As filed, via EDGAR, with the Securities and Exchange Commission on February 29,
2000.
File No.: 33-84842
ICA No.: 811-8798
SCHEDULE 14A (RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
[ ] Definitive proxy statement Commission Only
[ ] Definitive additional materials (as permitted by Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE BEAR STEARNS FUNDS
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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APPENDIX
Investment Advisory Agreements. Bear Stearns Asset Management Inc. ("BSAM") provides investment advisory
services to each Portfolio pursuant to current Investment Advisory Agreements with the Fund (each a "Current Advisory
Agreement") dated as shown in the following table:
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Portfolios Current Advisory Agreement Date(s) Last Submitted to Purpose of
Date(s) Shareholders for Approval Submission to
Shareholders
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<S> <C> <C> <C>
Income, Large Cap, February 22, 1995, as February 22, 1995 Initial Approval
Small Cap Portfolios revised May 4, 1995
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Money Market Portfolio June 2, 1997 July 14, 1997 Initial Approval
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S&P STARS Portfolio June 25, 1997 June 18, 1997 Initial Approval
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Balanced, High Yield, September 8, 1997 December 19, 1997 Initial Approval
International Equity
Portfolios
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Focus List Portfolio December 29, 1997 December 29, 1997 Initial Approval
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Insiders Select Fund January 20, 1998 January 20, 1998 New Benchmark
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EMD Portfolio July 29, 1999 April 29, 1999 Initial Approval
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</TABLE>
As to each Portfolio, the Current Advisory Agreement is
subject to annual approval by (i) the Board or (ii) the vote of a majority (as
defined in the 1940 Act) of the Portfolio's outstanding voting securities,
provided that in either event the continuance also is approved by a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act) of
the Fund or BSAM, by vote cast in person at a meeting called for the purpose of
voting on such approval. The Trustees, including a majority of the Trustees who
are not "interested persons" of any party to the Agreements, last approved the
Current Advisory Agreements at a meeting held on February 7, 2000. Each Current
Advisory Agreement is terminable, as to a Portfolio, without penalty, on 60
days' notice, by the Board or by vote of the holders of a majority of the
Portfolio's shares, or, on not less than 90 days' notice, by BSAM. As to the
relevant Portfolio, the Current Advisory Agreement will terminate automatically
in the event of its assignment (as defined in the 1940 Act).
BSAM is a wholly owned subsidiary of The Bear Stearns
Companies Inc. The following persons are directors and/or senior officers of
BSAM: Mark A. Kurland, President, Chairman of the Board and Director; Robert S.
Reitzes, Executive Vice President and Director; Doni L. Fordyce, Vice President,
Chief Operating Officer and Director; Stephen A. Bornstein, Secretary; and
Warren J. Spector and Robert M. Steinberg, Directors.
Advisory Fees. The following table shows the monthly fees that
the Fund has agreed to pay BSAM for advisory services to the Portfolios, at the
indicated annual percentage of the value of a Portfolio's average daily net
assets.
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Portfolio Advisory Fee
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Money Market Portfolio 0.20%
Income Portfolio 0.45%
High Yield Portfolio 0.60%
EMD Portfolio 1.00% of assets up to $50
million, 0.85% of assets between
$50 million and $100 million and
0.55% of assets above $100 million
S&P STARS Portfolio 0.75%
Focus List Portfolio 0.65%
Large Cap Portfolio 0.75%
Small Cap Portfolio 0.75%
Insiders Select Fund 1.00%
Balanced Portfolio 0.65%
International Equity Portfolio 1.00%
The Insiders Select Fund. The monthly fee that The Insiders
Select Fund will pay BSAM will be adjusted monthly if the Portfolio's
performance outperforms or underperforms the S&P MidCap 400 Index. This
adjustment may increase or decrease the total advisory fee payable to BSAM by an
annual rate of up to 0.50% of the value of the Portfolio" average daily net
assets. The following table details this adjustment.
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<CAPTION>
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Percentage Point Difference Between Designated Class Performance
Performance (Net of Expenses Including Advisory Fees) and Adjustment Ttotal
Percentage Change in the S&P MidCap 400 Index Basic Fee Rate (%) Fee
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<S> <C> <C> <C>
+3.00 percentage points or more 1.00% 0.50% 1.50%
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+2.75 percentage points or more but less than +3.00 percentage points 1.00% 0.40% 1.40%
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+2.50 percentage points or more but less than +2.75 percentage points 1.00% 0.30% 1.30%
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+2.25 percentage points or more but less than +2.50 percentage points 1.00% 0.20% 1.20%
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+2.00 percentage points or more but less than +2.25 percentage points 1.00% 0.10% 1.10%
Less than +2.00 percentage points but more than -2.00 percentage points 1.00% 0% 1.00%
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-2.00 percentage points or less but more than -2.25 percentage points 1.00% -0.10% 0.90%
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-2.25 percentage points or less but more than -2.50 percentage points 1.00% -0.20% 0.80%
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-2.50 percentage points or less but more than -2.75 percentage points 1.00% -0.30% 0.70%
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-2.75 percentage points or less but more than -3.00 percentage points 1.00% -0.40% 0.60%
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-3.00 percentage points or less 1.00% -0.50% 0.50%
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</TABLE>
The following table shows the investment advisory fees that
the Portfolios paid to BSAM and the amounts that BSAM waived for the fiscal year
ended March 31, 1999.
Portfolio Paid Waived
--------- ---- ------
Money Market Portfolio $33,827 $400,797
Income Portfolio $0 $50,882
High Yield Portfolio $25,136 $416,687
EMD Portfolio $88,623 $335,209
S&P STARS Portfolio $1,291,152 $716,763
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Insiders Select Fund $759 $321,688
Large Cap Portfolio $0 $165,850
Small Cap Portfolio $67,550 $400,694
Focus List Portfolio $0 $63,550
Balanced Portfolio $0 $101,976
International Equity Portfolio $0 $114,148
In addition, BSAM reimbursed the following amounts for the
fiscal year ended March 31, 1999 in order to maintain applicable voluntary
expense limitations.
Portfolio Paid
--------- ----
Money Market Portfolio $142,863
Income Portfolio $299,061
High Yield Portfolio $121,391
EMD Portfolio $137,134
Insiders Select Fund $42,908
Large Cap Portfolio $157,111
Small Cap Portfolio $28,865
Focus List Portfolio $218,241
Balanced Portfolio $224,243
International Equity Portfolio $157,011
In addition to the Fund, BSAM serves as investment adviser to
the registered investment companies listed below.
Name of Fund
Managed Income Net Assets Amount of Annual
Plus Fund, Inc. as of ________ Advisory Fee
--------------- -------------- ----------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Sub-Investment Advisory Agreement. Marvin & Palmer Associates,
Inc. ("M&P") provides investment advisory services to the International Equity
Portfolio pursuant to a Sub-Investment Advisory Agreement with BSAM dated
September 8, 1997 (the "Current Sub-Investment Advisory Agreement"). The Current
Sub-Investment Advisory Agreement had an initial term of one year from the date
of execution and will continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by (i) the
Board or (ii) a vote of a majority of the Portfolio's outstanding voting
securities (as defined in the 1940 Act), provided that in either case its
continuance also is approved by a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Fund, BSAM or M&P, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The Board most recently approved the Current Sub-Investment Advisory
Agreement on February 7,
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<PAGE>
2000. The Current Sub-Investment Advisory Agreement may be terminated without
penalty, (i) by BSAM upon 60 days' notice to M&P, (ii) by the Board or by vote
of the holders of a majority of the Portfolio's shares upon 60 days' notice to
M&P, or (iii) by M&P upon not less than 90 days' notice to the Fund and BSAM.
The Current Sub-Investment Advisory Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act). As compensation for
M&P's services, BSAM has agreed to pay M&P a monthly fee calculated on an annual
basis equal to 0.20% of the Portfolio's total average daily net assets to the
extent the Portfolio's average daily net assets are in excess of $25 million and
below $50 million at the relevant month end, 0.45% of the Portfolio's total
average daily net assets to the extent the Portfolio's average daily net assets
are in excess of $50 million and below $65 million at the relevant month end,
and 0.60% of the Portfolio's total average daily net assets to the extent the
Portfolio's average daily net assets are in excess of $65 million at the
relevant month end.
The table below gives the name, address and principal
occupation of each director and principal executive officer of M&P.
Principal
Name Address Position with M&P Occupation
---- ------- ----------------- ----------
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Administration Agreement. Bear Stearns Funds Management Inc.
("BSFM"), a wholly owned subsidiary of The Bear Stearns Companies Inc., 575
Lexington Avenue, New York, New York 10022, provides certain administrative
services to the Fund pursuant to the Administration Agreement with the Fund
dated February 22, 1995, as revised April 11, 1995, June 2, 1997, September 8,
1997, February 4, 1998 and July 29, 1999. The Administration Agreement was last
approved as of February 7, 2000 and thereafter will be subject to annual
approval by (i) the Board or (ii) vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Portfolio, provided that in
either event its continuance also is approved by a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Fund or BSFM,
by vote cast in person at a meeting called for the purpose of voting on such
approval. The Administration Agreement may be terminated without penalty on 60
days' notice by the Board or by vote of the holders of a majority of the
Portfolio's shares or, upon not less than 90 days' notice, by BSFM. As to each
Portfolio, the Administration Agreement will terminate automatically in the
event of its assignment (as defined in the 1940 Act).
For administrative services, the Fund has agreed to pay BSFM a
monthly fee at the annual rate of 0.15% of the average daily net assets of each
Portfolio other than the Money Market Portfolio. The Fund has agreed to pay BSFM
a monthly fee at the annual rate of 0.05%
4
<PAGE>
of the average daily net assets of the Money Market Portfolio. The following
table shows the administration fees that the Portfolios paid to BSFM for the
fiscal year ended March 31, 1999.
Portfolio Paid
--------- ----
Money Market Portfolio $108,656
Income Portfolio $16,960
High Yield Portfolio $110,456
EMD Portfolio+ $0
S&P STARS Portfolio $401,582
Insiders Select Fund $68,666
Large Cap Portfolio $33,079
Small Cap Portfolio $99,413
Focus List Portfolio $14,665
Balanced Portfolio $23,533
International Equity Portfolio $17,122
+ Prior to July 29, 1999, BSAM paid BSFM this fee from its management fee.
Distribution Plans. Rule 12b-1 adopted by the SEC under
Section 12 of the 1940 Act provides, among other things, that an investment
company may bear expenses of distributing its shares only pursuant to a plan
adopted in accordance with the Rule. The Board has adopted a distribution plan
with respect to Class A, Class B and Class C shares (the "Current Distribution
Plans"). Each Current Distribution Plan provides that it may not be amended to
increase materially the costs which holders of a class of shares may bear
pursuant to such Plan without approval of such affected shareholders and that
other material amendments of the Plan must be approved by the Board, and by the
Trustees who are neither "interested persons" (as defined by the 1940 Act) of
the Fund nor have any direct or indirect financial interest in the operation of
the Plan or in the related Plan agreements, by vote cast in person at a meeting
called for the purpose of considering such amendments. In addition, because
Class B shares automatically convert into Class A shares after eight years, the
Fund is required by an SEC rule to obtain the approval of Class B as well as
Class A shareholders for a proposed amendment to each Current Distribution Plan
that would materially increase the amount to be paid by Class A shareholders
under such Plan. Such approval must be by a "majority" of the Class A and Class
B shares (as defined in the 1940 Act), voting separately by class. Each Current
Distribution Plan and related agreement is subject to annual approval by such
vote cast in person at a meeting called for the purpose of voting on such Plan.
An amended and restated distribution plan was most recently approved on February
7, 2000. Each Current Distribution Plan may be terminated at any time by vote of
a majority of the Trustees who are not "interested persons" and who have no
direct or indirect financial interest in the operation of the Plan or in the
Plan agreements or by vote of holders of a majority of the relevant class'
shares. A Plan agreement may be terminated without penalty, at any time, by such
vote of the Trustees upon not more than 60 days' written notice to the parties
to such agreement or by vote of the holders of a majority of the relevant class'
shares. A Plan agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
The following tables show the amounts that Class A, Class B
and Class C shares of each Portfolio paid under (a) the relevant Current
Distribution Plan, including amounts paid to
5
<PAGE>
(i) broker-dealers, (ii) underwriters and (iii), if applicable, for advertising,
printing, mailing prospectuses to prospective shareholders, compensation to
sales personnel, and interest, carrying, or other financing charges ("Other
Distribution"); and (b) the Shareholder Servicing Plan for personal services
rendered to shareholders (see "Shareholder Servicing Plan"), for the fiscal year
ended March 31 1999.
Class A*
Total Broker- Other
Portfolio Payments Dealers Distribution
--------- -------- ------- ------------
Income Portfolio $15,836 $11,276 $4,560
High Yield Portfolio $138,476 $13,924 $124,552
EMD Portfolio $113,931 $86,913 $27,018
S&P STARS Portfolio $682,524 $489,767 $192,757
Insiders Select Fund $124,069 $83,259 $40,810
Large Cap Portfolio $46,716 $33,523 $13,193
Small Cap Portfolio $111,413 $87,549 $40,810
Focus List Portfolio $21,863 $2,435 $19,428
Balanced Portfolio $23,454 $2,672 $20,782
International Equity Portfolio $30,684 $3,611 $27,073
*Class A shares made no payments to underwriters
Class B*
Total Broker-
Portfolio Payments Dealers Underwriters
--------- -------- ------- ------------
Income Portfolio $4,599 $36 $4,563
High Yield Portfolio $148,999 $1,881 $147,118
EMD Portfolio $12,295 $185 $12,110
S&P STARS Portfolio $193,055 $2,594 $190,461
Insiders Select Fund $63,310 $602 $67,708
Large Cap Portfolio $12,841 $134 $12,707
Small Cap Portfolio $21,972 $179 $21,793
Focus List Portfolio $31,426 $896 $30,530
Balanced Portfolio $14,094 $559 $13,535
International Equity Portfolio $26,946 $1,337 $25,609
*Class B shares made no payments for other distribution.
Class C*
Total Broker-
Portfolio Payments Dealers Underwriters
--------- -------- ------- ------------
Income Portfolio $17,360 $11,983 $5,377
High Yield Portfolio $183,211 $11,093 $172,118
EMD Portfolio $33,433 $21,054 $12,379
S&P STARS Portfolio $714,370 $510,458 $203,912
Insiders Select Fund $130,390 $85,454 $44,936
Large Cap Portfolio $55,531 $42,660 $12,871
Small Cap Portfolio $151,596 $115,051 $36,545
Focus List Portfolio $22,616 $3,367 $19,249
Balanced Portfolio $9,368 $2,286 $7,082
International Equity Portfolio $25,834 $6,123 $19,711
*Class C shares made no payments for other distribution.
6
<PAGE>
Shareholder Servicing Plan. The Fund has adopted a shareholder
servicing plan on behalf of Class A, Class B and Class C shares of the
Portfolios (the "Current Shareholder Servicing Plan"). In accordance with the
Current Shareholder Servicing Plan, the Fund may enter into agreements under
which a Portfolio pays fees of up to 0.25% of the average daily net assets of a
share Class for expenses incurred in connection with the personal service and
maintenance of Portfolio shareholder accounts, responding to inquiries of, and
furnishing assistance to, shareholders regarding ownership of the shares or
their accounts or similar services not otherwise provided on behalf of the
Portfolio. Prior to February 1999, service fees were paid through the
distribution plan of Class A and Class C shares of the Income, Large Cap and
Small Cap Portfolios.
Brokerage Commissions. The following table shows the total
brokerage commissions that each Portfolio paid during the fiscal year ended
March 31, 1999 (including the amount paid to Bear Stearns). The table also shows
the percentage of total commissions paid to Bear Stearns and commissions paid as
a percentage of total transactions. No brokerage commissions were paid by the
Money Market or Income Portfolios.
<TABLE>
<CAPTION>
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Portfolio Total Commissions Commissions Paid to % Paid to Bear % of Total
Paid (including Bear Stearns Stearns Transactions
commissions paid to
Bear Stearns)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High Yield $3,600 $900 25.00% 0.44%
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EMD $2,972 $0 0% 0.26%
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S&P STARS $780,970 $500,570 64.10% 0.18%
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Insiders Select Fund $161,821 $15,902 9.83% 0.19%
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Large Cap $23,164 $1,602 6.92% 0.14%
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Small Cap $120,832 $3,540 2.93% 0.27%
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Focus List $23,472 $23,472 100.00% 0.16%
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Balanced $12,605 $5,688 45.12% 0.16%
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International Equity $67,305 $259 0.38% 0.24%
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</TABLE>
