfolios in ways that benefited small-cap stocks, particularly stocks
of undervalued "old economy" companies. Although investors continued to favor
growth over value stocks for most of the period -- regardless of market
capitalization -- in March they began to focus on earnings and cash flow in a
dramatic shift that continued into April. We believe that this broadening of
the market and "rationalization" of valuations should continue to benefit
small-cap stocks.
Our outlook for small-cap stocks remains positive. As the volatility in
large-cap stocks has risen and returns from small-cap stocks have increased,
we believe that more money will continue to flow into the small-cap sector.
We will continue to invest in "real economy" stocks in the industrial and
consumer sectors, for example, that trade at low valuations and in technology
companies with reasonable multiples -- a strategy that we believe will
continue to serve us well.
FOCUS LIST PORTFOLIO
For the fiscal year ended March 31, 2000, the Portfolio's Class A shares had
a total return of 22.46% (without giving effect to the sales charge), and
Class B and C shares had a total return of 21.83% and 21.81%(5), respectively
(without giving effect to the CDSC). The Portfolio's benchmark, the S&P 500
Index, returned 17.94% for the same period.
With just a stumble or two along the way, technology and telecommunications
stocks roared upward throughout the Portfolio's fiscal year. Superior growth
prospects and a widespread perception that these companies were immune to the
old rules pertaining to stock valuation fueled market expectations. In
contrast, "old economy," large-cap issues wilted as investors pursued the
fast-growing "new economy" stocks. As a result, the Portfolio benefited from
its heavy weighting in technology and telecommunications issues. Intel (5.19%
of net assets), EMC Corp. (6.04%), Project Software (7.12%), America Online
(6.21%) and Qwest (5.47%) all made impressive contributions to performance.
CONSUMER STOCKS POST GAINS
Given investors' fixation with the "new economy," however, it was difficult
for other sectors to attract investors' attention throughout the period.
Nonetheless, while the vast majority of stocks could not keep pace with the
market's favorites, the performance of many stocks was in line with
historical averages. For instance, among the Portfolio's holdings, Starbucks
(7.06%), Pepsi Bottling Group (4.25%) and Darden Restaurants (3.79%) all had
gains, which in any other market climate would have been considered very
respectable. (To lock in profits, we sold Starbucks just after the fiscal
year end.)
4
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When all was said and done, however, activity in and the prospects of "new
economy" issues dominated the headlines and the airwaves throughout the year.
Nevertheless, in March, some of the groundswell of enthusiasm for issues
whose valuations were built solely on long-term potential rather than current
profits began to dissipate. Money began moving back into more traditional
sectors where -- having been out of the spotlight for well over a year --
bargains abounded. Consequently, while the past year was a very good one for
technology and telecommunication issues generally, the environment became
much more selective at the period's end.
Going forward, we expect it to become even more so. By the end of March, many
of the "not quite ready for prime time" new economy issues corrected
dramatically. Telecommunications and technology issues with earnings and a
strong "concept" generally weathered the storm. Moreover, the prospects for
these sectors remain positive since their products and services will continue
to change the way we live and do business for some time to come. Those
companies with strong fundamentals coupled with truly innovative ideas will
continue to offer investors exceptional opportunity. The Portfolio intends to
remain heavily weighted in these issues.
BALANCED PORTFOLIO
For the fiscal year ended March 31, 2000, the Portfolio's Class A shares had
a total return of (1.21)% (without giving effect to the sales charge), and
Class B and C shares both had a total return of (1.68)%(6) (without giving
effect to the CDSC). The Portfolio's broad-based securities market index, the
S&P 500 Index, returned 17.94% while the Lipper Balanced Fund Index returned
10.46% for the same period.
With technology stocks driving the stock market's performance, the
twelve-month period that ended March 31, 2000, was very difficult for
investment managers who primarily adhere to a value style of investing as we
do. For most of 1999 and early 2000, the flight to ultra-high growth "new
economy" stocks continued, as investors turned a blind eye to fundamentals
such as price-to-earnings and price-to-cash flow ratios.
During this volatile period, we have gradually and selectively increased the
Portfolio's exposure to technology and communications stocks whose valuations
have fallen within our investing parameters. Last fall, we added
Hewlett-Packard (1.60% of net assets) and Intel (1.88%).
NEW VALUE IN "OLD ECONOMY" STOCKS
As our fiscal year drew to a close, investors switched abruptly from
technology to traditional companies with real earnings and cash flow, which
has benefited the kinds of stocks held in the Portfolio. The turning point in
market sentiment occurred when Procter & Gamble announced an unexpected
earnings shortfall in early March that caused its stock to plummet and
triggered a decline in many other "old economy" stocks. We took advantage of
this retreat to buy quality companies with depressed valuations, including
Procter & Gamble (1.00% of net assets), which has an improving product line
and expected long-term earnings growth of 10%-12%, and Abbott Laboratories
(1.40%), which is selling at a discount of approximately 20% to the market
but has an expected long-term earnings growth rate of 12%-14%.
Anticipating that financial services companies would benefit from an
increasingly deregulated environment, we started building a large position in
the financial services sector last year, and Fannie Mae (1.85%), Bank of New
York (1.95%) and Citigroup (1.84%) are among our largest equity holdings.
The twelve months ended March 31, 2000, was also an unusually volatile period
in the fixed income markets as the Federal Reserve Board raised short-term
interest rates five times to fight inflation. Due to several unusual and
unrelated developments, the yield curve inverted during the first quarter of
this year. This was caused by the increase in short-term rates and the
decrease in long-term rates resulting from the Government's buyback of its
outstanding bonds and its announcement that it would hold fewer 30-year
auctions.
5
<PAGE>
Agency bonds should have picked up the slack, but their prices fell as the
Treasury voiced concern about an expected surge in agency debt. As a result,
the yield differential between Treasuries and agency issues widened,
beginning a domino effect that rippled through other sectors of the market.
The Portfolio's performance was helped by the fact that it does not hold
agency issues. However, corporate bonds also came under pressure as investors
feared that companies would turn to leveraged buyouts to enhance shareholder
value at bondholders' expense, since additional leverage increases the risk
of a sudden downgrade in credit quality.
We will continue to maintain an overweighting in corporate and
mortgage-backed issues, which have become very cheap. To maintain quality, we
are focusing on issues of large companies in sectors that are less likely to
succumb to restructuring, such as financial services, energy producers and
retail sales. With the yield curve inverted, we will continue to focus on 2-7
year maturities, where we are finding the best value.
INTERNATIONAL EQUITY PORTFOLIO**
For the fiscal year ended March 31, 2000, the Portfolio's Class A shares had
a total return of 85.67% (without giving effect to the sales charge), and
Class B and C shares had a total return of 84.66% and 84.65%(7), respectively
(without giving effect to the contingent deferred sales charge, or CDSC).The
Portfolio's benchmark, the Morgan Stanley Capital International Europe,
Australasia, Far East (EAFE) Index, returned 25.40% for the same period.
During the twelve-month period ended March 31, 2000, the Portfolio
significantly outperformed its benchmark. This was due primarily to our focus
on countries with the most favorable market characteristics as conditions
changed throughout the year and a heavy concentration in large-cap quality
growth stocks. Initially, the Portfolio was heavily overweighted in Asia
relative to its benchmark and underweighted in Europe. By period's end, the
magnitude of these over and underweightings was reduced. Throughout the
fiscal year, we concentrated on large, well-established growth companies that
appeared best positioned to capitalize on investors' enthusiasm for the "new
economy."
TECHNOLOGY ISSUES REIGN WORLDWIDE
During the past twelve months, international markets performed strongly as a
result of several positive trends. Asian markets continued to strengthen,
including Japan's, where the government has begun making progress on
structural reforms. Expectations that the monetary union would be a catalyst
for more rapid change, coupled with more favorable political sentiment, led
to a rally in the European markets. As a result, the stage was set for what
became a global phenomenon: the spectacular rise of technology and
telecommunications issues.
Around the world, "new economy" issues outperformed "old economy" stocks by a
substantial margin. By mid-March, with the valuation in relative performance
breathtakingly wide, bargains in "old economy" issues had become too
widespread and attractive to ignore. Although the rise in technology and
telecommunications stocks was responsible for the strong performance of the
world's markets, by mid-March money began moving back into more traditional
sectors.
Although the Portfolio was affected by the March downdraft, the impact was
blunted due to the fact that in all markets, our holdings were concentrated
in well-known, large-cap companies. Moreover, in the latter half of the
period, we had begun to place greater emphasis on what we call "tangible
tech," that is, those companies producing the hardware for and the backbone
of wireless and Internet technologies, such as Nokia (4.19% of net assets),
STMicroelectronics (3.29%) and Rohm (1.53%). At the same time, we gradually
reduced our exposure in the software and Internet sectors.
6
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By period's end, we had shifted our regional allocations somewhat in response
to improving fundamentals in Continental Europe, where the prospects of
German tax reform and increased merger activity are helping to improve the
outlook for the "euro zone." As a result, we have raised our weighting in
Continental Europe and reduced the magnitude of our overweight position in
Asia, where we continue to be positive.
Despite the extreme volatility in recent weeks, we believe that the outlook
for world markets remains positive. Market leadership is likely to be broader
going forward than it has been over the past 18 months. In this environment,
we continue to emphasize high-quality "new economy" companies with a strong
franchise, and have begun to broaden the Portfolio to include what we believe
to be some of the best "old economy" growth stocks.
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 and Trustee
The Bear Stearns Funds
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* 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, 2000, the Portfolio's Class A shares
had a total return of 42.52%, including the initial 5.50% maximum sales
charge and Class B shares returned 45.13% including the 5.00% CDSC and
Class C shares returned 49.15%, including the 1.00% CDSC.
(2)For the fiscal year ended March 31, 2000, the Portfolio's Class A shares
had a total return of (5.12)%, including the initial 5.50% maximum sales
charge and the Class B shares returned (5.07)%, including the 5.00% CDSC
and Class C shares returned (1.06)%, including the 1.00% CDSC.
(3)For the fiscal year ended March 31, 2000, the Portfolio's Class A shares
had a total return of (9.40)%, including the initial 5.50% maximum sales
charge and the Class B shares returned (9.64)%, including the 5.00% CDSC
and Class C shares returned (6.24)%, including the 1.00% CDSC.
(4)For the fiscal year ended March 31, 2000, the Portfolio's Class A shares
had a total return of 30.63%, including the initial 5.50% maximum sales
charge and the Class B shares returned 32.53%, including the 5.00% CDSC
and Class C shares returned 36.54%, including the 1.00% CDSC.
(5)For the fiscal year ended March 31, 2000, the Portfolio's Class A shares
had a total return of 15.71%, including the initial 5.50% maximum sales
charge and the Class B shares returned 16.83%, including the 5.00% CDSC
and Class C shares returned 20.81%, including the 1.00% CDSC.
(6)For the fiscal year ended March 31, 2000, the Portfolio's Class A shares
had a total return of (6.62)%, including the initial 5.50% maximum sales
charge and the Class B shares returned (6.45)%, including the 5.00% CDSC
and Class C shares returned (2.63)%, including the 1.00% CDSC.
(7)For the fiscal year ended March 31, 2000, the Portfolio's Class A shares
had a total return of 75.48%, including the initial 5.50% maximum sales
charge and the Class B shares returned 79.66%, including the 5.00% CDSC
and Class C shares returned 83.65%, 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.
7
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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. BROAD-BASED INDEX
[GRAPH]
<TABLE>
<CAPTION>
Class A shares Class C shares S&P 500 Composite Index
<S> <C> <C> <C>
Apr. 5, 1995 $ 9,450.00 $10,000.00 $ 10,000.00
$ 10,571.43 $11,083.33 $ 10,800.00
Sept. 30, 1995 $ 11,444.45 $11,975.00 $ 11,700.00
$ 11,644.82 $12,170.34 $ 12,375.00
Mar. 31, 1996 $ 12,158.20 $12,691.32 $ 13,075.00
$ 12,304.88 $12,836.51 $ 13,620.00
Sept. 30, 1996 $ 13,282.76 $13,835.76 $ 14,095.00
$ 14,878.37 $15,471.38 $ 15,225.00
Mar. 31, 1997 $ 14,208.88 $14,763.54 $ 15,653.00
$ 16,411.13 $17,034.15 $ 18,450.00
Sept. 30, 1997 $ 19,353.33 $20,058.56 $ 19,756.79
$ 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 $ 23,923.36
Sept. 30, 1998 $ 19,056.42 $19,647.04 $ 21,543.56
$ 24,523.71 $25,254.31 $ 26,131.58
Mar. 31, 1999 $ 25,995.13 $26,716.53 $ 27,433.48
$ 26,598.22 $28,613.40 $ 29,366.12
Sept. 30, 1999 $ 24,028.83 $27,056.83 $ 27,532.03
$ 31,872.63 $34,199.83 $ 31,628.30
Mar. 31, 2000 $ 38,903.00 $40,122.00 $ 32,352.75
</TABLE>
Past performance is not predictive of future performance.
S&P STARS PORTFOLIO
<TABLE>
<S> <C>
Class A shares.............. $38,903
Class C shares.............. 40,122
S&P 500 Composite Index..... 32,353
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED
MARCH 31, 2000 AVERAGE ANNUAL(4)
--------------- -----------------
<S> <C> <C>
S&P STARS Portfolio(2)
Class A shares(5)............ 42.52% 31.26%
Class B shares(6)............ 45.13 40.64
Class C shares(7)............ 49.15 32.07
Class Y shares(3)............ 51.61 31.58
S&P 500 Composite Index(1)........ 17.94 26.50
</TABLE>
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(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 average annual 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, 2000 for Class A and C shares.
(5) Reflects the initial maximum sales charge of 5.50%, for each period
shown. Without the applicable sales charge, the total returns would have
been 50.82% and 32.76%, respectively, for each period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total returns would have been 50.13% and
41.51%, respectively, for each period shown. Assuming no redemption of
shares at the end of the period, the average annual 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, 2000 would have been 50.15%.
CDSC - Contingent Deferred Sales Charge
8
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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
[GRAPH]
<TABLE>
<CAPTION>
Class A shares Class C shares S&P MidCap 400 Index
<S> <C> <C> <C>
June 16, 1995 $9,450 $10,000 $10,000
September 30, 1995 $10,386 $10,975 $11,123
March 31, 1996 $11,031 $11,633 $11,974
September 30, 1996 $12,111 $12,733 $12,681
March 31, 1997 $13,051 $13,691 $13,249
September 30, 1997 $16,623 $17,388 $17,639
March 31, 1998 $19,057 $19,874 $19,743
September 30, 1998 $15,839 $16,480 $16,525
March 31, 1999 $19,114 $19,842 $19,829
September 30, 1999 $18,608 $19,273 $20,739
March 31, 2000 $19,191 $19,828 $27,387
</TABLE>
Past performance is not predictive of future performance.
THE INSIDERS SELECT FUND
<TABLE>
<S> <C>
Class A shares.......... $19,191
Class C shares.......... 19,828
S&P Midcap 400 Index.... 27,387
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED
MARCH 31, 2000 AVERAGE ANNUAL(4)
--------------- -----------------
<S> <C> <C>
The Insiders Select Fund(2)
Class A shares(5)........... (5.12)% 14.55%
Class B shares(6)........... (5.07) 3.59
Class C shares(7)........... (1.06) 15.34
Class Y shares(3)........... 0.72 16.22
S&P MidCap 400 Index(1).......... 38.09 23.37
</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 average annual 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, 2000 for Class A and C shares.
(5) Reflects the initial maximum sales charge of 5.50%, for each period
shown. Without the applicable sales charge, the total returns would have
been 0.40% and 15.92% respectively, for each period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total returns would have been (0.13)% and
5.28%, respectively, for each period shown. Assuming no redemption of
shares at the end of the period, the average annual 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 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, 2000 would have been (0.07)%.
CDSC - Contingent Deferred Sales Charge
9
<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
[GRPAH]
<TABLE>
<CAPTION>
Class A Shares Class C Shares S&P 500 Composite Index
<S> <C> <C> <C>
Apr. 4, 1995 $9,450.00 $10,000.00 $10,000.00
$10,190.50 $10,683.30 $10,800.00
Sept. 30, 1995 $11,293.60 $11,825.00 $11,700.00
$11,913.70 $12,462.60 $12,375.00
Mar. 31, 1996 $12,033.00 $12,571.00 $13,075.00
$12,041.00 $12,562.70 $13,150.00
Sept. 30, 1996 $12,255.70 $12,771.10 $14,095.00
$13,625.10 $14,178.70 $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 $20,086.00 $20,785.20 $23,321.00
$20,298.10 $20,976.40 $24,091.00
Sept. 30, 1998 $17,713.80 $18,280.10 $21,695.00
$20,645.40 $21,289.60 $26,315.00
Mar. 31, 1999 $20,824.70 $21,454.00 $27,626.00
$22,481.00 $23,131.30 $29,572.00
Sept. 30, 1999 $20,276.10 $20,829.10 $27,725.00
$20,692.20 $21,241.40 $31,850.00
Mar. 31, 2000 $19,803.40 $20,297.10 $32,580.00
</TABLE>
Past performance is not predictive of future performance.
LARGE CAP VALUE PORTFOLIO
<TABLE>
<S> <C>
Class A shares............ $18,812.00
Class C shares............ $20,115.00
S&P 500 Composite Index... $32,580.00
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED
MARCH 31, 2000 AVERAGE ANNUAL(4)
--------------- -----------------
<S> <C> <C>
Large Cap Value Portfolio(2)
Class A shares(5)............ (9.40)% 14.64%
Class B shares(6)............ (9.64) 3.73
Class C shares(7)............ (6.24) 15.21
Class Y shares(3)............ (4.51) 14.11
S&P 500 Composite Index(1)........ 17.94 26.65
</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 average annual 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, 2000 for Class A and C shares.
(5) Reflects the initial maximum sales charge of 5.50%, for each period
shown. Without the applicable sales charge, the total returns would have
been (4.91)% and 15.77% respectively, for each period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total returns would have been (5.41)% and
4.92%, respectively, for each period shown. Assuming no redemption of
shares at the end of the period, the average annual 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 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, 2000 would have been (5.39)%.
CDSC - Contingent Deferred Sales Charge
10
<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
[GRAPH]
<TABLE>
<CAPTION>
Class A shares Class C shares Russell 2000 Index
<S> <C> <C> <C>
Apr. 3, 1995 $9,450.00 $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 $17,416.00
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 $14,620.00
$18,306.23 $18,834.14 $17,025.00
Mar. 31, 1999 $16,737.39 $17,203.10 $16,100.00
$19,242.98 $20,691.89 $18,598.00
Sept. 30, 1999 $17,999.39 $19,331.12 $17,412.00
$19,743.43 $21,170.13 $20,650.00
Mar. 31, 2000 $22,953.00 $23,663.00 $22,113.00
</TABLE>
Past performance is not predictive of future performance.
SMALL CAP VALUE PORTFOLIO
<TABLE>
<S> <C>
Class A shares......... $22,953
Class C shares......... 23,663
Russell 2000 Index..... 22,113
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED
MARCH 31, 2000 AVERAGE ANNUAL(4)
--------------- -----------------
<S> <C> <C>
Small Cap Value Portfolio(2)
Class A shares(5)............. 30.63% 18.08%
Class B shares(6)............. 32.53 10.89
Class C shares(7)............. 36.54 18.80
Class Y shares(3)............. 38.86 18.77
Russell 2000 Index(1).............. 37.29 17.20
</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 average annual 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, 2000 for Class A and C shares.
(5) Reflects the initial maximum sales charge of 5.50%, for each period
shown. Without the applicable sales charge, the total returns would have
been 38.21% and 19.42% respectively, for each period shown.
(6) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, the total returns would have been 37.53% and
12.09%, respectively, for each period shown. Assuming no redemption of
shares at the end of the period, the average annual 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, 2000 would have been 37.54%.
CDSC - Contingent Deferred Sales Charge
11
<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
[GRAPH]
<TABLE>
<CAPTION>
Class A Class B Class C S&P 500
shares shares shares Composite Index
<S> <C> <C> <C> <C>
Dec. 31,1997 $9,450.00 $10,000.00 $10,000.00 $10,000.00
Mar. 31,1998 $10,551.20 $11,150.00 $11,150.00 $11,394.88
June 30, 1998 $10,645.60 $11,233.30 $11,233.30 $11,771.02
Sept. 30,1998 $9,511.80 $10,025.00 $10,025.00 $10,600.09
Dec. 31,1998 $12,627.10 $13,288.60 $13,305.30 $12,857.54
Mar. 31,1999 $13,660.30 $14,340.30 $14,348.70 $13,498.11
June 30, 1999 $14,236.00 $14,924.60 $14,933.00 $14,449.03
Sept. 30, 1999 $13,423.70 $14,048.20 $14,056.50 $13,546.03
Dec. 31,1999 $15,947.50 $16,677.50 $16,685.90 $15,562.09
Mar. 31, 2000 $16,728.30 $17,170.50 $17,478.80 $15,918.54
</TABLE>
Past performance is not predictive of future performance.
FOCUS LIST PORTFOLIO
<TABLE>
<S> <C>
Class A shares............ $16,728
Class B shares............ 17,170
Class C shares............ 17,479
S&P 500 Composite Index... 15,918
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED
MARCH 31, 2000 AVERAGE ANNUAL(3)
--------------- -----------------
<S> <C> <C>
0Focus List Portfolio(2)
Class A shares(4).............. 15.71% 25.60%
Class B shares(5).............. 16.83 27.06
Class C shares(6).............. 20.81 28.06
S&P 500 Composite Index(1).......... 17.94 22.93
</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,
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) For the period of December 29, 1997 (commencement of investment
operations) through March 31, 2000.
(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 22.46% and 28.79% respectively, for each period
shown.
(5) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, total returns would have been 21.83% and
28.04%, 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, 2000 would have been 21.81%.
12
<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
[GRAPH]
<TABLE>
<CAPTION>
S&P 500 Lipper Balanced
Class A shares Class B shares Class C shares Composite Index Fund Index
<S> <C> <C> <C> <C> <C>
Dec.31,1997 $ 9,450.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00
Mar.31,1998 $ 10,209.78 $ 10,791.86 $ 10,791.86 $ 11,394.88 $ 10,791.06
Jun/ 30, 1998 $ 10,400.67 $ 10,435.00 $ 10,872.00 $ 11,771.02 $ 10,955.14
Sept.30,1998 $ 9,792.26 $ 10,325.17 $ 10,325.17 $ 10,600.09 $ 10,321.13
Dec.31,1998 $ 10,601.96 $ 10,610.00 $ 11,053.00 $ 12,857.54 $ 11,508.65
Mar.31,1999 $ 10,619.59 $ 10,579.00 $ 11,186.48 $ 13,498.11 $ 11,693.30
Jun/ 30, 1999 $ 11,105.64 $ 11,196.00 $ 11,660.00 $ 14,449.03 $ 12,218.84
Sept. 30, 1999 $ 9,848.61 $ 9,838.47 $ 10,837.46 $ 13,546.60 $ 11,712.50
Dec.31,1999 $ 10,581.17 $ 10,690.00 $ 11,082.00 $ 15,562.09 $ 12,541.73
Mar. 31, 2000 $ 10,499.00 $ 10,690.00 $ 10,990.00 $ 15,918.54 $ 12,915.36
</TABLE>
Past performance is not predictive of future perfomance.
BALANCED PORTFOLIO
<TABLE>
<S> <C>
Class A shares............... $ 10,498
Class B shares............... 10,690
Class C shares............... 10,990
S&P 500 Composite Index...... 15,918
Lipper Balanced Fund Index... 12,915
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED
MARCH 31, 2000 AVERAGE ANNUAL(3)
--------------- -----------------
<S> <C> <C>
Balanced Portfolio(2)
Class A shares(4)............... (6.62)% 2.18%
Class B shares(5)............... (6.45) 3.00
Class C shares(6)............... (2.63) 4.27
Class Y shares(7)............... (0.75) 5.17
Lipper Balanced Fund Index(1)........ 10.46 12.03
S&P 500 Composite Index(1)........... 17.94 22.93
</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 either 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,
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) For the period of December 29, 1997 (commencement of investment
operations) through March 31, 2000 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 (1.21)% and 4.77%, respectively, for each period
shown.
(5) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, total returns would have been (1.68)% and
4.27%, 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, 2000 would have been (1.68)%.
(7) The average annual return of Class Y shares (for which January 6, 1998
was the initial public offering date) would have been higher than Class
A, B, 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
13
<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
[GRAPH]
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares MSCI EAFE Index
<S> <C> <C> <C> <C>
Dec. 31, 1997 $9,450.00 $10,000.00 $10,000.00 $10,000.00
Mar. 31, 1998 $10,842.53 $11,458.33 $11,458.33 $11,471.00
Jun. 30, 1998 $11,881.90 $12,549.99 $12,541.66 $11,592.80
Sept. 30, 1998 $10,196.86 $10,750.00 $10,750.00 $9,945.01
Dec. 31, 1998 $11,892.07 $12,527.41 $12,527.41 $11,999.70
Mar. 31, 1999 $11,923.57 $12,544.08 $12,544.08 $12,166.64
Jun. 30, 1999 $12,380.35 $13,002.51 $13,002.51 $12,475.81
Sept. 30, 1999 $13,506.55 $14,169.40 $14,169.40 $13,023.33
Dec. 31, 1999 $21,630.12 $22,666.74 $22,666.74 $15,235.35
Mar. 31, 2000 $22,139.06 $22,863.34 $23,163.25 $15,219.33
</TABLE>
Past performance is not predictive of future performance.
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<S> <C>
Class A shares........ $22,139
Class B shares........ $22,863
Class C shares........ $23,163
MSCI EAFE Index......... $15,219
</TABLE>
TOTAL RETURNS
<TABLE>
<CAPTION>
ONE YEAR ENDED
MARCH 31, 2000 AVERAGE ANNUAL(3)
--------------- -----------------
International Equity Portfolio(2)
<S> <C> <C>
Class A shares(4)............. 75.48% 42.20%
Class B shares(5)............. 79.66 44.24
Class C shares(6)............. 83.65 45.07
MSCI EAFE Index(1)................. 25.40 20.50
</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,
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) For the period of December 29, 1997 (commencement of investment
operations) through March 31, 2000.
(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 85.67% and 45.81% respectively, for each period
shown.
(5) Reflects the applicable contingent deferred sales charge. Without the
applicable sales charge, total returns would have been 84.66% and
45.08%, 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, 2000 would have been 84.65%.
14
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
MARCH 31, 2000
(UNAUDITED)
TOP TEN INDUSTRY WEIGHTINGS
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
-------------------------------------------------------------------------------------
<S> <C> <C>
1. Electronic Components..................................... 7.39
2. Networking Products....................................... 6.87
3. Electronics............................................... 6.72
4. Cable TV.................................................. 6.32
5. Telecommunications........................................ 6.09
6. Oil & Gas Drilling........................................ 5.71
7. Commercial Services....................................... 5.62
8. Diversified Operations.................................... 5.56
9. Cellular Telecommunications............................... 5.19
10. Banks..................................................... 3.03
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
TOP TEN HOLDINGS*
---------------------------------------------------------------------------------------------------------------------------
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
------- ------------------------------ ------------------------------- ----------
<S> <C> <C> <C>
1. Cisco Systems, Inc......................... Networking Products 6.11
2. Global Marine Inc.......................... Oil & Gas Drilling 5.71
3. Comcast Corp., Special Class A............. Cable TV 4.72
4. Adobe Systems Inc.......................... Electronics 4.71
5. Sprint Corp. (PCS Group)................... Cellular Telecommunications 4.34
6. Tyco International Ltd..................... Diversified Operations 3.01
7. AT&T Corp.................................. Telephone Integrated 2.92
8. GM Hughes Electronics Corp................. Electronics & Electrical Equipment 2.85
9. Xilinx, Inc................................ Electronic Components 2.53
10. Duff & Phelps Credit Rating Co............. Commercial Services 2.42
</TABLE>
-----------------------------------------
* The Portfolio's holdings will change over time.
15
<PAGE>
THE BEAR STEARNS FUNDS
The Insiders Select Fund
MARCH 31, 2000
(UNAUDITED)
TOP TEN INDUSTRY WEIGHTINGS
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
---------------------------------------------------------------------------------------
<S> <C> <C>
1. Credit & Finance .............................. 10.70
2. Electronic Components - Semiconductors......... 9.83
3. Multi-Line Insurance........................... 6.08
4. Medical - Drugs................................ 5.44
5. Cosmetics & Toiletries......................... 5.22
6. Telephone - Integrated......................... 5.20
7. Financial Services............................. 5.19
8. Aerospace & Defense Equipment.................. 4.46
9. Drugs & Hospital Supplies...................... 4.45
10. Retail - Discount.............................. 4.12
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
TOP TEN HOLDINGS*
---------------------------------------------------------------------------------------------------------------------------
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
------- ------------------------------ --------------------- ----------
<S> <C> <C> <C>
1. American International Group, Inc......... Multi-Line Insurance 6.08
2. Citigroup Inc............................. Financial Services 5.19
3. American Express Co....................... Credit & Finance 4.46
4. United Technologies Corp.................. Aerospace & Defense Equipment 4.46
5. Johnson & Johnson......................... Drugs & Hospital Supplies 4.45
6. Dollar General Corp....................... Retail - Discount 4.12
7. Columbia/HCA Healthcare Corp.............. Medical Services 4.09
8. Fannie Mae................................ Credit & Finance 3.98
9. Kimberly-Clark Corp....................... Cosmetics & Toiletries 3.75
10. Broadwing Inc............................. Telecommunications 3.72
</TABLE>
----------------------------------------
* The Portfolio's holdings will change over time.
16
<PAGE>
THE BEAR STEARNS FUNDS
Large Cap Value Portfolio
MARCH 31, 2000
(UNAUDITED)
TOP TEN INDUSTRY WEIGHTINGS
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
--------------------------------------------------------
<S> <C> <C>
1. Medical - Drugs................... 9.81
2. Oil Companies - Integrated ....... 9.71
3. Cosmetics & Toiletries............ 8.94
4. Credit & Finance.................. 5.70
5. Computers - Micro................. 5.62
6. Banks............................. 4.80
7. Life/Health Insurance............. 4.17
8. Retail - Restaurants.............. 3.42
9. Automobiles....................... 3.38
10. Financial Services................ 3.31
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
TOP TEN HOLDINGS*
---------------------------------------------------------------------------------------------------------------------------
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
------- ------------------------------ ------------------------------- ----------
<S> <C> <C> <C>
1. Baxter International Inc.................... Medical - Drugs 3.54
2. Fannie Mae.................................. Credit & Finance 3.53
3. McDonald's Corp............................. Retail - Restaurants 3.42
4. Citigroup Inc............................... Financial Services 3.31
5. Atlantic Richfield Co....................... Oil Companies - Integrated 3.16
6. AT&T Corp................................... Telephone - Integrated 3.14
7. United Technologies Corp.................... Aerospace & Defense 3.13
8. Washington Mutual, Inc...................... Savings & Loan 3.09
9. International Business Machines Corp........ Computers - Micro 3.07
10. Intel Corp. Electronics 3.03
</TABLE>
-------------------------
* The Portfolio's holdings will change over time.
17
<PAGE>
THE BEAR STEARNS FUNDS
Small Cap Value Portfolio
MARCH 31, 2000
(unaudited)
TOP TEN INDUSTRY WEIGHTINGS
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
------------------------------------------------------------------
<S> <C> <C>
1. Commercial Services.................. 8.68
2. Communications....................... 8.60
3. Electronic Components................ 6.55
4. Building & Construction Products..... 5.12
5. Radio................................ 5.04
6. Medical - Drugs...................... 4.74
7. Human Resources...................... 4.39
8. Miscellaneous Industrials............ 4.30
9. Computer Software.................... 3.57
10. Food - Meat Products................. 3.51
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
TOP TEN HOLDINGS*
---------------------------------------------------------------------------------------------------------------------------
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
------- ------------------------------ ------------------------------- ----------
<S> <C> <C> <C>
1. Cox Radio, Inc., Class A............. Radio 5.04
2. Data Transmission Network Corp....... Communications 4.90
3. Vishay Intertechnology, Inc.......... Electronic Components 4.90
4. Duff & Phelps Credit Rating Co....... Commercial Services 4.76
5. Impax Laboratories, Inc.............. Medical - Drugs 4.74
6. Butler International, Inc............ Human Resources 4.39
7. KEMET Corp........................... Miscellaneous Industrials 4.30
8. Elcor Corp........................... Building & Construction Products 4.11
9. Steiner Leisure Ltd.................. Commercial Services 3.92
10. COMARCO, Inc......................... Communications 3.70
</TABLE>
-------------------------
* The Portfolio's holdings will change over time.
18
<PAGE>
THE BEAR STEARNS FUNDS
Focus List Portfolio
MARCH 31, 2000
(UNAUDITED)
TOP TEN INDUSTRY WEIGHTINGS
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
---------------------------------------------------------------------------
<S> <C> <C>
1. Technology: Computer Services........................... 9.55
2. Technology: Internet/News Media......................... 8.58
3. Technology: Enterprise Software......................... 7.12
4. Retail: Restaurants..................................... 7.06
5. Technology: Computers & Office Equipment................ 6.04
6. Telecom Services: Wireline.............................. 5.47
7. Technology: Computers................................... 5.20
8. Technology: Semiconductors.............................. 5.19
9. Basic Industry: Paper & Forest Products................. 5.14
10. Financial Services: Government - Sponsored Enterprises... 4.74
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
TOP TEN HOLDINGS*
---------------------------------------------------------------------------------------------------------------------------
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
------- ------------------------------ ------------------------------- ----------
<S> <C> <C> <C>
1. Project Software & Development, Inc......... Technology: Enterprise Software 7.12
2. Starbucks Corp.............................. Retail: Restaurants 7.06
3. America Online, Inc......................... Technology: Internet/News Media 6.21
4. EMC Corp.................................... Technology: Computers & Office Equipment 6.04
5. Qwest Communications International Inc...... Telecom Services: Wireline 5.47
6. Immersion Corp.............................. Technology: Computers 5.20
7. Intel Corp.................................. Technology: Semiconductors 5.19
8. Kimberly-Clark Corp......................... Basic Industry: Paper & Forest Products 5.14
9. Affiliated Computer Services, Inc........... Technology: Computer Services 5.01
10. Fannie Mae.................................. Financial Services: Government - Sponsored Enterprises 4.74
</TABLE>
-------------------------
* The Portfolio's holdings will change over time.
19
<PAGE>
THE BEAR STEARNS FUNDS
Balanced Portfolio
MARCH 31, 2000
(UNAUDITED)
TOP INDUSTRY WEIGHTINGS
<TABLE>
<CAPTION>
EQUITY
------------------------------------------------------------------------------------------
PERCENT OF
RANK INDUSTRY NET ASSETS
-------------------------------------------------------------------------------------------
<S> <C> <C>
1. Medical - Drugs............................ 5.62
2. Cosmetics & Toiletries..................... 5.20
3. Oil Companies - Integrated................. 4.43
4. Life/Health Insurance...................... 3.94
5. Electronics................................ 3.47
LONG-TERM DEBT
--------------------------------------------------------------------------------
1. U.S. Government Agency Obligations.................. 19.12
2. Mortgage Backed Securities.......................... 2.88
3. Food & Beverages.................................... 2.88
4. Financial........................................... 2.42
5. U.S. Government Obligations......................... 1.75
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
TOP FIVE HOLDINGS*
---------------------------------------------------------------------------------------------------------------------------
EQUITY
---------------------------------------------------------------------------------------------------------------------------
PERCENT OF
RANK HOLDINGS NET ASSETS
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Bank of New York Co., Inc. (The).... Banks 1.95
2. Intel Corp.......................... Electronics 1.88
3. Dun & Bradstreet Corp. (The)........ Commercial Services 1.87
4. Heinz (H.J.) Co..................... Food - Miscellaneous/Diversified 1.86
5. Fannie Mae.......................... Credit & Finance 1.85
LONG-TERM DEBT
---------------------------------------------------------------------------------------------------------------------------
1. Fannie Mae................................. U.S. Government Agency Obligations 13.36
2. Government National Mortgage Association... U.S. Government Agency Obligations 5.40
3. U.S. Treasury Bonds........................ U.S. Government Obligations 1.75
4. DuPont (E.I.) de Nemours Co................ Chemicals - Diversified 1.73
5. American Home Products..................... Medical - Drugs 1.44
</TABLE>
-----------------------------------
* The Portfolio's holdings will change over time.
20
<PAGE>
THE BEAR STEARNS FUNDS
International Equity Portfolio
MARCH 31, 2000
(UNAUDITED)
TOP TEN INDUSTRY WEIGHTINGS
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
-------------------------------------------------------------------------------------
<S> <C> <C>
1. Telecommunication Equipment..................... 11.98
2. Electronic Components - Semiconductors.......... 9.75
3. Electronic Components - Miscellaneous........... 8.40
4. Telecommunication Services...................... 6.77
5. Cellular Telecommunications..................... 6.63
6. Finance - Investment Banking/Brokerage.......... 5.02
7. Computer Services............................... 4.19
8. Computers - Integrated Systems.................. 3.65
9. Internet Content................................ 3.44
10. Telephone - Integrated.......................... 2.85
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
TOP TEN HOLDINGS*
---------------------------------------------------------------------------------------------------------------------------
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
------- ------------------------------ ------------------------------- ----------
<S> <C> <C> <C>
1. Nokia Oyj............................... Telecommunication Equipment 4.19
2. Murata Manufacturing Co., Ltd........... Electronic Components - Miscellaneous 4.08
3. Telefonaktiebolaget (L.M.) Ericsson AB.. Telecommunication Equipment 3.76
4. NTT Mobile Communications Network, Inc.. Cellular Telecommunications 3.74
5. STMicroelectronics NV................... Electronic Components - Semiconductors 3.29
6. The Nikko Securities Co., Ltd........... Finance - Investment Banking/Brokerage 3.26
7. SOFTBANK Corp........................... Internet Content 2.99
8. Japan Telecom Co., Ltd.................. Telephone - Integrated 2.85
9. Tokyo Electron Ltd...................... Electronic Components - Semiconductors 2.76
10. Matsushita Communication Industrial Co., Ltd. Telecommunication Equipment 2.70
</TABLE>
--------------------------------
* The Portfolio's holdings will change over time.
21
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
COMMON STOCKS--99.82%
<S> <C> <C>
BANKS - 3.03%
520,000 FleetBoston Financial Corp. .........................$ 18,980,000
550,000 PNC Financial Services Group ........................ 24,784,375
--------------
43,764,375
--------------
CABLE TV - 6.32%
380,000 Cablevision Systems Corp., Class A*+ ................ 23,085,000
1,570,000 Comcast Corp., Special Class A*+ .................... 68,098,750
--------------
91,183,750
--------------
CELLULAR TELECOMMUNICATIONS - 5.19%
960,000 Sprint Corp. (PCS Group) (a)* ....................... 62,700,000
220,000 Vodafone Airtouch plc - ADR ......................... 12,223,750
--------------
74,923,750
--------------
COMMERCIAL SERVICES - 5.62%
380,000 Convergys Corp.*+ ................................... 14,677,500
350,000 Duff & Phelps Credit Rating Co.+++ .................. 34,890,625
1,100,000 Dun & Bradstreet Corp. (The) ........................ 31,487,500
--------------
81,055,625
--------------
COMPUTER SERVICES - 2.95%
1,100,000 Ceridian Corp.*+ .................................... 21,106,250
600,000 MarchFirst, Inc.* ................................... 21,412,500
--------------
42,518,750
--------------
COMPUTERS - MEMORY DEVICES - 1.60%
185,000 EMC Corp.* .......................................... 23,125,000
--------------
COMPUTERS - MICRO - 1.17%
180,000 Sun Micosystems, Inc.* .............................. 16,866,562
--------------
CONSULTING SERVICES - 1.04%
950,000 Gartner Group, Inc., Class A+++ ..................... 14,962,500
--------------
COSMETICS & TOILETRIES - 1.90%
490,000 Kimberly-Clark Corp.++ .............................. 27,440,000
--------------
CREDIT & FINANCE - 2.27%
220,000 American Express Co.+ ............................... 32,766,250
--------------
DATA PROCESSING/MANAGEMENT - 0.49%
260,000 Reynolds & Reynolds Co. ( The),
Class A++ ......................................... $7,020,000
--------------
DIVERSIFIED OPERATIONS - 5.56%
100,000 General Electric Co.+ ............................... 15,518,750
630,000 Roper Industries, Inc. .............................. 21,380,625
870,000 Tyco International Ltd. ............................. 43,391,250
--------------
80,290,625
--------------
ELECTRONIC COMPONENTS - 7.39%
240,000 Applied Materials, Inc.* ............................ 22,620,000
310,000 LSI Logic Corp.* .................................... 22,513,750
450,000 Vishay Intertechnology, Inc.*+ ...................... 25,031,250
440,000 Xilinx, Inc.* ....................................... 36,437,500
--------------
106,602,500
--------------
ELECTRONICS - 6.72%
610,000 Adobe Systems Inc. .................................. 67,900,625
220,000 Intel Corp. ......................................... 29,026,250
--------------
96,926,875
--------------
ELECTRONICS & ELECTRICAL EQUIPMENT - 2.85%
330,000 GM Hughes Electronics Corp*(a) ...................... 41,085,000
--------------
FOOD - MEAT PRODUCTS - 0.82%
750,000 IBP, Inc. ........................................... 11,812,500
--------------
INVESTMENT MANAGEMENT/ADVISOR SERVICE - 1.99%
670,000 Eaton Vance Corp. ................................... 28,768,125
--------------
MACHINERY - PRINT TRADE - 1.35%
390,000 Zebra Technologies Corp., Class A* .................. 19,500,000
--------------
MEDICAL - WHOLESALE DRUG DISTRIBUTION - 2.07%
650,000 Cardinal Health, Inc.+ .............................. 29,818,750
--------------
MULTIMEDIA - 1.94%
280,000 Time Warner Inc.+ ................................... 28,000,000
--------------
NETWORKING PRODUCTS - 6.87%
1,140,000 Cisco Systems, Inc.* ................................ 88,136,250
140,000 Extreme Networks, Inc.* ............................. 11,060,000
--------------
99,196,250
--------------
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
THE BEAR STEARNS FUNDS
S&P STARS Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
OIL & GAS DRILLING - 5.71%
3,250,000 Global Marine Inc.* ............................... $ 82,468,750
--------------
OIL & OFFSHORE DRILLING - 2.28%
890,000 Santa Fe International Corp.++ .................... 32,930,000
--------------
PHARMACEUTICALS - 2.52%
250,000 COR Therapeutics, Inc.* ...................... 16,480,469
50,000 Millennium Pharmaceuticals, Inc.*+ ........... 6,493,750
360,000 Teva Pharmaceutical Industries Ltd. ADR ...... 13,432,500
--------------
36,406,719
--------------
PHYSICAL THERAPY/REHABILITATION CENTERS - 1.24%
722,600 RehabCare Group, Inc.*+ ...................... 17,839,188
--------------
PUBLISHING - BOOKS - 1.57%
420,000 Scholastic Corp.* ............................ 22,653,750
--------------
RETAIL - DRUG STORES - 1.46%
560,000 CVS Corp.++ .................................. 21,035,000
--------------
RETAIL - GROCERY STORES - 1.35%
1,110,000 Kroger Co. (The)*++ .......................... 19,494,375
--------------
RETAIL - OFFICE SUPPLIES - 0.85%
610,000 Staples, Inc.*++ ............................. 12,200,000
--------------
RETAIL - RESTAURANTS - 2.74%
589,820 Consolidated Products, Inc.*++ ............... 5,566,426
1,060,000 Outback Steakhouse, Inc.*++ .................. 33,986,250
--------------
39,552,676
TELECOMMUNICATIONS - 6.09%
590,000 MCI Worldcom, Inc.* .......................... 26,734,375
260,000 Nortel Networks Corp.+ ....................... 32,760,000
190,000 QUALCOMM, Inc.*+ ............................. 28,369,375
--------------
87,863,750
--------------
TELEPHONE - INTEGRATED - 2.92%
750,000 AT&T Corp.+ ................................. 42,187,500
--------------
TELEVISION - 0.78%
100,000 Univision Communications, Inc.-- Class A* ... $ 11,300,000
--------------
TRANSPORT - TRUCK - 1.17%
450,000 USFreightways Corp. .......................... 16,846,875
--------------
Total Common Stocks
(cost - $997,583,207) ....................... 1,440,405,770
--------------
SHORT-TERM INVESTMENT 0.05%
INVESTMENT COMPANY - 0.05%
742,115 Federated Investors, Trust for Short-Term
U.S. Government Securities**+++
(cost - $742,115) ................................. 742,115
--------------
Total Investments 99.87%
(cost - $998,325,322) ............................. 1,441,147,885
Other assets in excess of
liabilities -- 0.13% .............................. 1,903,673
Net Assets 100.00% ................................. $1,443,051,558
--------------
--------------
</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.
(a) Security or a portion thereof is out on loan.
ADR - American Depositary Receipts.
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 -- Expect 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.
23
<PAGE>
THE BEAR STEARNS FUNDS
The Insiders Select Fund
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 92.76%
AEROSPACE & DEFENSE EQUIPMENT - 4.46%
20,000 United Technologies Corp. ..................... $1,263,750
--------------
AUTOMOTIVE PARTS & EQUIPMENT - 0.00%
0 Dana Corp. .................................... 11
--------------
COMMERCIAL SERVICES - 2.69%
26,700 Dun & Bradstreet Corp. (The) .................. 764,287
--------------
COMPUTER SERVICES - 3.14%
25,000 MarchFirst, Inc.* ............................ 892,187
--------------
COMPUTERS - MEMORY DEVICES - 3.68%
50,300 Cadence Design Systems, Inc.* ................ 1,043,725
--------------
COSMETICS & TOILETRIES - 5.22%
14,300 Avon Products, Inc. .......................... 415,594
19,000 Kimberly-Clark Corp. ......................... 1,064,000
--------------
1,479,594
--------------
CREDIT & FINANCE - 10.70%
8,500 American Express Co. ......................... 1,265,969
20,000 Fannie Mae ................................... 1,128,750
12,300 MBIA, Inc. ................................... 640,369
--------------
3,035,088
--------------
DRUGS & HOSPITAL SUPPLIES - 4.45%
18,000 Johnson & Johnson ............................ 1,261,125
--------------
ELECTRONIC COMPONENTS - 3.16%
16,100 Vishay Intertechnology, Inc.* ................ 895,562
--------------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 9.83%
15,000 Lattice Semiconductor Corp.* ................. 1,015,312
13,800 National Semiconductor Corp.* ................ 836,625
16,700 Novellus Systems, Inc.* ...................... 937,287
--------------
2,789,224
--------------
ELECTRONICS - 3.62%
19,400 Emerson Electric Co. ......................... $1,025,775
--------------
FINANCIAL SERVICES - 5.19%
24,800 Citigroup Inc. ............................... 1,470,950
--------------
LIFE/HEALTH INSURANCE - 1.66%
8,400 American General Corp. ....................... 471,450
--------------
MEDICAL - DRUGS - 5.44%
17,100 Abbott Laboratories .......................... 601,706
15,000 Baxter International Inc. .................... 940,313
--------------
1,542,019
--------------
MEDICAL SERVICES - 4.09%
45,800 Columbia/HCA Healthcare Corp. ................ 1,159,313
--------------
MULTI-LINE INSURANCE - 6.08%
15,750 American International Group, Inc. ........... 1,724,625
--------------
NETWORKING PRODUCTS - 2.89%
28,000 Cabletron Systems, Inc.* ..................... 820,750
--------------
RETAIL - DISCOUNT - 4.12%
43,500 Dollar General Corp. ......................... 1,169,063
--------------
RETAIL - RESTAURANTS - 3.42%
25,800 McDonald's Corp. ............................. 969,113
--------------
TELECOMMUNICATIONS - 3.72%
28,400 Broadwing Inc.* .............................. 1,056,125
--------------
TELEPHONE - INTEGRATED - 5.20%
10,900 AT&T Corp. ................................... 613,125
20,500 SBC Communications, Inc. ..................... 861,000
--------------
1,474,125
--------------
Total Common Stocks
(cost - $21,091,677) ......................... 26,307,861
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
THE BEAR STEARNS FUNDS
The Insiders Select Fund
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 7.72%
INVESTMENT COMPANY 0.11%
30,074 Federated Investors, Trust for Short-Term
U.S. Government Securities**
(cost-$30,074) ..................................... $30,074
--------------
<CAPTION>
PRINCIPAL
AMOUNT
(000'S)
------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATION - 7.61%
$2,160 Freddie Mac Discount Notes, 6.05%,
04/03/00(cost - $2,159,274) ...................... 2,159,274
--------------
Total Short-Term Investments
(cost - $2,189,34 .............................. 2,189,348
--------------
Total Investments -- 100.48%
(cost - $23,281,025) ........................... 28,497,209
Liabilities in excess of other
assets -- (0.48)% .............................. (136,881)
--------------
Net Assets-- 100.00% ............................. $28,360,328
--------------
--------------
</TABLE>
-----------
* Non-income producing security.
** Money market fund.
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, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 85.11%
AEROSPACE & DEFENSE EQUIPMENT - 3.14%
8,000 United Technologies Corp. .................... $ 505,500
--------------
AUTOMOBILES - 3.38%
3,400 Ford Motor Co. ............................... 156,187
4,700 General Motors Corp. ......................... 389,219
--------------
545,406
--------------
BANKS - 4.80%
8,000 Bank of New York Co., Inc. (The) ............. 332,500
9,800 PNC Financial Services Group ................. 441,613
--------------
774,113
--------------
BREWERY - 2.70%
7,000 Anheuser-Busch Companies, Inc. ............... 435,750
--------------
COMMERCIAL SERVICES - 2.98%
16,800 Dun & Bradstreet Corp. (The) ................. 480,900
--------------
COMPUTERS - MICRO - 5.62%
3,100 Hewlett-Packard Co. .......................... 410,944
4,200 International Business Machines Corp. ........ 495,600
--------------
906,544
--------------
COSMETICS & TOILETRIES - 8.94%
8,500 Avon Products, Inc. .......................... 247,031
11,000 Gillette Co. (The) ........................... 414,562
8,300 Kimberly-Clark Corp. ......................... 464,800
5,600 Procter & Gamble Company (The) ............... 315,000
--------------
1,441,393
--------------
CREDIT & FINANCE - 5.70%
10,100 Fannie Mae ................................... 570,019
6,700 MBIA, Inc. ................................... 348,819
--------------
918,838
--------------
DIVERSIFIED OPERATIONS - 2.84%
20,000 Viad Corp. ................................... 457,500
--------------
ELECTRIC - INTEGRATED - 1.14%
4,000 FPL Group, Inc. .............................. 184,250
--------------
ELECTRONICS - 3.03%
3,700 Intel Corp. .................................. $ 488,169
--------------
FINANCIAL SERVICES - 3.31%
9,000 Citigroup Inc. ............................... 533,812
--------------
FOOD - RETAIL - 1.35%
7,000 Albertson's Inc. ............................. 217,000
--------------
LIFE/HEALTH INSURANCE - 4.17%
5,600 American General Corp. ....................... 314,300
10,000 AXA Financial, Inc. .......................... 358,750
--------------
673,050
MEDICAL - DRUGS - 9.81%
9,600 Abbott Laboratories .......................... 337,800
9,100 Baxter International Inc. .................... 570,456
3,700 Bristol-Myers Squibb Co. ..................... 213,675
7,400 Merck & Co., Inc. ............................ 459,725
--------------
1,581,656
OIL COMPANIES - INTEGRATED - 9.71%
6,000 Atlantic Richfield Co. ....................... 510,000
4,300 Exxon Mobil Corp. ............................ 334,594
9,000 Texaco Inc. .................................. 482,625
8,000 Unocal Corp. ................................. 238,000
--------------
1,565,219
--------------
RETAIL - RESTAURANTS - 3.42%
14,700 McDonald's Corp. ............................. 552,169
--------------
SAVINGS & LOAN - 3.09%
18,785 Washington Mutual, Inc. ...................... 497,802
--------------
TELEPHONE - INTEGRATED - 3.14%
9,000 AT&T Corp. ................................... 506,250
--------------
TELEPHONE - LOCAL - 2.84%
7,500 Bell Atlantic Corp. .......................... 458,438
--------------
Total Common Stocks
(cost - $10,721,068) 13,723,759
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
THE BEAR STEARNS FUNDS
Large Cap Value Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 15.79%
INVESTMENT COMPANY 0.14%
22,751 Federated Investors, Trust for Short-Term
U.S. Government Securities* ....................... $22,751
--------------
<CAPTION>
PRINCIPAL
AMOUNT
(000'S)
---------
U.S. GOVERNMENT AGENCY OBLIGATION - 15.65%
$2,525 Freddie Mac, Discount Notes,
6.05%, 04/03/00 ................................... 2,524,151
--------------
Total Short-Term Investments
(cost - $2,546,902) ............................... 2,546,902
--------------
Total Investments -- 100.90%
(cost $13,267,970) ............................... 16,270,661
Liabilities in excess of
other assets-- (0.90)% ............................ (144,788)
--------------
Net Assets-- 100.00% ................................ $16,125,873
--------------
--------------
</TABLE>
------------
* Money market fund.
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, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 98.77%
COMMON STOCKS -- 96.41%
BATTERY MANUFACTURING - 0.97%
30,400 Rayovac Corp.* ...................................... $706,800
--------------
BEVERAGES - NON ALCOHOLIC - 0.01%
2,404 PepsiAmericas Inc.* ................................. 8,113
--------------
BOTTLING - 0.00%
646 BAESA Buenos Aires Embotelladora S.A.* .............. 39
--------------
BROADCASTING - 2.00%
94,200 Four Media Co.* ..................................... 1,454,212
--------------
BUILDING & CONSTRUCTION PRODUCTS - 5.12%
86,550 Elcor Corp. ......................................... 2,985,975
12,400 Southdown, Inc. ..................................... 731,600
--------------
3,717,575
--------------
CHEMICALS - DIVERSIFIED - 1.01%
41,400 Olin Corp.* ......................................... 734,850
--------------
COMMERCIAL SERVICES - 8.68%
34,700 Duff & Phelps Credit Rating Co. ..................... 3,459,156
147,800 Steiner Leisure Ltd.* ............................... 2,845,150
--------------
6,304,306
--------------
COMMUNICATIONS - 8.60%
78,750 COMARCO, Inc.* ...................................... 2,687,344
125,000 Data Transmission Network Corp.* .................... 3,554,687
--------------
6,242,031
--------------
COMMUNICATIONS SOFTWARE - 1.88%
49,800 Inter-Tel, Incorporated ............................. 1,363,275
--------------
COMPUTER SERVICES - 2.64%
63,900 CACI International, Inc.* ........................... 1,913,006
--------------
COMPUTER SOFTWARE - 3.57%
93,300 Communication Intelligence Corp. .................... 556,884
126,400 Zi Corp.* ........................................... 2,038,200
--------------
2,595,084
--------------
CONSUMER PRODUCTS - MISC - 0.70%
36,900 Dial Corp. (The) .................................... $507,375
--------------
DISTRIBUTION/WHOLESALE - 0.04%
6,444 Huttig Building Products, Inc.* ..................... 28,998
--------------
DIVERSIFIED OPERATIONS - 0.94%
29,000 Crane Co. ........................................... 683,312
--------------
ELECTRONIC COMPONENTS - 6.55%
26,100 Cubic Corp. ......................................... 587,250
17,300 Photronics, Inc.* ................................... 610,906
63,900 Vishay Intertechnology, Inc ......................... 3,554,437
--------------
4,752,593
--------------
FERTILIZERS - 0.20%
9,600 IMC Global Inc.* .................................... 141,000
--------------
FINANCE - CONSUMER LOANS - 0.93%
16,500 Student Loan Corporation (The)* ..................... 675,469
--------------
FINANCIAL SERVICES - 1.56%
35,900 Bank United Corp., Class A .......................... 1,133,094
--------------
FOOD - MEAT PRODUCTS - 1.27%
121,000 Hibernia Foods plc - ADR* ........................... 922,625
--------------
HOME FURNISHINGS - 1.43%
55,200 Furniture Brands International, Inc*. ......... 1,038,450
--------------
HOTELS & MOTELS - 2.98%
40,500 Station Casinos, Inc.* .............................. 883,406
256,400 U.S. Franchise Systems, Inc.* ....................... 1,282,000
--------------
2,165,406
--------------
HUMAN RESOURCES - 4.39%
257,725 Butler International, Inc.* ......................... 3,189,347
--------------
INSTRUMENTS - CONTROLS - 1.19%
47,300 Frequency Electronics, Inc.* ........................ 863,225
--------------
LIFE/HEALTH INSURANCE - 2.57%
112,000 Penn Treaty American Corp.* ......................... 1,869,000
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
SMALL CAP VALUE PROTFOLIO
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MACHINERY - CONSTRUCTION & MINING - 0.81%
40,900 Terex Corp. ......................................... $587,938
--------------
MEDICAL & DRUGS SERVICES - 2.57%
97,000 ChiRex, Inc.* ....................................... 1,867,250
--------------
MEDICAL - DRUGS - 4.62%
766,754 Impax Laboratories, Inc.* ........................... 3,354,549
--------------
MEDICAL SUPPLIES - 1.98%
29,000 INAMED Corp.* ....................................... 1,435,500
--------------
MISCELLANEOUS INDUSTRIALS - 4.30%
49,400 KEMET Corp.* ........................................ 3,124,550
--------------
MISCELLANEOUS MANUFACTURING - 1.40%
79,400 Polymer Group, Inc.* ................................ 1,012,350
--------------
NON-FERROUS METALS - 1.18%
28,100 Mueller Industries, Inc.* ........................... 853,538
--------------
OIL & GAS DRILLING - 1.84%
52,600 Global Marine Inc.* ................................. 1,334,725
--------------
RADIO - 5.04%
43,600 Cox Radio, Inc., Class A* ........................... 3,662,400
--------------
REAL ESTATE INVESTMENT TRUSTS - 1.23%
20,800 Glenborough Realty Trust Inc. ....................... 301,600
45,100 U.S. Restaurant Properties, Inc. .................... 589,119
--------------
890,719
--------------
RECREATIONAL CENTERS - 2.72%
80,700 Bally Total Fitness Holding Corp.* .................. 1,977,150
--------------
RENTAL AUTO/EQUIPMENT - 2.04%
85,900 United Rentals, Inc.* ............................... 1,481,775
--------------
RETAIL - APPAREL/SHOE - 0.55%
20,000 Claire's Stores, Inc. ............................... 401,250
--------------
RETAIL - RESTAURANTS - 1.97%
67,000 Jack in the Box Inc. ................................ 1,427,938
--------------
STEEL - 2.83%
282,900 Universal Stainless & Alloy Products, Inc.* ......... $2,051,025
--------------
TRANSPORT - 2.10%
58,900 Celadon Group, Inc.* ................................ 1,524,038
--------------
Total Common Stocks
(cost $56,885,772) ............................... 69,995,880
--------------
PREFERRED STOCKS -- 2.04%
FOOD - MEAT PRODUCTS - 2.04%
7,000 Hibernia Foods plc - ADR Convertible
Series A* (Cost $700,000) ......................... 1,482,639
--------------
RIGHTS/WARRANTS -- 0.32%
FOOD - MEAT PRODUCTS - 0.20%
70,000 Hibernia Foods plc - ADR, Class E* .................. 140,000
70,000 Hibernia Foods plc - ADR, Class F* .................. 8,750
--------------
148,750
--------------
MEDICAL - DRUGS - 0.12%
225,000 Impax Laboratories, Inc., Series C* ................. 84,375
--------------
Total Rights/Warrants
(cost $0) ........................................ 233,125
--------------
SHORT-TERM INVESTMENT -- 1.95%
INVESTMENT COMPANY
1,417,616 Federated Investors, Trust for Short-Term
U.S. Government Securities**
(cost - $1,417,616) ............................... 1,417,616
--------------
Total Investments -- 100.72%
(cost $59,003,388) ............................... 73,129,260
Liabilities in excess of other
assets -- (0.72)% ................................. (522,793)
--------------
Net Assets-- 100.00% ................................ $72,606,467
--------------
--------------
</TABLE>
-------------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund.
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, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 92.75%
BASIC INDUSTRY: MACHINERY -
CONSTRUCTION & MINING - 1.32%
35,000 Terex Corp.*+ ....................................... $503,125
--------------
BASIC INDUSTRY: PAPER & FOREST PRODUCTS - 5.14%
35,000 Kimberly-Clark Corp. ................................ 1,960,000
--------------
CONSUMER: BEVERAGES - 4.25%
81,000 Pepsi Bottling Group, Inc. (The) .................... 1,620,000
--------------
CONSUMER: RESTAURANTS - 3.79%
81,000 Darden Restaurants Inc. ............................. 1,442,812
--------------
FINANCIAL SERVICES: GOVERNMENT-SPONSORED
ENTERPRISES - 4.74%
32,000 Fannie Mae .......................................... 1,806,000
--------------
FOOD: MISCELLANEOUS/DIVERSIFIED - 0.00%
600 Vlasic Foods International Inc.*+ ................... 1,425
--------------
MEDIA/COMMUNICATIONS: BROADCASTING - 3.88%
14,800 Time Warner Inc. .................................... 1,480,000
--------------
MEDIA COMMUNICATIONS: BROADCASTING -
TV & RADIO - 4.26%
72,000 USA Networks, Inc.* ................................. 1,624,500
--------------
MEDIA COMMUNICATIONS: BROADCASTING: TELEVISION - 3.72%
25,000 CBS Corp.* .......................................... 1,415,625
--------------
MEDIA: ENTERTAINMENT/SPECIALTY - 4.29%
40,000 SFX Entertainment, Inc.* ............................ 1,632,500
--------------
RETAIL: RESTAURANTS - 7.06%
60,000 Starbucks Corp.* .................................... 2,688,750
--------------
TECHNOLOGY: COMPUTER SERVICES - 9.55%
50,200 Affiliated Computer Services, Inc. Class A* 1,907,600
26,000 BISYS Group Inc. (The)* ............................. 1,729,000
--------------
3,636,600
--------------
TECHNOLOGY: COMPUTERS - 5.20%
33,000 Immersion Corp.* .................................... 1,980,000
--------------
TECHNOLOGY: COMPUTERS & OFFICE EQUIPMENT - 6.04%
18,400 EMC Corp.* .......................................... $2,300,000
--------------
TECHNOLOGY: ELECTRONIC COMPONENTS - 3.15%
30,000 Solectron Corp.* .................................... 1,201,875
--------------
TECHNOLOGY: ENTERPRISE SOFTWARE - 7.12%
48,000 Project Software & Development, Inc.* ............... 2,712,000
--------------
TECHNOLOGY: INTERNET/NEWS MEDIA - 8.58%
35,200 America Online, Inc.* ............................... 2,367,200
36,000 Ticketmaster Online-CitySearch, Inc. Class B* ....... 902,250
--------------
3,269,450
--------------
TECHNOLOGY: SEMICONDUCTORS - 5.19%
15,000 Intel Corp. ......................................... 1,979,063
--------------
TELECOM SERVICES: WIRELINE - 5.47%
43,000 Qwest Communications International Inc.*(a) 2,085,500
--------------
Total Common Stocks
(cost - $25,613,920) .............................. 35,339,225
--------------
SHORT-TERM INVESTMENTS - 12.57%
INVESTMENT COMPANY - 0.08%
32,279 Federated Investors, Trust for Short-Term
U.S. Government Securities**+ ..................... 32,279
--------------
<CAPTION>
PRINCIPAL
AMOUNT
(000's)
----------
U.S. GOVERNMENT AGENCY OBLIGATION - 12.49%
$ 4,760 Freddie Mac, Discount Notes, - 6.05%,
04/03/00+ ......................................... 4,758,400
--------------
Total Short-Term Investments
(cost - $4,790,679) ............................... 4,790,679
--------------
Total Investments 105.32%
(cost - $30,404,598) .............................. 40,129,904
Liabilities in excess of other
assets (5.32)% ................................... (2,028,298)
--------------
Net Assets 100.00% ................................. $38,101,606
--------------
--------------
</TABLE>
----------
* Non-income producing security.
** Money market fund.
+ Not a Focus List Selection at March 31, 2000.
(a) Security or a portion thereof is out on loan.
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
THE BEAR STEARNS FUNDS
Balanced Portfolio
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 58.26%
AEROSPACE & DEFENSE EQUIPMENT - 1.62%
3,600 United Technologies Corp. ...........................$ 227,475
--------------
AUTOMOBILES - 2.45%
3,700 Ford Motor Co. ...................................... 169,969
2,100 General Motors Corp. ................................ 173,906
--------------
343,875
--------------
BANKS - 1.95%
6,600 Bank of New York Co., Inc. (The) .................... 274,312
--------------
BROADCASTING - 1.21%
11,000 Four Media Co.* ..................................... 169,812
--------------
CABLE TV - 1.67%
5,400 Comcast Corp., Class A .............................. 234,225
--------------
CELLULAR TELECOMMUNICATIONS - 0.47%
1,000 Sprint Corp. (PCS Group)* ........................... 65,312
--------------
COMMERCIAL SERVICES - 2.38%
9,200 Dun & Bradstreet Corp. (The) ........................ 263,350
3,700 Steiner Leisure Ltd.* ............................... 71,225
--------------
334,575
--------------
COMMUNICATIONS - 0.87%
4,300 Data Transmission Network Corp.* .................... 122,281
--------------
COMPUTERS - MICRO - 3.45%
1,700 Hewlett-Packard Co. ................................. 225,356
2,200 International Business Machines Corp. ............... 259,600
--------------
484,956
--------------
COSMETICS & TOILETRIES - 5.20%
3,000 Avon Products, Inc. ................................. 87,187
6,500 Gillette Co. (The) .................................. 244,969
4,600 Kimberly-Clark Corp. ................................ 257,600
2,500 Proctor & Gamble Company (The) ...................... 140,625
--------------
730,381
--------------
CREDIT & FINANCE - 3.39%
4,600 Fannie Mae .......................................... 259,612
6,500 SLM Holding Corp. ................................... 216,531
--------------
476,143
--------------
DIVERSIFIED OPERATIONS - 2.01%
2,000 Tyco International Ltd.* ............................$ 99,750
8,000 Viad Corp. .......................................... 183,000
--------------
282,750
--------------
ELECTRONICS - 3.47%
1,000 Adobe Systems Incorporated .......................... 111,312
2,000 Intel Corp. ......................................... 263,875
700 Texas Instruments Incorporated ...................... 112,000
--------------
487,187
--------------
FINANCIAL SERVICES - 1.84%
4,350 Citigroup Inc. ...................................... 258,009
--------------
FOOD - MISCELLANEOUS/DIVERSIFIED - 2.24%
7,500 Heinz (H.J.) Co. .................................... 261,563
7,000 Hibernia Foods plc - ADR* ........................... 53,375
--------------
314,938
--------------
HOTELS & MOTELS - 0.35%
9,800 U.S. Franchise Systems, Inc.* ....................... 49,000
--------------
HUMAN RESOURCES - 0.58%
6,600 Butler International, Inc.* ......................... 81,675
--------------
LIFE/HEALTH INSURANCE - 3.94%
2,300 American General Corp. .............................. 129,088
4,700 AXA Financial, Inc. ................................. 168,613
3,000 Penn Treaty American Corporation* ................... 50,063
8,900 Torchmark Inc. ...................................... 205,813
--------------
553,577
--------------
MEDICAL - DRUGS - 5.62%
5,600 Abbott Laboratories ........................... 197,050
4,000 Baxter International Inc. ........................... 250,750
1,600 Bristol-Myers Squibb Co. ............................ 92,400
10,000 Impax Laboratories, Inc.* ........................... 43,750
3,300 Merck & Co., Inc. ................................... 205,013
--------------
788,963
--------------
MULTIMEDIA - 0.71%
1,000 Time Warner Inc. .................................... 100,000
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
THE BEAR STEARNS FUND
PORTFOLIO OF INVESTMENTS
BALANCED PORTFOLIO
MARCH 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS (CONTINUED)
OIL & GAS DRILLING - 0.72%
4,000 Global Marine Inc.* ................................. $101,500
--------------
OIL COMPANIES - INTEGRATED - 4.43%
900 Atlantic Richfield Co. .............................. 76,500
2,800 Exxon Mobile Corp. .................................. 217,875
4,400 Texaco Inc. ......................................... 235,950
3,100 Unocal Corp. ........................................ 92,225
--------------
622,550
--------------
RADIO - 0.60%
1,000 Cox Radio, Inc., Class A* ........................... 84,000
--------------
RENTAL AUTO/EQUIPMENT - 0.43%
3,500 United Rentals, Inc.* ............................... $60,375
--------------
RETAIL - RESTAURANTS - 1.77%
6,600 McDonald's Corp. .................................... 247,913
--------------
SAVINGS & LOAN - 1.59%
8,450 Washington Mutual, Inc. ............................. 223,925
--------------
TELEPHONE - INTEGRATED - 3.30%
4,500 AT&T Corp ........................................... 253,125
5,000 SBC Communications, Inc. ............................ 210,000
--------------
463,125
--------------
Total Equity Securities
(cost - $7,480,244) ............................... 8,182,834
--------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATES DATES
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS - 40.09%
CORPORATE OBLIGATIONS - 19.22%
AUTOMOBILES - 1.06%
$ 150 Honda Auto Lease Trust, Series 1999-A Class A4 ..... 6.450% 09/16/02 148,374
---------
CHEMICALS - DIVERSIFIED - 1.73%
250 DuPont (E.I.) de Nemours Co., Notes ................ 6.750 09/01/07 243,125
---------
COMPUTER SERVICES - 1.05%
150 Electronic Data Systems, Notes ..................... 6.850 10/15/04 147,938
---------
FINANCIAL - 2.42%
70 Associates Corp. N.A., Senior Notes ................ 6.000 07/15/05 65,538
100 Finova Capital Corp., Notes 7.250 11/08/04 96,000
50 General Electric Capital Corp., Debentures, Series A 8.850 04/01/05 53,563
125 Lehman Brothers Holdings Inc., Notes ............... 7.875 11/01/09 125,313
---------
340,414
---------
FOOD & BEVERAGES - 2.88%
75 Anheuser-Busch Cos., Inc., Notes ................... 6.750 06/01/05 73,500
150 Safeway Inc., Notes ................................ 6.050 11/15/03 144,000
200 Sara Lee Corp., Medium-Term Notes .................. 6.150 06/19/08 186,500
---------
404,000
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
THE BEAR STEARNS FUND
PORTFOLIO OF INVESTMENTS
BALANCED PORTFOLIO
MARCH 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATES DATES VALUE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
MEDICAL - DRUGS - 1.44%
$ 200 American Home Products, Notes ...................... 7.900% 02/15/05 $202,750
---------
MORTGAGE BACKED SECURITIES - 2.88%
100 Conseco Finance Home Equity Loan, Series 2000-B, Class AF2 7.340 02/15/31 100,016
100 Green Tree Home Improvement Loan Trust, Series 1998-D, Class HEA3 6.130 08/15/29 98,777
100 J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C9 Class A2 7.770 10/15/32 102,207
100 UCFC Home Equity Loan, Series 1996-B1 Class A6 7.975 02/15/22 104,061
---------
405,061
---------
MULTIMEDIA - 1.51%
150 Time Warner Inc., Debentures ....................... 6.850 01/15/26 147,750
75 Time Warner Inc., Senior Notes, Company Guaranteed . 6.625 05/15/29 64,219
---------
211,969
---------
OIL - 0.65%
100 Enron Oil & Gas Resources Inc., Notes .............. 6.000 12/15/08 91,125
---------
OIL FIELD MACHINERY & EQUIPMENT - 0.68%
100 Smith International Inc., Senior Notes ............. 7.000 09/15/07 95,375
---------
RETAIL - 1.58%
100 Gap, Inc., Notes ................................... 6.900 09/15/07 98,500
125 TJX Companies Inc., Notes .......................... 7.450 12/15/09 123,906
---------
222,406
---------
TELEPHONE - LOCAL - 0.55%
75 BellSouth Capital Funding, Debentures .............. 7.875 02/15/30 76,875
---------
TRANSPORT - RAIL - 0.79%
125 Burlington North Santa Fe, Debentures .............. 6.750 03/15/29 110,938
---------
Total Corporate Obligations (cost - $2,755,712) .... 2,700,350
---------
U.S. GOVERNMENT OBLIGATIONS - 1.75%
U.S. TREASURY BONDS - 1.75%
225 U.S. Treasury Bonds (cost - $239,455) .............. 6.125-7.500 11/15/16-11/15/27 245,609
---------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 19.12%
FANNIE MAE - 13.36%
1,746 Pass-Thru Pools .................................... 6.000-8.000 08/01/06-12/01/29 1,683,787
200 TBA ................................................ 7.000 10/01/25 192,250
---------
1,876,037
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
THE BEAR STEARNS FUND
PORTFOLIO OF INVESTMENTS
BALANCED PORTFOLIO
MARCH 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATES DATES VALUE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
FREDDIE MAC - 0.36%
$ 53 Pass-Thru Pools .................................... 7.000% 5/01/26 $51,085
---------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 5.40%
650 Pass-Thru Pools .................................... 6.500-8.500 07/15/17-06/15/28 633,932
125 TBA ................................................ 7.500 03/15/25 123,906
---------
757,838
---------
Total U.S. Government Agency Obligations (cost - $2,773,613) 2,684,960
---------
Total Long-Term Debt Investments
(cost - $5,768,780) .............................. 5,630,919
---------
<CAPTION>
SHARES
-----------
SHORT-TERM INVESTMENTS -- 3.28%
INVESTMENT COMPANY - 1.15%
161,911 Federated Investors, Trust for Short-Term U.S. Government Securities(1)** 5.620 -- 161,911
---------
<CAPTION>
PRINCIPAL
AMOUNT
(000'S)
-----------
U.S. GOVERNMENT AGENCY OBLIGATION - 2.13%
$ 300 Fannie Mae, Discount Notes(1) ...................... 5.830 04/13/00-04/19/00 299,296
-----------
Total Short-Term Investments (cost - $461,207) ..... 461,207
-----------
Total Investments 101.63% (cost - $13,710,231) .... 14,274,960
Liabilities in excess of other assets -- (1.63)% ... (228,544)
-----------
Net Assets -- 100.00% .............................. $14,046,416
-----------
-----------
</TABLE>
---------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund.
(1) A portion of which was segregated as collateral for TBA securities.
TBA To Be Announced.
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, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 84.80%
AUSTRALIA - 0.62%
MULTIMEDIA - 0.62%
42,300 The News Corporation Ltd.
(cost - $619,786) ................................. $ 591,063
-----------
CANADA - 3.73%
COMMUNICATIONS SOFTWARE - 0.79%
7,100 Research in Motion Ltd.* ............................ 756,150
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 1.28%
6,000 PMC-Sierra, Inc.* ................................... 1,222,125
-----------
INTERNET SOFTWARE - 0.33%
2,500 724 Solutions, Inc.* ................................ 311,250
-----------
TELECOMMUNICATION EQUIPMENT - 1.33%
10,100 Nortel Networks Corp. ............................... 1,272,600
-----------
Total Canada (cost - $2,762,731) .................... 3,562,125
-----------
FINLAND - 6.43%
TELECOMMUNICATION EQUIPMENT - 4.19%
18,900 Nokia Oyj, Class A .................................. 3,996,766
-----------
TELECOMMUNICATION SERVICES - 2.24%
31,300 Sonera Oyj .......................................... 2,135,445
-----------
Total Finland (cost - $4,397,534) ................... 6,132,211
-----------
FRANCE - 6.03%
COMPUTER SERVICES - 1.29%
4,550 Cap Gemini SA ....................................... 1,232,118
-----------
COMPUTERS - INTEGRATED SYSTEMS - 1.05%
12,100 Equant NV* .......................................... 1,003,827
-----------
DIVERSIFIED OPERATIONS - 0.40%
3,300 Vivendi ............................................. 380,501
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 3.29%
17,100 STMicroelectronics NV ............................... 3,141,608
-----------
Total France (cost - $4,859,327) .................... 5,758,054
-----------
GERMANY - 7.19%
DIVERSIFIED MANUFACTURING OPERATIONS - 1.26%
8,500 Siemans AG .......................................... 1,199,680
-----------
GERMANY (CONTINUED)
ELECTRONIC COMPONENTS - MISCELLANEOUS - 2.17%
15,800 Epcos AG* ........................................... $ 2,071,249
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 0.40%
7,400 Infineon Technologies AG ............................ 382,367
-----------
ENTERPRISE SOFTWARE/SERVICES - 1.33%
1,730 SAP AG .............................................. 1,270,513
-----------
INTERNET SOFTWARE - 0.68%
8,500 Fantastic Corp.* .................................... 239,936
900 Intershop Communications AG* ........................ 409,063
-----------
648,999
-----------
MONEY CENTER BANKS - 0.51%
7,300 Deutsche Bank AG .................................... 485,121
-----------
MULTI-LINE INSURANCE - 0.84%
1,950 Allianz AG .......................................... 803,272
-----------
Total Germany (cost - $6,492,903) ................... 6,861,201
-----------
HONG KONG - 2.99%
DIVERSIFIED OPERATIONS - 1.29%
45,000 Citic Pacific Ltd. .................................. 272,780
53,000 Hutchinson Whampoa Ltd. ............................. 956,335
-----------
1,229,115
-----------
REAL ESTATE DEVELOPMENT - 0.56%
36,000 Cheung Kong (Holdings) Ltd. ......................... 538,625
-----------
TELEVISION - 1.14%
122,000 Television Broadcasts Ltd. .......................... 1,085,019
-----------
Total Hong Kong (cost - $2,266,393) ................. 2,852,759
-----------
ISRAEL - 0.88%
COMPUTER DATA SECURITY - 0.88%
4,900 Check Point Software Technologies Ltd.*
(cost - $538,194) ................................. 838,206
-----------
ITALY - 0.24%
CELLULAR TELECOMMUNICATIONS - 0.24%
18,900 Telecom Italia Mobile SpA
(cost - $270,443) ................................. 230,962
-----------
</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, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
JAPAN - 31.51%
AUDIO/VIDEO PRODUCTS - 2.70%
18,200 Sony Corp. .......................................... $ 2,573,002
-----------
CELLULAR TELECOMMUNICATIONS - 3.74%
8,700 NTT Mobile Communications Network, Inc. ............. 3,571,100
-----------
COMPUTER SERVICES - 0.18%
1,000 Fujitsu Support & Service, Inc. ..................... 168,771
-----------
DATA PROCESSING/MANAGEMENT - 0.21%
700 Trans Cosmos Inc. ................................... 197,923
-----------
ELECTRONIC COMPONENTS - MISCELLANEOUS - 5.33%
1,300 Kyocera Corp. ....................................... 217,501
16,000 Murata Manufacturing Co., Ltd. ...................... 3,892,165
33,000 NEC Corp. ........................................... 974,894
-----------
5,084,560
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 4.29%
4,200 Rohm Company Ltd. ................................... 1,461,902
17,400 Tokyo Electron Ltd. ................................. 2,629,551
-----------
4,091,453
-----------
ELECTRONIC MEASUREMENT INSTRUMENTS - 0.32%
770 Keyence Corp. ....................................... 307,805
-----------
FINANCE - INVESTMENT BANKING/BROKERAGE - 4.70%
205,100 The Nikko Securities Co., Ltd. ...................... 3,107,545
42,000 The Nomura Securities Co., Ltd. ..................... 1,371,813
-----------
4,479,358
-----------
INTERNET CONTENT - 2.99%
3,200 SOFTBANK Corp. ...................................... 2,854,774
-----------
INTERNET SOFTWARE - 0.29%
4,000 Internet Initiative Japan Inc., ADR* ................ 279,000
-----------
MEDICAL - DRUGS - 0.06%
800 Takeda Chemical Industries, Ltd. .................... 56,939
-----------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 0.40%
10,000 Nikon Corp. ......................................... 384,146
-----------
JAPAN (CONTINUED)
RETAIL - CONVENIENCE STORES - 0.08%
700 Seven-Eleven Japan Co., Ltd. ........................ $ 80,534
-----------
TELECOMMUNICATION EQUIPMENT - 2.70%
14,000 Matsushita Communication Industrial Co., Ltd. ....... 2,579,827
-----------
TELECOMMUNICATION SERVICES - 0.67%
3,400 NTT Data Corp. ...................................... 639,789
-----------
TELEPHONE - INTEGRATED - 2.85%
6,400 Japan Telecom Co., Ltd. ............................. 2,714,375
-----------
Total Japan (cost - $21,878,615) .................... 30,063,356
-----------
MEXICO - 0.32%
BROADCAST SERVICES/PROGRAMMING - 0.32%
4,500 Grupo Televisa SA*
(cost $274,078) .................................. 306,000
-----------
NETHERLANDS - 4.75%
COMPUTER SERVICES - 1.56%
9,400 CMG plc ............................................. 811,764
8,800 Getronics NV ........................................ 672,797
-----------
1,484,561
-----------
COMPUTERS - INTEGRATED SYSTEMS - 2.15%
18,400 ASM Lithography Holding NV* ......................... 2,054,676
-----------
ELECTRONIC COMPONENTS - MISCELLANEOUS - 0.90%
5,136 Koninklijke (Royal) Philips Electronics NV .......... 862,987
-----------
MEDICAL - BIOMEDICAL/GENETICS - 0.14%
1,000 QIAGEN N.V.* ........................................ 136,000
-----------
Total Netherlands (cost $3,957,857) ................ 4,538,224
-----------
SOUTH KOREA - 2.45%
ELECTRONIC PRODUCTS - MISCELLANEOUS - 2.45%
13,100 Samsung Electronics, GDR+
(cost $1,770,247) ................................ 2,337,695
-----------
SPAIN - 0.45%
INTERNET CONTENT - 0.45%
5,300 Terra Networks, SA*
(cost $651,778) .................................. 426,761
-----------
SWEDEN - 6.40%
ENGINEERING/R & D SERVICES - 0.36%
2,900 ABB Ltd. ............................................ 341,689
-----------
</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, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
SWEDEN (CONTINUED)
SECURITY SERVICES - 0.64%
25,200 Securitas AB, Class B Shares ........................ $ 609,583
-----------
TELECOMMUNICATION EQUIPMENT - 3.76%
38,200 Telefonaktiebolaget (L.M.) Ericsson, ADR ............ 3,583,637
-----------
TELECOMMUNICATION SERVICES - 1.64%
18,200 NetCom AB* .......................................... 1,569,327
-----------
Total Sweden (cost - $4,358,233) .................... 6,104,236
-----------
SWITZERLAND - 0.87%
MEDICAL - BIOMEDICAL/GENETICS - 0.87%
220 Ares-Serono Group, Class B Shares
(cost - $646,968) ................................. 828,291
-----------
UNITED KINGDOM - 9.62%
CABLE TV - 0.21%
7,600 British Sky Broadcasting Group plc Ord 50p .......... 201,263
-----------
CELLULAR TELECOMMUNICATIONS - 2.65%
454,269 Vodafone AirTouch plc ord 0.10p ..................... 2,525,563
-----------
COMPUTER DATA SECURITY - 0.88%
6,100 Baltimore Technologies plc Ord 1p* .................. 836,894
-----------
COMPUTER SERVICES - 1.16%
32,900 Logica plc Ord 10p* ................................. 1,102,718
-----------
COMPUTERS - INTEGRATED SYSTEMS - 0.45%
6,400 Psion plc Ord 5p .................................... 424,937
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 0.49%
7,700 ARM Holdings plc Ord 0.25p* ......................... 465,556
-----------
MEDICAL - BIOMEDICAL/GENETICS - 0.18%
5,200 Cambridge Antibody Technology Group
plc Ord 10p* ...................................... 169,022
-----------
MEDICAL - DRUGS - 0.58%
27,100 Shire Pharmaceuticals Group plc
Ord 5p* ........................................... 456,537
54,900 SkyePharma plc Ord 10p* ............................. 96,340
-----------
552,877
-----------
UNITED KINGDOM (CONTINUED)
MULTIMEDIA - 0.18%
5,000 Pearson plc Ord 25p ................................. $ 173,967
-----------
TELECOMMUNICATION SERVICES - 2.22%
44,500 COLT Telecom Group plc Ord 25p* ..................... 2,119,077
-----------
TELEVISION - 0.19%
15,000 Carlton Communications plc Ord 5p ................... 181,984
-----------
THERAPEUTICS - 0.43%
22,600 Celltech Group plc Ord 50p* ......................... 409,572
-----------
Total United Kingdom
(cost - $8,164,240) ............................... 9,163,430
-----------
UNITED STATES - 0.32%
FINANCE - INVESTMENT BANKING/BROKERAGE - 0.32%
12,200 TD Waterhouse Group, Inc.*
(cost - $240,890) ................................. 305,000
-----------
Total Common Stocks
(cost - $64,150,217) .............................. 80,899,574
-----------
SHORT-TERM INVESTMENTS -- 13.11%
UNITED STATES - 13.11%
INVESTMENT COMPANY - 0.54%
515,171 Federated Investors, Trust for Short-term
U.S. Government Securities** ........................ 515,171
-----------
<CAPTION>
PRINCIPAL
AMOUNT
(000'S)
-----------
U.S. GOVERNMENT AGENCY OBLIGATION - 12.57%
$ 12,000 Freddie Mac, Discount Notes ......................... 11,995,966
-----------
Total Short-Term Investments
(cost - $12,511,137) .............................. 12,511,137
-----------
Total Investments 97.91%
(cost - $76,661,354) .............................. 93,410,711
Other assets in excess of
liabilities 2.09% ................................ 1,991,115
-----------
Net Assets 100.00% ................................. $95,401,826
-----------
-----------
</TABLE>
-------------
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
* Non-income producing security.
** Money market fund.
+ SECRule 144A security, such securities are traded only among "qualified
institutional buyers."
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
THE BEAR STEARNS FUNDS
STATEMENTS OF ASSETS & LIABILITIES
MARCH 31, 2000
<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 - $998,325,322,
$23,281,025, $13,267,970,
$59,003,388, $30,404,598,
$13,710,231 and
$76,661,354, respectively).$1,441,147,885 $28,497,209 $16,270,661 $73,129,260 $40,129,904 $14,274,960 $93,410,711
Collateral received for
securities loaned.......... 40,200,600 -- -- -- 2,000,000 -- --
Receivable for investments
sold....................... 34,901,509 -- -- 799,501 -- -- 236,518
Receivable for Portfolio
shares sold................ 21,929,148 22,017 15,807 199,293 174,806 -- 2,247,925
Dividends, interest and
reclaims receivable,
if any..................... 518,163 37,803 25,371 27,312 16,196 69,871 74,149
Receivable from investment
adviser.................... -- 24,939 24,249 430 21,117 35,293 --
Deferred organization
expenses and other assets.. 82,379 41,811 24,911 27,191 56,503 69,322 84,125
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Total assets............ 1,538,779,684 28,623,779 16,360,999 74,182,987 42,398,526 14,449,446 96,053,428
-------------- ----------- ----------- ----------- ----------- ----------- -----------
LIABILITIES
Payable for investments
purchased.................. 49,823,082 -- -- 900,729 1,885,739 314,047 136,851
Payable upon return of
securities loaned.......... 40,200,600 -- -- -- 2,000,000 -- --
Payable for Portfolio shares
repurchased................ 2,625,948 123,362 166,415 513,671 297,513 16,516 295,775
Distribution and service
fees payable
(Class A, B, and C shares). 1,877,369 55,884 21,875 68,875 58,184 13,361 108,539
Administration fee payable... 169,424 3,598 1,518 9,305 4,090 1,235 11,417
Advisory fee payable......... 532,592 -- -- -- -- -- 41,038
Custodian fee payable........ 10,010 8,335 1,130 1,566 2,420 2,614 1,205
Accrued expenses............. 489,101 72,272 44,188 82,374 48,974 55,257 56,777
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Total liabilities...... 95,728,126 263,451 235,126 1,576,520 4,296,920 403,030 651,602
-------------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS
Capital stock, $0.001
par value (unlimited
shares of beneficial
interest authorized)....... 39,830 1,693 968 3,146 1,806 1,117 3,441
Paid-in capital.............. 970,775,645 21,400,919 13,125,149 51,683,749 28,768,066 14,138,494 77,737,516
Undistributed net investment
income..................... -- -- 26,534 -- -- 6,787 --
Accumulated net realized
gain/(loss) on investments,
securities sold short,
options and foreign currency
related transactions, if any 29,413,520 1,741,532 (29,469) 6,793,700 (393,572) (664,711) 907,149
Net unrealized appreciation on
investments, option and
foreign currency related
transactions, if any....... 442,822,563 5,216,184 3,002,691 14,125,872 9,725,306 564,729 16,753,720
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets..............$1,443,051,558 $28,360,328 $16,125,873 $72,606,467 $38,101,606 $14,046,416 $95,401,826
-------------- ----------- ----------- ----------- ----------- ----------- -----------
-------------- ----------- ----------- ----------- ----------- ----------- -----------
CLASS A
Net assets...................$ 673,550,014 $15,187,557 $ 7,950,561 $24,086,718 $22,580,030 $ 3,788,816 $61,508,126
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Shares of beneficial
interest outstanding....... 18,493,132 898,653 475,906 1,042,492 1,064,754 301,842 2,209,623
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Net asset value per share.... $36.42 $16.90 $16.71 $23.10 $21.21 $12.55 $27.84
-------------- ----------- ----------- ----------- ----------- ----------- -----------
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Maximum offering price
per share (net asset
value plus sales charge
of 5.50*% of the
offering price)............ $38.54 $17.88 $17.68 $24.44 $22.44 $13.28 $29.46
-------------- ----------- ----------- ----------- ----------- ----------- -----------
-------------- ----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Net assets...................$ 300,692,734 $ 5,469,351 $ 1,378,567 $ 4,030,016 $ 9,123,695 $ 1,872,973 $15,655,897
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Shares of beneficial
interest outstanding....... 8,391,498 330,595 83,603 176,783 435,839 150,206 568,948
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Net asset value and
offering price per share** $35.83 $16.54 $16.49 $22.80 $20.93 $12.47 $27.52
-------------- ----------- ----------- ----------- ----------- ----------- -----------
-------------- ----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Net assets...................$ 314,793,978 $ 6,907,651 $ 3,359,048 $13,398,809 $ 6,397,881 $ 1,583,415 $18,237,803
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Shares of beneficial
interest outstanding....... 8,788,814 417,647 203,014 587,784 305,464 127,015 662,793
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Net asset value and
offering price per share**.. $35.82 $16.54 $16.55 $22.80 $20.94 $12.47 $27.52
-------------- ----------- ----------- ----------- ----------- ----------- -----------
-------------- ----------- ----------- ----------- ----------- ----------- -----------
CLASS Y
Net assets...................$ 154,014,832 $ 795,769 $ 3,437,697 $31,090,924 -- $ 6,801,212 --
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Shares of beneficial
interest outstanding........ 4,156,493 46,564 205,451 1,338,507 -- 537,934 --
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Net asset value, offering
and redemption
price per share............ $37.05 $17.09 $16.73 $23.23 -- $12.64 --
-------------- ----------- ----------- ----------- ----------- ----------- -----------
-------------- ----------- ----------- ----------- ----------- ----------- -----------
</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.
38
<PAGE>
THE BEAR STEARNS FUNDS
STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
<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................... $ 2,515,944 $ 597,034 $ 374,795 $ 311,173 $ 80,350 $ 171,995 $ 140,142
Interest.................... 162,883 113,433 29,226 172,724 107,760 576,496 191,534
Less: Foreign taxes
withheld........... (12,293) (4,394) (505) -- (4,598) (122) (11,714)
-------------- ----------- ----------- ----------- ----------- ----------- -----------
2,666,534 706,073 403,516 483,897 183,512 748,369 319,962
-------------- ----------- ----------- ----------- ----------- ----------- -----------
EXPENSES
Advisory fees............... 5,423,504 233,347 148,333 478,893 152,064 122,347 323,468
Distribution and
service fees - Class A..... 1,728,411 107,664 45,082 103,526 60,899 22,544 101,146
Distribution and
service fees - Class B..... 1,298,365 75,266 17,711 33,413 62,809 20,560 58,422
Distribution and
service fees - Class C..... 1,623,394 104,263 47,396 122,343 49,326 15,911 62,755
Transfer agent fees and expenses 803,862 171,361 152,054 158,377 114,071 163,437 131,410
Accounting fees............. 496,050 127,821 91,804 145,164 90,839 108,840 108,251
Administration fees......... 1,084,891 60,652 29,667 95,666 35,090 28,234 48,520
Federal and state
registration fees.......... 251,115 57,179 43,217 46,176 47,654 43,648 53,068
Legal and auditing fees..... 104,999 58,142 46,763 75,392 42,751 43,303 46,499
Custodian fees and expenses. 91,769 20,062 8,718 15,705 12,810 11,493 23,699
Amortization of organization
expenses................... 40,875 36,219 15,981 21,571 7,928 10,755 12,235
Reports and notices to
shareholders............... 210,237 15,057 3,875 29,650 5,377 3,109 5,999
Insurance expenses.......... 7,164 6,369 6,033 6,369 6,030 5,974 5,919
Trustees' fees and expenses. 6,000 4,392 3,989 5,720 4,079 4,083 4,000
Other....................... 52,591 3,784 1,753 8,338 2,850 2,661 1,802
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses before
waivers and related
reimbursements........ 13,223,227 1,081,578 662,376 1,346,303 694,577 606,899 987,193
Less: waivers and related
reimbursements........ (1,311,869) (328,584) (353,406) (445,351) (310,842) (416,200) (360,396)
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses after
waivers and related
reimbursements........ 11,911,358 752,994 308,970 900,952 383,735 190,699 626,797
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment income/(loss) (9,244,824) (46,921) 94,546 (417,055) (200,223) 557,670 (306,835)
-------------- ----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) from:
Investments............... 47,607,437 1,745,520 1,365,082 10,998,429 259,848 (495,495) 2,376,755
Foreign currency
related transactions..... -- -- -- -- -- -- (863,938)
Net change in unrealized
appreciation on:
Investments............... 333,805,696 (1,591,810) (2,343,259) 9,879,006 5,563,489 (468,033) 14,941,435
Foreign currency
related transactions.... -- -- -- -- -- -- 5,189
-------------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized and
unrealized gain/(loss)
on investments............ 381,413,133 153,710 (978,177) 20,877,435 5,823,337 (963,52 8) 16,459,441
-------------- ----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE/(DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS................ $ 372,168,309 $ 106,789 $ (883,631) $20,460,380 $ 5,623,114 $ (405,858) $16,152,606
-------------- ----------- ----------- ----------- ----------- ----------- -----------
-------------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
39
<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
FISCAL YEARS FISCAL YEARS FISCAL YEARS
ENDED MARCH 31, ENDED MARCH 31, ENDED MARCH 31,
---------------------------- -------------------------- ------------------------
2000 1999 2000 1999 2000 1999
-------------- ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income/(loss).......... $ (9,244,824) $ (2,293,626) $ (46,921) $ 9,925 $ 94,546 $ 119,515
Net realized gain/(loss) from
investments and foreign currency
related transactions, if any........ 47,607,437 5,095,349 1,745,520 434,689 1,365,082 1,012,884
Net change in unrealized
appreciation/(depreciation) on
investments and foreign currency
related transactions, if any........ 333,805,696 69,260,476 (1,591,810) (424,713) (2,343,259) (291,673)
-------------- ------------ ------------ ------------ ----------- -----------
Net increase/(decrease) in net
assets, resulting from operations... 372,168,309 72,062,199 106,789 19,901 (883,631) 840,726
-------------- ------------ ------------ ------------ ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income
Class A shares...................... -- -- -- -- (45,967) (52,112)
Class B shares...................... -- -- -- -- -- (4,736)
Class C shares...................... -- -- -- -- -- (3,697)
Class Y shares...................... -- -- (9,925) -- (39,260) (58,015)
-------------- ------------ ------------ ------------ ----------- -----------
-- -- (9,925) -- (85,227) (118,560)
-------------- ------------ ------------ ------------ ----------- -----------
Net realized capital gains
Class A shares...................... (3,841,879) (6,112,211) (231,030) (1,358,815) (965,266) (807,345)
Class B shares...................... (1,534,789) (944,991) (81,221) (434,161) (187,749) (114,321)
Class C shares...................... (1,797,757) (3,004,046) (115,814) (675,728) (456,258) (474,805)
Class Y shares...................... (878,492) (1,819,866) (10,614) (54,124) (412,235) (487,820)
-------------- ------------ ------------ ------------ ----------- -----------
(8,052,917) (11,881,114) (438,679) (2,522,828) (2,021,508) (1,884,291)
-------------- ------------ ------------ ------------ ----------- -----------
SHARES OF BENEFICIAL INTEREST
Net proceeds from the sale of shares.. 798,042,336 370,960,712 5,111,644 26,721,919 4,435,664 9,602,484
Cost of shares repurchased............ (132,359,417) (250,991,253) (22,466,125) (18,667,292) (8,787,784) (9,537,890)
Shares issued in reinvestment of
dividends........................... 7,667,498 11,062,277 419,532 2,358,103 1,889,844 1,621,941
-------------- ------------ ------------ ------------ ----------- -----------
Net increase/(decrease) in net assets
derived from shares of beneficial
interest transactions............... 673,350,417 131,031,736 (16,934,949) 10,412,730 (2,462,276) 1,686,535
-------------- ------------ ------------ ------------ ----------- -----------
Total increase/(decrease) in net
assets.............................. 1,037,465,809 191,212,821 (17,276,764) 7,909,803 (5,452,642) 524,410
NET ASSETS
Beginning of year..................... 405,585,749 214,372,928 45,637,092 37,727,289 21,578,515 21,054,105
-------------- ------------ ------------ ------------ ----------- -----------
End of year*.......................... $1,443,051,558 $405,585,749 $ 28,360,328 $ 45,637,092 $16,125,873 $21,578,515
-------------- ------------ ------------ ------------ ----------- -----------
-------------- ------------ ------------ ------------ ----------- -----------
</TABLE>
---------
* Includes undistributed net investment income as follows:
FOR THE FISCAL YEARS ENDED
---------------------------------
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
The Insiders Select Fund -- $ 9,925
Large Cap Value Portfolio $26,534 17,215
Balanced Portfolio 6,787 36,656
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
SMALL CAP VALUE PORTFOLIO FOCUS LIST PORTFOLIO BALANCED PORTFOLIO PORTFOLIO
--------------------------- ------------------------- ------------------------- --------------------------
FOR THE FOR THE FOR THE FOR THE
FISCAL YEARS FISCAL YEARS FISCAL YEARS FISCAL YEARS
ENDED MARCH 31, ENDED MARCH 31, ENDED MARCH 31, ENDED MARCH 31,
--------------------------- ------------------------- ------------------------- --------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (417,055) $ (350,567) $ (200,223) $ (82,665) $ 557,670 $ 447,144 $ (306,835) $ (20,982)
10,998,429 262,412 259,848 (653,420) (495,495) (169,216) 1,512,817 15,991
9,879,006 (15,312,529) 5,563,489 3,662,162 (468,033) 426,454 14,946,624 848,548
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
20,460,380 (15,400,684) 5,623,114 2,926,077 (405,858) 704,382 16,152,606 843,557
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
-- -- -- -- (138,819) (121,594) -- (1,421)
-- -- -- -- (61,758) (32,964) -- (530)
-- -- -- -- (48,967) (21,505) -- (510)
-- -- -- -- (337,995) (251,191) -- --
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
-- -- -- -- (587,539) (427,254) -- (2,461)
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
(1,277,255) (1,150,703) -- (7,560) -- (3,931) (207,812) --
(205,466) (141,517) -- (5,323) -- (1,206) (59,979) --
(731,213) (714,120) -- (4,143) -- (703) (54,225) --
(1,836,155) (1,268,782) -- -- -- (6,483) -- --
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
(4,050,089) (3,275,122) -- (17,026) -- (12,323) (322,016) --
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
14,008,142 45,379,051 23,255,511 7,301,185 4,617,733 8,698,719 77,620,077 8,180,925
(17,845,914) (48,453,172) (5,082,971) (3,208,556) (7,783,192) (2,836,127) (12,659,470) (2,716,280)
3,599,234 2,949,510 -- 16,732 407,602 230,561 229,035 1,297
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
(238,538) (124,611) 18,172,540 4,109,361 (2,757,857) 6,093,153 65,189,642 5,465,942
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
16,171,753 (18,800,417) 23,795,654 7,018,412 (3,751,254) 6,357,958 81,020,232 6,307,038
56,434,714 75,235,131 14,305,952 7,287,540 17,797,670 11,439,712 14,381,594 8,074,556
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
$ 72,606,467 $ 56,434,714 $38,101,606 $14,305,952 $14,046,416 $17,797,670 $ 95,401,826 $14,381,594
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
------------ ------------ ----------- ----------- ----------- ----------- ------------ -----------
</TABLE>
41
<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
ASSET NET REALIZED AND DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT UNREALIZED FROM NET FROM NET
BEGINNING INCOME/ GAIN/(LOSS) ON INVESTMENT REALIZED
OF PERIOD (LOSS)**(1) INVESTMENTS**(2) INCOME CAPITAL GAINS
--------- ----------- ---------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
S&P STARS PORTFOLIO
CLASS A
For the fiscal year ended March 31, 2000............... $24.39 $(0.21) $12.53 -- $(0.29)
For the fiscal year ended March 31, 1999............... 19.97 (0.12) 5.46 -- (0.92)
For the fiscal year ended March 31, 1998............... 16.13 (0.13) 6.69 -- (2.72)
For the fiscal year ended March 31, 1997............... 14.92 (0.09) 2.63 -- (1.33)
For the period April 3, 1995* through March 31, 1996... 12.00 -- 3.31 -- (0.39)
CLASS B
For the fiscal year ended March 31, 2000............... 24.11 (0.27) 12.28 -- (0.29)
For the fiscal year ended March 31, 1999............... 19.86 (0.12) 5.29 -- (0.92)
For the period January 5, 1998* through March 31, 1998. 17.37 (0.04) 2.53 -- --
CLASS C
For the fiscal year ended March 31, 2000............... 24.10 (0.30) 12.31 -- (0.29)
For the fiscal year ended March 31, 1999............... 19.85 (0.22) 5.39 -- (0.92)
For the fiscal year ended March 31, 1998............... 16.06 (0.22) 6.65 -- (2.64)
For the fiscal year ended March 31, 1997............... 14.86 (0.17) 2.62 -- (1.25)
For the period April 3, 1995* through March 31, 1996... 12.00 (0.06) 3.28 -- (0.36)
CLASS Y
For the fiscal year ended March 31, 2000............... 24.68 (0.12) 12.78 -- (0.29)
For the fiscal year ended March 31, 1999............... 20.11 (0.05) 5.54 -- (0.92)
For the fiscal year ended March 31, 1998............... 16.23 (0.05) 6.74 -- (2.81)
For the fiscal year ended March 31, 1997............... 14.97 (0.02) 2.66 -- (1.38)
For the period August 7, 1995* through March 31, 1996.. 14.13 0.07 1.20 $(0.03) (0.40)
THE INSIDERS SELECT FUND
CLASS A
For the fiscal year ended March 31, 2000............... 17.02 -- 0.07 -- (0.19)
For the fiscal year ended March 31, 1999............... 17.88 -- (0.01) -- (0.85)
For the fiscal year ended March 31, 1998............... 14.58 -- 6.30 -- (3.00)
For the fiscal year ended March 31, 1997............... 14.00 0.02 2.48 (0.01) (1.91)
For the period June 16, 1995* through March 31, 1996... 12.00 0.03 1.98 (0.01) --
CLASS B
For the fiscal year ended March 31, 2000............... 16.75 (0.05) 0.03 -- (0.19)
For the fiscal year ended March 31, 1999............... 17.69 -- (0.09) -- (0.85)
For the period January 6, 1998* through March 31, 1998. 15.72 0.01 1.96 -- --
CLASS C
For the fiscal year ended March 31, 2000............... 16.74 (0.05) 0.04 -- (0.19)
For the fiscal year ended March 31, 1999............... 17.68 -- (0.09) -- (0.85)
For the fiscal year ended March 31, 1998............... 14.48 (0.07) 6.21 -- (2.94)
For the fiscal year ended March 31, 1997............... 13.96 (0.06) 2.47 -- (1.89)
For the period June 16, 1995* through March 31, 1996... 12.00 (0.01) 1.97 -- --
CLASS Y
For the fiscal year ended March 31, 2000............... 17.33 -- 0.13 (0.18) (0.19)
For the fiscal year ended March 31, 1999............... 18.09 -- 0.09 -- (0.85)
For the fiscal year ended March 31, 1998............... 14.66 0.07 6.36 -- (3.00)
For the fiscal year ended March 31, 1997............... 14.02 0.08 2.49 (0.02) (1.91)
For the period June 20, 1995* through March 31, 1996... 12.12 0.07 1.87 (0.04) --
</TABLE>
----------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on the actual shares outstanding on the dates of distributions.
(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.
42
<PAGE>
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
REFLECTED IN
NET EXPENSE RATIOS AND
ASSET RATIO OF NET INVESTMENT
VALUE, TOTAL NET ASSETS, RATIO OF NET INVESTMENT INCOME/(LOSS) PORTFOLIO
END OF INVESTMENT END OF PERIOD EXPENSES TO INCOME/(LOSS) TO DUE TO WAIVERS AND TURNOVER
PERIOD RETURN(3) (000's OMITTED) AVERAGE NET ASSETS(1) AVERAGE NET ASSETS(1) REIMBURSEMENTS RATE
-------- ----------- --------------- --------------------- -------------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
$36.42 50.82% $673,550 1.50% (1.12)% 0.18% 54.67%
24.39 27.46 206,130 1.50 (0.73) 0.27 76.17
19.97 43.53 109,591 1.50(6) (0.83)(6) 0.38 172.78(7)
16.13 16.87 67,491 1.50(6) (0.59)(6) 0.70 220.00(7)
14.92 27.68 45,049 1.50(5)(6) (0.01)(5)(6) 0.89(5) 295.97(7)
35.83 50.13 300,693 2.00 (1.63) 0.18 54.67
24.11 26.75 49,319 2.00 (1.23) 0.27 76.17
19.86 14.34(4) 5,800 2.00(5) (1.47)(4)(5) 0.53(4)(5) 172.78(7)
35.82 50.15 314,794 2.00 (1.63) 0.18 54.67
24.10 26.75 97,654 2.00 (1.23) 0.27 76.17
19.85 42.80 63,330 2.00(6) (1.32)(6) 0.38 172.78(7)
16.06 16.33 37,622 2.00(6) (1.09)(6) 0.70 220.00(7)
14.86 26.91 28,081 2.00(5)(6) (0.45)(5)(6) 0.92(5) 295.97(7)
37.05 51.61 154,015 1.00 (0.56) 0.18 54.67
24.68 28.02 52,483 1.00 (0.23) 0.27 76.17
20.11 44.22 35,652 1.00(6) (0.32)(6) 0.38 172.78(7)
16.23 17.48 14,763 1.00(6) (0.10)(6) 0.70 220.00(7)
14.97 9.09(4) 8,779 1.00(5)(6) 0.82(4)(5)(6) 0.99(4)(5) 295.97(7)
16.90 0.40 15,187 1.65 0.10 0.81 76.06
17.02 0.29 24,395 1.65 0.02 0.81 99.71
17.88 46.02 21,912 1.65 0.03 1.09 115.64
14.58 18.31 13,860 1.65 0.11 1.82 128.42
14.00 16.75 12,132 1.65(5) 0.38(5) 1.87(5) 93.45
16.54 (0.13) 5,469 2.15 (0.40) 0.81 76.06
16.75 (0.16) 8,426 2.15 0.03 0.81 99.71
17.69 12.53(4) 2,253 2.15(5) (0.95)(4)(5) 1.82(4)(5) 115.64
16.54 (0.07) 6,908 2.15 (0.40) 0.81 76.06
16.74 (0.16) 11,902 2.15 0.02 0.81 99.71
17.68 45.17 12,297 2.15 (0.46) 1.10 115.64
14.48 17.69 9,519 2.15 (0.38) 1.81 128.42
13.96 16.33 9,928 2.15(5) (0.12)(5) 1.92(5) 93.45
17.09 0.72 796 1.15 0.60 0.81 76.06
17.33 0.85 914 1.15 0.02 0.81 99.71
18.09 46.68 1,265 1.15 0.55 1.07 115.64
14.66 18.81 1,557 1.15 0.60 1.81 128.42
14.02 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 the timing differences in the commencement of the initial 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.
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
ASSET NET REALIZED AND DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT UNREALIZED FROM NET FROM NET
BEGINNING INCOME/ GAIN/(LOSS) ON INVESTMENT REALIZED
OF PERIOD (LOSS)**(1) INVESTMENTS**(2) INCOME CAPITAL GAINS
--------- ----------- ---------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
LARGE CAP VALUE PORTFOLIO
CLASS A
For the fiscal year ended March 31, 2000 $19.74 $ 0.11 $(0.94) $(0.10) $(2.10)
For the fiscal year ended March 31, 1999 20.83 0.11 0.59 (0.11) (1.68)
For the fiscal year ended March 31, 1998 17.17 0.05 7.15 (0.02) (3.52)
For the fiscal year ended March 31, 1997 15.13 0.04 2.28 (0.10) (0.18)
For the period April 3, 1995* through March 31, 1996 12.00 0.06 3.10 (0.02) (0.01)
CLASS B
For the fiscal year ended March 31, 2000 19.51 0.01 (0.93) -- (2.10)
For the fiscal year ended March 31, 1999 20.66 0.08 0.52 (0.07) (1.68)
For the period January 28, 1998* through March 31, 1998 18.17 (0.01) 2.50 -- --
CLASS C
For the fiscal year ended March 31, 2000 19.57 0.01 (0.93) (2.10)
For the fiscal year ended March 31, 1999 20.66 0.07 0.53 (0.01) (1.68)
For the fiscal year ended March 31, 1998 17.11 (0.03) 7.10 (3.52)
For the fiscal year ended March 31, 1997 15.08 (0.02) 2.25 (0.02) (0.18)
For the period April 3, 1995* through March 31, 1996 12.00 (0.01) 3.10 -- (0.01)
CLASS Y
For the fiscal year ended March 31, 2000 19.78 0.22 (0.97) (0.20) (2.10)
For the fiscal year ended March 31, 1999 20.84 0.17 0.65 (0.20) (1.68)
For the fiscal year ended March 31, 1998 17.18 0.26 7.05 (0.13) (3.52)
For the fiscal year ended March 31, 1997 15.12 0.23 2.17 (0.16) (0.18)
For the period September 11, 1995* through March 31, 1996 13.98 0.07 1.16 (0.08) 45.28
SMALL CAP VALUE PORTFOLIO
CLASS A
For the fiscal year ended March 31, 2000 17.93 (0.15) 6.69 -- (1.37)
For the fiscal year ended March 31, 1999 23.65 (0.13) (4.65) -- (0.94)
For the fiscal year ended March 31, 1998 17.48 (0.14) 8.06 -- (1.75)
For the fiscal year ended March 31, 1997 15.87 (0.10) 1.95 -- (0.24)
For the period April 3, 1995* through March 31, 1996 12.00 (0.07) 4.17 -- (0.23)
CLASS B
For the fiscal year ended March 31, 2000 17.71 (0.24) 6.60 -- (1.27)
For the fiscal year ended March 31, 1999 23.48 (0.16) (4.67) -- (0.94)
For the period January 21, 1998* through March 31, 1998 19.95 -- 3.53 -- --
CLASS C
For the fiscal year ended March 31, 2000 17.70 (0.26) 6.62 -- (1.26)
For the fiscal year ended March 31, 1999 23.48 (0.26) (4.58) -- (0.94)
For the fiscal year ended March 31, 1998 17.38 (0.24) 8.00 -- (1.66)
For the fiscal year ended March 31, 1997 15.79 (0.18) 1.93 -- (0.16)
For the period April 3, 1995* through March 31, 1996 12.00 (0.10) 4.11 -- (0.22)
CLASS Y
For the fiscal year ended March 31, 2000 18.03 (0.05) 6.72 -- (1.47)
For the fiscal year ended March 31, 1999 23.65 (0.02) (4.66) -- (0.94)
For the fiscal year ended March 31, 1998 17.47 (0.04) 8.06 -- (1.84)
For the fiscal year ended March 31, 1997 15.85 (0.05) 1.97 -- (0.30)
For the period June 22, 1995* through March 31, 1996 13.09 -- 3.05 -- (0.29)
</TABLE>
----------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on the actual shares outstanding on the dates of distributions.
(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 the 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
NET EXPENSE RATIOS AND
ASSET RATIO OF NET INVESTMENT
VALUE, TOTAL NET ASSETS, RATIO OF NET INVESTMENT INCOME/(LOSS) PORTFOLIO
END OF INVESTMENT END OF PERIOD EXPENSES TO INCOME/(LOSS) TO DUE TO WAIVERS AND TURNOVER
PERIOD RETURN(3) (000's OMITTED) AVERAGE NET ASSETS(1) AVERAGE NET ASSETS(1) REIMBURSEMENTS RATE
-------- ----------- --------------- --------------------- -------------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
$16.71 (4.91)% $7,950 1.50% 0.56% 1.78% 55.66%
19.74 3.68 9,677 1.50 0.54 1.46 38.27
20.83 44.59 8,358 1.50 0.32 1.73 61.75
17.17 15.44 4,987 1.50 0.43 1.58 136.67
15.13 26.35 3,616 1.50(5) 0.46(5) 4.34(5) 45.28
16.49 (5.41) 1,379 2.00 0.03 1.75 55.66
19.51 3.21 1,911 2.00 0.08 1.46 38.27
20.66 13.70(4) 446 2.00(5) (0.73)(4)(5) 1.05(4)(5) 61.75
16.55 (5.39) 3,359 2.00 0.03 1.75 55.66
19.57 3.22 5,250 2.00 0.08 1.46 38.27
20.66 43.94 4,987 2.00 (0.19) 1.73 61.75
17.11 14.87 2,986 2.00 (0.08) 1.61 136.67
15.08 25.71 3,520 2.00(5) (0.06)(5) 4.39(5) 45.28
16.73 (4.51) 3,438 1.00 0.98 1.77 55.66
19.78 4.29 4,741 1.00 1.08 1.46 38.27
20.84 45.27 7,263 1.00 0.83 1.76 61.75
17.18 16.04 6,109 1.00 1.00 1.50 136.67
15.12 8.75(4) 3,413 1.00(5) 0.76(4)(5) 4.41(4)(5) 45.28
23.10 38.21 24,086 1.50 (0.75) 0.65 65.85
17.93 (20.26) 18,520 1.50 (0.60) 0.65 84.12
23.65 46.86 25,111 1.50 (0.71) 0.76 90.39
17.48 11.71 13,143 1.50 (0.81) 1.00 56.88
15.87 34.36 6,474 1.50(5) (0.66)(5) 2.32(5) 40.79
22.80 37.53 4,030 2.00 (1.24) 0.65 65.85
17.71 (20.63) 2,716 2.00 (1.10) 0.65 84.12
23.48 17.69(4) 901 2.00(5) (1.49)(4)(5) 1.31(4)(5) 90.39
22.80 37.54 13,399 2.00 (1.24) 0.65 65.85
17.70 (20.67) 11,112 2.00 (1.10) 0.65 84.12
23.48 46.10 18,082 2.00 (1.21) 0.76 90.39
17.38 11.12 11,071 2.00 (1.31) 0.99 56.88
15.79 33.59 6,753 2.00(5) (1.09)(5) 2.39(5) 40.79
23.23 38.86 31,091 1.00 (0.24) 0.65 65.85
18.03 (19.84) 24,087 1.00 (0.10) 0.65 84.12
23.65 47.54 31,141 1.00 (0.21) 0.77 90.39
17.47 12.19 16,724 1.00 (0.31)(4)(5) 1.00 56.88
15.85 23.52(4) 8,989 1.00(5) -- 2.45(4)(5) 40.79
</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 the timing differences in the commencement of the initial public
offerings.
(5) Annualized.
45
<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
ASSET NET REALIZED AND DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT UNREALIZED FROM NET FROM NET
BEGINNING INCOME/ GAIN/(LOSS) ON INVESTMENT REALIZED
OF PERIOD (LOSS)**(1) INVESTMENTS**(2) INCOME CAPITAL GAINS
--------- ----------- ---------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
FOCUS LIST PORTFOLIO
CLASS A
For the fiscal year ended March 31, 2000................. $17.32 $(0.07) $3.96 -- --
For the fiscal year ended March 31, 1999................. 13.40 (0.07) 4.01 $(0.02)
For the period December 29, 1997* through March 31, 1998. 12.00 (0.01) 1.41 -- --
CLASS B
For the fiscal year ended March 31, 2000................. 17.18 (0.16) 3.91 -- --
For the fiscal year ended March 31, 1999................. 13.38 (0.13) 3.95 (0.02)
For the period December 29, 1997* through March 31, 1998. 12.00 (0.01) 1.39 -- --
CLASS C
For the fiscal year ended March 31, 2000................. 17.19 (0.18) 3.93 -- --
For the fiscal year ended March 31, 1999................. 13.38 (0.13) 3.96 -- (0.02)
For the period December 29, 1997* through March 31, 1998. 12.00 (0.01) 1.39 -- --
BALANCED PORTFOLIO
CLASS A
For the fiscal year ended March 31, 2000................. 13.11 0.39 (0.54) $(0.41) --
For the fiscal year ended March 31, 1999................. 12.93 0.34 0.18 (0.33) (0.01)
For the period December 29, 1997* through March 31, 1998. 12.00 0.06 0.91 (0.04) --
CLASS B
For the fiscal year ended March 31, 2000................. 13.07 0.37 (0.58) (0.39) --
For the fiscal year ended March 31, 1999................. 12.92 0.29 0.16 (0.29) (0.01)
For the period December 29, 1997* through March 31, 1998. 12.00 0.05 0.90 (0.03) --
CLASS C
For the fiscal year ended March 31, 2000................. 13.07 0.37 (0.58) (0.39) --
For the fiscal year ended March 31, 1999................. 12.92 0.29 0.16 (0.29) (0.01)
For the period December 29, 1997* through March 31, 1998. 12.00 0.05 0.90 (0.03) --
CLASS Y
For the fiscal year ended March 31, 2000................. 13.16 0.40 (0.49) (0.43) --
For the fiscal year ended March 31, 1999................. 12.95 0.37 0.21 (0.36) (0.01)
For the period January 6, 1998* through March 31, 1998... 12.05 0.06 0.88 (0.04) --
INTERNATIONAL EQUITY PORTFOLIO
CLASS A
For the fiscal year ended March 31, 2000................. 15.14 (0.05) 12.98 -- (0.23)
For the fiscal year ended March 31, 1999................. 13.77 (0.03) 1.40 --+ --
For the period December 29, 1997* through March 31, 1998. 12.00 0.01 1.76 -- --
CLASS B
For the fiscal year ended March 31, 2000................. 15.05 (0.10) 12.80 -- (0.23)
For the fiscal year ended March 31, 1999................. 13.75 (0.02) 1.32 --+ --
For the period December 29, 1997* through March 31, 1998. 12.00 -- 1.75 -- --
CLASS C
For the fiscal year ended March 31, 2000................. 15.05 (0.09) 12.79 -- (0.23)
For the fiscal year ended March 31, 1999................. 13.75 (0.02) 1.32+ --+ --
For the period December 29, 1997* through March 31, 1998. 12.00 -- 1.75 -- --
</TABLE>
-------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on the actual shares outstanding on the dates of distributions.
+ 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 the 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
NET EXPENSE RATIOS AND
ASSET RATIO OF NET INVESTMENT
VALUE, TOTAL NET ASSETS, RATIO OF NET INVESTMENT INCOME/(LOSS) PORTFOLIO
END OF INVESTMENT END OF PERIOD EXPENSES TO INCOME/(LOSS) TO DUE TO WAIVERS AND TURNOVER
PERIOD RETURN(3) (000's OMITTED) AVERAGE NET ASSETS(1) AVERAGE NET ASSETS(1) REIMBURSEMENTS RATE
-------- ----------- --------------- --------------------- -------------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
$21.21 22.46% $22,580 1.40% (0.63)% 1.33% 56.26%
17.32 29.47 6,542 1.40 (0.57) 2.89 84.49
13.40 11.67 3,201 1.40(5) (0.30)(5) 5.01(5) 28.91
20.93 21.83 9,124 1.90 (1.11) 1.33 56.26
17.18 28.61 4,460 1.90 (1.07) 2.89 84.49
13.38 11.50 2,399 1.90(5) (0.78)(5) 5.27(5) 28.91
20.94 21.81 6,398 1.90 (1.09) 1.33 56.26
17.19 28.69 3,304 1.90 (1.07) 2.89 84.49
13.38 11.50 1,687 1.90(5) (0.62)(5) 5.52(5) 28.91
12.55 (1.21) 3,789 1.20 2.77 2.21 86.27
13.11 4.07 4,495 1.20 2.65 2.08 45.98
12.93 8.04 3,852 1.20(5) 2.47(5) 3.25(5) 12.72
12.47 (1.68) 1,873 1.70 2.27 2.21 86.27
13.07 3.56 1,811 1.70 2.15 2.08 45.98
12.92 7.92 1,044 1.70(5) 1.96(5) 3.30(5) 12.72
12.47 (1.68) 1,583 1.70 2.27 2.21 86.27
13.07 3.56 1,089 1.70 2.15 2.08 45.98
12.92 7.92 858 1.70(5) 1.95(5) 3.33(5) 12.72
12.64 (0.75) 6,801 0.70 3.27 2.21 86.27
13.16 4.59 10,403 0.70 3.15 2.08 45.98
12.95 7.80(4) 5,685 0.70(5) 2.98(4)(5) 3.12(4)(5) 12.72
27.84 85.67 61,508 1.75 (0.77) 1.12 96.36
15.14 9.97 8,299 1.75 0.05 2.38 114.68
13.77 14.75 3,765 1.75(5) 0.53(5) 4.06(5) 3.26
27.52 84.66 15,656 2.25 (1.27) 1.12 96.36
15.05 9.48 3,156 2.25 (0.45) 2.38 114.68
13.75 14.58 2,137 2.25(5) (0.06)(5) 4.04(5) 3.26
27.52 84.65 18,238 2.25 (1.27) 1.12 96.36
15.05 9.48 2,926 2.25 (0.45) 2.38 114.68
13.75 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 the timing
differences in the commencement of the initial public offerings of Class Y
shares.
(5) Annualized.
47
<PAGE>
T H E B E A R S T E A R N S F U N D S
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 eleven 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 four non-diversified portfolios, S&P STARS Portfolio ("S&P
STARS"), The Insiders Select Fund ("Insiders Select"), Focus List Portfolio
("Focus List") and Emerging Markets Debt Portfolio, (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, International
Equity, and Emerging Markets Debt Portfolio have yet to commence their
initial public offerings. On April 29, 1999, a special shareholder meeting
was held that approved a plan of reorganization and liquidation of the
Emerging Markets Debt Portfolio from Bear Stearns Investment Trust to a newly
created separate series of The Bear Stearns Funds with the same name and
investment objectives and policies. Such transaction was effected on July 29,
1999.
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.
48
<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 with
respect to 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 statements 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 option activity for the
fiscal year ended March 31, 2000.
49
<PAGE>
SHORT SELLING--S&P STARS, Insiders Select, Large Cap and Small Cap may engage
in short selling of securities. 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. S&P STARS, Insiders Select, Large Cap, Small Cap, Focus
List, Balanced and International Equity did not engage in either any short
sales "against the box" or short sales during the fiscal year ended March 31,
2000. The Portfolios had no open short sales at March 31, 2000.
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 when due and a default results, the lending agent has
agreed to deposit into the respective Portfolio's custody account replacement
securities of the same issue, type, class and series or, if unable to obtain
such securities, to credit the respective Portfolio with the market value of
such securities on such date. If the Portfolio is holding cash collateral for
the defaulted securities loan, the lending agent is responsible to deposit
only such securities or to credit such amount as can be obtained with such
collateral (including investments made with such collateral), and the
Portfolio would have exposure to any losses resulting from a shortfall. The
market value of securities on loan to brokers and the related value of cash
and collateral securities received at March 31, 2000, was as follows:
<TABLE>
<CAPTION>
MARKET VALUE OF MARKET VALUE
FUND SECURITIES ON LOAN OF COLLATERAL
---- ------------------ -------------
<S> <C> <C>
S&P STARS.................................... $39,564,969 $40,200,600
Focus List................................... 1,940,000 2,000,000
</TABLE>
During the fiscal year ended March 31, 2000, income from securities lending
of $78,025, $541, $120,123, and $4,285 was earned by S&P STARS, Insiders
Select, Small Cap and Balanced, respectively. Such income from securities
lending is included under the caption Interest in the Statements of
Operations. No other Portfolios had security lending transactions during the
fiscal year ended March 31, 2000.
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 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
50
<PAGE>
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, 2000, only International Equity entered into such
forward currency contracts. The Portfolios had no open forward currency
contracts at March 31, 2000.
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 or foreign exchange losses
incurred after October 31, 1999 within the fiscal year are deemed to arise on
the first day of the following fiscal year. Large Cap, Balanced and
International Equity incurred and elected to defer such losses of $29,469,
$461,515 and $446,727, respectively. Focus List and Balanced have a capital
loss carry forward of $393,572 and $203,196, respectively, which expires in
2008.
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, 2000, S&P STARS, Small Cap and International
Equity each reclassified within the composition of net assets, net investment
losses of $9,244,824, $417,055 and $306,835, respectively, to accumulated net
realized gain on investments. At March 31, 2000 Insiders Select and Focus
List each reclassified within the composition of net assets, net investment
losses of $46,921 and $200,223, respectively, 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.
51
<PAGE>
TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
For the fiscal year ended March 31, 2000, 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. For the fiscal year ended March
31, 2000 the performance adjustment fee reduced the total advisory fee by
$183,200 or 0.45% of the value of Insiders Select's average daily net assets
due to underperformance in comparison to the S&P MidCap 400 Index, the
Portfolio's benchmark index.
BSAM has engaged Marvin & Palmer Associates, Inc. ("Marvin & Palmer") as
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 International Equity's total
average daily net assets to the extent 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 International Equity's total average daily net assets
to the extent International Equity's net assets in excess of $65 million at
the relevant month end. For the fiscal year ended March 31, 2000, Marvin &
Palmer earned $33,269.
For the fiscal year ended March 31, 2000, 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, 2000, PFPC has voluntarily waived a
portion of its fee in all Portfolios except S&P STARS.
For the fiscal year ended March 31, 2000, 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 --
Balanced............................ 1.20 1.70 1.70 0.70
International Equity................ 1.75 2.25 2.25 --
</TABLE>
52
<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, 2000, 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........................... $1,311,869 --
Insiders Select..................... 229,835 $ 98,749
Large Cap........................... 148,333 205,073
Small Cap........................... 417,207 28,144
Focus List.......................... 152,064 158,778
Balanced............................ 122,347 293,853
International Equity................ 265,757 94,639
</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, 2000, Bear Stearns, an affiliate of the
Adviser and the Administrator, earned approximately $711,620, $26,124, $996,
$4,560, $58,642, and $8,576 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.
53
<PAGE>
For the fiscal year ended March 31, 2000, 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......................................... $3,055,527 $1,594,643
Insiders Select................................... 188,479 98,714
Large Cap......................................... 71,372 38,817
Small Cap......................................... 168,582 90,700
Focus List........................................ 114,553 58,481
Balanced.......................................... 38,627 20,388
International Equity.............................. 141,457 80,866
</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. The Distributor advanced 1.25% in sales commissions to all authorized
dealers on net asset value transfers. 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, 2000, 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............................................... $6,677,266 $352,591 $59,767
Insiders Select......................................... 71,446 91,860 2,879
Large Cap............................................... 52,474 12,851 542
Small Cap............................................... 78,512 16,690 1,746
Focus List.............................................. 271,440 41,513 2,156
Balanced*............................................... 23,593 2,610 224
International Equity.................................... 641,563 19,854 4,181
</TABLE>
----------
* Balanced received $286 in CDSC upon certain redemptions by Class A
shareholders.
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, 2000 for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
PORTFOLIO COST APPRECIATION DEPRECIATION NET APPRECIATION
--------- -------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C>
S&P STARS........................................... $1,004,760,184 $462,117,714 $(25,730,013) $436,387,701
Insiders Select..................................... 23,281,025 5,423,344 (207,160) 5,216,184
Large Cap........................................... 13,267,970 3,068,328 (65,637) 3,002,691
Small Cap........................................... 59,396,263 19,404,222 (5,671,225) 13,732,997
Focus List.......................................... 30,404,598 11,353,095 (1,627,789) 9,725,306
Balanced............................................ 13,710,231 1,251,309 (686,580) 564,729
International Equity................................ 76,746,556 18,880,390 (2,216,235) 16,664,155
</TABLE>
54
<PAGE>
For the fiscal year ended March 31, 2000, 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.............................................. $1,055,428,322 $401,563,766
Insiders Select........................................ 28,827,199 45,246,235
Large Cap.............................................. 10,626,343 17,340,194
Small Cap.............................................. 41,922,123 47,643,111
Focus List............................................. 28,077,805 12,158,872
Balanced............................................... 15,779,308 18,197,388
International Equity................................... 77,512,393 28,575,251
</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, 2000, 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 CLASS C CLASS Y
--------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
S&P STARS........................................... 5,491 -- 5,494 --
Insiders Select..................................... 1 -- -- --
Large Cap........................................... 1,526 -- 1,514 --
Small Cap........................................... 1,276 -- 1,266 --
Focus List.......................................... 41,736 41,737 41,737 --
Balanced............................................ 55,557 55,557 58,757 1
International Equity................................ 38,730 39,069 138,890 --
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
S&P STARS INSIDERS SELECT
----------------------------------------- ---------------------------------------
SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS
------------ ------------ ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>a
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 13,163,146 3,248,656 125,851 185,048 732,282 12,445
Value.................................. $381,715,259 $ 90,884,581 $3,611,927 $ 3,293,100 $12,619,360 $ 216,667
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 13,356,673 10,653,471 260,562 822,035 693,757 79,376
Value.................................. $285,940,228 $225,975,249 $5,518,701 $14,004,050 $11,455,485 $1,261,278
CLASS B
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 6,737,562 443,490 51,681 54,234 231,131 4,479
Value.................................. $191,885,561 $ 12,389,356 $1,461,529$ 944,321 $ 3,908,421 $ 76,454
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 1,816,976 105,953 42,628 489,490 140,589 26,712
Value.................................. $ 39,716,007 $ 2,329,507 $ 894,326 $ 8,243,946 $ 2,267,701 $ 418,312
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 5,445,621 770,211 61,048 41,702 341,248 6,218
Value.................................. $157,461,719 $ 21,947,291 $1,725,834$ 722,324 $ 5,668,769 $ 106,084
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 1,500,923 775,235 136,180 258,790 283,301 40,088
Value.................................. $ 32,744,043 $ 15,847,614 $2,855,694 $ 4,440,849 $ 4,567,478 $ 627,381
CLASS Y
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 2,249,511 249,776 29,784 8,367 15,665 1,154
Value.................................. $ 66,979,797 $ 7,138,189 $ 868,208$ 151,899 $ 269,575 $ 20,327
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 593,967 324,017 83,772 1,825 22,222 3,166
Value.................................. $ 12,560,434 $ 6,838,883 $1,793,556 $ 33,074 $ 376,628 $ 51,132
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
LARGE CAP SMALL CAP
----------------------------------------- ---------------------------------------
SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS
------------ ------------ ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 98,435 163,288 50,628 402,514 455,537 62,704
Value.................................. $1,866,750 $3,083,908 $902,699 $ 8,399,020 $ 9,376,284 $1,180,723
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 236,435 182,475 34,912 1,836,377 1,923,838 58,402
Value.................................. $4,771,728 $3,596,602 $665,076 $33,847,374 $35,242,367 $1,063,921
CLASS B
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 41,130 65,674 10,226 50,495 37,194 10,137
Value.................................. $ 755,418 $1,180,301 $180,292 $ 1,032,568 $ 742,560 $ 188,548
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 88,188 17,993 6,120 142,362 34,784 7,380
Value.................................. $1,751,063 $ 331,830 $115,353 $ 2,826,045 $ 613,558 $ 133,000
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 42,107 130,825 23,501 119,135 191,769 32,704
Value.................................. $ 790,474 $2,427,344 $415,728 $ 2,419,333 $ 3,845,481 $ 608,297
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 72,424 69,436 23,811 174,437 351,849 34,901
Value.................................. $1,462,648 $1,367,701 $450,271 $ 3,524,703 $ 6,472,733 $ 629,311
CLASS Y
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 54,377 110,601 21,936 108,870 192,231 85,802
Value.................................. $1,023,022 $2,096,231 $391,125 $ 2,157,221 $ 3,881,589 $1,621,666
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 83,237 212,477 20,538 284,559 326,429 61,415
Value.................................. $1,617,045 $4,241,757 $391,241 $ 5,180,929 $ 6,124,514 $1,123,278
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
FOCUS LIST BALANCED
----------------------------------------- ---------------------------------------
SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS
------------ ------------ ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 850,647 163,672 -- 96,599 144,406 6,911
Value.................................. $16,012,893 $3,056,130 -- $1,277,290 $1,869,978 $ 88,616
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 273,095 134,732 508 203,116 162,878 4,677
Value.................................. $ 3,857,601 $1,822,606 $7,297 $2,584,096 $2,121,980 $ 59,462
CLASS B
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 238,452 62,296 -- 34,146 25,440 2,994
Value.................................. $ 4,376,148 $1,163,328 -- $ 456,587 $ 313,578 $ 38,228
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 166,081 86,025 371 58,838 2,483 1,358
Value.................................. $ 2,369,877 $1,237,419 $5,300 $ 751,354 $ 31,916 $ 17,255
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. 159,224 46,012 -- 53,749 13,827 3,767
Value.................................. $ 2,866,470 $ 863,513 -- $ 726,179 $ 175,677 $ 47,995
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. 76,706 10,820 289 15,231 49 1,718
Value.................................. $ 1,073,707 $ 148,531 $4,135 $ 196,638 $ 640 $ 21,785
CLASS Y
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. -- -- -- 159,043 429,633 18,019
Value.................................. -- -- -- $2,157,677 $5,423,959 $232,763
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares................................. -- -- -- 394,174 53,105 10,358
Value.................................. -- -- -- $5,166,631 $ 681,591 $132,059
<CAPTION>
INTERNATIONAL EQUITY
-------------------------------------
SALES REPURCHASES REINVESTMENTS
----- ----------- -------------
<C> <C> <C>
CLASS A
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares........................................................................ 2,000,076 344,946 6,345
Value......................................................................... $51,331,987 $8,072,673 $151,326
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares........................................................................ 436,615 162,043 46
Value......................................................................... $ 6,455,599 $2,355,819 $ 660
CLASS B
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares........................................................................ 499,048 142,225 2,391
Value......................................................................... $12,913,688 $3,402,875 $ 56,475
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares........................................................................ 69,803 15,483 36
Value......................................................................... $ 1,039,099 $ 212,361 $ 527
CLASS C
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares........................................................................ 512,956 45,497 899
Value......................................................................... $13,374,402 $1,183,922 $ 21,234
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
Shares........................................................................ 46,356 9,943 8
Value......................................................................... $ 686,227 $ 148,100 $ 110
</TABLE>
58
<PAGE>
CREDIT AGREEMENT
Effective October 1, 1999, the Fund, on behalf of the Portfolios, had entered
into a demand promissory note arrangement with The Chase Manhattan Bank (the
"Bank") to provide an uncommitted credit facility to the Fund (on behalf of
each Portfolio). The credit facility bears interest at the greater of (i) the
rate otherwise in effect for such loan plus 2%, or (ii) that rate of interest
from time to time announced by the Bank at its principal office as its prime
commercial lending rate plus 2%, with such interest to be payable on demand
and upon payment in full of such principal. Prior thereto, the Fund on behalf
of each Portfolio, had entered into a credit agreement with BankBoston, N.A.
The agreement provided that each party to the credit agreement was permitted
to borrow in an amount equal to the lesser of $25 million or 25% of the net
assets of each Portfolio. At no time did the aggregate outstanding principal
amount of all loans to any of the Portfolios exceed $25 million. Each
Portfolio as a fundamental policy is permitted to borrow in an amount up to
331/3% of the value of such Portfolio's assets. However, each Portfolio
intended to borrow, if any, money only for temporary or emergency (not
leveraging) purposes in an amount up to 15% of its net assets. The line of
credit bore interest at the greater of: (i) the annual rate of interest
announced from time to time from the bank at its head office as its Base
Rate, or (ii) the Federal Funds 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, 2000, were as follows:
<TABLE>
<CAPTION>
MAXIMUM LOAN AMOUNTS
PORTFOLIO AVERAGE LOAN BALANCE OUTSTANDING AVERAGE INTEREST RATE
--------- -------------------- -------------------- ---------------------
<S> <C> <C> <C>
S&P STARS...................................... $444,925 $ 4,756,600 6.53%
Insiders Select................................ 12,223 443,800 6.52
Large Cap...................................... 14,202 331,000 7.21
Small Cap...................................... 59,918 1,001,859 6.87
Focus List..................................... 2,822 583,000 6.43
Balanced....................................... 1,288 337,600 7.63
International Equity........................... 5,273 236,100 7.72
</TABLE>
The Portfolios had no amounts outstanding under the line of credit agreement
at March 31, 2000.
59
<PAGE>
T H E B E A R S T E A R N S F U N D S
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
(Series of The Bear Stearns Funds):
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, 2000, 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 responsiblity of the Portfolios' management. Our
responsiblity is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and 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, 2000 by
correspondence with the custodian and brokers; where replies were not
received, 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 audit provides 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, 2000, the results of their operations, the
changes in their net assets and the financial highlights for each of the
periods presented in conformity with accounting principles generally accepted
in the United States of America.
Deloitte & Touche LLP
New York, New York
May 17, 2000
60
<PAGE>
T H E B E A R S T E A R N S F U N D S
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, 2000) 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, 2000, the
following dividends and distributions per share were paid by each of the
Portfolios:
<TABLE>
<CAPTION>
S&P STARS THE INSIDERS LARGE CAP SMALL CAP FOCUS LIST INTERNATIONAL
PORTFOLIO SELECT FUND VALUE PORTFOLIO VALUE PORTFOLIO PORTFOLIO EQUITY PORTFOLIO
--------- ------------ --------------- --------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Payment Date: 12/20/99 12/20/99 12/20/99 12/20/99 12/20/99 12/20/99
Net Investment Income:
Class A -- -- $0.1000 -- -- --
Class B -- -- -- -- -- --
Class C -- -- -- -- -- --
Class Y -- $0.1816 0.2000 -- -- --
Short-Term Capital Gains:
Class A -- -- -- $0.7651 -- --
Class B -- -- -- 0.6651 -- --
Class C -- -- -- 0.6551 -- --
Class Y -- -- -- 0.8651 -- --
Long-Term Capital Gains:
Class A $0.2881 $0.1942 $2.1000 $0.6049 -- $0.2323
Class B 0.2881 0.1942 2.1000 0.6049 -- 0.2323
Class C 0.2881 0.1942 2.1000 0.6049 -- 0.2323
Class Y 0.2881 0.1942 2.1000 0.6049 -- --
<CAPTION>
BALANCED PORTFOLIO
----------------------------------------------------
<S> <C> <C> <C> <C>
Payment Date: 06/21/99 09/20/99 12/20/99 03/20/00
Net Investment Income:
Class A $0.0800 $0.1000 $0.1500 $0.075
Class B 0.0750 0.0950 0.1450 0.070
Class C 0.0750 0.0950 0.1450 0.070
Class Y 0.0850 0.1050 0.1550 0.080
</TABLE>
Ordinary income dividends, which include short-term capital gain
distributions, should be reported as dividend income on Form 1040. Income
dividends are taxable as ordinary income as are short-term capital gain
distributions.
61
<PAGE>
INCOME PERCENTAGES BY SECURITY TYPE FOR FISCAL YEAR ENDED MARCH 31, 2000:
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 39.71%
Fannie Mae 25.97
Freddie Mac 8.98
Government National Mortgage
Association 13.64
U.S. Treasury Obligations 9.49
Federal Home Loan Bank 2.11
Federal Farm Credit Bank 0.10
------
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 2000. 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 2001.
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.
62
<PAGE>
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