<PAGE>
THE
BEAR STEARNS
FUNDS
575 LEXINGTON AVENUE
NEW YORK, NY 10022
1.800.766.4111
Michael Minikes Chairman of the Board and
Trustee
Doni L. Fordyce President and Trustee
Peter M. Bren Trustee
John S. Levy Trustee
M.B. Oglesby, Jr. Trustee
Robert E. Richardson Trustee
Robert M. Steinberg Trustee
Barry Sommers Executive Vice President
Stephen A. Bornstein Vice President and Secretary
Frank J. Maresca Vice President and Treasurer
Vincent L. Pereira Assistant Treasurer
INVESTMENT ADVISER
Bear Stearns Asset
Management Inc.
575 Lexington Avenue
New York, NY 10022
SUB-ADVISER
INTERNATIONAL EQUITY
PORTFOLIO
Marvin &Palmer
Associates, Inc.
1201 N. Market Street
Suite 2300
Wilmington, DE19801
ADMINISTRATOR
Bear Stearns Funds
Management Inc.
575 Lexington Avenue
New York, NY 10022
CUSTODIAN
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540
COUNSEL
Kramer Levin
Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
TRANSFER AND DIVIDEND
DISBURSEMENT AGENT
PFPC Worldwide Inc.
Bellevue Corporate Center
400 Bellevue Parkway
Wilmington, DE 19809
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
The financial information herein is taken from the records of each Portfolio
without examination by independent auditors who do not express an opinion
thereof.
This report is submitted for the general information of the shareholders of
each Portfolio. It is not authorized for distribution to prospective
investors in each Portfolio unless it is preceded or accompanied by a current
prospectus which includes details regarding each Portfolio's objectives,
policies, sales commissions and other information. Total investment return is
based on historical results and is not intended to indicate future
performance. The investment return and principal value of an investment in
each Portfolio will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than original cost.
"Standard & Poor's(R)" and "S&P(R)" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by Bear, Stearns & Co. Inc.
S&P STARS Portfolio is not sponsored, managed, advised, sold or promoted
by Standard & Poor's.
BSF-R-015-07
THE
BEAR STEARNS
FUNDS
EQUITY 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
SEMI-ANNUAL REPORT
SEPTEMBER 30, 2000
BEAR
STEARNS
<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
LETTER TO SHAREHOLDERS
October 27, 2000
Dear Shareholders:
We are pleased to present the semi-annual report to shareholders for 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 six
months ended September 30, 2000. Detailed performance data for each class of
shares of each Portfolio can be found in the "Financial Highlights" section
of this report.
S&P STARS PORTFOLIO
For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of 3.08% (without giving effect to the sales charge), and
Class B and C shares had a total return of 2.85%(1) (without giving effect to
the contingent deferred sales charge, or CDSC). The Portfolio's benchmark,
the S&P 500 Index, returned (3.60)% for the same period.
The six months ended September 30, 2000, were a highly volatile period for
stocks as enthusiasm ran hot and cold in the second calendar quarter and then
evaporated in the third. Initially, concerns about interest rates kept
investors on edge. By the end of the summer, earnings disappointments and
rising energy costs added more uncertainty to the mix. The upshot was a
volatile marketplace as performance began to be measured more strictly than
had been the case over the past several years. Not surprisingly, new economy
issues, the market's favorites of late, hit an air pocket. The
telecommunications sector took the brunt of investors' dissatisfaction as
they glumly eyed the increasing trend toward the commoditization of voice
traffic as well as the funding concerns of new entrants. Despite the
environment, the fund's diversified, large-cap-oriented portfolio helped it
to weather the storm better than most.
Recognizing that the landscape was changing and that the July-through-October
period has traditionally been difficult for the technology sector, we sharply
reduced our technology exposure to a market weighting in the third quarter.
In the telecommunication services group, for example, we eliminated our
position in Worldcom.
After remaining underweighted in the financial sector earlier in the year as
interest rates rose, we increased our holdings during the quarter in
anticipation of lower rates ahead. These stocks had been out of favor for
quite some time, and valuations were very attractive. By the period's end,
the Portfolio held Fleet Boston Financial (3.27% of net assets), PNC
Financial Services (2.95%) and Eaton Vance (2.39%). We had correctly
anticipated an end to rate hikes and a slowdown in the economy, and these
issues helped the Portfolio hold its ground. Our overweighted position in
energy, specifically in the oil services area, also benefited the Portfolio.
Having performed well in light of current events, this group is expected to
strengthen further as drilling is increased in North America as well as
overseas.
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EARNINGS EXPECTATIONS REMAIN HIGH
The market environment in the near term may be somewhat rocky. Clearly, the
Federal Reserve has finished tightening and the economy is showing signs of
slowing. But earnings expectations have not been adjusted in response. Thus,
as GDP growth slows from 5% in the first half of the year to the neighborhood
of 3% in the months ahead, negative earnings surprises will be more
commonplace. Once the adjustment is complete, however, 2001 should be a good
year for investors. In a more moderate environment, interest rates should be
stable, and possibly decline a bit, and inflation should remain benign, which
will be good for equities, particularly financial issues.
Indeed, the financial and technology sectors may have the best upside
potential over the next 12 to 18 months. Viewed from a GARP (growth at a
reasonable price) perspective, many technology and telecom issues are now
quite attractively priced, and we may opportunistically increase the
Portfolio's weighting in these groups in the weeks ahead.
THE INSIDERS SELECT FUND
For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of 12.72% (without giving effect to the sales charge), and
Class B and C shares had a total return of 12.45%(2) (without giving effect
to the CDSC). The Portfolio's benchmark, the S&P MidCap 400 Index, returned
8.45% for the same period.
We believe that the equity markets will continue to be volatile as corporate
earnings expectations are adjusted to reflect the slowdown in the economy.
This suggests more normalized earnings growth rates and equity returns, which
should result in better relative performance by value stocks. This outlook
appears to be consistent with the lack of overall insider buying and
increased selling in some of the more economically sensitive sectors. We
continue to believe that companies that have low valuations, stable earnings
growth and positive insider profiles are the types of companies that will do
well in a slowing economy.
As a result of our economic outlook, we added to our financial services
holdings. Specifically, we bought Washington Mutual (2.68% of net assets) and
PNC Financial Services Group (3.38%). We expect firms such as these to
perform well in a slowing economy, which is typically accompanied by stable
to lower interest rates. We also like the insider profiles of this sector as
many of these companies have solid insider buying, significant insider
ownership and corporate share repurchase programs. Our holdings in this
sector, which include Fannie Mae (5.02%), MBIA (3.07%), American
International Group (4.86%) and American Express (4.45%), have performed well
over the past six months.
Investing in the technology sector has been particularly challenging as a
result of weakening stock fundamentals, greater price volatility and
generally weaker insider profiles. We sold our positions in National
Semiconductor, Cabletron Systems and Marchfirst. We sold these positions
earlier this year for the reasons mentioned above, but we plan to revisit the
group as valuations have come down dramatically. We are carefully monitoring
insider activity and share repurchase as tools to identify value in this
sector.
The Fund's performance was also helped by the strong performance of our
holdings in the health care sector. The Fund benefited from its positions in
Abbott Laboratories (2.85%), Baxter International (1.77%), HCA (3.26%) and
Johnson & Johnson (3.95%), all of which have improving fundamentals and
positive insider profiles. Conversely, we were hurt by our exposure to the
telecommunications industry due to weakening fundamentals specific to that
industry. Holdings such as AT&T and Broadwing (2.55%) did poorly as a result
of overcapacity and increasing competition. We sold AT&T as a result of these
issues as well as a deterioration in its insider profile.
CONSUMER STOCKS OFFER VALUE
We took advantage of favorable valuations to buy other stocks that generally do
well in a slower-growing economy. New positions include Albertson's (2.46%), TJX
Companies (1.94%) and FPL Group (3.60%). Albertson's is one of the largest
food-drug store operators in the U.S. The company has recently stumbled due to
integration issues with American Stores and its stock is now trading at a
historically low valuation. Despite this recent misstep, we believe that the
company can overcome these problems and resume its historical growth rate. In
addition, earnings per share should
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benefit from the company's aggressive share repurchase plan. TJX Companies is
an off-price retailer of home goods and apparel best known for its TJ Maxx
and Marshalls stores. Like other retailers, these companies should benefit
from a soft landing of the U.S. economy next year. We are attracted to TJX
specifically due to its low valuation and insider profile. FPL Group is a
public utility holding company engaged in the generation, transmission and
sale of electrical energy in Florida. The company is expected to benefit from
the deregulation of the power generation industry and synergies from a
recently announced merger with Entergy. In addition, FPL has had a strong
track record of aggressive share buybacks.
LARGE CAP VALUE PORTFOLIO
For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of 12.63% (without giving effect to the sales charge) and
Class B and Class C shares had a total return of 12.37% and 12.33%(3),
respectively, (without giving effect to the CDSC). The Portfolio's benchmark,
the S&P 500 Index, returned (3.60)% for the same period.
The six-month period ending September 30, 2000, was extremely volatile as
investors continued to jettison high-P/E technology and telecommunications
issues for stocks of companies with price-earnings ratios that reflected more
realistic earnings growth expectations. Initially concerned about the impact
of rising interest rates, investors grew increasingly nervous about the
outlook for corporate earnings in a slowing economy, an anxiety that was
heightened by elevated oil prices and a weak euro. Our focus on well-managed
companies with a history of -- and expectations for -- steady earnings growth
enabled the Portfolio to turn in a positive performance when most major stock
indices were down.
FINANCIAL STOCKS OUTPERFORM
Reversing the pattern of the past several years, technology stocks were the
worst performers during the period, while financial services and health care
stocks were among the best. Expecting the industry to benefit from
deregulation and lower interest rates, we have maintained a heavy
concentration in financial services for some time. Our holdings in banks,
thrifts, insurance and specialty companies performed strongly during the
six-month period and most have had double-digit returns year to date. Even at
current prices, we continue to believe that they represent good value.
Our health care holdings were mixed. Abbott Laboratories (2.02% of net
assets), Baxter International (2.01%) and Johnson & Johnson (1.49%) were up,
while Merck & Co. Inc. (2.57%) fell on concerns about patent expirations and
possible government regulation of drug prices. Consumer-oriented companies,
such as Procter & Gamble (1.75%), Gillette (1.86%) and McDonald's (3.12%),
fell on announcements that earnings would be hurt by weaker results in
Europe. Although returns are down, we believe the fundamentals of these
companies are strong, and we expect Europe to continue to restructure in ways
that will support economic and corporate growth. Reflecting investor
sentiment, our telecom holdings were among our poorest performers. AT&T
(0.90%) fell the most as it was battered by heated competition in the long
distance market.
New positions include Electronic Data Systems (EDS) (1.49%), TJX Companies
(2.10%) and May Department Stores (1.62%). EDS met our value criteria as its
price fell along with other information technology companies, but we believe
it has solid long-term earnings growth potential. TJX and May Department
Stores were too good to pass up after their stocks had fallen by roughly
half. TJX owns Marshalls, the largest off-price clothing retailer in the
U.S., and May Department Stores is, in our view, the best-run department
store in the country. Both have expected earnings growth rates in excess of
10% per year while trading at P/Es of less than 10.
These stocks represent the kind of steady growth that has begun to appeal to
investors seeking less risk. The market continues to be unforgiving when
earnings expectations are missed, or even when they are on target but
investors fear slower growth. As the economy slows to a steadier, more
sustainable pace, the kinds of companies that we own in the Portfolio, with
their below-market valuations and low double-digit growth prospects, should
become increasingly attractive.
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SMALL CAP VALUE PORTFOLIO*
For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of (4.24)% (without giving effect to the sales charge),
and Class B and C shares had a total return of (4.52)%(4) (without giving
effect to the CDSC). The Portfolio's benchmark, the Russell 2000 Index
returned (2.71)% for the same period, and the Russell 2000 Value Index
returned 9.43%.
Although the Portfolio has held its own year-to-date when measured against
the Russell 2000 Index, it lagged for the six months ended September 30. Part
of this was due to the annual rebalancing of the index that occurred at the
end of June, which led to a large reduction in technology's weighting in the
index and an increase in the financial component's share. Consequently, our
overweighting in technology hurt the Portfolio's relative performance,
although we expect our holdings in this sector to meet their earnings
expectations. We were slightly underweighted in the financial sector,
particularly pure financials such as banks and insurance companies, which
hampered performance as this sector performed well during the period.
Two of our top ten holdings, KEMET (3.60% of net assets) and Vishay (3.32%),
declined more than 30% from their peaks. However, both companies preannounced
better-than-expected third-quarter results. Afterward, earnings-per-share
estimates for both companies were revised upward. Although we took some
profits in these stocks early in the period as they reached our upper limit
on individual holdings, they are still among our larger positions. Both KEMET
and Vishay are trading at earnings-per-share (EPS) multiples that are well
under their earnings growth estimates. KEMET is trading at a single-digit
earnings-per-share multiple and Vishay is trading at just over 10 times its
EPS estimates for 2000. With earnings growth expectations for both stocks in
the high teens to low 20s for 2001, we believe they still offer greater
upside potential than downside risk.
BUILDING POSITIONS IN ENERGY AND HEALTH CARE
Two areas of increased focus and exposure for the Portfolio are energy and
health care. We built up a position in Meridian Resource Corp. (2.53%), a
natural gas exploration and production company, which was up more than 85%
over the six months. We also added to our position in Caremark Rx (3.45%), a
provider of prescription benefit management services and therapeutic
pharmaceutical services, whose stock was up more than 100% during the period.
Countering these successes were falters in our more industrial holdings such
as Elcor (1.66%), a manufacturer of roofing products, which could not pass
through the rise in oil costs in their raw materials as successfully as we
had predicted. The stock ended the period down 50%.
The outlook for the overall stock market has definitely grown cloudier as
stocks of many larger companies have declined and the overall market has
experienced a dramatic loss in capitalization. This could lead to a more
pronounced slowdown in the economy, although we still expect a soft landing.
The November election further muddies the crystal ball as individual sectors
of the market will be affected not only by who wins the presidency, but also
by which party prevails in Congress. Wall Street typically prefers a division
of power between the parties in the two branches of government. Given these
uncertainties, we continue to invest in high-quality companies, which we
believe results in less risk.
FOCUS LIST PORTFOLIO
For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of (12.49)% (without giving effect to the sales charge),
and Class B and C shares had a total return of (12.71)% and (12.70)%(5),
respectively, (without giving effect to the contingent deferred sales charge,
or CDSC). The Portfolio's benchmark, the S&P 500 Index returned (3.60)% for
the same period.
Investor concern about earnings, energy prices and interest rates roiled the
markets throughout the spring, summer and early fall. As the period began,
anticipation that the Federal Reserve would move to hike rates kept investors
on edge. By mid-summer, energy prices and expectations that some of the
market's highest fliers of the past year might disappoint were rising. As a
result, prices seesawed through June and July, and rallied in August. But the
elation was short-lived. In late summer, several highly visible companies
pre-announced shortfalls and enthusiasm for equities began to evaporate.
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Despite the volatile environment, several of the Portfolio's holdings
performed well. Starbucks and Qwest hit our price targets early in the period
and we sold them at significant premiums to their purchase price. BISYS
(6.05%) and Fannie Mae (6.89%) weathered the storm and moved upward. These
gains, however, did not compensate for the weakness of our holdings in
technology and telecom, sectors that fell precipitously in September as the
earnings pre-announcement season began. Intel (3.75%) fell sharply on the
news that earnings would come in short of expectations, and EMC Corp.
(10.38%) and AOL (5.70%) declined as investors moved out of technology and
new economy stocks. As a result, the period was disappointing.
Nonetheless, the general price decline enabled us to add several new
positions to the Portfolio at very attractive prices, such as DuPont (4.37%)
and Vodafone (4.45%). With oil a critical component in many of its products,
DuPont should benefit as oil prices stabilize, then decline in the coming
months. Recently battered Vodafone represented growth potential at a price
simply too attractive to resist.
A BRIGHTER OUTLOOK FOR TECHNOLOGY'S LEADERS
Despite the current climate, we are optimistic about the Portfolio's
prospects in the months ahead. We believe that the technology and
telecommunications issues we hold represent strong growth potential since
each is a leader in its respective arena. While it is unlikely that they will
bounce back within the very near term, when enthusiasm does return, these
issues will more than likely bounce first. Moreover, at long last, earnings
expectations, the drivers of the current decline, are becoming more
realistic. As a result, we expect that the environment ahead will be a
hospitable one for stocks with a compelling "story," strong fundamentals and
truly innovative products -- the type of issues the Portfolio holds.
BALANCED PORTFOLIO
For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of 5.27% (without giving effect to the sales charge), and
Class B and C shares had a total return of 5.06% and 4.98%(6), respectively,
(without giving effect to the CDSC). The Portfolio's broad-based securities
market index, the S&P 500 Index, returned (3.60)% while the Lipper Balanced
Fund Index returned 0.77% for the same period.
The major factors driving both the stock and bond markets during the six
months ended September 30 were concerns about the pace of economic growth,
what action the Federal Reserve would take in response, and what would happen
to corporate profits as a result. Fears that the economy was accelerating too
fast and that interest rates would continue to rise shifted during the summer
to concerns about falling corporate profits in a slowing economy. For much of
the period, investors jettisoned high-P/E technology issues for stocks of
companies with price-earnings ratios that reflected more realistic earnings
expectations. In this environment, our focus on well-managed companies with a
history of -- and expectations for -- steady earnings growth benefited the
Portfolio.
Reversing the trend of the past several years, technology stocks were the
worst performers during the period, and financial services and health care
were among the best. We have maintained a heavy concentration in financial
services for some time, and these holdings performed strongly. Even at
current prices, we continue to believe that they represent good value. Our
health care holdings turned in mixed results, and our consumer-oriented
companies fell on announcements that earnings would be hurt by weaker results
in Europe. Although returns are down, we believe the fundamentals of these
companies are strong.
New equity positions include Electronic Data Systems (EDS) (0.81% of net
assets), TJX Companies (1.23%) and May Department Stores (0.79%). EDS shares
had fallen along with other information technology companies, and shares of
TJX and May Department Stores were caught in the downdraft affecting
retailers. At recent prices, all three met our value criteria, with expected
earnings growth rates that exceed their P/Es.
THE FEDERAL RESERVE MOVES TO THE SIDELINES
The biggest change in the bond market was the shift in sentiment regarding
Fed policy. As it became increasingly clear that the U.S. economy was
slowing, fears about Fed intervention abated and the yield curve steepened.
In contrast to the stock market, the bond market as a whole enjoyed relative
price stability and positive total returns.
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However, lower earnings and the specter of corporate restructuring
contributed to concerns about corporate credit risk. In this environment,
industry and individual security selection has become paramount. We continued
to overweight quality corporate bonds, concentrating on sectors and
sub-sectors most likely to do well in the current slowdown, such as energy,
financial services, discount retailers and media/telecom. We shortened
maturities slightly, but maintained our concentration in the intermediate
part of the yield curve. We also continued to overweight asset-backed
securities, with their relatively higher returns and insulation from the
idiosyncratic risk facing corporate issues, which are vulnerable to
disappointing earnings reports.
Given a slowing economy, a battered stock market and a presidential election,
we expect the Fed to hold interest rates steady through the end of this year
and likely lower them in the first half of 2001. When it does cut rates, or
even adopts a neutral bias, both the stock and bond markets should benefit.
INTERNATIONAL EQUITY PORTFOLIO**
For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of (23.10)% (without giving effect to the sales charge),
and Class B and C shares had a total return of (23.29)%(7) (without giving
effect to the CDSC).The Portfolio's benchmark, the Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE) Index returned (11.60)%
for the same period.
Conventional wisdom has it that equity markets are driven by fear and greed.
It can be argued that greed was the driver behind the astonishing rise of
telecommunications, technology and dot-com stocks worldwide over the past
several years. But there is little doubt that during the past two quarters
greed gave way to fear -- fear of inflation risks generated by potentially
overheating economies, of rising oil prices and of declining corporate
profitability. The rapid slide of the euro, the closeness of the presidential
election in the U.S. and the question of a sustainable economic recovery in
Japan added a good deal of uncertainty to the mix.
The result of this change in psychology was an extremely rotational market on
both a geographic and sector basis. The move in leadership away from Japan,
which began some nine months ago, accelerated. Interest shifted to Europe,
where the fall of the euro made European corporations more competitive
globally. Economic activity was strong and profits were rising. On a sector
basis, the slowdown in information technology spending post-Y2K and the
potential delay in the rollout of third generation cellular technology
dampened enthusiasm for telecom and technology issues.
Realizing that the environment was changing, we adjusted the Portfolio to
reflect the more difficult climate throughout the summer. Exposure in Japan
was significantly reduced, resulting in an overweighting in Europe. We
eliminated positions in telecommunication service providers and reduced our
technology holdings. At the same time, positions in pharmaceutical, energy,
consumer goods and financial service companies were added. The possible
economic slowdown caused by rising interest rates and oil prices has aided
the food and beverage sector and pharmaceuticals. Many of these companies are
also benefiting from a weaker euro since a substantial portion of their
revenues are generated in the U.S. Of late, energy stocks have gone up on the
back of rising crude oil prices. With the stabilization of interest rates,
financial services stocks should also begin to benefit.
MARKETS WAIT FOR UNCERTAINTIES TO ABATE
Going forward, we believe that much of what is currently troubling investors
will be resolved over the next several quarters. Fear in the markets is
driven by uncertainty and much of the current uncertainty should abate in the
near future. The U.S. election will be decided and we will know whether
central bank intervention on behalf of the euro has been effective. We will
also see whether the current spike in oil prices is sustainable or whether it
is merely an inventory problem.
6
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Moreover, the impact of rising interest rates and oil prices on the world
economies should be apparent with economic activity slowing to a more
moderate pace. In such an environment, interest rates will stabilize -- and
may even decline -- which will be positive for equities. Finally, it is
unusual for equity markets to rotate for long periods. Clear leadership
should evolve as market uncertainties dissipate. When the new leaders appear,
we will adjust the Portfolio accordingly.
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
---------
* 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 six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of (2.59)%, including the initial 5.50% maximum sales
charge, Class B shares returned (2.15)% including the 5.00% CDSC and Class C
shares returned 1.85%, including the 1.00% CDSC.
(2) For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of 6.54%, including the initial 5.50% maximum sales
charge, Class B shares returned 6.83%, including the 5.00% CDSC and Class C
shares returned 11.31%, including the 1.00% CDSC.
(3) For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of 6.45%, including the initial 5.50% maximum sales
charge, Class B shares returned 6.73%, including the 5.00% CDSC and Class C
shares returned 11.18%, including the 1.00% CDSC.
(4) For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of (9.49)%, including the initial 5.50% maximum sales
charge, Class B shares returned (9.29)%, including the 5.00% CDSC and Class
C shares returned (5.47)%, including the 1.00% CDSC.
(5) For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of (17.29)%, including the initial 5.50% maximum sales
charge, Class B shares returned (17.06)%, including the 5.00% CDSC and Class
C shares returned (13.56)%, including the 1.00% CDSC.
(6) For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of (0.51)%, including the initial 5.50% maximum sales
charge, Class B shares returned 0.06%, including the 5.00% CDSC and Class C
shares returned 3.98%, including the 1.00% CDSC.
(7) For the six months ended September 30, 2000, the Portfolio's Class A shares
had a total return of (27.33)%, including the initial 5.50% maximum sales
charge, Class B shares returned (27.13)%, including the 5.00% CDSC and Class
C shares returned (23.29)%, including the 1.00% CDSC.
Bear Stearns Asset Management Inc. waived 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.
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T H E B E A R S T E A R N S F U N D S
S&P STARS PORTFOLIO
SEPTEMBER 30, 2000
(UNAUDITED)
==============================================================================
TOP TEN INDUSTRY WEIGHTINGS*
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<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
---- ------------------------------------------------- ----------
<S> <C> <C>
1. Cable TV 8.25
2. Networking Products 6.37
3. Banks 6.22
4. Electronic Components 5.95
5. Cellular Telecommunications 5.64
6. Oil & Gas Drilling 5.56
7. Telecommunication Equipment 4.75
8. Finance - Investment Banker/Brokerage 4.68
9. Electronics 4.57
10. Diversified Operations 3.96
</TABLE>
==============================================================================
TOP TEN HOLDINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
---- ------------------------------- -------------------- ----------
<S> <C> <C> <C>
1. Comcast Corp. Cable TV 5.23
2. Global Marine Inc. Oil & Gas Drilling 4.57
3. Sprint Corp. (PCS Group) Cellular
Telecommunications 3.95
4. Moody's Corp. Finance - Investment
Banker/Brokerage 3.75
5. Cisco Systems, Inc. Networking Products 3.64
6. Adobe Systems Inc. Electronics 3.53
7. FleetBoston Financial Corp. Banks 3.27
8. Xilinx, Inc. Electronic Components 3.25
9. CVS Corp. Retail - Drug Stores 3.24
10. Cablevision Systems Corp. Cable TV 3.01
</TABLE>
-------
* The Portfolio's composition will change over time.
8
<PAGE>
T H E B E A R S T E A R N S F U N D S
THE INSIDERS SELECT PORTFOLIO
SEPTEMBER 30, 2000
(UNAUDITED)
==============================================================================
TOP TEN INDUSTRY WEIGHTINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
---- ------------------------------------------------- ----------
<S> <C> <C>
1. Credit & Finance 12.54
2. Telecommunication Services 5.89
3. Banks 5.65
4. Commercial Services 5.37
5. Multi-Line Insurance 4.86
6. Aerospace & Defense Equipment 4.71
7. Medical - Drugs 4.62
8. Financial Services 4.38
9. Electronics 4.14
10. Drugs & Hospital Supplies 3.95
</TABLE>
==============================================================================
TOP TEN HOLDINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
---- ------------------------------- -------------------- ----------
<S> <C> <C> <C>
1. Fannie Mae Credit & Finance 5.02
2. American International
Group, Inc. Multi-Line Insurance 4.86
3. United Technologies Corp. Aerospace & Defense
Equipment 4.71
4. American Express Co. Credit & Finance 4.45
5. Citigroup Inc. Financial Services 4.38
6. Emerson Electric Co. Electronics 4.14
7. Johnson & Johnson Drugs & Hospital
Supplies 3.95
8. FPL Group, Inc. Electric - Integrated 3.60
9. SBC Communications Inc. Telephone - Integrated 3.60
10. USA Education Inc. Finance - Consumer Loans 3.48
</TABLE>
-----
* The Portfolio's composition will change over time.
9
<PAGE>
T H E B E A R S T E A R N S F U N D S
LARGE CAP VALUE PORTFOLIO
SEPTEMBER 30, 2000
(UNAUDITED)
==============================================================================
TOP TEN INDUSTRY WEIGHTINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
---- ------------------------------------------------- ----------
<S> <C> <C>
1. Credit & Finance 9.09
2. Oil Companies - Integrated 8.17
3. Banks 7.13
4. Medical - Drugs 6.59
5. Cosmetics & Toiletries 6.02
6. Retail - Restaurants 5.83
7. Telephone - Integrated 5.67
8. Life/Health Insurance 4.56
9. Retail - Department Stores 3.72
10. Aerospace & Defense Equipment 3.03
</TABLE>
==============================================================================
TOP TEN HOLDINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
---- ------------------------------- -------------------- ----------
<S> <C> <C> <C>
1. Fannie Mae Credit & Finance 3.50
2. USA Education Inc. Credit & Finance 3.37
3. McDonald's Corp. Retail - Restaurants 3.12
4. United Technologies Corp. Aerospace & Defense
Equipment 3.03
5. PNC Financial Services Group Banks 2.97
6. Allstate Corporation (The) Multi-Line Insurance 2.92
7. Texaco Inc. Oil Companies
- Integrated 2.84
8. SBC Communications Inc. Telephone
- Integrated 2.80
9. Anheuser-Busch Companies, Inc. Brewery 2.76
10. Wendy's International, Inc. Retail - Restaurants 2.71
</TABLE>
-----
* The Portfolio's composition will change over time.
10
<PAGE>
T H E B E A R S T E A R N S F U N D S
SMALL CAP VALUE PORTFOLIO
SEPTEMBER 30, 2000
(UNAUDITED)
==============================================================================
TOP TEN INDUSTRY WEIGHTINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
---- ------------------------------------------------- ----------
<S> <C> <C>
1. Medical - Drugs 10.85
2. Building & Construction Products 10.54
3. Electronic Components 5.50
4. Commercial Services 4.36
5. Health Care 4.01
6. Communications 3.95
7. Miscellaneous Industrials 3.60
8. Electronic Components - Semiconductors 3.52
9. Life/Health Insurance 3.31
10. Food - Miscellaneous/Diversified 3.24
</TABLE>
==============================================================================
TOP TEN HOLDINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
---- ------------------------------- -------------------- ----------
<S> <C> <C> <C>
1. Impax Laboratories, Inc. Medical - Drugs 9.78
2. Steiner Leisure Ltd. Commercial Services 4.36
3. Southdown, Inc. Building &
Construction
Products 4.03
4. COMARCO, Inc. Communications 3.95
5. KEMET Corp. Miscellaneous
Industrials 3.60
6. Caremark Rx, Inc. Health Care 3.45
7. Vishay Intertechnology, Inc. Electronic
Components 3.32
8. Penn Treaty American Corp. Life/Health
Insurance 3.31
9. Hibernia Foods plc Food - Miscellaneous
/Diversified 3.24
10. Bally Total Fitness Holding
Corp. Recreational Centers 3.07
</TABLE>
-------
* The Portfolio's composition will change over time.
11
<PAGE>
T H E B E A R S T E A R N S F U N D S
FOCUS LIST PORTFOLIO
SEPTEMBER 30, 2000
(UNAUDITED)
==============================================================================
TOP TEN INDUSTRY WEIGHTINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
---- ------------------------------------------------- ----------
<S> <C> <C>
1. Technology: Computer Services 13.59
2. Technology: Computers & Office Equipment 10.38
3. Media: Radio & TV Broadcasting 8.84
4. Media: Cable and Entertainment 8.26
5. Financial Services: Government - Sponsored
Enterprises 6.89
6. Technology: Enterprise Software 5.93
7. Technology: Internet/News Media 5.70
8. Healthcare: Major Pharmaceuticals 5.67
9. Consumer: Restaurants 5.07
10. Consumer: Hard Line Retailers - Home Improvement 4.95
</TABLE>
==============================================================================
TOP TEN HOLDINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
---- ------------------------------- -------------------- ----------
<S> <C> <C> <C>
1. EMC Corp. Technology:
Computers & Office
Equipment 10.38
2. Affiliated Computer Services,
Inc. Technology: Computer
Services 7.54
3. Fannie Mae Financial Services:
Government -
Sponsored
Enterprises 6.89
4. The BISYS Group, Inc. Technology: Computer
Services 6.05
5. Oracle Corp. Technology:
Enterprise
Software 5.93
6. America Online, Inc. Technology: Internet
/News Media 5.70
7. Bristol-Myers Squibb Co. Healthcare: Major
Pharmaceuticals 5.67
8. Darden Restaurants, Inc. Consumer:
Restaurants 5.07
9. The Home Depot, Inc. Consumer: Hard Line
Retailers - Home
Improvement 4.95
10. Viacom Inc. Media: Cable and
Entertainment 4.78
</TABLE>
-------
* The Portfolio's composition will change over time.
12
<PAGE>
T H E B E A R S T E A R N S F U N D S
BALANCED PORTFOLIO
SEPTEMBER 30, 2000
(UNAUDITED)
==============================================================================
TOP TEN INDUSTRY WEIGHTINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
---- ------------------------------------------------- ----------
<S> <C> <C>
1. Oil Companies - Integrated 6.08
2. Medical - Drugs 4.50
3. Cosmetics & Toiletries 4.25
4. Telephone - Integrated 3.80
5. Credit & Finance 3.74
<CAPTION>
LONG-TERM DEBT
------------------------------------------------------------------------------
1. U.S. Government Agency Obligations 16.49
2. U.S. Government Obligations 7.44
3. Mortgage Backed Securities 4.58
4. Financial 2.66
5. Food & Beverages 1.99
</TABLE>
==============================================================================
TOP FIVE HOLDINGS*
EQUITY
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
---- ------------------------------- -------------------- ----------
<S> <C> <C> <C>
1. Fannie Mae Credit & Finance 1.93
2. Citigroup Inc. Financial Services 1.87
3. USA Education Inc. Credit & Finance 1.81
4. Unocal Corp. Oil Companies -
Integrated 1.74
5. Kimberly-Clark Corp. Cosmetics &
Toiletries 1.73
<CAPTION>
LONG-TERM DEBT
------------------------------------------------------------------------------
1. Fannie Mae U.S. Government
Agency Obligations 11.77
2. U.S. Treasury Notes U.S. Government
Obligations 4.92
3. Government National Mortgage
Association U.S. Government
Agency Obligations 2.90
4. U.S. Treasury Bonds U.S. Government
Obligations 2.52
5. American Home Products Medical - Drugs 1.40
</TABLE>
-------
* The Portfolio's composition will change over time.
13
<PAGE>
T H E B E A R S T E A R N S F U N D S
INTERNATIONAL EQUITY PORTFOLIO
SEPTEMBER 30, 2000
(UNAUDITED)
==============================================================================
TOP TEN INDUSTRY WEIGHTINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK INDUSTRY NET ASSETS
---- ------------------------------------------------- ----------
<S> <C> <C>
1. Money Center Banks 18.87
2. Medical - Drugs 16.73
3. Multi-line Insurance 10.59
4. Telecommunication Equipment 7.11
5. Oil Companies - Integrated 6.95
6. Food - Miscellaneous/Diversified 2.96
7. Wire & Cable Products 2.39
8. Electronic Components - Miscellaneous 2.29
9. Drug Delivery Systems 2.24
10. Investment Management/Adviser Services 2.22
</TABLE>
==============================================================================
TOP TEN HOLDINGS*
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
RANK HOLDINGS INDUSTRY NET ASSETS
---- ------------------------------- -------------------- ----------
<S> <C> <C> <C>
1. Aventis SA Medical - Drugs 3.87
2. ING Groep NV Multi-line Insurance 3.78
3. Royal Dutch Petroleum Co. Oil Companies -
Integrated 3.74
4. Axa Multi-line Insurance 3.63
5. HSBC Holdings plc Money Center Banks 3.53
6. Total Fina Elf SA Oil Companies -
Integrated 2.98
7. ABN AMRO Holding NV Money Center Banks 2.67
8. San Paolo - IMI SpA Money Center Banks 2.51
9. Credit Suisse Group Money Center Banks 2.49
10. Alcatel Telecommunication
Equipment 2.47
</TABLE>
-------
* The Portfolio's composition will change over time.
14
<PAGE>
T H E B E A R S T E A R N S F U N D S
S&P STARS PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 99.19%
BANKS - 6.22%
2,250,000 FleetBoston Financial Corp. $ 87,750,000
1,220,000 PNC Financial Services Group 79,300,000
--------------
167,050,000
--------------
CABLE TV - 8.25%
1,220,000 Cablevision Systems Corp., Class A* 80,901,250
3,430,000 Comcast Corp., Special Class A* 140,415,625
--------------
221,316,875
--------------
CELLULAR TELECOMMUNICATIONS - 5.64%
3,020,000 Sprint Corp. (PCS Group) *+ 105,888,750
1,230,000 Vodafone Group plc - ADR+ 45,510,000
--------------
151,398,750
--------------
COMMERCIAL SERVICES - 1.01%
700,000 Convergys Corp.*+ 27,212,500
--------------
COMPUTER SERVICES - 3.16%
1,500,000 Ceridian Corp.*+ 42,093,750
2,710,000 MarchFirst, Inc.*+ 42,664,526
--------------
84,758,276
--------------
COMPUTERS - MEMORY DEVICES - 1.37%
370,000 EMC Corp.* 36,676,250
--------------
COMPUTERS - MICRO - 1.18%
270,000 Sun Microsystems, Inc.* 31,522,500
--------------
CONSULTING SERVICES - 0.51%
1,185,000 Gartner Group, Inc., Class A*+ 13,775,625
--------------
COSMETICS & TOILETRIES - 1.48%
710,000 Kimberly-Clark Corp.++ 39,626,875
--------------
CREDIT & FINANCE - 1.81%
800,000 American Express Co.+ 48,600,000
--------------
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS - 3.96%
240,000 General Electric Co.++ $ 13,845,000
1,020,000 Roper Industries, Inc.++ 33,851,250
1,130,000 Tyco International Ltd. 58,618,750
--------------
106,315,000
--------------
ELECTRONIC COMPONENTS - 5.95%
1,620,000 LSI Logic Corp.* 47,385,000
810,000 Vishay Intertechnology, Inc.* 24,907,500
1,020,000 Xilinx, Inc.* 87,337,500
--------------
159,630,000
--------------
ELECTRONICS - 4.57%
610,000 Adobe Systems Inc. 94,702,500
670,000 Intel Corp. 27,846,875
--------------
122,549,375
--------------
FINANCE - INVESTMENT BANKER/BROKERAGE - 4.68%
170,000 Lehman Brothers Holdings Inc. 25,117,500
3,822,600 Moody's Corp.(b)*+++ 100,582,163
--------------
125,699,663
--------------
HEALTH CARE COST MANAGEMENT SERVICES - 0.85%
680,000 Orthodontic Centers of America, Inc.* 22,652,500
--------------
INTERNET CONTENT - 0.75%
1,446,800 SportsLine.com, Inc.*+++ 19,983,925
--------------
INVESTMENT MANAGEMENT/ADVISOR SERVICES - 2.39%
1,260,000 Eaton Vance Corp. 64,260,000
--------------
MEDICAL - DRUGS - 1.89%
1,130,000 Pfizer Inc. 50,779,375
--------------
MEDICAL - GENERIC DRUGS - 1.52%
630,000 Watson Pharmaceuticals, Inc.* 40,871,250
--------------
MEDICAL - WHOLESALE DRUG DISTRIBUTION - 2.23%
680,000 Cardinal Health, Inc.+ 59,967,500
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
T H E B E A R S T E A R N S F U N D S
S&P STARS PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MULTI-LINE INSURANCE - 0.52%
400,000 Allstate Corp. (The) $ 13,900,000
--------------
MULTIMEDIA - 1.31%
450,000 Time Warner Inc.+ 35,212,500
--------------
NETWORKING PRODUCTS - 6.37%
1,770,000 Cisco Systems, Inc.* 97,792,500
640,000 Extreme Networks, Inc.*++ 73,280,000
--------------
171,072,500
--------------
OIL & GAS DRILLING - 5.56%
3,970,000 Global Marine Inc.* 122,573,750
510,000 Nabors Industries, Inc.* 26,724,000
--------------
149,297,750
--------------
OIL & OFFSHORE DRILLING - 2.30%
1,370,000 Santa Fe International Corp. 61,735,625
--------------
PHARMACEUTICALS - 2.90%
500,000 COR Therapeutics, Inc.*+ 31,156,250
100,000 Millennium Pharmaceuticals, Inc.*+ 14,606,250
440,000 Teva Pharmaceutical Industries
Ltd. - ADR+ 32,202,500
--------------
77,965,000
--------------
PHYSICAL THERAPY/REHABILITATION CENTERS - 2.50%
1,580,000 RehabCare Group, Inc.* 67,150,000
--------------
PIPELINES - 1.06%
500,000 Dynegy Inc., Class A 28,500,000
--------------
PUBLISHING - BOOKS - 2.22%
750,000 Scholastic Corp.* 59,671,875
--------------
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
RETAIL - DRUG STORES - 3.24%
1,880,000 CVS Corp.++ $ 87,067,500
--------------
RETAIL - GROCERY STORES - 1.27%
1,510,000 Kroger Co. (The)*++ 34,069,375
RETAIL - OFFICE SUPPLIES - 0.57%
1,080,000 Staples, Inc.*++ 15,322,500
--------------
RETAIL - RESTAURANTS - 1.95%
516,920 Consolidated Products, Inc.*++ 4,135,360
1,780,000 Outback Steakhouse, Inc.*++ 48,282,500
--------------
52,417,860
--------------
SEMICONDUCTOR EQUIPMENT - 0.83%
480,000 Novellus Systems, Inc.* 22,350,000
--------------
TELECOMMUNICATION EQUIPMENT - 4.75%
1,400,000 ANTEC Corp.*+ 41,300,000
1,300,000 AT&T Wireless Group(a)*+ 27,137,500
990,000 Nortel Networks Corp. 58,966,875
--------------
127,404,375
--------------
TELECOMMUNICATION SERVICES - 0.61%
438,800 Copper Mountain Networks, Inc.*+ 16,455,000
--------------
TELEVISION - 0.49%
350,000 Univision Communications Inc.,
Class A*++ 13,081,250
--------------
TRANSPORT - TRUCK - 0.93%
1,100,000 USFreightways Corp.+ 24,956,250
--------------
WEB HOSTING/DESIGN - 0.39%
130,000 Macromedia, Inc.* 10,505,625
--------------
Total Common Stocks
(cost - $2,137,074,458) 2,662,781,224
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
T H E B E A R S T E A R N S F U N D S
S&P STARS PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT -- 0.00%
INVESTMENT COMPANY - 0.00%
476 Federated Automated Government
Money Trust, 5.90%**+++
(cost - $476) $ 476
--------------
Total Investments -- 99.19%
(cost - $2,137,074,934) 2,662,781,700
Other assets in excess of
liabilities -- 0.81% 21,796,238
--------------
Net Assets-- 100.00% $2,684,577,938
==============
</TABLE>
-------
ADR - American Depositary Receipts.
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; interest rate reflects SEC seven-day
yield at September 30, 2000.
(a) Security or a portion thereof is out on loan.
(b) When-issued.
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.
17
<PAGE>
T H E B E A R S T E A R N S F U N D S
THE INSIDERS SELECT FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 89.08%
AEROSPACE & DEFENSE EQUIPMENT - 4.71%
19,400 United Technologies Corp. $ 1,343,450
--------------
AUTOMOTIVE PARTS & EQUIPMENT - 0.00%
0 Dana Corp. 9
--------------
BANKS - 5.65%
14,800 PNC Financial Services Group 962,000
13,000 SunTrust Banks, Inc. 647,562
--------------
1,609,562
--------------
CABLE TV - 3.13%
21,800 Comcast Corp.* 892,438
--------------
COMMERCIAL SERVICES - 5.37%
25,400 Moody's Corp. 668,337
32,500 Viad Corp. 863,281
--------------
1,531,618
--------------
COMMERCIAL SERVICES - FINANCE - 0.76%
12,700 Dunn & Bradstreet Corp.* 215,900
--------------
CREDIT & FINANCE - 12.54%
20,900 American Express Co. 1,269,675
20,000 Fannie Mae 1,430,000
12,300 MBIA, Inc. 874,837
--------------
3,574,512
--------------
DRUGS & HOSPITAL SUPPLIES - 3.95%
12,000 Johnson & Johnson 1,127,250
--------------
ELECTRIC - INTEGRATED - 3.60%
15,600 FPL Group, Inc. 1,025,700
--------------
ELECTRONICS - 4.14%
17,600 Emerson Electric Co. 1,179,200
--------------
FINANCE - CONSUMER LOANS - 3.48%
20,600 USA Education Inc. 992,662
--------------
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
FINANCIAL SERVICES - 4.38%
23,086 Citigroup Inc. $ 1,247,006
--------------
FOOD - RETAIL - 2.46%
33,400 Albertson's, Inc. 701,400
--------------
LIFE/HEALTH INSURANCE - 3.31%
12,100 American General Corp. 943,800
--------------
MEDICAL - DRUGS - 4.62%
17,100 Abbott Laboratories 813,319
6,300 Baxter International Inc. 502,819
--------------
1,316,138
--------------
MEDICAL - HOSPITALS - 3.26%
25,000 HCA-The Healthcare Co. 928,125
--------------
MULTI-LINE INSURANCE - 4.86%
14,475 American International Group, Inc. 1,385,077
--------------
RETAIL - DEPARTMENT STORES - 3.23%
17,900 May Department Stores
Company (The) 366,950
24,600 TJX Companies, Inc. (The) 553,500
--------------
920,450
--------------
RETAIL - RESTAURANTS - 3.46%
49,100 Wendy's International, Inc. 985,069
--------------
SAVINGS & LOAN - 2.68%
19,200 Washington Mutual, Inc. 764,400
--------------
TELECOMMUNICATION SERVICES - 5.89%
28,400 Broadwing Inc.* 725,975
19,700 Verizon Communications 954,219
--------------
1,680,194
--------------
TELEPHONE - INTEGRATED - 3.60%
20,500 SBC Communications Inc. 1,025,000
--------------
Total Common Stocks
(cost - $18,436,168) 25,388,960
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
T H E B E A R S T E A R N S F U N D S
THE INSIDERS SELECT FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 11.02%
INVESTMENT COMPANY - 0.14%
39,950 Federated Investors, Trust for Short-Term
U.S. Government Securities, 6.14%**
(cost - $39,950) $ 39,950
--------------
PRINCIPAL
AMOUNT
(000'S)
---------
U.S. GOVERNMENT AGENCY OBLIGATION - 10.88%
$ 3,100 Federal Home Loan Bank Discount
Notes, 6.22%, 10/02/00
(cost - $3,099,464) 3,099,464
--------------
Total Short-Term Investments
(cost - $3,139,414) 3,139,414
--------------
Total Investments -- 100.10%
(cost - $21,575,582) 28,528,374
Liabilities in excess of other
assets -- (0.10%) (27,189)
--------------
Net Assets -- 100.00% $ 28,501,185
==============
</TABLE>
-------
* Non-income producing security.
** Money market fund; interest rate reflects SEC seven-day yield at
September 30, 2000.
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
T H E B E A R S T E A R N S F U N D S
LARGE CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 97.15%
AEROSPACE & DEFENSE EQUIPMENT 3.03%
9,400 United Technologies Corp. $ 650,950
--------------
BANKS - 7.13%
8,000 Bank of America Corporation 419,000
9,800 PNC Financial Services Group 637,000
9,500 SunTrust Banks, Inc. 473,219
--------------
1,529,219
--------------
BREWERY - 2.76%
14,000 Anheuser-Busch Companies, Inc. 592,375
--------------
CHEMICALS - DIVERSIFIED - 1.31%
6,800 Du Pont (E.I.) de Nemours and Company 281,775
--------------
COMMERCIAL SERVICES - 2.63%
16,200 Moody's Corp. 426,262
8,100 New Dun & Bradstreet Corporation (The) * 137,700
--------------
563,962
--------------
COMPUTER SERVICES - 1.49%
7,700 Electronic Data Systems Corporation 319,550
--------------
COMPUTERS - MICRO - 1.63%
3,100 International Business Machines Corp. 348,750
--------------
COSMETICS & TOILETRIES - 6.02%
12,900 Gillette Co. (The) 398,287
9,300 Kimberly-Clark Corp. 519,056
5,600 Procter & Gamble Company (The) 375,200
--------------
1,292,543
--------------
CREDIT & FINANCE - 9.09%
10,500 Fannie Mae 750,750
6,700 MBIA, Inc. 476,537
15,000 USA Education Inc. 722,812
--------------
1,950,099
--------------
DISTRIBUTION/WHOLESALE - 1.87%
21,000 Genuine Parts Company 400,312
--------------
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS - 2.59%
6,100 Minnesota Mining and Manufacturing
Company (3M) $ 555,862
--------------
DIVERSIFIED OPERATIONS - 2.48%
20,000 Viad Corp. 531,250
--------------
DRUGS & HOSPITAL SUPPLIES - 1.49%
3,400 Johnson & Johnson 319,387
--------------
ELECTRIC - INTEGRATED - 2.70%
8,800 FPL Group, Inc. 578,600
--------------
ELECTRIC PRODUCTS - MISCELLANEOUS - 2.25%
7,200 Emerson Electric Co. 482,400
--------------
FINANCIAL SERVICES - 2.55%
10,133 Citigroup Inc. 547,815
--------------
FOOD - RETAIL - 1.47%
15,000 Albertson's Inc. 315,000
--------------
LIFE/HEALTH INSURANCE - 4.56%
5,600 American General Corp. 436,800
19,500 Torchmark Corporation 542,344
--------------
979,144
--------------
MEDICAL - DRUGS - 6.59%
9,100 Abbott Laboratories 432,819
5,400 Baxter International Inc. 430,988
7,400 Merck & Co., Inc. 550,838
--------------
1,414,645
--------------
MULTI-LINE INSURANCE - 2.92%
18,000 Allstate Corporation (The) 625,500
--------------
OIL COMPANIES - INTEGRATED - 8.17%
5,740 BP Amoco Plc ADR 304,220
4,300 Exxon Mobil Corp. 383,238
11,600 Texaco Inc. 609,000
12,900 Unocal Corporation 457,144
--------------
1,753,602
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
T H E B E A R S T E A R N S F U N D S
LARGE CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 2.38%
12,500 Eastman Kodak Company $ 510,938
--------------
RETAIL - DEPARTMENT STORES - 3.72%
17,000 May Department Stores Company (The) 348,500
20,000 TJX Companies, Inc. (The) 450,000
--------------
798,500
--------------
RETAIL - RESTAURANTS - 5.83%
22,200 McDonald's Corp. 670,163
29,000 Wendy's International, Inc. 581,813
--------------
1,251,976
--------------
SAVINGS & LOAN - 2.63%
14,185 Washington Mutual, Inc. 564,740
--------------
TELECOMMUNICATION SERVICES - 2.19%
9,700 Verizon Communications 469,844
--------------
TELEPHONE - INTEGRATED - 5.67%
6,600 AT&T Corp. 193,875
12,000 SBC Communications Inc. 600,000
13,900 WorldCom, Inc.* 422,213
--------------
1,216,088
--------------
Total Common Stocks
(cost - $17,381,690) 20,844,826
--------------
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
SHORT-TERM INVESTMENT - 4.74%
INVESTMENT COMPANY - 4.74%
1,018,229 Federated Investors, Trust for
Short-Term U.S. Government
Securities, 6.14%** (cost - $1,018,229) $ 1,018,229
--------------
Total Investments -- 101.89%
(cost $18,399,919) 21,863,055
Liabilities in excess of other assets
-- (1.89%) (406,266)
--------------
Net Assets -- 100.00% $ 21,456,789
==============
</TABLE>
-------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund; interest rate reflects SEC seven-day yield at
September 30, 2000.
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
T H E B E A R S T E A R N S F U N D S
SMALL CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 95.30%
BATTERY MANUFACTURING - 0.32%
14,000 Rayovac Corp.* $ 239,750
--------------
BEVERAGES - NON ALCOHOLIC - 0.01%
2,404 PepsiAmericas Inc.* 8,414
--------------
BUILDING & CONSTRUCTION PRODUCTS - 10.54%
86,550 Elcor Corp. 1,254,975
65,000 Insituform Technologies, Inc.* 2,185,625
42,900 Southdown, Inc. 3,056,625
130,500 Washington Group International, Inc.* 1,492,594
--------------
7,989,819
--------------
CHEMICALS - DIVERSIFIED - 0.88%
41,400 Olin Corp. 670,162
--------------
COMMERCIAL SERVICES - 4.36%
147,800 Steiner Leisure Ltd.* 3,307,025
--------------
COMMUNICATIONS - 3.95%
85,250 COMARCO, Inc. 2,994,406
--------------
COMPUTER SERVICES - 1.81%
63,900 CACI International, Inc.* 1,369,856
--------------
COMPUTER SOFTWARE - 2.23%
240,700 Zi Corp.* 1,692,422
--------------
COMPUTERS - PERIPHERAL EQUIPMENT - 0.89%
65,400 S3 Incorporated* 674,437
--------------
CONSUMER PRODUCTS - MISC - 1.25%
81,600 Dial Corp. (The) 948,600
--------------
DISTRIBUTION/WHOLESALE - 0.04%
6,444 Huttig Building Products, Inc.* 28,998
--------------
DIVERSIFIED OPERATIONS - 0.87%
29,000 Crane Co. 663,375
--------------
ELECTRONIC COMPONENTS - 5.50%
26,100 Cubic Corp. 623,137
47,500 Photronics, Inc.* 1,036,094
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
ELECTRONIC COMPONENTS (CONTINUED)
81,750 Vishay Intertechnology, Inc.* $ 2,513,812
--------------
4,173,043
--------------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 3.52%
21,800 Fairchild Semiconductor Corporation* 613,125
61,500 Rudolph Technologies, Inc.* 2,056,406
--------------
2,669,531
--------------
FERTILIZERS - 0.18%
9,600 IMC Global Inc. 139,200
--------------
FINANCE - CONSUMER LOANS - 2.05%
31,800 Student Loan Corporation (The) 1,552,237
--------------
FINANCIAL SERVICES - 2.40%
35,900 Bank United Corp., Class A 1,819,681
--------------
FOOD - MISCELLANEOUS/DIVERSIFIED - 3.24%
470,373 Hibernia Foods plc - ADR* 2,454,759
--------------
HEALTH CARE - 4.01%
232,600 Caremark Rx, Inc.* 2,616,750
72,400 Columbia Laboratories, Inc.* 420,825
--------------
3,037,575
--------------
HOME FURNISHINGS - 1.21%
55,200 Furniture Brands International, Inc.* 917,700
--------------
HOTELS & MOTELS - 2.97%
70,650 Station Casinos, Inc.* 1,006,763
256,400 U.S. Franchise Systems, Inc.* 1,241,938
--------------
2,248,701
--------------
HUMAN RESOURCES - 1.88%
267,625 Butler International, Inc.* 1,421,758
--------------
INSTRUMENTS - CONTROLS - 1.89%
62,600 Frequency Electronics, Inc. 1,436,044
--------------
LIFE/HEALTH INSURANCE - 3.31%
137,900 Penn Treaty American Corp.* 2,508,056
--------------
MACHINERY - CONSTRUCTION & MINING - 0.70%
40,900 Terex Corp. 534,256
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
T H E B E A R S T E A R N S F U N D S
SMALL CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MEDICAL - DRUGS - 9.55%
53,800 ATS Medical, Inc.* $ 810,363
768,054 Impax Laboratories, Inc.* 6,432,452
--------------
7,242,815
--------------
MISCELLANEOUS INDUSTRIALS - 3.60%
98,800 KEMET Corp.* 2,729,350
--------------
MISCELLANEOUS MANUFACTURING - 0.57%
58,200 Polymer Group, Inc. 429,225
--------------
NON-FERROUS METALS - 0.83%
28,100 Mueller Industries, Inc.* 630,494
--------------
OIL & GAS DRILLING - 2.14%
52,600 Global Marine Inc. 1,624,025
--------------
OIL COMPANIES - INTEGRATED - 2.53%
278,500 Meridian Resource Corporation (The)* 1,914,688
--------------
RADIO - 3.01%
130,800 Cox Radio, Inc., Class A* 2,280,825
REAL ESTATE INVESTMENT TRUSTS - 1.40%
59,100 Glenborough Realty Trust Inc. 1,063,800
--------------
RECREATIONAL CENTERS - 3.07%
93,100 Bally Total Fitness Holding Corp.* 2,327,500
--------------
RENTAL AUTO/EQUIPMENT - 2.73%
85,900 United Rentals, Inc.* 2,072,338
--------------
RETAIL - RESTAURANTS - 1.89%
67,000 Jack in the Box Inc.* 1,436,313
--------------
STEEL - 2.87%
316,700 Universal Stainless & Alloy Products, Inc.* 2,177,313
--------------
TRANSPORT - 1.10%
93,800 Celadon Group, Inc.* 832,475
Total Common Stocks
(cost $63,267,743) 72,260,966
--------------
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
RIGHTS/WARRANTS - 1.30%
MEDICAL - DRUGS - 1.30%
225,000 Impax Laboratories, Inc., Series C*
(cost - $0) $ 984,375
--------------
SHORT-TERM INVESTMENTS - 4.22%
INVESTMENT COMPANIES - 4.22%
125,014 Federated Automated Government
Money Trust, 5.90%** 125,014
3,074,846 Federated Investors, Trust for Short-Term
U.S. Government Securities, 6.14%** 3,074,846
--------------
Total Short-Term Investments
(cost - $3,199,860) 3,199,860
--------------
Total Investments - 100.82%
(cost - $66,467,603) 76,445,201
Liabilities in excess of other
assets - (0.82%) (617,995)
--------------
Net Assets - 100.00% $ 75,827,206
==============
</TABLE>
-------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund; interest rate reflects SEC seven-day yield at
September 30, 2000.
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
T H E B E A R S T E A R N S F U N D S
FOCUS LIST PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 100.27%
BASIC INDUSTRY: COMMODITY
CHEMICALS - 4.37%
35,000 DuPont (E.I.) de Nemours and Company $ 1,450,312
--------------
CONSUMER: HARD LINE RETAILERS -
HOME IMPROVEMENT - 4.95%
31,000 Home Depot, Inc. (The) 1,644,937
--------------
CONSUMER: RESTAURANTS - 5.07%
81,000 Darden Restaurants, Inc. 1,685,813
--------------
FINANCIAL SERVICES: GOVERNMENT-
SPONSORED ENTERPRISES - 6.89%
32,000 Fannie Mae 2,288,000
--------------
FOOD: MISCELLANEOUS/DIVERSIFIED - 0.00%
600 Vlasic Foods International Inc.*+ 675
--------------
HEALTHCARE: MAJOR PHARMACEUTICALS - 5.67%
33,000 Bristol-Myers Squibb Co. 1,885,125
--------------
MEDIA: ADVERTISING AND
MARKETING SERVICES - 4.52%
42,000 True North Communications Inc. 1,501,500
--------------
MEDIA: CABLE AND ENTERTAINMENT - 8.26%
14,800 Time Warner Inc. 1,158,100
27,125 Viacom Inc., Class B* 1,586,813
--------------
2,744,913
--------------
MEDIA: RADIO & TV BROADCASTING - 8.84%
24,000 Clear Channel Communications, Inc.* 1,356,000
72,000 USA Networks, Inc.* 1,579,500
--------------
2,935,500
--------------
TECHNOLOGY: COMPUTER SERVICES - 13.59%
50,200 Affiliated Computer Services, Inc.,
Class A* 2,503,725
26,000 BISYS Group, Inc. (The)* 2,010,125
--------------
4,513,850
--------------
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
TECHNOLOGY: COMPUTERS & OFFICE
EQUIPMENT - 10.38%
34,800 EMC Corp.* $ 3,449,550
--------------
TECHNOLOGY: CONSUMER INTERNET - 3.73%
41,000 InfoSpace, Inc.* 1,240,250
--------------
TECHNOLOGY: ELECTRONIC COMPONENTS - 4.17%
30,000 Solectron Corp.* 1,383,750
--------------
TECHNOLOGY: ENTERPRISE SOFTWARE - 5.93%
25,000 Oracle Corp.* 1,968,750
--------------
TECHNOLOGY: INTERNET/NEWS MEDIA - 5.70%
35,200 America Online, Inc.* 1,892,000
--------------
TECHNOLOGY: SEMICONDUCTORS - 3.75%
30,000 Intel Corp. 1,246,875
--------------
TELECOMMUNICATIONS: SERVICES/WIRELESS - 4.45%
40,000 Vodafone Group plc ADR 1,480,000
--------------
Total Common Stocks
(cost - $25,357,559) 33,311,800
SHORT-TERM INVESTMENT -- 0.00%
INVESTMENT COMPANY - 0.00%
14 Federated Investors, Trust for
Short-Term U.S. Government Securities,
6.14%**+ (cost - $14) 14
--------------
Total Investments -- 100.27%
(cost - $25,357,573) 33,311,814
Liabilities in excess of
other assets - (0.27%) (89,193)
--------------
Net Assets - 100.00% $ 33,222,621
==============
</TABLE>
-------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund; interest rate reflects SEC seven-day yield at
September 30, 2000.
+ Not a Focus List Selection at September 30, 2000.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
T H E B E A R S T E A R N S F U N D S
BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 56.64%
AEROSPACE & DEFENSE EQUIPMENT - 1.68%
3,600 United Technologies Corp. $ 249,300
--------------
BANKS - US - 1.11%
3,300 SunTrust Banks, Inc. 164,381
--------------
CABLE TV - 1.49%
5,400 Comcast Corp., Class A* 221,062
--------------
CHEMICALS - DIVERSIFIED - 0.75%
2,700 Du Pont (E.I.) de Nemours and Company 111,881
--------------
COMMERCIAL SERVICES - 2.60%
8,700 Moody's Corp. 228,919
4,350 New Dun & Bradstreet
Corporation, (The)* 73,950
3,700 Steiner Leisure Ltd.* 82,787
--------------
385,656
--------------
COMPUTER SERVICES - 0.81%
2,900 Electronic Data Systems Corporation 120,350
-------------
COMPUTERS - 1.87%
1,000 Hewlett-Packard Co. 97,000
1,600 International Business Machines Corp. 180,000
-------------
277,000
-------------
COSMETICS & TOILETRIES - 4.25%
5,400 Gillette Co. (The) 166,725
4,600 Kimberly-Clark Corp. 256,737
3,100 Proctor & Gamble Company (The) 207,700
-------------
631,162
-------------
CREDIT & FINANCE - 3.74%
4,000 Fannie Mae 286,000
5,600 USA Education Inc. 269,850
-------------
555,850
-------------
DIVERSIFIED MANUFACTURING
OPERATIONS - 1.10%
1,800 Minnesota Mining and Manufacturing
Company (3M) 164,025
-------------
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS - 2.13%
2,000 Tyco International Ltd.* $ 103,750
8,000 Viad Corp. 212,500
-------------
316,250
-------------
DRUGS & HOSPITAL SUPPLIES - 1.08%
1,700 Johnson & Johnson 159,694
-------------
ELECTRONICS - 1.02%
1,600 Intel Corp. 66,500
1,800 Texas Instruments Incorporated 84,937
-------------
151,437
-------------
FINANCIAL SERVICES - 1.87%
5,133 Citigroup Inc. 277,503
-------------
FOOD - MISCELLANEOUS/DIVERSIFIED - 1.87%
6,500 Heinz (H.J.) Co. 240,906
7,000 Hibernia Foods plc - ADR* 36,531
-------------
277,437
-------------
FOOD - RETAIL - 0.88%
6,200 Albertson's Inc. 130,200
-------------
HOTELS & MOTELS - 0.32%
9,800 U.S. Franchise Systems, Inc.* 47,469
-------------
HUMAN RESOURCES - 0.24%
6,600 Butler International, Inc.* 35,063
-------------
LIFE/HEALTH INSURANCE - 3.40%
2,600 American General Corp. 202,800
3,000 Penn Treaty American Corporation* 54,563
8,900 Torchmark Inc. 247,531
-------------
504,894
-------------
MEDICAL - DRUGS - 4.50%
3,600 Abbott Laboratories 171,225
2,100 Baxter International Inc. 167,606
10,000 Impax Laboratories, Inc.* 83,750
3,300 Merck & Co., Inc. 245,644
-------------
668,225
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
T H E B E A R S T E A R N S F U N D S
BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES (CONTINUED)
MULTIMEDIA - 1.05%
2,000 Time Warner Inc. $ 156,500
-------------
OIL & GAS DRILLING - 0.83%
4,000 Global Marine Inc.* 123,500
-------------
OIL COMPANIES - INTEGRATED - 6.08%
3,076 BP Amoco Plc - ADR 163,028
2,800 Exxon Mobil Corp. 249,550
4,400 Texaco Inc. 231,000
7,300 Unocal Corp. 258,694
-------------
902,272
-------------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 1.10%
4,000 Eastman Kodak Company 163,500
-------------
RADIO - 0.35%
3,000 Cox Radio, Inc., Class A* 52,313
-------------
RENTAL AUTO/EQUIPMENT - 0.57%
3,500 United Rentals, Inc.* 84,438
-------------
RETAIL - DEPARTMENT STORES - 2.02%
5,700 May Department Stores Company (The) $ 116,850
8,100 TJX Companies Inc., (The) 182,250
-------------
299,100
-------------
RETAIL - RESTAURANTS - 1.61%
7,900 McDonald's Corp. 238,481
-------------
SAVINGS & LOAN - 1.49%
5,550 Washington Mutual, Inc. 220,959
-------------
TELEPHONE - INTEGRATED - 3.80%
4,500 AT&T Corp 132,188
5,000 SBC Communications Inc. 250,000
6,000 WorldCom, Inc.* 182,250
-------------
564,438
-------------
WIRELESS EQUIPMENT - 1.03%
5,400 Motorola, Inc. 152,550
-------------
Total Equity Securities
(cost - $7,861,066) 8,406,890
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE(S) DATE(S)
<S> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS - 39.78%
CORPORATE OBLIGATIONS - 15.85%
COMPUTER SERVICES - 1.52%
$ 75 Computer Sciences Corporation, Notes 7.500% 08/08/05 75,879
150 Electronic Data Systems Corp., Notes 6.850 10/15/04 149,797
----------
225,676
----------
FINANCIAL - 2.66%
70 Associates Corp. N.A., Senior Notes 6.000 07/15/05 67,093
75 AT&T Capital Corp., Medium Term Notes, Series F, CIT Group Inc. Guaranteed 6.660 05/15/05 73,666
125 Finova Capital Corp., Notes 6.35-7.125 10/15/00-5/17/04 99,811
50 General Electric Capital Corp., Debentures, Series A 8.850 04/01/05 54,003
100 Lehman Brothers Holdings Inc., Medium Term Notes, Series F 7.500 08/07/08 99,790
----------
394,363
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
T H E B E A R S T E A R N S F U N D S
BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE(S) DATE(S) VALUE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT INVESTMENTS (CONTINUED)
CORPORATE OBLIGATIONS (CONTINUED)
FOOD & BEVERAGES - 1.99%
$ 75 Anheuser-Busch Cos., Inc., Notes 6.750% 06/01/05 $ 74,511
75 ConAgra Foods, Inc., Notes 7.875 09/15/10 75,822
150 Safeway Inc., Notes 6.050 11/15/03 145,011
-----------
295,344
-----------
MEDICAL - DRUGS - 1.40%
200 American Home Products, Notes 7.900 02/15/05 207,224
-----------
MORTGAGE BACKED SECURITIES - 4.58%
100 Conseco Finance Home Equity Loan, Series 2000-B, Class AF2 7.340 02/15/31 100,649
100 Conti-Mortgage Home Equity Loan Trust, Series 1998-1, Class A5 6.430 04/15/16 98,994
100 Green Tree Home Improvement Loan Trust, Series 1998-D, Class HEA3 6.130 08/15/29 99,135
100 J.P. Morgan Commercial Mortgage Finance Corp., Series 2000-C9 Class A2 7.770 10/15/32 103,298
50 Paine Webber Mortgage Acceptance Corp., Series 2000-HE1, Class A2 8.270 02/25/30 50,879
50 Saxon Asset Securities Trust, Series 2000-3, Class AF$ 7.630 10/25/23 50,016
100 UCFC Home Equity Loan, Series 1996-B1 Class A6 7.975 02/15/22 100,990
75 World Omni Auto Receivables Trust, Series 2000-A, Class A3 7.130 02/15/04 75,591
-----------
679,552
-----------
MULTIMEDIA - 1.00%
150 Time Warner Inc., Debentures 6.850 01/15/26 148,759
-----------
OIL - 1.23%
100 Conoco Inc., Senior Notes 6.950 04/15/29 92,565
100 Enron Oil & Gas Resources Inc., Notes 6.000 12/15/08 89,919
-----------
182,484
-----------
OIL FIELD MACHINERY & EQUIPMENT - 0.65%
100 Smith International Inc., Senior Notes 7.000 09/15/07 96,099
-----------
RETAIL DEPARTMENT STORES - 0.48%
75 TJX Companies Inc., (The), Notes 7.450 12/15/09 70,881
-----------
TELECOMMUNICATIONS - 0.34%
50 CBS Corporation, Senior Notes 7.150 05/20/05 50,123
-----------
Total Corporate Obligations
(cost $2,353,761) 2,350,505
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
T H E B E A R S T E A R N S F U N D S
BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT INTEREST MATURITY
(000'S) RATE(S) DATE(S) VALUE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 7.44%
U.S. TREASURY BONDS - 2.52%
$ 350 Bonds 6.125-7.500% 11/15/16-08/15/29 $ 374,281
----------
U.S. TREASURY NOTES - 4.92%
725 Notes 5.750-6.500 08/15/09-08/15/10 730,383
----------
Total U.S. Government Obligations
(cost $1,086,506) 1,104,664
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 16.49%
FANNIE MAE - 11.77%
25 Benchmark Notes 6.140 09/02/08 23,753
1,606 Pass-thru Pools 6.000-7.000 04/01/09-04/01/30 1,570,093
160 TBA, Pass-thru Pools 6.500 10/16/30 153,699
---------
1,747,545
---------
FEDERAL HOME LOAN BANK - 0.99%
150 Federal Home Loan Bank 4.875 01/22/02 147,066
---------
FREDDIE MAC - 0.83%
50 Pass-thru Pools 7.000 05/01/26 49,350
75 TBA, Pass-thru Pools 7.250 06/15/05 75,012
---------
124,362
---------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.90%
433 Pass-thru Pools 6.500-7.500 08/15/25-06/15/20 430,552
---------
Total U.S. Government Agency Obligations
(cost - $2,483,660) 2,449,525
---------
Total Long-Term Debt Investments
(cost - $5,923,927) 5,904,694
---------
SHORT-TERM INVESTMENTS -- 4.35%
COMMERCIAL PAPER - 0.50%
75 American Express Credit Corp.,(1) 6.490 10/30/00 74,608
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
T H E B E A R S T E A R N S F U N D S
BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
INTEREST MATURITY
SHARES RATE(S) DATE(S) VALUE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS (CONTINUED)
INVESTMENT COMPANY - 2.77%
411,402 Federated Investors, Trust for Short-Term U.S. Government Securities** 6.140% -- $ 411,402
-------------
PRINCIPAL
AMOUNT
(000'S)
-------
U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 1.08%
$160 Fannie Mae, Discount Notes(1) 6.380 10/16/00 159,574
------------
Total Short-Term Investments
(cost - $645,584) 645,584
------------
Total Investments - 100.77%
(cost - $14,430,577) 14,957,168
Liabilities in excess of other assets -- (0.77%) (113,859)
------------
Net Assets - 100.00% $14,843,309
------------
------------
</TABLE>
--------
ADR American Depositary Receipts.
TBA To Be Announced.
* Non-income producing security.
** Money market fund; interest rate reflects SEC seven-day yield at
September 30, 2000.
(1) A portion of which was segregated as collateral for TBA securities.
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
T H E B E A R S T E A R N S F U N D S
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------
SHARES VALUE
----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 92.45%
AUSTRALIA - 0.80%
COMMERCIAL BANKS NON-U.S. - 0.80%
35,900 Australia & New Zealand Banking
Group Ltd. $ 258,191
88,900 Westpac Banking Corp. Ltd. 613,847
------------
Total Australia (cost - $914,344) 872,038
------------
CANADA - 3.12%
MONEY CENTER BANKS - 0.97%
9,500 Bank of Nova Scotia 276,231
8,300 Canadian Imperial Bank of Commerce 273,057
17,700 The Toronto-Dominion Bank 519,955
------------
1,069,243
------------
TELECOMMUNICATION EQUIPMENT - 2.15%
39,600 Nortel Networks Corp. 2,358,675
------------
Total Canada (cost - $3,529,346) 3,427,918
------------
DENMARK - 1.17%
MEDICAL-DRUGS - 1.17%
5,800 Novo Nordisk A/S (cost - $976,290) 1,286,337
------------
FINLAND - 1.53%
TELECOMMUNICATION EQUIPMENT - 1.53%
41,400 Nokia Oyj (cost - $2,228,842) 1,677,569
------------
FRANCE - 18.15%
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 0.90%
20,100 STMicroelectronics NV 985,277
------------
FOOD - MISCELLANEOUS/DIVERSIFIED - 1.06%
8,500 Groupe Danone 1,167,096
------------
MEDICAL - DRUGS - 5.79%
56,500 Aventis SA 4,237,849
39,200 Sanofi-Synthelabo SA 2,106,597
------------
6,344,446
------------
MONEY CENTER BANKS - 1.32%
5,600 BNP Paribas SA 493,664
----------------------------------------------------------------------
SHARES VALUE
----------------------------------------------------------------------
FRANCE (CONTINUED)
MONEY CENTER BANKS (CONTINUED)
17,100 Societe Generale, Class A Shares $ 955,918
------------
1,449,582
------------
MULTI-LINE INSURANCE - 3.63%
30,500 Axa 3,983,269
------------
OIL COMPANIES - INTEGRATED - 2.98%
22,300 Total Fina Elf SA 3,262,628
------------
TELECOMMUNICATION EQUIPMENT - 2.47%
42,400 Alcatel 2,712,576
Total France (cost - $20,565,487) 19,904,874
------------
GERMANY - 10.65%
DIVERSIFIED MANUFACTURING OPERATIONS - 1.60%
13,400 Siemans AG 1,752,391
------------
ENTERPRISE SOFTWARE/SERVICES - 0.58%
2,500 SAP AG 630,934
------------
MEDICAL - DRUGS - 2.23%
38,500 Schering AG 2,446,084
------------
MEDICAL PRODUCTS - 0.26%
3,200 Fresenius Medical Care AG 283,788
------------
MONEY CENTER BANKS - 2.33%
25,300 Deutsche Bank AG 2,116,445
10,000 Dresdner Bank AG 439,889
------------
2,556,334
------------
MULTI-LINE INSURANCE - 1.63%
5,400 Allianz AG 1,784,529
------------
REINSURANCE - 2.02%
7,500 Muenchener Rueckversicherungs-Gesellschaft AG 2,217,094
------------
Total Germany (cost - $11,753,642) 11,671,154
------------
HONG KONG - 3.40%
DIVERSIFIED OPERATIONS - 0.47%
120,000 Citic Pacific Ltd. 517,129
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
T H E B E A R S T E A R N S F U N D S
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------
SHARES VALUE
----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
HONG KONG (CONTINUED)
MONEY CENTER BANKS - 2.93%
229,600 HSBC Holdings plc $ 3,209,793
------------
Total Hong Kong (cost - $3,880,800) 3,726,922
------------
IRELAND - 2.83%
COMMERCIAL BANKS - NON-U.S. - 0.59%
14,600 Allied Irish Banks plc 159,561
60,800 Bank of Ireland 486,887
------------
646,448
------------
DRUG DELIVERY SYSTEMS - 2.24%
44,800 Elan Corp. plc, ADR* 2,452,800
------------
Total Ireland (cost - $2,742,379) 3,099,248
------------
ISRAEL - 0.27%
INTERNET SECURITY - 0.27%
1,900 Check Point Software
Technologies Ltd.* (cost - $280,860) 299,250
------------
ITALY - 4.37%
LIFE/HEALTH INSURANCE - 1.26%
104,500 Alleanza Assicurazioni 1,383,202
------------
MONEY CENTER BANKS - 2.51%
169,300 San Paolo - IMI SpA 2,751,850
------------
MULTI-LINE INSURANCE - 0.60%
20,300 Assicurazioni Generali SpA 652,938
------------
Total Italy (cost - $4,771,513) 4,787,990
------------
JAPAN - 6.97%
ELECTRONIC COMPONENTS - MISCELLANEOUS - 0.98%
47,300 NEC Corp. 1,074,602
------------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 0.30%
3,600 Tokyo Electron Ltd. 326,485
------------
ELECTRONIC MEASUREMENT INSTRUMENTS - 0.43%
1,370 Keyence Corp. 474,163
------------
FINANCE - INVESTMENT BANKING/BROKERAGE - 0.50%
25,000 The Nomura Securities Co., Ltd. 543,679
------------
----------------------------------------------------------------------
SHARES VALUE
----------------------------------------------------------------------
JAPAN (CONTINUED)
MEDICAL - DRUGS - 2.13%
27,000 Chugai Pharmaceutical Co., Ltd. $ 490,478
19,000 Eisai Co., Ltd. 599,574
18,800 Takeda Chemical Industries, Ltd. 1,242,199
------------
2,332,251
------------
OFFICE AUTOMATION & EQUIPMENT - 0.24%
6,000 Canon Inc. 265,963
------------
WIRE & CABLE PRODUCTS - 2.39%
77,000 Fujikura Ltd. 634,185
59,000 Sumitomo Electric Industries, Ltd. 1,018,277
35,000 The Furukawa Electric Co., Ltd. 966,824
------------
2,619,286
------------
Total Japan (cost - $8,132,767) 7,636,429
------------
MEXICO - 0.51%
BROADCAST SERVICES/PROGRAMMING - 0.51%
9,700 Grupo Televisa SA (cost - $704,118) 559,569
------------
NETHERLANDS - 13.85%
BREWERY - 1.44%
28,400 Heineken NV 1,578,836
------------
ELECTRONIC COMPONENTS - MISCELLANEOUS - 1.31%
33,438 Koninklijke (Royal) Philips Electronics NV 1,439,034
------------
FOOD - RETAIL - 0.58%
22,400 Koninklijke Ahold NV 635,092
------------
MEDICAL - BIOMEDICAL/GENETICS - 0.33%
7,600 QIAGEN NV* 358,150
------------
MONEY CENTER BANKS - 2.67%
125,500 ABN AMRO Holding NV 2,923,653
------------
MULTI-LINE INSURANCE - 3.78%
62,300 ING Groep NV 4,149,522
------------
OIL COMPANIES - INTEGRATED - 3.74%
67,800 Royal Dutch Petroleum Co. 4,097,651
------------
Total Netherlands (cost - $15,580,906) 15,181,938
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
T H E B E A R S T E A R N S F U N D S
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------
SHARES VALUE
----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
NORWAY - 0.29%
DIVERSIFIED MANUFACTURING OPERATIONS - 0.29%
7,600 Norsk Hydro ASA (cost - $329,740) $ 318,118
------------
SINGAPORE - 0.85%
MONEY CENTER BANKS - 0.45%
68,000 United Overseas Bank Ltd. 488,427
------------
REAL ESTATE DEVELOPMENT - 0.40%
90,000 City Developments Ltd. 439,584
------------
Total Singapore (cost $1,005,395) 928,011
------------
SPAIN - 1.06%
MONEY CENTER BANKS - 1.06%
77,000 Banco Bilbao Vizcaya Argentaria,
SA (cost - $1,086,251) 1,163,249
------------
SWEDEN - 2.24%
INVESTMENT COMPANIES - 0.48%
37,500 Investor AB 531,376
------------
SECURITY SERVICES - 0.80%
40,000 Securitas AB, Class B Shares 874,078
------------
TELECOMMUNICATION EQUIPMENT - 0.96%
71,100 Telefonaktiebolaget (L.M.) Ericsson
AB, ADR 1,053,169
------------
Total Sweden (cost - $3,030,086) 2,458,623
------------
SWITZERLAND - 10.37%
COMMERCIAL BANKS - NON-U.S. - 0.19%
40 Julius Baer Holding Ltd., (Zurich) 207,470
------------
FOOD, MISCELLANEOUS/DIVERSIFIED - 1.90%
1,002 Nestle SA 2,086,969
------------
MEDICAL - DRUGS - 4.25%
1,510 Novartis AG 2,315,093
1,922 Serono SA+ 2,346,289
------------
4,661,382
------------
----------------------------------------------------------------------
SHARES VALUE
----------------------------------------------------------------------
SWITZERLAND (CONTINUED)
MONEY CENTER BANKS - 4.03%
14,600 Credit Suisse Group-Reg $ 2,728,356
12,700 UBS AG 1,689,963
------------
4,418,319
------------
Total Switzerland (cost - $11,341,928) 11,374,140
------------
UNITED KINGDOM - 10.02%
COMPUTER DATA SECURITY - 0.27%
29,100 Baltimore Technologies plc Ord .1p* 296,868
------------
COMPUTER SERVICES - 1.61%
53,600 Logica plc Ord 10p 1,763,259
------------
COMPUTERS - INTEGRATED SYSTEMS - 0.23%
14,600 Sema Group plc Ord 10p 250,399
------------
HUMAN RESOURCES - 0.72%
88,500 Capita Group plc Ord 2p 785,083
------------
INVESTMENT MANAGEMENT/ADVISER SERVICES - 2.22%
112,700 Amvescap plc Ord 25p 2,439,419
------------
MEDICAL - DRUGS - 1.16%
42,000 Glaxo Wellcome plc Ord 25p 1,271,747
------------
MEDICAL PRODUCTS - 0.61%
68,400 Nycomed Amersham plc Ord 5p 670,994
------------
MONEY CENTER BANKS - 0.60%
46,600 HSBC Holdings plc Ord .5p 662,800
------------
MULTI-LINE INSURANCE - 0.95%
73,500 CGNU plc Ord 25p 1,043,230
------------
MULTIMEDIA - 1.01%
58,200 Reuters Group plc Ord 25p 1,103,144
------------
OIL COMPANIES - INTEGRATED - 0.23%
28,200 BP Amoco plc Ord .25p 250,996
------------
THERAPEUTICS - 0.41%
22,600 Celltech Group plc Ord 50p* 450,756
------------
Total United Kingdom (cost - $10,113,827) 10,988,695
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
T H E B E A R S T E A R N S F U N D S
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------
SHARES VALUE
----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
Total Common Stocks
(cost - $102,968,521) $101,362,072
------------
SHORT-TERM INVESTMENTS -- 9.87%
UNITED STATES - 9.87%
INVESTMENT COMPANIES - 5.31%
2,731,473 Federated Automated Government
Money Trust, 5.90%** 2,731,473
3,087,589 Federated Investors, Trust for Short-Term
U.S. Government Securities, 6.14%** 3,087,589
------------
5,819,062
------------
PRINCIPAL
AMOUNT
(000'S)
---------
AGENCY OBLIGATION - 4.56%
$5,000 Federal Home Loan Bank
Discount Note, 6.40% 4,999,136
------------
Total Short-Term Investments
(cost - $10,818,198) 10,818,198
------------
Total Investments -- 102.32%
(cost - $113,786,719) 112,180,270
Liabilities in excess of other
assets -- (2.32%) (2,545,647)
------------
Net Assets -- 100.00% $109,634,623
============
</TABLE>
--------
ADR American Depositary Receipts.
* Non-income producing security.
** Money market fund; interest rate reflects SEC seven-day yield at
September 30, 2000.
+ With an additional 12 rights, with no market value.
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
T H E B E A R S T E A R N S F U N D S
STATEMENTS OF ASSETS & LIABILITIES
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
S&P STARS THE INSIDERS
PORTFOLIO SELECT FUND
-------------- -----------
<S> <C> <C>
ASSETS
Investments, at value
(cost - $2,137,074,934, $21,575,582, $18,399,919,
$66,467,603, $25,357,573, $14,430,577 and
$113,786,719, respectively) $2,662,781,700 $28,528,374
Collateral received for securities loaned 28,246,300 --
Receivable for investments sold 35,164,764 177,218
Receivable for Portfolio shares sold 80,264,986 15,005
Dividends, interest and reclaims receivable 1,067,472 22,936
Receivable from investment adviser -- 14,018
Deferred organization expenses and other assets 100,877 19,568
-------------- -----------
Total assets 2,807,626,099 28,777,119
-------------- -----------
LIABILITIES
Payable for investments purchased 83,457,231 --
Payable upon return of securities loaned 28,246,300 --
Payable for Portfolio shares repurchased 4,919,952 103,068
Loan Payable 147,500 --
Distribution and service fees payable (Class A, B,
and C shares) 3,814,352 48,474
Administration fee payable 311,672 3,397
Advisory fee payable 1,425,478 --
Custodian fee payable 41,965 3,278
Accrued expenses 683,711 117,717
-------------- -----------
Total liabilities 123,048,161 275,934
-------------- -----------
NET ASSETS
Capital stock, $0.001 par value (unlimited shares
of beneficial interest authorized) 71,988 1,511
Paid-in capital 2,144,865,201 18,276,705
Undistributed net investment income/(loss) (11,918,606) (35,396
Accumulated net realized gain/(loss) from investments,
and foreign currency related transactions, if any 25,852,589 3,305,573
Net unrealized appreciation/(depreciation) on investments
and foreign currency related transactions, if any 525,706,766 6,952,792
-------------- -----------
Net assets $2,684,577,938 $28,501,185
-------------- -----------
CLASS A
Net assets $1,340,966,668 $15,851,560
-------------- -----------
Shares of beneficial interest outstanding 35,719,269 832,288
-------------- -----------
Net asset value per share $37.54 $19.05
====== ======
Maximum offering price per share (net asset value plus
sales charge of 5.50%* of the offering price) $39.72 $20.16
====== ======
CLASS B
Net assets $ 606,298,639 $ 5,428,617
-------------- -----------
Shares of beneficial interest outstanding 16,455,377 291,815
-------------- -----------
Net asset value and offering price per share** $36.85 $18.60
====== ======
CLASS C
Net assets $ 541,388,785 $ 6,424,291
-------------- -----------
Shares of beneficial interest outstanding 14,697,673 345,458
-------------- -----------
Net asset value and offering price per share** $36.84 $18.60
====== ======
CLASS Y
Net assets $ 195,923,846 $ 796,717
-------------- -----------
Shares of beneficial interest outstanding 5,116,173 41,256
-------------- -----------
Net asset value, offering and redemption price per share $38.30 $19.31
====== ======
</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.
34
<PAGE>
T H E B E A R S T E A R N S F U N D S
<TABLE>
<CAPTION>
LARGE CAP SMALL CAP FOCUS INTERNATIONAL
VALUE VALUE LIST BALANCED EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at value
(cost - $2,137,074,934, $21,575,582, $18,399,919,
$66,467,603, $25,357,573, $14,430,577 and
$113,786,719, respectively) $21,863,055 $76,445,201 $33,311,814 $14,957,168 $112,180,270
Collateral received for securities loaned -- 2,062,700 -- -- --
Receivable for investments sold 193,797 132,246 200,893 202,973 1,494,573
Receivable for Portfolio shares sold 85,665 677,521 18,273 12,171 4,516,710
Dividends, interest and reclaims receivable 25,586 40,664 17,222 76,083 179,719
Receivable from investment adviser 14,862 -- 14,621 26,730 --
Deferred organization expenses and other assets 16,444 18,225 40,423 45,241 58,199
----------- ----------- ----------- ----------- ------------
Total assets 22,199,409 79,376,557 33,603,246 15,320,366 118,429,471
----------- ----------- ----------- ----------- ------------
LIABILITIES
Payable for investments purchased 399,174 1,154,163 -- 337,486 4,388,267
Payable upon return of securities loaned -- 2,062,700 193,100 -- --
Payable for Portfolio shares repurchased 241,635 104,649 41,476 39,305 4,045,818
Loan Payable -- -- -- -- --
Distribution and service fees payable (Class A, B,
and C shares) 24,928 69,897 62,268 14,425 201,813
Administration fee payable 2,137 9,260 3,733 1,301 13,470
Advisory fee payable -- 39,850 -- -- 14,491
Custodian fee payable 1,266 3,536 1,965 3,093 28,635
Accrued expenses 73,480 105,296 78,083 81,447 102,354
----------- ----------- ----------- ----------- ------------
Total liabilities 742,620 3,549,351 380,625 477,057 8,794,848
----------- ----------- ----------- ----------- ------------
NET ASSETS
Capital stock, $0.001 par value (unlimited shares
of beneficial interest authorized) 1,143 3,428 1,802 1,1345,152 --
Paid-in capital 16,290,992 57,953,482 28,762,749 14,374,534 118,024,950
Undistributed net investment income/(loss) 111,905 (134,192) (127,084) 32,689 (142,165)
Accumulated net realized gain/(loss) from investments,
and foreign currency related transactions, if any 1,589,613 8,026,890 (3,369,087) (91,639) (6,634,854)
Net unrealized appreciation/(depreciation) on investments
and foreign currency related transactions, if any 3,463,136 9,977,598 7,954,241 526,591 (1,618,460)
----------- ----------- ----------- ----------- ------------
Net assets $21,456,789 $75,827,206 $33,222,621 $14,843,309 $109,634,623
----------- ----------- ----------- ----------- ------------
CLASS A
Net assets $11,530,497 $22,436,612 $19,858,330 $ 3,711,404 $ 62,418,538
----------- ----------- ----------- ----------- ------------
Shares of beneficial interest outstanding 612,664 1,014,458 1,070,211 284,076 2,915,641
----------- ----------- ----------- ----------- ------------
Net asset value per share $18.82 $22.12 $18.56 $13.06 $21.41
====== ====== ====== ====== ======
Maximum offering price per share (net asset value plus
sales charge of 5.50%* of the offering price) $19.92 $23.41 $19.64 $13.82 $22.66
====== ====== ====== ====== ======
CLASS B
Net assets $ 1,528,348 $ 4,212,250 $ 8,040,224 $ 2,454,512 $ 15,837,704
----------- ----------- ----------- ----------- ------------
Shares of beneficial interest outstanding 82,487 193,526 440,032 189,459 750,150
----------- ----------- ----------- ----------- ------------
Net asset value and offering price per share** $18.53 $21.77 $18.27 $12.96 $21.11
====== ====== ====== ====== ======
CLASS C
Net assets $ 3,709,703 $12,676,384 $ 5,324,067 $ 1,569,165 $ 31,378,381
----------- ----------- ----------- ----------- ------------
Shares of beneficial interest outstanding 199,540 582,420 291,245 121,154 1,486,512
----------- ----------- ----------- ----------- ------------
Net asset value and offering price per share** $18.59 $21.77 $18.28 $12.95 $21.11
====== ====== ====== ====== ======
CLASS Y
Net assets $ 4,688,241 $36,501,960 -- $ 7,108,228 --
----------- ----------- ----------- ----------- ------------
Shares of beneficial interest outstanding 248,119 1,637,593 -- 539,169 --
----------- ----------- ----------- ----------- ------------
Net asset value, offering and redemption price per share $18.90 $22.29 -- $13.18 --
====== ====== ====== ====== ======
</TABLE>
35
<PAGE>
T H E B E A R S T E A R N S F U N D S
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
LARGE CAP SMALL CAP FOCUS INTERNATIONAL
S&P STARS THE INSIDERS VALUE VALUE LIST BALANCED EQUITY
PORTFOLIO SELECT FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- ---------- ----------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 3,763,831 $ 182,654 $ 177,668 $ 188,996 $ 52,394 $ 64,233 $ 572,157
Interest 337,602 36,858 48,394 186,826 101,447 212,529 384,107
Less: Foreign taxes withheld (21,348) -- (382) -- -- (63) (38,542)
----------- ---------- ---------- ----------- ----------- -------- ------------
4,080,085 219,512 225,680 375,822 153,841 276,699 917,722
----------- ---------- ---------- ----------- ----------- -------- ------------
EXPENSES
Advisory fees 7,168,253 80,428 69,274 276,855 114,340 46,665 544,124
Distribution and service fees - Class A 2,249,888 37,500 22,807 56,398 53,073 9,408 157,516
Distribution and service fees - Class B 2,136,163 26,680 7,536 20,436 41,266 10,683 80,997
Distribution and service fees - Class C 2,036,785 32,176 17,537 63,895 28,369 7,753 144,992
Transfer agent fees and expenses 750,498 92,284 80,275 80,741 74,236 82,190 89,980
Accounting fees 375,790 54,126 33,843 70,750 44,948 35,747 66,877
Administration fees 1,433,651 20,668 13,855 55,371 26,367 10,769 81,153
Federal and state registration fees 370,394 21,984 16,236 17,482 20,204 20,207 40,053
Legal and auditing fees 48,782 30,583 27,578 25,582 25,069 22,084 30,332
Custodian fees and expenses 112,085 5,977 4,850 9,333 4,468 4,575 146,423
Amortization of organization expenses -- 8,262 -- -- 3,964 5,368 6,118
Reports and notices to shareholders 90,533 4,979 1,962 4,941 3,510 2,636 5,047
Insurance expenses 4,936 4,538 4,474 4,632 2,966 4,495 4,449
Trustees' fees and expenses 4,456 4,262 4,264 3,510 4,262 2,039 4,262
Other 30,217 1,601 1,649 2,335 1,535 1,579 1,608
----------- ---------- ---------- ----------- ----------- -------- ------------
Total expenses before waivers
and related reimbursements 16,812,431 426,048 306,140 692,261 448,577 266,198 1,403,931
Less: waivers and related
reimbursements (813,740) (171,140) (165,831) (182,247) (167,652) (188,049) (344,044)
----------- ---------- ---------- ----------- ----------- -------- ------------
Total expenses after waivers and
related reimbursements 15,998,691 254,908 140,309 510,014 280,925 78,149 1,059,887
----------- ---------- ---------- ----------- ----------- -------- ------------
Net investment income/(loss) (11,918,606) (35,396) 85,371 (134,192) (127,084) 198,550 (142,165)
----------- ---------- ---------- ----------- ----------- -------- ------------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) from:
Investments (3,560,931) 1,564,041 1,619,082 1,233,190 (2,975,515) 573,072 (7,113,745)
Foreign currency related transactions -- -- -- -- -- -- (428,258)
Net change in unrealized appreciation on:
Investments 82,884,203 1,736,608 460,445 (4,148,274) (1,771,065) (38,138) (18,355,806)
Foreign currency related transactions -- -- -- -- -- -- (16,374)
----------- ---------- ---------- ----------- ----------- -------- ------------
Net realized and unrealized gain/(loss)
on investments 79,323,272 3,300,649 2,079,527 (2,915,084) (4,746,580) 534,934 (25,914,183)
----------- ---------- ---------- ----------- ----------- -------- ------------
NET INCREASE/(DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $67,404,666 $3,265,253 $2,164,898 $(3,049,276) $(4,873,664) $733,484 $(26,056,348)
=========== ========== ========== =========== =========== ======== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
T H E B E A R S T E A R N S F U N D S
This page intentionally left blank.
37
<PAGE>
T H E B E A R S T E A R N S F U N D S
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
S&P STARS PORTFOLIO THE INSIDERS SELECT LARGE CAP VALUE PORTFOLIO
------------------------------- ---------------------------- -----------------------------
FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE MONTHS ENDED FOR THE
SEPTEMBER 30, FISCAL SEPTEMBER 30, FISCAL SEPTEMBER 30, FISCAL
2000 YEAR ENDED 2000 YEAR ENDED 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000 (UNAUDITED) MARCH 31, 2000 (UNAUDITED) MARCH 31, 2000
-------------- -------------- ----------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income/(loss) $ (11,918,606) $ (9,244,824) $ (35,396) $ (46,921) $ 85,371 $ 94,546
Net realized gain/(loss) from
investments and foreign
currency related
transactions, if any (3,560,931) 47,607,437 1,564,041 1,745,520 1,619,082 1,365,082
Net change in unrealized
appreciation/(depreciation)
on investments and foreign
currency related
transactions, if any 82,884,203 333,805,696 1,736,608 (1,591,810) 460,445 (2,343,259)
-------------- -------------- ----------- ----------- ----------- -----------
Net increase/(decrease) in
net assets resulting from
operations 67,404,666 372,168,309 3,265,253 106,789 2,164,898 (883,631)
-------------- -------------- ----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM
Net investment income
Class A shares -- -- -- -- -- (45,967)
Class B shares -- -- -- -- -- --
Class C shares -- -- -- -- -- --
Class Y shares -- -- -- (9,925) -- (39,260)
-------------- -------------- ----------- ----------- ----------- -----------
-- -- -- (9,925) -- (85,227)
-------------- -------------- ----------- ----------- ----------- -----------
Net realized capital gains
Class A shares -- (3,841,879) -- (231,030) -- (965,266)
Class B shares -- (1,534,789) -- (81,221) -- (187,749)
Class C shares -- (1,797,757) -- (115,814) -- (456,258)
Class Y shares -- (878,492) -- (10,614) -- (412,235)
-------------- -------------- ----------- ----------- ----------- -----------
-- (8,052,917) -- (438,679) -- (2,021,508)
-------------- -------------- ----------- ----------- ----------- -----------
SHARES OF BENEFICIAL INTEREST
Net proceeds from the sale of
shares 1,295,585,869 798,042,336 2,580,819 5,111,644 6,031,050 4,435,664
Cost of shares repurchased (121,464,155) (132,359,417) (5,705,215) (22,466,125) (2,865,032) (8,787,784)
Shares issued in reinvestment
of dividends -- 7,667,498 -- 419,532 -- 1,889,844
-------------- -------------- ----------- ----------- ----------- -----------
Net increase/(decrease) in
net assets derived from
shares of beneficial
interest transactions 1,174,121,714 673,350,417 (3,124,396) (16,934,949) 3,166,018 (2,462,276)
-------------- -------------- ----------- ----------- ----------- -----------
Total increase/(decrease)
in net assets 1,241,526,380 1,037,465,809 140,857 (17,276,764) 5,330,916 (5,452,642)
NET ASSETS
Beginning of period 1,443,051,558 405,585,749 28,360,328 45,637,092 16,125,873 21,578,515
-------------- -------------- ----------- ----------- ----------- -----------
End of period* $2,684,577,938 $1,443,051,558 $28,501,185 $28,360,328 $21,456,789 $16,125,873
============== ============== =========== =========== =========== ===========
</TABLE>
* Includes undistributed net investment income as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED FISCAL
SEPTEMBER 30, 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000
------------------ --------------
<S> <C> <C>
Large Cap Value Portfolio $111,905 $26,534
Balanced Portfolio 32,689 6,787
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
T H E B E A R S T E A R N S F U N D S
<TABLE>
<CAPTION>
SMALL CAP VALUE PORTFOLIO FOCUS LIST PORTFOLIO
------------------------------- -------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
SEPTEMBER 30, FISCAL SEPTEMBER 30, FISCAL
2000 YEAR ENDED 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000 (UNAUDITED) MARCH 31, 2000
------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income/(loss) $ (134,192) $ (417,055) $ (127,084) $ (200,223)
Net realized gain/(loss) from investments and
foreign currency related transactions, if any 1,233,190 10,998,429 (2,975,515) 259,848
Net change in unrealized appreciation/
(depreciation) on investments and foreign
currency related transactions, if any (4,148,274) 9,879,006 (1,771,065) 5,563,489
----------- ----------- ----------- -----------
Net increase/(decrease) in net assets resulting
from operations (3,049,276) 20,460,380 (4,873,664) 5,623,114
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
Class A shares -- -- -- --
Class B shares -- -- -- --
Class C shares -- -- -- --
Class Y shares -- -- -- --
----------- ----------- ----------- -----------
-- -- -- --
----------- ----------- ----------- -----------
Net realized capital gains
Class A shares -- (1,277,255) -- --
Class B shares -- (205,466) -- --
Class C shares -- (731,213) -- --
Class Y shares -- (1,836,155) -- --
----------- ----------- ----------- -----------
-- (4,050,089) -- --
----------- ----------- ----------- -----------
SHARES OF BENEFICIAL INTEREST
Net proceeds from the sale of shares 11,127,888 14,008,142 5,332,750 23,255,511
Cost of shares repurchased (4,857,873) (17,845,914) (5,338,071) (5,082,971)
Shares issued in reinvestment of dividends -- 3,599,234 -- --
----------- ----------- ----------- -----------
Net increase/(decrease) in net assets
derived from shares of beneficial
interest transactions 6,270,015 (238,538) (5,321) 18,172,540
----------- ----------- ----------- -----------
Total increase/(decrease) in net assets 3,220,739 16,171,753 (4,878,985) 23,795,654
NET ASSETS
Beginning of period 72,606,467 56,434,714 38,101,606 14,305,952
----------- ----------- ----------- -----------
End of period* $75,827,206 $72,606,467 $33,222,621 $38,101,606
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
BALANCED PORTFOLIO INTERNATIONAL EQUITY PORTFOLIO
------------------------------- -------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
SEPTEMBER 30, FISCAL SEPTEMBER 30, FISCAL
2000 YEAR ENDED 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000 (UNAUDITED) MARCH 31, 2000
------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income/(loss) $ 198,550 $ 557,670 $ (142,165) $ (306,835)
Net realized gain/(loss) from investments and
foreign currency related transactions, if any 573,072 (495,495) (7,542,003) 1,512,817
Net change in unrealized appreciation/
(depreciation) on investments and foreign
currency related transactions, if any (38,138) (468,033) (18,372,180) 14,946,624
----------- ----------- ------------ -----------
Net increase/(decrease) in net assets
resulting from operations 733,484 (405,858) (26,056,348) 16,152,606
----------- ----------- ------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
Class A shares (43,521) (138,819) -- --
Class B shares (25,260) (61,758) -- --
Class C shares (16,850) (48,967) -- --
Class Y shares (87,017) (337,995) -- --
----------- ----------- ------------ -----------
(172,648) (587,539) -- --
----------- ----------- ------------ -----------
Net realized capital gains
Class A shares -- -- -- (207,812)
Class B shares -- -- -- (59,979)
Class C shares -- -- -- (54,225)
Class Y shares -- -- -- --
----------- ----------- ------------ -----------
-- -- -- (322,016)
----------- ----------- ------------ -----------
SHARES OF BENEFICIAL INTEREST
Net proceeds from the sale of shares 2,113,804 4,617,733 81,579,854 77,620,077
Cost of shares repurchased (2,010,071) (7,783,192) (41,290,709) (12,659,470)
Shares issued in reinvestment of dividends 132,324 407,602 -- 229,035
----------- ----------- ------------ -----------
Net increase/(decrease) in net assets
derived from shares of beneficial
interest transactions 236,057 (2,757,857) 40,289,145 65,189,642
----------- ----------- ------------ -----------
Total increase/(decrease) in net assets 796,893 (3,751,254) 14,232,797 81,020,232
NET ASSETS
Beginning of period 14,046,416 17,797,670 95,401,826 14,381,594
----------- ----------- ------------ -----------
End of period* $14,843,309 $14,046,416 $109,634,623 $95,401,826
=========== =========== ============ ===========
</TABLE>
39
<PAGE>
T H E B E A R S T E A R N S F U N D S
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 six months ended September 30, 2000 (unaudited) $36.42 $(0.14) $ 1.26 -- --
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 six months ended September 30, 2000 (unaudited) 35.83 (0.21) 1.23 -- --
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 six months ended September 30, 2000 (unaudited) 35.82 (0.21) 1.23 -- --
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 six months ended September 30, 2000 (unaudited) 37.05 (0.08) 1.33 -- --
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 six months ended September 30, 2000 (unaudited) 16.90 -- 2.15 -- --
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 six months ended September 30, 2000 (unaudited) 16.54 (0.05) 2.11 -- --
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 six months ended September 30, 2000 (unaudited) 16.54 (0.05) 2.11 -- --
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 six months ended September 30, 2000 (unaudited) 17.09 0.04 2.18 -- --
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 related 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.
40
<PAGE>
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
NET REFLECTED IN
ASSET RATIO OF EXPENSE RATIOS AND
VALUE, TOTAL NET ASSETS, RATIO OF NET INVESTMENT 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) RELATED REIMBURSEMENTS RATE
------ ----------- --------------- --------------------- --------------------- ---------------------------- ---------
<C> <C> <C> <C> <C> <C> <C>
$37.54 3.08% $1,340,967 1.50%(5) (1.08)%(5) 0.09%(5) 17.86%
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)
36.85 2.85 606,299 2.00(5) (1.58)(5) 0.09(5) 17.86
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)
36.84 2.85 541,389 2.00(5) (1.58)(5) 0.09(5) 17.86
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)
38.30 3.38 195,924 1.00(5) (0.58)(5) 0.09(5) 17.86
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)
19.05 12.72 15,851 1.65(5) (0.06)(5) 1.24(5) 44.03
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
18.60 12.45 5,429 2.15(5) (0.56)(5) 1.24(5) 44.03
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
18.60 12.45 6,424 2.15(5) (0.56)(5) 1.24(5) 44.03
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
19.31 12.99 797 1.15(5) 0.44(5) 1.24(5) 44.03
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.
41
<PAGE>
T H E B E A R S T E A R N S F U N D S
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 six months ended September 30, 2000 (unaudited) $16.71 $0.07 $ 2.04 -- --
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 six months ended September 30, 2000 (unaudited) 16.49 0.04 2.00 -- --
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 six months ended September 30, 2000 (unaudited) 16.55 0.04 2.00 -- --
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 six months ended September 30, 2000 (unaudited) 16.73 0.09 2.08 -- --
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) (0.01)
SMALL CAP VALUE PORTFOLIO
CLASS A
For the six months ended September 30, 2000 (unaudited) 23.10 (0.05) (0.93) -- --
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 six months ended September 30, 2000 (unaudited) 22.80 (0.10) (0.93) -- --
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 six months ended September 30, 2000 (unaudited) 22.80 (0.11) (0.92) -- --
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 six months ended September 30, 2000 (unaudited) 23.23 -- (0.94) -- --
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 related 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)
NET REFLECTED IN
ASSET RATIO OF EXPENSE RATIOS AND
VALUE, TOTAL NET ASSETS, RATIO OF NET INVESTMENT 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) RELATED REIMBURSEMENTS RATE
------ ----------- --------------- --------------------- --------------------- ---------------------------- ---------
<C> <C> <C> <C> <C> <C> <C>
$18.82 12.63% $11,530 1.50%(5) 0.54%(5) 1.79%(5) 25.74%
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
18.53 12.37 1,528 2.00(5) 0.22(5) 1.79(5) 25.74
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
18.59 12.33 3,710 2.00(5) 0.25(5) 1.79(5) 25.74
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
18.90 12.97 4,688 1.00(5) 0.57(5) 1.79(5) 25.74
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
22.12 (4.24) 22,437 1.50(5) (0.48)(5) 0.49(5) 28.91
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
21.77 (4.52) 4,212 2.00(5) (0.98)(5) 0.49(5) 28.91
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
21.77 (4.52) 12,676 2.00(5) (0.98)(5) 0.49(5) 28.91
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
22.29 (4.05) 36,502 1.00(5) 0.02(5) 0.49(5) 28.91
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.
43
<PAGE>
T H E B E A R S T E A R N S F U N D S
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 six months ended September 30, 2000 (unaudited) $21.21 $(0.05) $(2.60) -- --
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 six months ended September 30, 2000 (unaudited) 20.93 (0.10) (2.56) -- --
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 six months ended September 30, 2000 (unaudited) 20.94 (0.10) (2.56) -- --
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 six months ended September 30, 2000 (unaudited) 12.55 0.17 0.49 $(0.15) --
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 six months ended September 30, 2000 (unaudited) 12.47 0.16 0.47 (0.14) --
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 six months ended September 30, 2000 (unaudited) 12.47 0.16 0.46 (0.14) --
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 six months ended September 30, 2000 (unaudited) 12.64 0.18 0.52 (0.16) --
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 06, 1998* through March 31, 1998 12.05 0.06 0.88 (0.04) --
INTERNATIONAL EQUITY PORTFOLIO
CLASS A
For the six months ended September 30, 2000 (unaudited) 27.84 (0.01) (6.42) -- --
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 six months ended September 30, 2000 (unaudited 27.52 (0.06) (6.35) -- --
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 six months ended September 30, 2000 (unaudited) 27.52 (0.05) (6.36) -- --
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 related reimbursments.
(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 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)
NET REFLECTED IN
ASSET RATIO OF EXPENSE RATIOS AND
VALUE, TOTAL NET ASSETS, RATIO OF NET INVESTMENT 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) RELATED REIMBURSEMENTS RATE
------ ----------- --------------- --------------------- --------------------- ---------------------------- ---------
<C> <C> <C> <C> <C> <C> <C>
$18.56 (12.49)% $19,858 1.40%(5) (0.52)%(5) 0.95%(5) 44.86%
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
18.27 (12.71) 8,040 1.90(5) (1.03)(5) 0.95(5) 44.86
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
18.28 (12.70) 5,324 1.90(5) (1.02)(5) 0.95(5) 44.86
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
13.06 5.27 3,711 1.20(5) 2.65(5) 2.62(5) 50.62
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
12.96 5.06 2,455 1.70(5) 2.15(5) 2.62(5) 50.62
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
12.95 4.98 1,569 1.70(5) 2.15(5) 2.62(5) 50.62
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
13.18 5.55 7,108 0.70(5) 3.15(5) 2.62(5) 50.62
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
21.41 (23.10) 62,419 1.75(5) (0.05)(5) 0.64(5) 87.59
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
21.11 (23.29) 15,838 2.25(5) (0.55)(5) 0.64(5) 87.59
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
21.11 (23.29) 31,378 2.25(5) (0.56)(5) 0.64(5) 87.59
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, due to the timing
differences in the commencement of the initial public offerings.
(5) Annualized.
45
<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 (unaudited)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Bear Stearns Funds (the "Fund") was organized as a Massachusetts business
trust on September 29, 1994 and is registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as an open-end management
investment company. The Fund currently 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.
ORGANIZATIONAL MATTERS--Prior to commencing investment operations on December
29, 1997, the Focus List, Balanced and International Equity Portfolios did
not have any transactions other than those relating to organizational matters
and the sale of one share of beneficial interest in each class of shares of
the Portfolios (except for Focus List and International Equity which has no
Class Y shares) to Bear, Stearns & Co. Inc. ("Bear Stearns" or the
"Distributor").
Costs of $39,619, $54,795 and $61,015 which were incurred by 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.
In the event that the Distributor or any transferee of the Distributor
redeems any of its original shares in a particular Portfolio prior to the end
of the sixty month period, the proceeds of the redemption payable in respect
of such shares shall be reduced by the pro rata share (based on the
proportionate share of the original shares redeemed to the total number of
original shares outstanding at the time of the redemption) of the unamortized
deferred organization expenses as of the date of such redemption. In the
event that a particular Portfolio is liquidated prior to the end of the sixty
month period, the Distributor or the transferee of the Distributor shall bear
the unamortized deferred organization expenses.
MANAGEMENT ESTIMATES--The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
certain estimates and assumptions that may affect the reported amounts and
disclosures in the financial statements. Actual results could differ from
those estimates.
46
<PAGE>
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 (which is normally
at 4:00 pm) on each business day. Portfolio securities, including covered call
options written by the Portfolios, are valued each business day at the last sale
price as of the close of regular trading on the Exchange by one or more
independent pricing services approved by the Board of Trustees. 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 include, among other things, consideration of 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).
SECURITIES LENDING--Loans of securities are required at all times to be
secured by collateral at least equal to 102% of the market value of the
securities on loan. However, in the event of default or bankruptcy by the
other party to the agreement, realization and/or retention of the collateral
may be subject to legal proceedings. In the event that the borrower fails to
return securities, and cash collateral being maintained by the borrower is
insufficient to cover the value of loaned securities and provided such
collateral insufficiency is not the result of investment losses, the lending
agent has agreed to pay the amount of the shortfall to the Portfolios. The
market value of securities on loan to brokers and the related value of cash
collateral received at September 30, 2000, was as follows:
<TABLE>
<CAPTION>
MARKET VALUE OF MARKET VALUE
FUND SECURITIES ON LOAN OF COLLATERAL+
<S> <C> <C>
S&P STARS.................................................................. $25,636,588 $28,246,300
Small Cap Value............................................................ 2,033,694 2,062,700
</TABLE>
--------
+ Cash collateral reinvested in various money market funds.
During the six months ended September 30, 2000, income from securities
lending of $181,982, $1,191, and $3,421 was earned by S&P STARS, Small Cap
and Focus List, 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 six months ended
September 30, 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.
47
<PAGE>
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.
At March 31, 2000, certain Portfolios had capital loss carryforwards
available as a reduction to the extent provided in regulations of any future
net capital gains realized before the end of fiscal year 2008. To the extent
that the capital loss carryforwards are used to offset future capital gains,
it is probable that the gains so offset will not be distributed to
shareholders. At March 31, 2000, Focus List and Balanced have a capital loss
carryforward 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.
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.
TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
For the six months ended September 30, 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 subject 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
Insiders Select's average daily net assets. The performance adjustment fee
reduced the total advisory fee by $68,894 or 0.50% of the value of Insiders
Select's average daily net assets due to underperformance of such Portfolio
on a trailing 12-month basis in comparison to the performance of the S&P
MidCap 400 Index, the Portfolio's benchmark index, for the six months ended
September 30, 2000.
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
48
<PAGE>
net assets to the extent 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 the International
Equity's net assets in excess of $65 million at the relevant month end.
During the six months ended September 30, 2000, Marvin & Palmer earned a fee
of $186,661.
For the six months ended September 30, 2000, Bear Stearns Funds Management
Inc. ("BSFM" or the "Administrator") served as administrator to each
Portfolio pursuant to an Administration Agreement. BSFM is entitled to
receive from each Portfolio a monthly fee equal to an annual rate of 0.15% of
each Portfolio's average daily net assets.
Under the terms of an Administrative Services Agreement with each Portfolio,
PFPC Worldwide Inc. provides certain accounting and administrative services
to each Portfolio. For providing these services, PFPC Worldwide 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, 0.03% of the
next $200 million and 0.02% of net assets above $800 million, subject to a
minimum annual fee of $134,000 for each Portfolio.
For the six months ended September 30, 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 0.90
Balanced ......................................... 1.20 1.70 1.70 0.70
International Equity.............................. 1.75 2.25 2.25 1.25
</TABLE>
As necessary, this limitation is effected by waivers by the Adviser of its
advisory fees and reimbursements of expenses exceeding the advisory fee. For
the six months ended September 30, 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.................................................................. $813,740 --
Insiders Select............................................................ 80,428 $ 90,712
Large Cap.................................................................. 69,274 96,557
Small Cap.................................................................. 182,247 --
Focus List................................................................. 114,340 53,312
Balanced .................................................................. 46,665 141,384
International Equity....................................................... 327,618 16,426
</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 six months ended September 30, 2000, Bear Stearns, an affiliate of
the Adviser, Administrator, Distributor and custodian earned approximately
$482,592, $2,418, $324, $30, $26,410, and $1,536 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 BSAM, BSFM, and Bear Stearns serves as
custodian to each of the Portfolios.
49
<PAGE>
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 these fees to pay broker/dealers whose
clients hold each Portfolio's shares and other distribution-related
activities. Bear Stearns uses shareholder servicing fees to pay for personal
service and maintenance of shareholder accounts.
For the six months ended September 30, 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.................................................................. $4,254,657 $2,168,179
Insiders Select............................................................ 62,893 33,463
Large Cap.................................................................. 30,210 17,670
Small Cap.................................................................. 91,447 49,282
Focus List................................................................. 78,764 43,944
Balanced................................................................... 18,532 9,312
International Equity....................................................... 248,251 135,254
</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. Furthermore, the Distributor advanced 1.25% in sales commissions to all
authorized dealers on net asset value transfers (which was discounted
effective October 1, 2000). In addition, Bear Stearns advanced 4.25% and
1.00% in sales commissions on the sale of Class B and C shares, respectively,
to dealers at the time of such sales.
For the six months ended September 30, 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 A, 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>
S&P STARS*.................................................. $10,366,400 $369,700 $50,200
Insiders Select............................................. 31,700 23,500 200
Large Cap................................................... 31,200 3,100 --
Small Cap................................................... 36,400 4,200 280
Focus List.................................................. 34,100 10,900 1,050
Balanced.................................................... 4,600 4,700 --
International Equity........................................ 215,800 35,100 31,600
</TABLE>
----------
* S&P STARS received $490 in CDSC upon certain redemptions by Class A
shareholders.
50
<PAGE>
INVESTMENTS IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned, gross
appreciation, gross depreciation and net unrealized
appreciation/(depreciation) of investments at September 30, 2000 for each
Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS GROSS NET APPRECIATION/
PORTFOLIO COST APPRECIATION DEPRECIATION (DEPRECIATION)
--------- -------------- ------------ ------------ -----------------
<S> <C> <C> <C> <C>
S&P STARS....................................... $2,143,470,091 $623,475,912 $(104,164,303) $519,311,609
Insiders Select................................. 21,575,582 7,123,353 (170,561) 6,952,792
Large Cap....................................... 18,405,985 3,998,014 (540,944) 3,457,070
Small Cap....................................... 66,860,478 17,013,079 (7,428,356) 9,584,723
Focus List...................................... 25,357,573 8,797,748 (843,507) 7,954,241
Balanced........................................ 14,430,577 1,126,394 (599,803) 526,591
International Equity............................ 114,014,976 4,596,478 (6,431,184) (1,834,706)
</TABLE>
For the six months ended September 30, 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......................................................................... $1,487,812,182 $344,760,000
Insiders Select................................................................... 11,449,839 15,669,389
Large Cap......................................................................... 9,398,352 4,356,811
Small Cap......................................................................... 24,462,827 20,014,045
Focus List........................................................................ 28,077,805 12,158,872
Balanced ......................................................................... 7,135,068 7,060,517
International Equity.............................................................. 130,300,839 84,368,789
</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. Under
certain circumstances, Class A shares can be subject to a CDSC of 1.00%.
Class B shares are sold with a CDSC of up to 5.00% within six years of
purchase. Class C shares are sold with a CDSC of 1.00% within the first year
of purchase. There is no sales charge or CDSC on Class Y shares, which are
offered primarily to institutional investors.
At September 30, 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 59,399 --
International Equity.................................................... 38,730 39,069 138,890 --
</TABLE>
51
<PAGE>
Transactions in shares of beneficial interest for each Portfolio were as
follows:
<TABLE>
<CAPTION>
S&P STARS INSIDERS SELECT
-------------------------------------- ---------------------------------------
SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS
-------- ----------- ------------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 19,641,258 2,415,121 -- 112,960 179,325 --
Value.................................. $722,929,148 $87,042,062 -- $1,968,116 $ 3,112,149 --
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
CLASS B
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 8,420,139 356,260 -- 21,895 60,675 --
Value.................................. $302,856,659 $12,758,228 -- $ 366,784 $ 1,038,640 --
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
CLASS C
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 6,309,311 400,452 -- 14,455 86,644 --
Value.................................. $226,871,491 $14,281,931 -- $ 245,919 $ 1,460,681 --
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
CLASS Y
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 1,160,252 200,572 -- -- 5,308 --
Value.................................. $ 42,928,571 $ 7,381,934 -- --$ 93,745 --
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
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
LARGE CAP SMALL CAP
------------------------------------ -------------------------------------
SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS
------------------------------------ -------------------------------------
CLASS A<S> <C> <C> <C> <C> <C> <C>
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 227,916 91,158 -- 92,923 120,957 --
Value.................................. $4,112,212 $1,601,613 -- $2,035,381 $2,666,582 --
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
CLASS B
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 9,983 11,099 -- 24,811 8,068 --
Value.................................. $ 169,854 $ 193,432 -- $ 539,346 $ 176,430 --
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
CLASS C
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 23,286 26,760 -- 26,447 31,811 --
Value.................................. $ 410,826 $ 469,663 -- $ 569,044 $ 683,346 --
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
CLASS Y
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 75,999 33,331 -- 359,663 60,577 --
Value.................................. $1,338,158 $ 600,324 -- $7,984,117 $1,331,515 --
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
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
FOCUS LIST BALANCED
--------------------------------------- ------------------------------------
SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS
--------- ----------- ------------- ----- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 217,880 212,423 -- 32,589 52,548 2,193
Value.................................. $ 4,214,938 $4,032,377 -- $ 419,326 $ 676,770 $ 28,390
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
CLASS B
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 28,375 24,182 -- 49,346 11,350 1,257
Value.................................. $ 535,105 $ 452,881 -- $ 633,895 $ 144,577 $ 16,172
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
CLASS C
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. 30,880 45,099 -- 7,484 14,640 1,295
Value.................................. $ 582,707 $ 852,813 -- $ 95,581 $ 186,452 $ 16,647
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
CLASS Y
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares................................. -- -- -- 73,117 77,324 5,442
Value.................................. -- -- -- $ 965,002 $1,002,272 $ 71,115
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares................................. -- -- -- 159,043 429,633 18,019
Value.................................. -- -- -- $2,157,677 $5,423,959 $232,763
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
----------------------------------
SALES REPURCHASES REINVESTMENTS
----- ----------- -------------
<S> <C> <C> <C>
CLASS A
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares........................................................................ 2,095,424 1,389,406 --
Value......................................................................... $48,689,584 $31,843,593 --
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
CLASS B
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares........................................................................ 238,076 56,874 --
Value......................................................................... $ 5,596,759 $ 1,279,488 --
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares........................................................................ 499,048 142,225 2,391
Value......................................................................... $12,913,688 $ 3,402,875 $ 56,475
CLASS C
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
Shares........................................................................ 1,175,588 351,869 --
Value......................................................................... $27,293,511 $ 8,167,628 --
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
Shares........................................................................ 512,956 45,497 899
Value......................................................................... $13,374,402 $ 1,183,922 $ 21,234
</TABLE>
54
<PAGE>
CREDIT FACILITY
The Fund entered into a demand promissory note arrangement with The Chase
Manhattan Bank (the "Bank") to provide an uncommitted credit facility to the
Fund (on behalf of 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.
Each Portfolio as a fundamental policy is permitted to borrow in an amount up
to 331/3% of the value of each Portfolio's assets. However, each Portfolio
intends to borrow money only for temporary or emergency (not leveraging)
purposes and only in amounts not to exceed 15% of its net assets.
Each loan is payable on demand or upon termination of this credit facility
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 facility during the six months
ended September 30, 2000, were as follows:
<TABLE>
<CAPTION>
AVERAGE MAXIMUM AVERAGE
LOAN LOAN AMOUNTS INTEREST
PORTFOLIO BALANCE OUTSTANDING RATE
--------- ------- ------------ ---------
<S> <C> <C> <C>
S&P STARS...................................... $524,093 $8,953,000 6.85%
Insiders Select................................ 502,500 105,000 6.93
Large Cap...................................... 4,172 148,400 7.02
Small Cap..................................... 4,044 690,000 7.00
Focus List.................................... 2,957 193,100 7.15
Balanced ...................................... 1,366 50,000 6.98
International Equity.......................... 3,022 130,000 6.75
</TABLE>
Except as noted, the Portfolios had no amounts outstanding under the line of
credit facility at September 30, 2000, (S&P STARS and Focus List had $147,500
and $193,100, respectively, outstanding under the line of credit
facility).
55
<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
Results of Special Meeting of Shareholders - (unaudited)
On April 17, 2000, a special meeting of shareholders of the The Bear Stearns
Funds (the "Fund") was held and the following matters with respect to the
Portfolios listed below were voted upon:
(1) Election of seven Trustees to serve on the Board of the Fund until their
successors are duly elected and qualified.
<TABLE>
<CAPTION>
TRUSTEE FOR WITHHELD NON-VOTES
------- ----------- -------- ----------
<S> <C> <C> <C>
Peter M. Bren 971,355,317 887,214 20,635,571
Doni L. Fordyce 971,342,861 899,670 20,635,571
John S. Levy 971,355,432 887,099 20,635,571
Michael Minikes 971,354,519 888,012 20,635,571
M.B. Oglesby, Jr. 971,356,270 886,261 20,635,571
Robert E. Richardson 971,358,104 884,427 20,635,571
Robert M. Steinberg 971,346,988 895,543 20,635,571
</TABLE>
(2) Ratification of the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the fiscal year ending March 31, 2001.
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD NON-VOTES
----------- ------- --------- ----------
<S> <C> <C> <C> <C>
970,516,805 598,042 1,127,684 20,635,571
</TABLE>
(3) Approval, with respect to each Portfolio of the Fund, of an amended and
Restated Investment Advisory Agreement.
<TABLE>
<CAPTION>
PORTFOLIO FOR AGAINST WITHHELD NON-VOTES
--------- ---------- ------- -------- ---------
<S> <C> <C> <C> <C>
S&P STARS Portfolio 28,530,204 239,094 867,570 7,308,435
The Insiders Select Fund 1,506,918 13,876 61,305 239,029
Large Cap Value Portfolio 934,893 6,028 32,736 24,798
Small Cap Value Portfolio 2,902,312 8,515 43,843 156,031
Focus List Portfolio 1,287,253 8,144 37,783 375,047
Balanced Portfolio 1,202,180 2,558 6,111 32,584
International Equity Portfolio 2,083,679 7,138 44,768 595,499
</TABLE>
56
<PAGE>
(4) Approval with respect to the International Equity Portfolio, of an Amended
and Restated Sub-Investment Advisory Agreement.
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD NON-VOTES
--------- ------- -------- ---------
<S> <C> <C> <C> <C>
International Equity 2,081,816 8,261 45,508 595,499
</TABLE>
(5) Approval with respect to the A, B and C Classes of shares of each
Portfolio, of an Amended and Restated Distribution Plan.
<TABLE>
<CAPTION>
PORTFOLIO FOR AGAINST WITHHELD NON-VOTES
--------- ---------- ------- -------- ---------
<S> <C> <C> <C> <C>
S&P STARS Portfolio
Class A 13,094,395 167,401 460,805 3,408,776
Class B 5,571,758 51,208 218,287 1,772,534
Class C 6,236,350 70,692 232,058 1,592,792
The Insiders Select Fund
Class A 804,219 5,070 28,920 126,377
Class B 269,882 6,577 8,004 67,959
Class C 384,190 3,839 24,070 44,753
Large Cap Value Portfolio
Class A 435,890 1,845 19,303 18,494
Class B 75,568 -- 539 9,579
Class C 190,210 4,320 12,496 4,054
Small Cap Value Portfolio
Class A 884,457 3,330 28,660 91,258
Class B 136,278 248 2,224 34,271
Class C 526,967 5,852 13,225 46,677
Focus List Portfolio
Class A 703,389 4,713 19,034 256,964
Class B 320,864 2,072 8,000 86,693
Class C 263,671 270 11,167 31,389
Balanced Portfolio
Class A 276,903 1,484 6,111 23,058
Class B 144,221 1,074 -- 8,485
Class C 125,328 -- -- 1,820
International Equity Portfolio
Class A 1,207,578 9,190 16,533 485,165
Class B 395,124 1,905 9,788 48,729
Class C 471,675 4,285 19,505 61,607
</TABLE>
57
<PAGE>
THE BEAR STEARNS FUNDS
(6) Approval, with respect to S&P STARS Portfolio, The Insiders Select Fund,
Large Cap Value Portfolio and Small Cap Value Portfolio of the Fund, of a
modification of a fundamental policy concerning the issuance of senior
securities.
<TABLE>
<CAPTION>
PORTFOLIO FOR AGAINST WITHHELD NON-VOTES
--------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C>
S&P STARS Portfolio 14,573,566 468,763 956,698 20,946,276
The Insiders Select Fund** 649,052 19,951 63,650 1,088,475
Large Cap Value Portfolio** 536,599 5,163 32,735 423,958
Small Cap Value Portfolio 1,746,119 19,209 51,842 1,293,531
</TABLE>
(7) Approval of amendments to, and a restatement of, the Fund's Declaration
of Trust:
(a) To permit the Trustees to reorganize the Fund and any future portfolio
without shareholder approval (results reported for the Fund).
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD NON-VOTES
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
593,890,391 3,017,845 1,519,363 394,450,503
</TABLE>
(b) To permit the Trustees to reorganize an existing Portfolio without
shareholder approval.
<TABLE>
<CAPTION>
PORTFOLIO FOR AGAINST WITHHELD NON-VOTES
--------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
S&P STARS Portfolio* 13,743,179 1,313,748 942,101 20,946,275
The Insiders Select Fund** 608,036 63,848 60,769 1,088,475
Large Cap Value Portfolio** 501,201 41,989 31,308 423,957
Small Cap Value Portfolio 1,734,650 33,973 48,549 1,293,529
Focus List Portfolio* 483,467 40,370 39,516 1,144,874
Balanced Portfolio* 483,720 9,084 6,335 744,294
International Equity Portfolio* 814,086 46,508 47,904 1,822,586
</TABLE>
(c) To permit electronic and telephonic voting (results reported for the
Fund).
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD NON-VOTES
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
596,718,281 530,167 1,189,151 394,440,503
</TABLE>
(d) To permit the Trustees to amend the Declaration of Trust without
shareholder approval (results reported for the Fund).
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD NON-VOTES
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
587,473,031 7,282,190 3,682,378 394,440,503
</TABLE>
(e) To convert from share-based to dollar-based voting rights (results
reported for the Fund).
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD NON-VOTES
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
591,508,285 5,445,022 1,484,292 394,440,503
</TABLE>
--------
* The proposal for these Portfolios was not passed.
** The special meeting of shareholders was adjourned and reconvened on May 1,
2000 in order to permit further solicitation of proxies from shareholders
of The Insiders Select Fund and Large Cap Value Portfolio with respect to
proposals 6 and 7(b). These are the results of the May 1, 2000 meeting.
The Insiders Select Fund did not pass these proposals whereas Large Cap
Value Portfolio passed both proposals.
58
