-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DPvoAIgFWkqttiYdahzszjB5JSnYVjV3CQl/NHbyKO6VhqWA1gLgu4KSgbPIg7Pb DekGY0s6GDI22FXqsT87JA== 0000912057-00-052056.txt : 20001205 0000912057-00-052056.hdr.sgml : 20001205 ACCESSION NUMBER: 0000912057-00-052056 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEAR STEARNS FUNDS CENTRAL INDEX KEY: 0000931145 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08798 FILM NUMBER: 782729 BUSINESS ADDRESS: STREET 1: 245 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10167 MAIL ADDRESS: STREET 1: 245 PARK AVE STREET 2: 245 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10167 N-30D 1 a2028323zn-30d.txt N-30D 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 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. 1 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 2 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. 3 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. 4 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. 5 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 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. 7 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* - ------------------------------------------------------------------------------
PERCENT OF RANK INDUSTRY NET ASSETS - ---- ------------------------------------------------- ---------- 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
============================================================================== TOP TEN HOLDINGS* - ------------------------------------------------------------------------------
PERCENT OF RANK HOLDINGS INDUSTRY NET ASSETS - ---- ------------------------------- -------------------- ---------- 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
- ------- * The Portfolio's composition will change over time. 8 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* - ------------------------------------------------------------------------------
PERCENT OF RANK INDUSTRY NET ASSETS - ---- ------------------------------------------------- ---------- 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
============================================================================== TOP TEN HOLDINGS* - ------------------------------------------------------------------------------
PERCENT OF RANK HOLDINGS INDUSTRY NET ASSETS - ---- ------------------------------- -------------------- ---------- 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
- ----- * The Portfolio's composition will change over time. 9 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* - ------------------------------------------------------------------------------
PERCENT OF RANK INDUSTRY NET ASSETS - ---- ------------------------------------------------- ---------- 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
============================================================================== TOP TEN HOLDINGS* - ------------------------------------------------------------------------------
PERCENT OF RANK HOLDINGS INDUSTRY NET ASSETS - ---- ------------------------------- -------------------- ---------- 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
- ----- * The Portfolio's composition will change over time. 10 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* - ------------------------------------------------------------------------------
PERCENT OF RANK INDUSTRY NET ASSETS - ---- ------------------------------------------------- ---------- 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
============================================================================== TOP TEN HOLDINGS* - ------------------------------------------------------------------------------
PERCENT OF RANK HOLDINGS INDUSTRY NET ASSETS - ---- ------------------------------- -------------------- ---------- 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
- ------- * The Portfolio's composition will change over time. 11 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* - ------------------------------------------------------------------------------
PERCENT OF RANK INDUSTRY NET ASSETS - ---- ------------------------------------------------- ---------- 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
============================================================================== TOP TEN HOLDINGS* - ------------------------------------------------------------------------------
PERCENT OF RANK HOLDINGS INDUSTRY NET ASSETS - ---- ------------------------------- -------------------- ---------- 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
- ------- * The Portfolio's composition will change over time. 12 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* - ------------------------------------------------------------------------------
PERCENT OF RANK INDUSTRY NET ASSETS - ---- ------------------------------------------------- ---------- 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 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
============================================================================== TOP FIVE HOLDINGS* EQUITY - ------------------------------------------------------------------------------
PERCENT OF RANK HOLDINGS INDUSTRY NET ASSETS - ---- ------------------------------- -------------------- ---------- 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 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
- ------- * The Portfolio's composition will change over time. 13 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* - ------------------------------------------------------------------------------
PERCENT OF RANK INDUSTRY NET ASSETS - ---- ------------------------------------------------- ---------- 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
============================================================================== TOP TEN HOLDINGS* - ------------------------------------------------------------------------------
PERCENT OF RANK HOLDINGS INDUSTRY NET ASSETS - ---- ------------------------------- -------------------- ---------- 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
- ------- * The Portfolio's composition will change over time. 14 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 --------------
The accompanying notes are an integral part of the financial statements. 15 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 --------------
The accompanying notes are an integral part of the financial statements. 16 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 ==============
- ------- 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 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 --------------
The accompanying notes are an integral part of the financial statements. 18 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 ==============
- ------- * 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 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 --------------
The accompanying notes are an integral part of the financial statements. 20 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 ==============
- ------- 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 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 --------------
The accompanying notes are an integral part of the financial statements. 22 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 ==============
- ------- 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 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 ==============
- ------- 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 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 -------------
The accompanying notes are an integral part of the financial statements. 25 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)
- ------------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------------ 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 -------------
PRINCIPAL AMOUNT INTEREST MATURITY (000'S) RATE(S) DATE(S) 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 ----------
The accompanying notes are an integral part of the financial statements. 26 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)
- ---------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT INTEREST MATURITY (000'S) RATE(S) DATE(S) VALUE - ---------------------------------------------------------------------------------------------------------------------------------- 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 -----------
The accompanying notes are an integral part of the financial statements. 27 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)
- ---------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT INTEREST MATURITY (000'S) RATE(S) DATE(S) VALUE - ---------------------------------------------------------------------------------------------------------------------------------- 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 ---------
The accompanying notes are an integral part of the financial statements. 28 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)
- ---------------------------------------------------------------------------------------------------------------------------------- INTEREST MATURITY SHARES RATE(S) DATE(S) VALUE - ---------------------------------------------------------------------------------------------------------------------------------- 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 ------------ ------------
- -------- 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 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)
- ---------------------------------------------------------------------- SHARES VALUE - ---------------------------------------------------------------------- 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 ------------
The accompanying notes are an integral part of the financial statements. 30 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)
- ---------------------------------------------------------------------- SHARES VALUE - ---------------------------------------------------------------------- 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 ------------
The accompanying notes are an integral part of the financial statements. 31 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)
- ---------------------------------------------------------------------- SHARES VALUE - ---------------------------------------------------------------------- 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 ------------
The accompanying notes are an integral part of the financial statements. 32 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)
- ---------------------------------------------------------------------- SHARES VALUE - ---------------------------------------------------------------------- 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 ============
- -------- 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 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)
S&P STARS THE INSIDERS PORTFOLIO SELECT FUND -------------- ----------- 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 ====== ======
* 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 T H E B E A R S T E A R N S F U N D S
LARGE CAP SMALL CAP FOCUS INTERNATIONAL VALUE VALUE LIST BALANCED EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------- ----------- ----------- ----------- ------------ 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 -- ====== ====== ====== ====== ======
35 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)
LARGE CAP SMALL CAP FOCUS INTERNATIONAL S&P STARS THE INSIDERS VALUE VALUE LIST BALANCED EQUITY PORTFOLIO SELECT FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------- ---------- ---------- ----------- ----------- -------- ------------ 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) =========== ========== ========== =========== =========== ======== ============
The accompanying notes are an integral part of the financial statements. 36 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 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
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 -------------- -------------- ----------- -------------- ------------ -------------- 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 ============== ============== =========== =========== =========== ===========
* Includes undistributed net investment income as follows:
FOR THE SIX FOR THE MONTHS ENDED FISCAL SEPTEMBER 30, 2000 YEAR ENDED (UNAUDITED) MARCH 31, 2000 ------------------ -------------- Large Cap Value Portfolio $111,905 $26,534 Balanced Portfolio 32,689 6,787
The accompanying notes are an integral part of the financial statements. 38 T H E B E A R S T E A R N S F U N D S
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 ------------ -------------- ------------- -------------- 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 =========== =========== =========== ===========
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 ------------ -------------- ------------- -------------- 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 =========== =========== ============ ===========
39 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. - -------------------------------------------------------------------------------
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&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) --
- ---------- * 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
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 - ------ ----------- --------------- --------------------- --------------------- ---------------------------- --------- $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
- ---------- (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 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. - -------------------------------------------------------------------------------
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 --------- ------------ ---------------- ---------- ------------- 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)
- ---------- * 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
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 - ------ ----------- --------------- --------------------- --------------------- ---------------------------- --------- $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
- ---------- (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 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. - -------------------------------------------------------------------------------
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 --------- ----------- ---------------- ---------- ------------- 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 -- --
- ---------- * 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
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 - ------ ----------- --------------- --------------------- --------------------- ---------------------------- --------- $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
- ---------- (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 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 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:
MARKET VALUE OF MARKET VALUE FUND SECURITIES ON LOAN OF COLLATERAL+ S&P STARS.................................................................. $25,636,588 $28,246,300 Small Cap Value............................................................ 2,033,694 2,062,700
-------- + 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 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 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:
PORTFOLIO CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Y SHARES 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
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:
PORTFOLIO ADVISORY FEE WAIVERS EXPENSE REIMBURSEMENTS 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
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 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:
CLASS A CLASS B CLASS C ------------------------ ------------------------- ------------------------- DISTRIBUTION SHAREHOLDER DISTRIBUTION SHAREHOLDER DISTRIBUTION SHAREHOLDER PORTFOLIO PLAN SERVICING PLAN SERVICING PLAN SERVICING - --------- ------------ ----------- ------------ ----------- ------------ ----------- 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
- ---------- (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:
PORTFOLIO DISTRIBUTION FEES SHAREHOLDER SERVICING FEES - --------- ----------------- -------------------------- 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
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:
FRONT-END SALES CHARGES CDSC CDSC PORTFOLIO CLASS A SHARES CLASS B SHARES CLASS C SHARES - --------- ----------------------- -------------- -------------- 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
- ---------- * S&P STARS received $490 in CDSC upon certain redemptions by Class A shareholders. 50 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:
GROSS GROSS NET APPRECIATION/ PORTFOLIO COST APPRECIATION DEPRECIATION (DEPRECIATION) - --------- -------------- ------------ ------------ ----------------- 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)
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:
PORTFOLIO PURCHASES SALES - --------- -------------- ------------ 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
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:
SHARES OF BENEFICIAL INTEREST ----------------------------------------- PORTFOLIO CLASS A CLASS B CLASS C CLASS Y - --------- ------- ------- ------- ------- 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 --
51 Transactions in shares of beneficial interest for each Portfolio were as follows:
S&P STARS INSIDERS SELECT -------------------------------------- --------------------------------------- SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS -------- ----------- ------------- -------- ----------- ------------- 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
52
LARGE CAP SMALL CAP ------------------------------------ ------------------------------------- SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS ------------------------------------ ------------------------------------- CLASS A 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
53
FOCUS LIST BALANCED --------------------------------------- ------------------------------------ SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS --------- ----------- ------------- ----- ----------- ------------- 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
INTERNATIONAL EQUITY ---------------------------------- SALES REPURCHASES REINVESTMENTS ----- ----------- ------------- 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
54 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:
AVERAGE MAXIMUM AVERAGE LOAN LOAN AMOUNTS INTEREST PORTFOLIO BALANCE OUTSTANDING RATE - --------- ------- ------------ --------- 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
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 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.
TRUSTEE FOR WITHHELD NON-VOTES - ------- ----------- -------- ---------- 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
(2) Ratification of the selection of Deloitte & Touche LLP as the Fund's independent auditors for the fiscal year ending March 31, 2001.
FOR AGAINST WITHHELD NON-VOTES ----------- ------- --------- ---------- 970,516,805 598,042 1,127,684 20,635,571
(3) Approval, with respect to each Portfolio of the Fund, of an amended and Restated Investment Advisory Agreement.
PORTFOLIO FOR AGAINST WITHHELD NON-VOTES - --------- ---------- ------- -------- --------- 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
56 (4) Approval with respect to the International Equity Portfolio, of an Amended and Restated Sub-Investment Advisory Agreement.
FOR AGAINST WITHHELD NON-VOTES --------- ------- -------- --------- International Equity 2,081,816 8,261 45,508 595,499
(5) Approval with respect to the A, B and C Classes of shares of each Portfolio, of an Amended and Restated Distribution Plan.
PORTFOLIO FOR AGAINST WITHHELD NON-VOTES - --------- ---------- ------- -------- --------- 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
57 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.
PORTFOLIO FOR AGAINST WITHHELD NON-VOTES - --------- ---------- ------- -------- ---------- 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
(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).
FOR AGAINST WITHHELD NON-VOTES ----------- --------- --------- ----------- 593,890,391 3,017,845 1,519,363 394,450,503
(b) To permit the Trustees to reorganize an existing Portfolio without shareholder approval.
PORTFOLIO FOR AGAINST WITHHELD NON-VOTES - --------- ---------- --------- -------- ----------- 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
(c) To permit electronic and telephonic voting (results reported for the Fund).
FOR AGAINST WITHHELD NON-VOTES ----------- --------- --------- ----------- 596,718,281 530,167 1,189,151 394,440,503
(d) To permit the Trustees to amend the Declaration of Trust without shareholder approval (results reported for the Fund).
FOR AGAINST WITHHELD NON-VOTES ----------- --------- --------- ----------- 587,473,031 7,282,190 3,682,378 394,440,503
(e) To convert from share-based to dollar-based voting rights (results reported for the Fund).
FOR AGAINST WITHHELD NON-VOTES ----------- --------- --------- ----------- 591,508,285 5,445,022 1,484,292 394,440,503
- -------- * 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 -----END PRIVACY-ENHANCED MESSAGE-----