-----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, O6GB0yR79gJZhv+9jG+Bvj+2/j2YTA+uDleQIzM4RFX6O5XNoXFGjUHztgCMYjaV gC9xvrUEiUDEtCLb56r+bg== 0001047469-02-005571.txt : 20021204 0001047469-02-005571.hdr.sgml : 20021204 20021204112950 ACCESSION NUMBER: 0001047469-02-005571 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021204 EFFECTIVENESS DATE: 20021204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEAR STEARNS FUNDS CENTRAL INDEX KEY: 0000931145 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08798 FILM NUMBER: 02848158 BUSINESS ADDRESS: STREET 1: 383 MADISON AVENUE STREET 2: 23RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10179 BUSINESS PHONE: (212) 272-9027 MAIL ADDRESS: STREET 1: 383 MADISON AVENUE STREET 2: 23RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10179 N-30D 1 a2092746zn-30d.txt N-30D THE BEAR STEARNS FUNDS EQUITY FUNDS - S&P STARS Portfolio - S&P STARS Opportunities Portfolio - The Insiders Select Fund - Intrinsic Value Portfolio - Small Cap Value Portfolio - Alpha Growth Portfolio - International Equity Portfolio SEMI-ANNUAL REPORT SEPTEMBER 30, 2002 BEAR BSF-R-015-11 STEARNS T H E B E A R S T E A R N S F U N D S S&P STARS Portfolio S&P STARS Opportunities Portfolio The Insiders Select Fund Intrinsic Value Portfolio Small Cap Value Portfolio Alpha Growth Portfolio International Equity Portfolio LETTER TO SHAREHOLDERS October 25, 2002 Dear Shareholders: We are pleased to present the semi-annual report to shareholders for the S&P STARS Portfolio ("S&P STARS"), S&P STARS Opportunities Portfolio ("S&P STARS Opportunities"), The Insiders Select Fund ("Insiders Select"), Intrinsic Value Portfolio ("Intrinsic"), Small Cap Value Portfolio ("Small Cap"), Alpha Growth Portfolio ("Alpha Growth") and International Equity Portfolio ("International Equity") for the six months ended September 30, 2002. Detailed performance data for each class of shares of each Portfolio can be found in the "Financial Highlights" of this report. S&P STARS PORTFOLIO The equity markets were driven by a range of factors over the past six months, including corporate governance scandals, earnings disappointments across a range of sectors and rising geopolitical risk. In this difficult investment environment, the Portfolio slightly underperformed the benchmark. The Portfolio's underperformance for the period was largely due to our expectation of an economic recovery. Early in the period, first quarter Gross Domestic Product ("GDP") growth was estimated at a surprisingly strong 5.0%. We consequently overweighted technology and consumer discretionary -- two economically sensitive sectors that tend to outperform during economic expansions. News of strong GDP growth was overshadowed, however, by a series of widely publicized accounting scandals, concerns about corporate creditworthiness and the growing threat of war with Iraq. A lower-than-expected second quarter GDP growth rate of 1.3% suggested that the economic upturn might be losing steam. As a result, the Portfolio's overweighted positions in technology and consumer discretionary detracted from performance. By contrast, stock selection within the energy and industrials sectors contributed positively to results, particularly our positions in oil and gas exploration. Within industrials, our investments in a tax, home mortgage and accounting services provider; a hair and retail products company; and a worldwide express delivery company also benefited returns. Growth stocks began to modestly outperform value stocks in June -- a trend that helped the Portfolio's performance as the period progressed. In bear markets, the multiples of growth stocks typically compress to those of the overall market. By the period's end, however, growth stock valuations had fallen below those of value stocks in many instances. For this reason, we believe growth appears more attractive on a relative basis than value at this time. Earnings expectations for equities must come down further before a stock market recovery can take hold, in our opinion. We expect to see this exercise play out in the fourth quarter, setting the stage for better stock market performance in 2003. In the meantime, the economy's positive signals -- such as stabilizing employment rates, estimated GDP growth of close to 3% for the third quarter, and an improvement in S&P 500 earnings in the second half -- could be partially offset in the near term by earnings readjustments and concerns of a war with Iraq. 1 We maintained a conservative stance for the Portfolio throughout the period, with below market average price-to-earnings, price-to-book and price-to-sales ratios, while still remaining true to our basic aim of purchasing quality growth stocks at a reasonable price. In the months ahead, we will continue to maintain a conservative posture, while being positioned to attempt to take advantage of any market upturns that occur. S&P STARS OPPORTUNITIES PORTFOLIO During the semi-annual period, equity markets around the world witnessed a global sell-off. Markets traded down as news of corporate accounting scandals, the growing threat of war with Iraq and global economic weakness drove record volatility. The Portfolio's slight underperformance was largely due to our overweighted positions in economically sensitive sectors such as consumer discretionary and technology. These sectors suffered on news of a deteriorating outlook for the U.S. economy. GDP, which had reached a robust growth rate of 5.0% in the first quarter, fell to 1.3% in the second quarter. In addition, within consumer staples, one of the Portfolio's largest holdings experienced a significant price decline following an earnings disappointment. Helping to offset some of these losses, the Portfolio's underweighted position in financial services helped performance during the period. We underweighted the sector based on our opinion that the favorable environment of declining interest rates had drawn to a close. Declining rates had led to wider margins on loans--a trend that benefited the sector throughout the past year. When interest rates begin to rise again, this favorable trend will be muted and margins will compress. Over the past year, the utilities sector has been plagued with highly publicized accounting scandals at some of the sector's leading firms. The sector -- once considered a safe haven -- has suffered as companies that entered into energy trading became embroiled in accounting scandals and charges of manipulating markets. Within utilities, the Portfolio's underweighted position helped performance for the quarter. In the months ahead, we believe the markets will continue to grapple with the possibility of a war with Iraq. In the equity markets, we expect sluggishness in corporate profitability to be partially offset by attractive valuations versus fixed income securities. Equity valuations have now fallen to levels where the market should find support, in our opinion. For the Portfolio, we plan to monitor the technology sector carefully as valuations are at five-year lows. We also believe there will be opportunities in the consumer discretionary sector as the mortgage refinancing boom continues to replenish consumers' wallets. THE INSIDERS SELECT FUND Insider selling, which reached a peak of $3.2 billion in May, declined precipitously to $37 million by the end of the period. In addition, the number of announcements of new corporate share repurchase programs increased. Though market conditions were difficult, the cash flow dynamics of many companies were apparently strong enough to enable corporations to repurchase stock. The Portfolio's modest underperformance for the period was partly due to our stock selection within the financial services sector. Our investments in regional banking stocks suffered as news of investigations into the investment banking and research practices of several Wall Street firms drove prices down across the sector. In addition, loan quality issues broadened outside technology and telecommunications, encompassing several other sectors. We maintained an underweighted position in the sector due to strong insider selling trends we observed early in the second quarter -- a decision that helped performance. Within technology, our investment in a systems and technology services company also detracted from performance after the company announced a reduction in earnings. Additionally, our investment in a semiconductor company suffered along with other cyclical stocks on news of a slowing U.S. economy. The slowing economy also caused stocks in the consumer discretionary sector -- a sector in which the Portfolio was overweighted -- to underperform. Our positioning was based on our expectation that economic conditions and, hence, capital spending would improve during the period, given that it has been 18 months since the Fed first began to aggressively cut interest rates. Specifically, our investments in retailers, media, cable and fast food hurt performance. 2 By contrast, our decision to underweight utilities helped offset losses in other areas, as did stock selection within the energy and healthcare sectors. Specifically, our investments in a hospital network and a regional integrated oil company outperformed. Finally, our decision to sell certain stocks based on strong insider selling activity helped performance. We are currently in the process of identifying investment opportunities that will enable us to redeploy the capital generated by these sales. In the months ahead, we believe the economy will enter a transitional phase. Corporate capital budgets have been cut to below maintenance levels, in our opinion. Companies will need to replenish inventories in order to meet even today's modest levels of demand. Given low levels of inventories, combined with well-below-average capacity utilization rates, we believe corporate profits are poised to rebound once economic growth returns to more normal levels. INTRINSIC VALUE PORTFOLIO The semi-annual period was a trying one for large cap stocks and the markets in general. Evidence of a slowing U.S. economy, a continuous stream of earnings disappointments and rising geopolitical risk led to record equity market volatility. The threat of a double-dip recession became too overpowering for investors and the equity markets. The result was a six month period at a multi-year low for the S&P 500. Few sectors were spared this corrective phase, thus leading to a significant valuation compression and undervaluation for the equity markets. The Portfolio's underperformance was due in part to its overweighted position in the consumer discretionary sector. Our positioning was based on our expectation that economic conditions and, hence, capital spending would improve during the period, given that it has been 18 months since the Federal Reserve Board first began to aggressively cut interest rates. Consumer discretionary stocks were driven down, however, on signs of a slowing economy. GDP, which had reached a robust level of 5.0% in the first quarter, fell to 1.3% in the second quarter. Our overweighting in regional and money center banking stocks also detracted from performance. Investigations into the investment banking and research practices of several Wall Street firms drove prices down across the financial sector. In addition, loan quality issues broadened outside technology and telecommunications during the period, encompassing several other sectors. Within consumer staples, one holding in particular hurt performance: our investment in a national grocery store chain suffered from a cost restructuring program as well as from increasing competition from mega stores. Finally, stock selection within producer durables also hurt performance. The Portfolio's significantly underweighted position in utilities helped to offset some of these losses, however. In addition to being underweighted in a sector that underperformed the benchmark, our decision to avoid wireless telecommunications and electric utilities with energy trading operations helped performance. Stock selection within energy contributed to performance as one of the Portfolio's holdings, an independent integrated oil company, significantly outperformed the sector. We originally bought this holding during the energy stock correction of late spring based on the company's low price-to-cash-flow dynamic, its above average dividend yield, and our view that it was trading at a discount to its intrinsic value. In the months ahead, we believe the economy will enter a transitional phase. Corporate capital budgets have been cut to below maintenance levels, in our opinion. Companies will need to replenish inventories in order to meet even today's modest levels of demand. Given low levels of inventories, combined with well-below-average capacity utilization rates, corporate profits are poised to rebound once economic growth returns to more normal levels. SMALL CAP VALUE PORTFOLIO* During the semi-annual period, the equity markets were beset by a growing number of corporate governance scandals, evidence of a slowing economy and record-setting volatility, among other challenges. In an extremely difficult investment environment, we underperformed the benchmark. After a strong year-and-a-half in which small cap stocks outperformed large caps, the small cap sector experienced a reversal of course, underperforming large caps from mid-May through September 30, 2002. As is typical during times of heightened volatility, small cap stocks were perceived as riskier investments, and were therefore sold off to a greater degree than large caps. 3 Stock selection across a range of sectors contributed positively to performance during the period. Within the healthcare sector in particular, two of our major holdings reported stronger-than-expected earnings growth, helping performance in the last three months of this period. The Portfolio's underweighted position in the health care sector as a whole also contributed to performance as the sector suffered from accounting issues and a string of negative earnings revisions by pharmaceutical companies. These benefits were somewhat offset by underperformance in other sectors, however. Stock selection within the consumer discretionary sector, which was hard hit on news of a slowing U.S. economy, detracted from performance. In the last three months of this period, two of our holdings in this sector -- a printing company and a retailer -- experienced price declines on negative earnings preannouncements. Signs of the weakening economy also led to volatility in the energy sector, hurting some of the Portfolio's investments. Energy stocks were additionally driven down by accounting scandals early in the period. When evaluating the Portfolio's performance for the period, it is important to keep in mind that the benchmark Russell 2000 Index was rebalanced on June 30 to recategorize companies by market capitalization and investment style. As a result, large and mid cap stocks that had witnessed precipitous share price declines were recategorized as small cap stocks. After the rebalance, the Index now includes a greater percentage of technology and telecommunications names. In addition, small cap value stocks that had experienced positive growth were recategorized as mid caps. The resulting shift in the benchmark's sector allocations opened up opportunities for the Portfolio to invest in previously unavailable stocks that we believe are trading at significant discounts to their intrinsic values. In the months ahead, we plan to continue our strategy of adding value through stock selection and maintaining sector weights that are in line with the benchmark. Given that stock prices have fallen so far, we expect to find investment opportunities among small cap companies that are now undervalued. ALPHA GROWTH PORTFOLIO On August 1, the Portfolio was restructured to pursue a strategy focused on identifying stocks with positive price and earnings momentum, high projected earnings over the next three to five years, and reasonable valuations. The Portfolio's name was changed to reflect this new strategy. The Portfolio's investment objective of capital appreciation remains the same. The Portfolio's outperformance for the semi-annual period was positively influenced by the quality of stocks identified by our new, systematic screening process. The process begins with a universe of 1,700 stocks representing 97% of equity trading volume in the U.S. Our first screen excludes all but the top 300 stocks in the universe as measured by market capitalization. From that group, we eliminate stocks that have not generated earnings. We then focus on relative strength, screening for the 100 stocks that have performed the best on a total return basis over the previous year. From this group of 100, we select investments for the Portfolio in three categories: We choose the 25 stocks with the best six-month relative price appreciation; the 25 stocks that have the best three to five year earnings per share forecast gains on a percentage basis; and ten stocks with high earnings gains over the previous five years, high forecasted earnings gains over the next five years, and a high degree of price predictability. We then eliminate duplicates and make an equal investment in each stock. The Portfolio will be rebalanced according to this screening process in January of each year. During the latter half of the period, security selection driven by our screening process led to the Portfolio's overweighted positions in consumer services, business services, consumer goods and industrial materials -- all of which contributed positively to performance. These sectors benefited as investors, who had once focused on a narrow range of technology and telecommunications stocks, began to discover value in these and other previously neglected sectors, and shifted assets accordingly. In spite of this year's volatility, history remains on the side of equity markets: since the founding of the New York Stock Exchange in the late 1700's, yearly equity returns have been positive 71% of the time. While past performance is not a guarantee of future results, we believe this is an excellent time to maintain and add to large cap equities as part of a well diversified portfolio. 4 INTERNATIONAL EQUITY PORTFOLIO** During the semi-annual period, the growing prospect of war in the Middle East, a number of large-scale U.S. and foreign corporate accounting scandals and downward pressure on corporate earnings raised concerns about whether the global economic recovery would lapse into a double-dip recession. These factors weighed heavily on international equity markets, all of which posted negative returns. We are pleased to have outperformed the benchmark in this difficult investment environment. The Portfolio's outperformance was largely due to our overweighted position in the Asia ex-Japan region, which benefited from strong growth dynamics and attractive valuations. Our decision to overweight Asia ex-Japan was based on our belief that it is uniquely positioned for above average growth. Following the Asian financial crisis of 1997-'98, macroeconomic restructuring and rigorous corporate reforms laid a foundation for accountability and profitability. The region has since come through the problems caused by overinvestment -- problems that other parts of the world, including the U.S., are now experiencing. In addition, our decision to significantly underweight Europe contributed to performance as the region underperformed the benchmark. Europe's lackluster performance was driven by restrictive monetary and fiscal policies, as well as by demographic constraints. In spite of the global economic slow-down, the European Central Bank maintained a tight monetary policy, giving priority instead to keeping inflation in check. In our opinion, its decision to keep interest rates relatively high hurt the region from a cyclical view. In addition, tax rates in Europe are higher than in other countries, and would be difficult to lower due to the constraints imposed by the stability pact among E.U. countries. Finally, tighter immigration policies and lower birth rates have brought Europe's population growth close to 0%. Population growth can be an important driver of overall economic growth. By contrast, the Portfolio's underweighted position in Japan detracted from performance. During the period, the benchmark was down 21%, compared to -26% for Europe, -14% for the Pacific Basin ex-Japan, and -7% for Japan. We believe Japan's strong relative performance was largely the result of its having been in a decade-long bear market. Japan outperformed the benchmark as investors bought equities that had been sold down to low valuations. In the months ahead, we plan to continue to overweight Asia ex-Japan, based on the region's above average growth prospects, better demographics, stronger savings rates and more attractive valuations. We will also continue to overweight consumer staples and materials -- two sectors that helped performance during the period. As an economically defensive sector, consumer staples stands to benefit from an environment of slower growth. We believe the materials sector will continue to achieve solid earnings growth as the consolidation taking place in some of the resource industries continues to unfold. 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, Doni L. Fordyce Doni L. Fordyce President The Bear Stearns Funds - ----------- * Small-cap funds typically carry additional risks, since smaller companies generally have a higher risk of failure than well-established larger companies. Historically, stocks of smaller companies have experienced a greater degree of market volatility than stocks on average. ** International investing involves risks such as currency exchange-rate volatility, possible political, social, or economic instability and differences in taxation and other financial standards. 5 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, 2002 (UNAUDITED)
- ------------------------------------------------------------------------------------------- TOP TEN INDUSTRY WEIGHTINGS - ------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- ---------------------------------------------------------- ---------- 1. Medical - Drugs ............................................. 5.60 2. Oil & Gas Drilling .......................................... 5.23 3. Electronic Components - Miscellaneous ....................... 4.41 4. Diversified Financial Services .............................. 4.30 5. Oil Companies - Exploration & Production .................... 4.12 6. Retail - Discount ........................................... 3.74 7. Retail - Bookstore .......................................... 3.58 8. Investment Management/Advisor Services ...................... 3.40 9. Publishing - Books .......................................... 3.37 10. Medical Instruments ......................................... 3.30 - ----------------------------------------------------------------------------------------- TOP TEN HOLDINGS* - ----------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- --------------------------------------------------------- ---------- ............................................................. 1. Citigroup Inc. ......................................... 4.30 2. Pfizer Inc. ............................................ 4.12 3. Barnes & Noble, Inc. ................................... 3.58 4. Eaton Vance Corp. ...................................... 3.40 5. Scholastic Corp. ....................................... 3.37 6. Comcast Corp., Special Class A ......................... 2.98 7. Tenet Healthcare Corp. ................................. 2.97 8. Lehman Brothers Holdings Inc. .......................... 2.69 9. Costco Wholesale Corp. ................................. 2.65 10. QUALCOMM Inc. .......................................... 2.65
- ------ * Holdings will change over time. Top ten holdings are provided for informational purposes only and should not be deemed as a recommendation to purchase or sell the securities mentioned. Bear, Stearns & Co. Inc. or its affiliates may hold positions in or may seek to perform investment banking services for the companies listed. 6 T H E B E A R S T E A R N S F U N D S S&P STARS Opportunities Portfolio SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------------------------ TOP TEN INDUSTRY WEIGHTINGS - ------------------------------------------------------------------------------------------ PERCENT OF RANK INDUSTRY NET ASSETS ---- --------------------------------------------------------- ---------- 1. Consulting Services ......................................... 4.51 2. Commercial Banks ............................................ 4.24 3. Retail - Restaurants ........................................ 3.97 4. Retail - Bookstore .......................................... 3.55 5. Medical Laboratories ........................................ 3.36 6. Oil & Gas Drilling .......................................... 3.27 7. Commercial Services - Finance ............................... 2.86 8. Financial Guarantee Insurance ............................... 2.84 9. Electronic Components - Miscellaneous ....................... 2.64 10. Retail - Computer Equipment ................................. 2.60 - ---------------------------------------------------------------------------------------- TOP TEN HOLDINGS* - -- ------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- --------------------------------------------------------- ---------- 1. Barnes & Noble, Inc. ....................................... 3.55 2. FTI Consulting, Inc. ....................................... 3.01 3. Ambac Financial Group, Inc. ................................ 2.84 4. Electronics Boutique Holdings Corp. ........................ 2.60 5. Constellation Brands, Inc. ................................. 2.20 6. SPX Corp. .................................................. 2.18 7. Laboratory Corp. of America Holdings ....................... 2.18 8. Flextronics International Ltd. ............................. 2.14 9. Tenet Healthcare Corp. ..................................... 2.05 10. Scholastic Corp. ........................................... 1.99
- ------ * Holdings will change over time. Top ten holdings are provided for informational purposes only and should not be deemed as a recommendation to purchase or sell the securities mentioned. Bear, Stearns & Co. Inc. or its affiliates may hold positions in or may seek to perform investment banking services for the companies listed. 7 T H E B E A R S T E A R N S F U N D S The Insiders Select Fund SEPTEMBER 30, 2002 (UNAUDITED)
- ----------------------------------------------------------------------------------------------- TOP TEN INDUSTRY WEIGHTINGS - ----------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- ---------------------------------------------------------- ---------- 1. Oil Companies - Exploration & Production .................... 8.17 2. Super-regional Banks - U.S. ................................. 7.88 3. Life/Health Insurance ....................................... 7.15 4. Diversified Manufacturing Operations ........................ 6.08 5. Financial Guarantee Insurance ............................... 4.93 6. Medical - Hospitals ......................................... 3.53 7. Electric - Integrated ....................................... 3.41 8. Telephone - Integrated ...................................... 3.21 9. Advertising Agencies ........................................ 3.21 10. Savings & Loan/Thrifts ...................................... 3.13 - ---------------------------------------------------------------------------------------------- TOP TEN HOLDINGS* - ---------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- ---------------------------------------------------------- ---------- 1. Apache Corp. ................................................ 5.35 2. AFLAC, Inc. ................................................. 3.63 3. HCA Inc. .................................................... 3.53 4. Lincoln National Corp. ...................................... 3.52 5. FPL Group, Inc. ............................................. 3.41 6. Interpublic Group of Cos., Inc. (The) ....................... 3.21 7. Pentair, Inc. ............................................... 3.19 8. Washington Mutual, Inc. ..................................... 3.13 9. PNC Financial Services Group, Inc. .......................... 3.13 10. Liberty Media Corp. ......................................... 3.06
- ------- * Holdings will change over time. Top ten holdings are provided for informational purposes only and should not be deemed as a recommendation to purchase or sell the securities mentioned. Bear, Stearns & Co. Inc. or its affiliates may hold positions in or may seek to perform investment banking services for the companies listed. 8 T H E B E A R S T E A R N S F U N D S Intrinsic Value Portfolio SEPTEMBER 30, 2002 (UNAUDITED)
- --------------------------------------------------------------------------- ---------------- TOP TEN INDUSTRY WEIGHTINGS - -------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- --------------------------------------------------------- ---------- 1. Super-regional Banks - U.S. ................................ 9.96 2. Telephone - Integrated ..................................... 8.09 3. Oil Companies - Integrated ................................. 7.71 4. Medical - Drugs ............................................ 5.33 5. Diversified Manufacturing Operations ....................... 4.00 6. Diversified Financial Services ............................. 3.73 7. Broadcasting Services/Programming .......................... 3.63 8. Retail - Restaurants ....................................... 3.19 9. Multi-line Insurance ....................................... 3.00 10. Food - Retail .............................................. 2.90 - ---------------------------------------------------------------------------------------------- TOP TEN HOLDINGS* - ---------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- ---------------------------------------------------------- ---------- 1. Citigroup Inc. .............................................. 3.73 2. Liberty Media Corp. ......................................... 3.63 3. McDonald's Corp. ............................................ 3.19 4. Safeway Inc. ................................................ 2.90 5. Bank of America Corp. ....................................... 2.89 6. May Department Stores Co. (The) ............................. 2.79 7. Abbott Laboratories ......................................... 2.72 8. Exxon Mobil Corp. ........................................... 2.71 9. Eastman Kodak Co. ........................................... 2.69 10. Interpublic Group of Cos., Inc. (The) ....................... 2.64
- ------- * Holdings will change over time. Top ten holdings are provided for informational purposes only and should not be deemed as a recommendation to purchase or sell the securities mentioned. Bear, Stearns & Co. Inc. or its affiliates may hold positions in or may seek to perform investment banking services for the companies listed. 9 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, 2002 (UNAUDITED)
- ----------------------------------------------------------------------------------------- TOP TEN INDUSTRY WEIGHTINGS - ----------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- ---------------------------------------------------------- ---------- 1. Commercial Banks ............................................ 8.49 2. Retail - Apparel/Shoe ....................................... 6.02 3. Transport - Truck ........................................... 4.26 4. Finance - Investment Banking/Brokerage ...................... 3.94 5. Electric - Integrated ....................................... 3.83 6. Savings & Loan/Thrifts ...................................... 3.70 7. Retail - Restaurants ........................................ 3.41 8. Food - Miscellaneous/Diversified ............................ 3.32 9. REITS - Office Property ..................................... 3.15 10. Metal Processors & Fabrication .............................. 3.04 - -------------------------------------------------------------------------------------------- TOP TEN HOLDINGS* - -------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- --------------------------------------------------------- ---------- 1. Yellow Corp. ........................................... 4.26 2. Hibernia Foods plc ..................................... 3.32 3. Glenborough Realty Trust Inc. .......................... 3.15 4. Mueller Industries, Inc. ............................... 3.04 5. Electronics for Imaging, Inc. .......................... 2.98 6. Olin Corp. ............................................. 2.95 7. BorgWarner, Inc. ....................................... 2.78 8. Jack in the Box Inc. ................................... 2.78 9. First BanCorp .......................................... 2.71 10. Key Energy Services, Inc. .............................. 2.70
- ------- * Holdings will change over time. Top ten holdings are provided for informational purposes only and should not be deemed as a recommendation to purchase or sell the securities mentioned. Bear, Stearns & Co. Inc. or its affiliates may hold positions in or may seek to perform investment banking services for the companies listed. 10 T H E B E A R S T E A R N S F U N D S Alpha Growth Portfolio SEPTEMBER 30, 2002 (UNAUDITED)
- --------------------------------------------------------------------------------------------- TOP TEN INDUSTRY WEIGHTINGS - --------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- --------------------------------------------------------- ---------- 1. Casino Hotels .............................................. 4.45 2. Medical - HMO .............................................. 4.27 3. Cosmetics & Toiletries ..................................... 4.24 4. Aerospace/Defense .......................................... 4.18 5. Multimedia ................................................. 4.06 6. Diversified Manufacturing Operations ....................... 4.00 7. Commercial Banks - Eastern U.S. ............................ 3.99 8. Beverages - Non-alcoholic .................................. 3.97 9. Commercial Services - Finance .............................. 3.66 10. Radio ...................................................... 2.43 - ----------------------------------------------------------------------------------------------- TOP TEN HOLDINGS* - ----------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- --------------------------------------------------------- ---------- 1. Westwood One, Inc. ......................................... 2.43 2. Apollo Group, Inc. ......................................... 2.36 3. Boston Scientific Corp. .................................... 2.34 4. Cardinal Health, Inc. ...................................... 2.33 5. Bed, Bath & Beyond Inc. .................................... 2.33 6. Intuit Inc. ................................................ 2.32 7. AutoZone, Inc. ............................................. 2.32 8. Deere & Co. ................................................ 2.30 9. MGM Mirage ................................................. 2.29 10. Starbucks Corp. ............................................ 2.29
- ------- * Holdings will change over time. Top ten holdings are provided for informational purposes only and should not be deemed as a recommendation to purchase or sell the securities mentioned. Bear, Stearns & Co. Inc. or its affiliates may hold positions in or may seek to perform investment banking services for the companies listed. All holdings were equally weighted on August 1, 2002. Differences in percentage holdings of each security after August 1, 2002 are due to market movement. 11 T H E B E A R S T E A R N S F U N D S International Equity Portfolio SEPTEMBER 30, 2002 (UNAUDITED)
- --------------------------------------------------------------------------------------------- TOP TEN INDUSTRY WEIGHTINGS - --------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- --------------------------------------------------------- ---------- 1. Commercial Banks - Non-U.S ................................. 10.96 2. Money Center Banks ......................................... 10.35 3. Oil Companies - Integrated ................................. 6.34 4. Auto - Cars/Light Trucks ................................... 6.01 5. Food - Miscellaneous/Diversified ........................... 5.97 6. Cosmetics & Toiletries ..................................... 4.45 7. Electronic Components - Semiconductors ..................... 4.36 8. Medical - Drugs ............................................ 4.35 9. Soap & Cleaning Preparations ............................... 3.66 10. Retail - Miscellaneous/Diversified ......................... 3.36 - --------------------------------------------------------------------------------------------- TOP TEN HOLDINGS* - --------------------------------------------------------------------------------------------- PERCENT OF RANK INDUSTRY NET ASSETS ---- -------------------------------------------------------- ---------- 1. Samsung Electronics Co., Ltd. ............................. 3.79 2. Ito-Yokado Co., Ltd. ...................................... 3.36 3. Kookmin Bank .............................................. 2.90 4. Total Fina Elf SA ......................................... 2.79 5. Reckitt Benckiser plc ..................................... 2.75 6. Honda Motor Co., Ltd. ..................................... 2.68 7. Bank of Ireland ........................................... 2.66 8. Commonwealth Bank of Australia ............................ 2.61 9. Novartis AG ............................................... 2.60 10. Nestle SA ................................................. 2.49
- ------- * Holdings will change over time. Top ten holdings are provided for informational purposes only and should not be deemed as a recommendation to purchase or sell the securities mentioned. Bear, Stearns & Co. Inc. or its affiliates may hold positions in or may seek to perform investment banking services for the companies listed. 12 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, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS -- 101.11% APPLICATIONS SOFTWARE - 0.53% 265,000 BARRA, Inc.++* .............................. $ 7,239,800 ----------- BEVERAGES - NON-ALCOHOLIC - 2.06% 760,000 PepsiCo, Inc. ............................... 28,082,000 ----------- BEVERAGES - WINE/SPIRITS - 2.62% 1,550,000 Constellation Brands, Inc., Class A* ........ 35,805,000 ----------- BROADCASTING SERVICE/PROGRAM - 0.59% 230,000 Clear Channel Communications, Inc.++* ....... 7,992,500 ----------- BUILDING - RESIDENTIAL/COMMERCIAL - 1.47% 360,000 Lennar Corp. ................................ 20,080,800 ----------- CABLE TV - 2.98% 1,950,000 Comcast Corp., Special Class A++* ........... 40,677,000 ----------- CELLULAR TELECOMMUNICATIONS - 0.72% 5,020,000 Sprint Corp. (PCS Group)+++* ................ 9,839,200 ----------- COMMERCIAL BANKS - 1.05% 570,000 National Commerce Financial Corp. ........... 14,278,500 ----------- COMMERCIAL SERVICES - FINANCE - 1.67% 470,000 Moody's Corp. ............................... 22,795,000 ----------- CONSULTING SERVICES - 1.78% 1,000,000 Gartner, Inc., Class A++* ................... 8,100,000 810,000 Watson Wyatt & Co. Holdings* ................ 16,200,000 ----------- 24,300,000 ----------- CONTAINERS - PAPER/PLASTIC - 2.45% 2,660,000 Smurfit-Stone Container Corp.* .............. 33,409,600 ----------- DATA PROCESSING/MANAGEMENT - 1.41% 690,000 First Data Corp. ............................ 19,285,500 ----------- DIVERSIFIED FINANCIAL SERVICES - 4.30% 1,980,000 Citigroup Inc. .............................. 58,707,000 ----------- DIVERSIFIED OPERATIONS - 1.34% 1,300,000 Tyco International Ltd.++ ................... 18,330,000 ----------- E-MARKETING/INFORMATION - 3.17% 6,780,000 DoubleClick Inc.++* ......................... 34,849,200 2,360,000 E.piphany, Inc.++* .......................... 8,496,000 ----------- 43,345,200 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ ELECTRONIC COMPONENTS - MISCELLANEOUS - 4.41% 4,600,000 Flextronics International Ltd.+* ............ $32,071,200 3,200,000 Vishay Intertechnology, Inc.+* .............. 28,160,000 ----------- 60,231,200 ----------- ELECTRONIC COMPONENTS - SEMICONDUCTORS - 0.40% 870,000 LSI Logic Corp.++* .......................... 5,524,500 ----------- ELECTRONIC DESIGN AUTOMATION - 1.34% 1,800,000 Cadence Design Systems, Inc.* ............... 18,306,000 ----------- ENERGY - 0.42% 2,600,000 Mirant Corp.++* ............................. 5,746,000 ----------- ENTERPRISE SOFTWARE/SERVICES - 0.23% 1,060,000 Packeteer, Inc.++* .......................... 3,180,000 ----------- FINANCE - INVESTMENT BANKING/BROKERAGE - 2.69% 750,000 Lehman Brothers Holdings Inc. ............... 36,787,500 ----------- FINANCIAL GUARANTEE INSURANCE - 2.13% 540,000 Ambac Financial Group, Inc. ................. 29,100,600 ----------- INTERNET CONTENT - 0.99% 8,090,000 CNET Networks, Inc.++*(b) ................... 8,899,000 3,870,000 SportsLine.com, Inc.++*(b) .................. 4,644,000 ----------- 13,543,000 ----------- INVESTMENT MANAGEMENT/ADVISOR SERVICES - 3.40% 1,680,000 Eaton Vance Corp.+ .......................... 46,435,200 ----------- MEDICAL - DRUGS - 5.60% 1,940,000 Pfizer Inc.+ ................................ 56,298,800 640,000 Wyeth+ ...................................... 20,352,000 ----------- 76,650,800 ----------- MEDICAL - HMO - 1.77% 330,000 WellPoint Health Networks Inc.* ............. 24,189,000 ----------- MEDICAL - HOSPITALS - 2.97% 820,000 Tenet Healthcare Corp.* ..................... 40,590,000 ----------- MEDICAL INSTRUMENTS - 3.30% 600,000 Guidant Corp.* .............................. 19,386,000 3,210,000 Intuitive Surgical, Inc.+*(b) ............... 25,647,900 ----------- 45,033,900 ----------- MEDICAL LABORATORIES - 1.90% 770,000 Laboratory Corp. of America Holdings++* ............................... 26,010,600 -----------
The accompanying notes are an integral part of the financial statements. 13 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, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) MEDICAL - WHOLESALE DRUG DISTRIBUTORS - 2.09% 460,000 Cardinal Health, Inc. ....................... $28,612,000 ----------- MULTI-LINE INSURANCE - 2.35% 1,410,000 MetLife, Inc. ............................... 32,091,600 ----------- NETWORKING PRODUCTS - 0.79% 2,560,000 Extreme Networks, Inc.++* ................... 10,777,600 ----------- OIL & GAS DRILLING - 5.23% 1,590,000 GlobalSantaFe Corp. ......................... 35,536,500 1,160,000 Noble Corp.+* ............................... 35,960,000 ----------- 71,496,500 ----------- OIL COMPANIES - EXPLORATION & PRODUCTION - 4.12% 510,000 Apache Corp. ................................ 30,319,500 1,300,000 Ocean Energy Inc. ........................... 25,935,000 ----------- 56,254,500 ----------- PUBLISHING - BOOKS - 3.37% 1,030,000 Scholastic Corp. +*(a) ...................... 46,020,400 ----------- REITS - OUTLET CENTERS - 1.56% 630,000 Chelsea Property Group, Inc. ................ 21,262,500 ----------- RETAIL - BOOKSTORE - 3.58% 2,310,000 Barnes & Noble, Inc.+* ...................... 48,879,600 ----------- RETAIL - DISCOUNT - 3.74% 1,120,000 Costco Wholesale Corp.* ..................... 36,254,400 300,000 Wal-Mart Stores, Inc. ....................... 14,772,000 ----------- 51,026,400 ----------- RETAIL - HAIR SALONS - 1.45% 700,000 Regis Corp.+ ................................ 19,803,000 ----------- RETAIL - RESTAURANTS - 2.92% 760,000 Applebee's International, Inc. .............. 16,659,200 700,000 Wendy's International, Inc. ................. 23,177,000 ----------- 39,836,200 ----------- STEEL - PRODUCERS - 0.61% 220,000 Nucor Corp. ................................. 8,338,000 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ SUPER-REGIONAL BANKS - U.S. - 1.63% 350,000 Bank of America Corp. ....................... $22,330,000 ----------- TELECOMMUNICATION EQUIPMENT - 2.65% 1,310,000 QUALCOMM Inc.+* ............................. 36,182,200 ----------- TEXTILE - HOME FURNISHINGS - 1.74% 480,000 Mohawk Industries, Inc.* .................... 23,832,000 ----------- TRANSPORTATION - SERVICES - 1.14% 310,000 FedEx Corp. ................................. 15,521,700 ----------- WEB PORTALS/ISP - 2.45% 1,420,000 Overture Services, Inc.++* .................. 33,469,400 ----------- Total Common Stocks (cost - $1,917,789,985) ................... 1,381,229,000 ------------- SHORT-TERM INVESTMENT -- 0.00% INVESTMENT COMPANY - 0.00% 94 Federated Investors, Trust for Short-Term U.S. Government Securities, 1.45%++** (cost - $94) .................... 94 ----------- Total Investments-- 101.11% (cost - $1,917,790,079) ................... 1,381,229,094 Liabilities in excess of other assets -- (1.11)% ......................... (15,158,489) -------------- Net Assets -- 100.00% ....................... $1,366,070,605 ==============
The accompanying notes are an integral part of the financial statements. 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, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ SHORT SALES OF COMMON STOCK -- (0.66)% INDUSTRIAL AUTOMATION/ROBOTICS - (0.25)% 240,000 Cognex Corp.++++* ........................... $3,338,400 ----------- PIPELINES - (0.27)% 450,000 El Paso Corp.++++ ........................... 3,721,500 ----------- SEMICONDUCTOR EQUIPMENT - (0.14)% 200,000 Teradyne, Inc.++++* ......................... 1,920,000 ----------- Total Short Sales of Common Stock (proceeds received - $9,392,104) .......... $8,979,900 ===========
Unless otherwise indicated, all common stocks held long are ranked as five stars. + Currently ranked as four stars. ++ Currently ranked as three stars. +++ Currently ranked as two stars. ++++ Currently ranked as one star. ++ Not ranked by stars. * Non-income producing security. ** Money market fund; interest rate reflects SEC seven-day yield at September 30, 2002. (a) A portion of this security is used as collateral for securities sold short. (b) Affiliated company; see additional disclosure in the financial statements and notes thereto. 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 a well below average performer and to fall in price. 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 Opportunities Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS -- 98.60% APPAREL MANUFACTURERS - 1.28% 30,000 Quiksilver, Inc.* ........................... $ 677,700 ----------- APPLICATIONS SOFTWARE - 1.50% 17,000 BARRA, Inc.++* .............................. 464,440 27,000 SERENA Software, Inc.++* .................... 324,000 1,000 Siebel Systems, Inc.++* ..................... 5,750 ----------- 794,190 ----------- ATHLETIC EQUIPMENT - 0.63% 17,000 Nautilus Group, Inc. (The)* ................. 331,500 ----------- BEVERAGES - WINE/SPIRITS - 2.20% 50,200 Constellation Brands, Inc., Class A* ........ 1,159,620 ----------- BUILDING & CONSTRUCTION PRODUCTS - 0.72% 6,000 American Standard Cos., Inc.* ............... 381,720 ----------- BUILDING - RESIDENTIAL/COMMERCIAL - 2.16% 13,000 KB HOME ..................................... 634,920 9,000 Lennar Corp. ................................ 502,020 ----------- 1,136,940 ----------- COMMERCIAL BANKS - 4.24% 31,000 Banknorth Group, Inc. ....................... 736,250 11,000 Commerce Bancorp, Inc. ...................... 456,610 41,600 National Commerce Financial Corp. ........... 1,042,080 ----------- 2,234,940 ----------- COMMERCIAL SERVICES - FINANCE - 2.86% 17,000 Coinstar, Inc.* ............................. 438,260 11,250 H&R Block, Inc. ............................. 472,613 12,300 Moody's Corp. ............................... 596,550 ----------- 1,507,423 ----------- COMPUTER SERVICES - 1.21% 15,000 Affiliated Computer Services, Inc., Class A* .................................. 638,250 ----------- CONSULTING SERVICES - 4.51% 39,900 FTI Consulting, Inc.* ....................... 1,586,423 39,900 Watson Wyatt & Co. Holdings* ................ 798,000 ----------- 2,384,423 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ CONTAINERS - PAPER/PLASTIC - 2.16% 33,200 Pactiv Corp.+* .............................. $ 546,140 47,100 Smurfit-Stone Container Corp.* .............. 591,576 ----------- 1,137,716 ----------- DECISION SUPPORT SOFTWARE - 0.52% 19,000 NetIQ Corp.++* .............................. 275,500 ----------- DISTRIBUTION/WHOLESALE - 0.84% 16,100 SCP Pool Corp.* ............................. 441,301 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 2.18% 11,400 SPX Corp.+* ................................. 1,150,260 ----------- DIVERSIFIED OPERATIONS - 1.12% 54,900 Cendant Corp.* .............................. 590,724 ----------- E-MARKETING/INFORMATION - 1.78% 182,400 DoubleClick, Inc.++* ........................ 937,536 ----------- ELECTRONIC COMPONENTS - MISCELLANEOUS - 2.64% 162,200 Flextronics International Ltd.+* ............ 1,130,858 30,000 Vishay Intertechnology, Inc.+* .............. 264,000 ----------- 1,394,858 ----------- ELECTRONIC COMPONENTS - SEMICONDUCTORS - 1.89% 100 Applied Micro Circuits Corp.++++* ........... 286 53,500 Fairchild Semiconductor Corp., Class A+* ................................. 506,645 24,000 Microchip Technology Inc.* .................. 490,800 ----------- 997,731 ----------- ELECTRONIC CONNECTORS - 0.47% 8,000 Amphenol Corp., Class A+* ................... 248,000 ----------- ELECTRONIC DESIGN AUTOMATION - 0.56% 29,000 Cadence Design Systems, Inc.* ............... 294,930 ----------- ELECTRONIC MEASURING INSTRUMENTS - 0.63% 26,700 Molecular Devices Corp.++* .................. 334,017 ----------- ENGINEERING/R & D SERVICES - 1.01% 17,300 Jacobs Engineering Group, Inc.* ............. 534,224 ----------- FIDUCIARY BANKS - 1.83% 33,400 Wilmington Trust Corp. ...................... 965,928 ----------- FINANCE - INVESTMENT BANKING/BROKERAGE - 1.11% 11,900 Lehman Brothers Holdings Inc. ............... 583,695 -----------
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 Opportunities Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) FINANCIAL GUARANTEE INSURANCE - 2.84% 27,800 Ambac Financial Group, Inc. ................. $ 1,498,142 ----------- FOOD - DAIRY PRODUCTS - 0.86% 6,500 Dreyer's Grand Ice Cream, Inc.+ ............. 454,090 ----------- FOOD - MEAT PRODUCTS - 1.45% 66,000 Tyson Foods, Inc., Class A .................. 767,580 ----------- FOOD - WHOLESALE/DISTRIBUTORS - 0.37% 15,000 Green Mountain Coffee, Inc.+* ............... 193,350 ----------- INSTRUMENTS - SCIENTIFIC - 0.51% 49,000 PerkinElmer, Inc.+++* ....................... 267,050 ----------- INTERNET INFRASTRUCTURE SOFTWARE - 0.53% 75,000 TIBCO Software Inc.++* ...................... 281,250 ----------- INVESTMENT MANAGEMENT/ADVISOR SERVICES - 1.39% 19,500 Eaton Vance Corp.+ .......................... 538,980 16,000 Stilwell Financial, Inc.++ .................. 193,120 ----------- 732,100 ----------- MACHINERY - CONSTRUCTION & MINING - 0.63% 41,000 JLG Industries, Inc. ........................ 330,050 ----------- MEDICAL - BIOMEDICAL/GENETICS - 2.36% 7,000 IDEC Pharmaceuticals Corp.+* ................ 290,640 28,000 Invitrogen Corp.+* 953,960 ----------- 1,244,600 ----------- MEDICAL - DRUGS - 0.76% 11,600 Celgene Corp.* .............................. 195,344 5,000 Cephalon, Inc.* ............................. 204,100 ----------- 399,444 ----------- MEDICAL - HMO - 1.39% 10,000 WellPoint Health Networks Inc.* ............. 733,000 ----------- MEDICAL - HOSPITALS - 2.05% 21,800 Tenet Healthcare Corp.* ..................... 1,079,100 ----------- MEDICAL INSTRUMENTS - 1.14% 12,000 Guidant Corp.* .............................. 387,720 26,500 Intuitive Surgical, Inc.+* .................. 211,735 ----------- 599,455 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ MEDICAL LABORATORIES - 3.36% 15,000 IMPATH Inc.++* .............................. $ 193,650 34,000 Laboratory Corp. of America Holdings++* ............................... 1,148,520 7,000 Quest Diagnostics, Inc.++* .................. 430,710 ----------- 1,772,880 ----------- MULTI-LINE INSURANCE - 0.31% 4,000 Hartford Financial Services Group, Inc. (The)+ ............................... 164,000 ----------- NETWORKING PRODUCTS - 0.40% 48,000 Adaptec, Inc.++* ............................ 211,680 ----------- OIL & GAS DRILLING - 3.27% 31,950 GlobalSantaFe Corp. ......................... 714,083 15,000 Nabors Industries, Ltd.* .................... 491,250 16,900 Noble Corp.+* ............................... 523,900 ----------- 1,729,233 ----------- OIL - FIELD SERVICES - 2.13% 21,100 BJ Services Co.+* ........................... 548,600 15,500 Weatherford International Ltd.* ............. 575,670 ----------- 1,124,270 ----------- OIL COMPANIES - EXPLORATION & PRODUCTION - 2.51% 7,000 Apache Corp. ................................ 416,150 15,550 Evergreen Resources, Inc.* .................. 637,239 13,500 Ocean Energy Inc. ........................... 269,325 ----------- 1,322,714 ----------- PHARMACY SERVICES - 1.96% 46,000 AdvancePCS++* ............................... 1,036,380 ----------- POWER CONVERSION/SUPPLY EQUIPMENT - 1.43% 79,000 American Power Conversion Corp.++* .......... 755,240 ----------- PUBLISHING - BOOKS - 1.99% 23,450 Scholastic Corp.* ........................... 1,047,746 ----------- REITS - HOTELS - 1.57% 25,000 Hospitality Properties Trust ................ 828,000 ----------- REITS - OUTLET CENTERS - 1.34% 21,000 Chelsea Property Group, Inc.* ............... 708,750 -----------
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 S&P STARS Opportunities Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) RENTAL - AUTO/EQUIPMENT - 1.48% 15,000 Rent-A-Center, Inc.* ........................ $ 779,250 ----------- RETAIL - APPAREL/SHOE - 0.97% 32,200 Chico's FAS, Inc.* .......................... 512,946 ----------- RETAIL - BOOKSTORE - 3.55% 88,550 Barnes & Noble, Inc.(a)+* ................... 1,873,718 ----------- RETAIL - COMPUTER EQUIPMENT - 2.60% 50,000 Electronics Boutique Holdings Corp.+* ....... 1,372,500 ----------- RETAIL - DEPARTMENT STORES - 1.11% 15,000 Sears, Roebuck & Co.+ ....................... 585,000 ----------- RETAIL - HAIR SALONS - 1.86% 34,600 Regis Corp.+ ................................ 978,834 ----------- RETAIL - RESTAURANTS - 3.97% 28,000 Applebee's International, Inc. .............. 613,760 26,000 Brinker International, Inc. ++* ............. 673,400 24,500 Wendy's International, Inc. ................. 811,195 ----------- 2,098,355 ----------- SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS - 1.82% 51,700 Exar Corp.++++* ............................. 597,135 153,000 GlobespanVirata, Inc.++* .................... 361,080 ----------- 958,215 ----------- STEEL - PRODUCERS - 0.22% 3,000 Nucor Corp. ................................. 113,700 ----------- TEXTILE - HOME FURNISHINGS - 1.58% 16,800 Mohawk Industries, Inc.* .................... 834,120 ----------- THERAPEUTICS - 0.38% 6,000 Gilead Sciences, Inc.* ...................... 201,180 ----------- TRANSPORT - TRUCK - 1.16% 20,700 Yellow Corp.* ............................... 610,816 ----------- WEB PORTALS/ISP - 1.30% 29,000 Overture Services, Inc.++* .................. 683,530 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ Total Common Stocks (cost - $58,663,965) ......... $52,015,394 ----------- SHORT-TERM INVESTMENT -- 2.38% INVESTMENT COMPANY - 2.38% 1,258,074 Federated Investors, Trust for Short-Term U.S. Government Securities, 1.45%++** (cost - $1,258,074) ............. 1,258,074 ----------- Total Investments -- 100.98% (cost - $59,922,039) ...................... 53,273,468 Liabilities in excess of other assets -- (0.98)% ........................ (516,157) ----------- Net Assets -- 100.00% ....................... $52,757,311 ----------- SHORT SALES OF COMMON STOCK-- (1.41)% CABLE TV - (0.61)% 13,000 Cox Communications, Inc., Class A++* ........ $ 319,670 ----------- HUMAN RESOURCES - (0.51)% 17,000 Robert Half International Inc.++++* ......... 269,790 ----------- OFFICE FURNITURE - (0.29)% 15,000 Steelcase Inc., Class A++++ ................. 157,050 ----------- Total Short Sales of Common Stock (proceeds received - $794,257) ............ $ 746,510 ===========
- ---------- Unless otherwise indicated, all common stocks held long are ranked as five stars. + Currently ranked as four stars. ++ Currently ranked as three stars. +++ Currently ranked as two stars. ++++ Currently ranked as one star. ++ Not ranked by stars. * Non-income producing security. ** Money market fund; interest rate reflects SEC seven-day yield at September 30, 2002. (a) A portion of this security is used as collateral for securities sold short. 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 a well below average performer and to fall in price. 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, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS -- 90.45% ADVERTISING AGENCIES - 3.21% 60,300 Interpublic Group of Cos., Inc. (The) ....... $ 955,755 ----------- AEROSPACE/DEFENSE - EQUIPMENT - 2.67% 14,100 United Technologies Corp. ................... 796,509 ----------- BROADCASTING SERVICES/PROGRAMMING - 3.06% 127,000 Liberty Media Corp., Class A* ............... 911,860 ----------- CABLE TV - 1.53% 21,800 Comcast Corp., Special Class A* ............. 454,748 ----------- CHEMICALS - DIVERSIFIED - 3.04% 20,300 PPG Industries, Inc. ........................ 907,410 ----------- COMPUTER SERVICES - 0.94% 20,000 Electronic Data Systems Corp. ............... 279,600 ----------- DATA PROCESSING/MANAGEMENT - 2.09% 18,500 Dun & Bradstreet Corp. (The)* ............... 621,785 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 6.08% 25,600 Pentair, Inc. ............................... 951,552 25,300 Textron, Inc. ............................... 862,730 ----------- 1,814,282 ----------- DIVERSIFIED OPERATIONS/COMMERCIAL SERVICES - 2.11% 30,800 Viad Corp. .................................. 629,244 ----------- ELECTRIC - INTEGRATED - 3.41% 18,900 FPL Group, Inc. ............................. 1,016,820 ----------- ELECTRIC PRODUCTS - MISCELLANEOUS - 1.33% 9,000 Emerson Electric Co. ........................ 395,460 ----------- ELECTRONIC COMPONENTS - SEMICONDUCTORS - 1.12% 28,100 National Semiconductor Corp.* ............... 335,514 ----------- FINANCE - CREDIT CARD - 2.66% 25,400 American Express Co. ........................ 791,972 ----------- FINANCE - MORTGAGE LOAN/BANKER - 1.28% 6,400 Fannie Mae .................................. 381,056 ----------- FINANCIAL GUARANTEE INSURANCE - 4.93% 18,000 MBIA, Inc. .................................. 719,100 18,400 MGIC Investment Corp. ....................... 751,272 ----------- 1,470,372 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ FOOD - RETAIL - 2.95% 39,400 Safeway, Inc.* .............................. $ 878,620 ----------- LIFE/HEALTH INSURANCE - 7.15% 35,300 AFLAC, Inc. ................................. 1,083,357 34,300 Lincoln National Corp. ...................... 1,047,865 ----------- 2,131,222 ----------- MACHINERY - GENERAL INDUSTRIAL - 1.90% 22,300 Dover Corp. ................................. 565,974 ----------- MEDICAL - HOSPITALS - 3.53% 22,100 HCA Inc. .................................... 1,052,181 ----------- OIL COMPANIES - EXPLORATION & PRODUCTION - 8.17% 26,840 Apache Corp. ................................ 1,595,638 26,800 Unocal Corp. ................................ 841,252 ----------- 2,436,890 ----------- OIL REFINING & MARKETING - 2.42% 23,900 Sunoco, Inc. ................................ 720,824 ----------- PHOTO EQUIPMENT & SUPPLIES - 2.98% 32,600 Eastman Kodak Co. ........................... 888,024 ----------- RETAIL - CONSUMER ELECTRONIC PRODUCTS - 1.71% 22,800 Best Buy Co., Inc.* ......................... 508,668 ----------- RETAIL - MAJOR DEPARTMENT STORES - 2.53% 33,100 May Department Stores Co. (The) ............. 753,687 ----------- RETAIL - RESTAURANTS - 2.46% 41,600 McDonald's Corp. ............................ 734,656 ----------- SAVINGS & LOAN/THRIFTS - 3.13% 29,700 Washington Mutual, Inc. ..................... 934,659 ----------- SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS - 0.97% 44,000 Cypress Semiconductor Corp.* ................ 288,640 ----------- SUPER-REGIONAL BANKS - U.S. - 7.88% 15,600 Comerica, Inc. .............................. 752,232 32,800 FleetBoston Financial Corp. ................. 666,824 22,100 PNC Financial Services Group, Inc. .......... 931,957 ----------- 2,351,013 -----------
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 The Insiders Select Fund PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) TELEPHONE - INTEGRATED - 3.21% 26,100 AT&T Corp. .................................. $ 313,461 70,700 Sprint Corp. (FON Group) .................... 644,784 ----------- 958,245 ----------- Total Common Stocks (cost - $31,482,059) ...................... 26,965,690 ----------- SHORT-TERM INVESTMENTS -- 9.80% INVESTMENT COMPANY - 0.41% 122,225 Federated Investors, Trust for Short-Term U.S. Government Securities, 1.45%** (cost - $122,225) ......................... 122,225 ----------- PRINCIPAL AMOUNT (000'S) - -------- U.S. GOVERNMENT AGENCY DISCOUNT NOTES -- 9.39% $ 2,800 Freddie Mac, Discount Notes, 1.60%, 10/01/02 (cost - $2,800,000) ....................... 2,800,000 ----------- Total Short-Term Investments (cost - $2,922,225) ....................... 2,922,225 ----------- Total Investments -- 100.25% (cost - $34,404,284) ...................... 29,887,915 Liabilities in excess of other assets -- (0.25)% ......................... (75,837) ----------- Net Assets -- 100.00% ....................... $29,812,078 ===========
* Non-income producing security. ** Money market fund; interest rate reflects SEC seven-day yield at September 30, 2002. 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 Intrinsic Value Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS -- 98.69% ADVERTISING AGENCIES - 2.64% 92,000 Interpublic Group of Cos., Inc. (The) ....... $ 1,458,200 ----------- AEROSPACE/DEFENSE - EQUIPMENT - 2.10% 20,500 United Technologies Corp. ................... 1,158,045 ----------- AUTO - CARS/LIGHT TRUCKS - 0.98% 13,900 General Motors Corp. ........................ 540,710 ----------- BROADCASTING SERVICES/PROGRAMMING - 3.63% 279,000 Liberty Media Corp., Class A* ............... 2,003,220 ----------- CHEMICALS - DIVERSIFIED - 2.29% 35,000 Du Pont (E.I.) de Nemours & Co. ............. 1,262,450 ----------- COMPUTER SERVICES - 0.64% 12,800 Computer Sciences Corp.* .................... 355,712 ----------- COMPUTERS - 1.46% 69,100 Hewlett-Packard Co. ......................... 806,397 ----------- COSMETICS & TOILETRIES - 1.80% 17,600 Kimberly-Clark Corp. ........................ 996,864 ----------- DIVERSIFIED FINANCIAL SERVICES - 3.73% 69,533 Citigroup Inc. .............................. 2,061,653 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 4.00% 54,200 General Electric Co. ........................ 1,336,030 25,700 Textron, Inc. ............................... 876,370 ----------- 2,212,400 ----------- DIVERSIFIED OPERATIONS/COMMERCIAL SERVICES - 0.73% 19,800 Viad Corp. .................................. 404,514 ----------- ELECTRIC - INTEGRATED - 2.29% 23,500 FPL Group, Inc. ............................. 1,264,300 ----------- ELECTRIC PRODUCTS - MISCELLANEOUS - 1.03% 13,000 Emerson Electric Co. ........................ 571,220 ----------- ELECTRONIC COMPONENTS - MISCELLANEOUS - 2.48% 94,200 Philips Electronics ......................... 1,368,726 ----------- FINANCE - CREDIT CARD - 2.62% 46,500 American Express Co. ........................ 1,449,870 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ FINANCE - INVESTMENT BANKING/BROKERAGE - 2.83% 53,900 J.P. Morgan Chase & Co. ..................... $ 1,023,561 15,900 Morgan Stanley .............................. 538,692 ----------- 1,562,253 ----------- FINANCE - MORTGAGE LOAN/BANKER - 2.47% 22,900 Fannie Mae .................................. 1,363,466 ----------- FINANCIAL GUARANTEE INSURANCE - 2.56% 6,000 MBIA Inc. ................................... 239,700 28,700 MGIC Investment Corp. ....................... 1,171,821 ----------- 1,411,521 ----------- FOOD - RETAIL - 2.90% 71,800 Safeway Inc.* ............................... 1,601,140 ----------- LIFE/HEALTH INSURANCE - 2.03% 36,700 Lincoln National Corp. ...................... 1,121,185 ----------- MACHINERY - GENERAL INDUSTRIAL - 1.61% 35,100 Dover Corp. ................................. 890,838 ----------- MEDICAL - DRUGS - 5.33% 37,200 Abbott Laboratories ......................... 1,502,880 33,300 Bristol-Myers Squibb Co. .................... 792,540 14,200 Merck & Co. Inc. ............................ 649,082 ----------- 2,944,502 ----------- MULTI-LINE INSURANCE - 3.00% 30,000 Allstate Corp. (The) ........................ 1,066,500 10,800 American International Group, Inc. .......... 590,760 ----------- 1,657,260 ----------- MULTIMEDIA - 2.08% 98,300 AOL Time Warner Inc.* ....................... 1,150,110 ----------- OIL COMPANIES - EXPLORATION & PRODUCTION - 1.99% 35,000 Unocal Corp. ............................... 1,098,650 ----------- OIL COMPANIES - INTEGRATED - 7.71% 20,175 ChevronTexaco Corp. ......................... 1,397,119 46,900 Exxon Mobil Corp. ........................... 1,496,110 48,100 Occidental Petroleum Corp. .................. 1,365,078 ----------- 4,258,307 ----------- PHOTO EQUIPMENT & SUPPLIES - 2.69% 54,500 Eastman Kodak Co. ........................... 1,484,580 -----------
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 Intrinsic Value Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) RETAIL - CONSUMER ELECTRONIC PRODUCTS - 1.16% 28,700 Best Buy Co., Inc.* ......................... $ 640,297 ----------- RETAIL - DISCOUNT - 1.24% 40,400 TJX Cos., Inc. (The) ........................ 686,800 ----------- RETAIL - MAJOR DEPARTMENT STORES - 2.79% 67,600 May Department Stores Co. (The) ............. 1,539,252 ----------- RETAIL - RESTAURANTS - 3.19% 99,900 McDonald's Corp. ............................ 1,764,234 ----------- SAVINGS & LOAN/THRIFTS - 2.64% 46,327 Washington Mutual, Inc. ..................... 1,457,911 ----------- SUPER-REGIONAL BANKS - U.S. - 9.96% 25,000 Bank of America Corp. ........................ 1,595,000 45,000 FleetBoston Financial Corp. ................. 914,850 28,600 PNC Financial Services Group ................ 1,206,062 15,300 SunTrust Banks, Inc. ........................ 940,644 45,600 U.S. Bancorp ................................ 847,248 ----------- 5,503,804 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ TELEPHONE - INTEGRATED - 8.09% 97,800 AT&T Corp. .................................. $ 1,174,578 51,900 SBC Communications Inc. ..................... 1,043,190 118,400 Sprint Corp. (Fon Group) .................... 1,079,808 42,700 Verizon Communications Inc. ................. 1,171,688 ----------- 4,469,264 ----------- Total Common Stocks (cost - $69,807,917) ...................... 54,519,655 ----------- SHORT-TERM INVESTMENT -- 1.88% INVESTMENT COMPANY - 1.88% 1,038,771 Federated Investors, Trust for Short-Term U.S. Government Securities, 1.45%** (cost - $1,038,771) ....................... 1,038,771 ----------- Total Investments -- 100.57% (cost - $70,846,688) ...................... 55,558,426 Liabilities in excess of other assets -- (0.57)% ......................... (312,294) ----------- Net Assets -- 100.00% ....................... $55,246,132 ===========
- -------- * Non-income producing security. ** Money market fund; interest rate reflects SEC seven-day yield at September 30, 2002. 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, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS -- 98.21% AUTO/TRUCK PARTS & EQUIPMENT - 2.78% 30,200 BorgWarner, Inc. ............................ $ 1,499,128 ----------- BROADCASTING SERVICES/PROGRAMMING - 2.12% 48,100 4Kids Entertainment, Inc.* .................. 1,141,413 ----------- BUILDING & CONSTRUCTION PRODUCTS - 1.54% 19,200 Nortek, Inc.* ............................... 830,784 ----------- CASINO SERVICES - 1.24% 35,900 Shuffle Master, Inc.* ....................... 668,099 ----------- CHEMICALS - DIVERSIFIED - 2.95% 97,000 Olin Corp. .................................. 1,588,860 ----------- CHEMICALS - SPECIALTY - 2.40% 79,500 Millennium Chemicals Inc. ................... 785,460 35,100 NL Industries, Inc. ......................... 509,301 ----------- 1,294,761 ----------- COMMERCIAL BANKS - 8.49% 8,000 Corus Bankshares, Inc. ...................... 350,480 38,300 First BanCorp. .............................. 1,459,995 44,100 Mid-State Bancshares ........................ 723,240 29,133 Pacific Capital Bancorp ..................... 791,194 57,800 Provident Bankshares Corp. .................. 1,247,324 ----------- 4,572,233 ----------- COMPUTER SERVICES - 2.50% 50,600 FactSet Research Systems Inc. ............... 1,343,430 ----------- COMPUTERS - PERIPHERAL EQUIPMENT - 2.98% 107,500 Electronics for Imaging, Inc.* .............. 1,603,900 ----------- CONSUMER PRODUCTS - MISCELLANEOUS - 2.66% 86,200 Tupperware Corp. ............................ 1,432,644 ----------- DIALYSIS CENTERS - 2.68% 43,800 Renal Care Group, Inc.* ..................... 1,440,582 ----------- ELECTRIC - INTEGRATED - 3.83% 43,300 Great Plains Energy Inc. .................... 829,195 80,800 Unisource Energy Corp. ...................... 1,232,200 ----------- 2,061,395 ----------- ELECTRONIC COMPONENTS - SEMICONDUCTORS - 1.44% 167,500 Three-Five Systems, Inc.* ................... 777,200 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ ELECTRONIC MEASURING INSTRUMENTS - 0.20% 8,700 Molecular Devices Corp.* .................... $ 108,837 ----------- FINANCE - CONSUMER LOANS - 1.31% 7,800 Student Loan Corp. (The) .................... 705,744 ----------- FINANCE - INVESTMENT BANKING/BROKERAGE - 3.94% 30,100 Jefferies Group, Inc. ....................... 1,148,616 79,200 SWS Group, Inc. ............................. 970,200 ----------- 2,118,816 ----------- FOOD - MISCELLANEOUS/DIVERSIFIED - 3.32% 457,773 Hibernia Foods plc, ADR* .................... 1,785,315 ----------- HOME FURNISHINGS - 2.47% 38,800 Furniture Brands International, Inc.* ....... 890,460 40,000 Natuzzi S.p.A., ADR ......................... 436,800 ----------- 1,327,260 ----------- HUMAN RESOURCES - 2.08% 73,600 Heidrick & Struggles International, Inc.* ... 1,117,984 ----------- IDENTIFICATION SYSTEMS/DEVICES - 1.17% 50,900 Checkpoint Systems, Inc.* ................... 628,615 ----------- MACHINERY - GENERAL INDUSTRIAL - 2.54% 139,400 Stewart & Stevenson Services, Inc. .......... 1,365,144 ----------- MEDICAL - BIOMEDICAL/GENETICS - 1.85% 25,400 Charles River Laboratories International, Inc.* ...................... 996,950 ----------- MEDICAL - DRUGS - 1.57% 51,900 American Pharmaceutical Partners, Inc.* ..... 847,527 ----------- MEDICAL - GENERIC DRUGS - 1.86% 94,200 Perrigo Co.* ................................ 1,001,346 ----------- METAL PROCESSORS & FABRICATION - 3.04% 63,100 Mueller Industries, Inc.* ................... 1,634,290 ----------- MISCELLANEOUS INDUSTRIALS - 1.45% 91,300 KEMET Corp.* ................................ 780,615 ----------- OIL - FIELD SERVICES - 2.70% 184,500 Key Energy Services, Inc.* .................. 1,453,860 ----------- OIL COMPANIES - EXPLORATION & PRODUCTION - 1.87% 478,400 Meridian Resource Corp. (The)* .............. 1,009,424 -----------
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 Small Cap Value Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) REITS - DIVERSIFIED - 2.98% 37,700 Colonial Properties Trust ................... $ 1,363,986 14,500 Keystone Property Trust ..................... 241,280 ----------- 1,605,266 ----------- REITS - HEALTH CARE - 1.34% 64,400 Senior Housing Properties Trust ............. 722,568 ----------- REITS - OFFICE PROPERTY - 3.15% 83,500 Glenborough Realty Trust Inc. ............... 1,695,050 ----------- RETAIL - APPAREL/SHOE - 6.02% 82,900 Genesco Inc.* ............................... 1,144,020 44,700 Stage Stores, Inc.* ......................... 969,543 158,100 Wilsons The Leather Experts Inc.* ........... 1,125,672 ----------- 3,239,235 ----------- RETAIL - RESTAURANTS - 3.41% 65,700 Jack in the Box Inc.* ....................... 1,497,960 18,000 O'Charley's Inc.* ........................... 337,338 ----------- 1,835,298 ----------- SAVINGS & LOAN/THRIFTS - 3.70% 32,000 First Financial Holdings, Inc. .............. 866,240 36,500 MAF Bancorp, Inc. ........................... 1,127,850 ----------- 1,994,090 ----------- SEMICONDUCTOR EQUIPMENT - 2.87% 43,600 DuPont Photomasks, Inc.* .................... 993,208 53,800 Rudolph Technologies, Inc.* ................. 553,602 ----------- 1,546,810 ----------- TELECOMMUNICATION EQUIPMENT - 1.50% 119,400 CommScope, Inc.* ............................ 809,532 ----------- TRANSPORT - TRUCK - 4.26% 77,700 Yellow Corp.* ............................... 2,292,772 ----------- Total Common Stocks (cost - $62,985,649) ...................... 52,876,777 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ SHORT-TERM INVESTMENTS -- 6.51% INVESTMENT COMPANIES - 0.38% 11 Federated Automated Government Money Trust, 1.26%** ...................... $ 11 202,364 Federated Investors, Trust for Short-Term U.S. Government Securities, 1.45%** ....... 202,364 ----------- Total Investment Companies (cost - $202,375) ......................... 202,375 ----------- PRINCIPAL AMOUNT (000'S) - --------- U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 6.13% $ 3,300 Freddie Mac, Discount Notes, 1.60% 10/01/02 (cost - $3,300,000) .............. 3,300,000 ----------- Total Short-Term Investments (cost - $3,502,375) ....................... 3,502,375 ----------- Total Investments -- 104.72% (cost - $66,488,024) ...................... 56,379,152 Liabilities in excess of other assets -- (4.72)% ......................... (2,540,021) ----------- Net Assets -- 100.00% ....................... $53,839,131 ===========
- ------- ADR American Depositary Receipts. * Non-income producing security. ** Money market fund; interest rate reflects SEC seven-day yield at September 30, 2002. 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 Alpha Growth Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS -- 99.30% AEROSPACE/DEFENSE - 4.18% 10,700 General Dynamics Corp. ...................... $ 870,231 13,800 Lockheed Martin Corp. ....................... 892,446 ----------- 1,762,677 ----------- APPLICATIONS SOFTWARE - 2.32% 21,500 Intuit Inc.* ................................ 978,895 ----------- BEVERAGES - NON-ALCOHOLIC - 3.97% 17,600 Coca-Cola Co. (The) ......................... 844,096 35,400 Pepsi Bottling Group, Inc. (The) ............ 828,360 ----------- 1,672,456 ----------- BUILDING PRODUCTS - AIR & HEATING - 1.89% 12,500 American Standard Cos. Inc.* ................ 795,250 ----------- CASINO HOTELS - 4.45% 18,900 Harrah's Entertainment, Inc.* ............... 911,169 25,900 MGM Mirage* ................................. 966,070 ----------- 1,877,239 ----------- CHEMICALS - DIVERSIFIED - 1.63% 15,400 PPG Industries, Inc. ........................ 688,380 ----------- CHEMICALS - SPECIALTY - 1.88% 19,000 Ecolab Inc. ................................. 792,870 ----------- COATINGS/PAINT - 1.75% 31,100 Sherwin-Williams Co. (The) .................. 736,448 ----------- COMMERCIAL BANKS - CENTRAL U.S. - 1.98% 28,005 Charter One Financial, Inc. ................. 832,309 ----------- COMMERCIAL BANKS - EASTERN U.S. - 3.99% 10,700 M&T Bank Corp. .............................. 843,267 22,200 North Fork Bancorp., Inc. ................... 840,048 ----------- 1,683,315 ----------- COMMERCIAL SERVICES - FINANCE - 3.66% 44,100 Concord EFS, Inc.* .......................... 700,308 34,700 Paychex, Inc. ............................... 842,169 ----------- 1,542,477 ----------- CONSUMER PRODUCTS - MISCELLANEOUS - 1.87% 16,700 Fortune Brands, Inc. ........................ 789,743 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COSMETICS & TOILETRIES - 4.24% 19,600 Avon Products, Inc. ......................... $ 903,560 9,900 Procter & Gamble Co. (The) .................. 884,862 ----------- 1,788,422 ----------- DATA PROCESSING/MANAGEMENT - 1.76% 26,400 Fiserv, Inc.* ............................... 741,312 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 4.00% 14,600 Danaher Corp. ............................... 830,010 13,700 ITT Industries, Inc. ........................ 853,921 ----------- 1,683,931 ----------- FOOD - MISCELLANEOUS/DIVERSIFIED - 2.01% 31,700 Cadbury Schweppes plc, ADR .................. 845,439 ----------- HOME DECORATION PRODUCTS - 1.90% 26,000 Newell Rubbermaid Inc. ...................... 802,620 ----------- HOTELS & MOTELS - 1.97% 72,800 Hilton Hotels Corp. ......................... 828,464 ----------- MACHINERY - FARM - 2.30% 21,300 Deere & Co. ................................. 968,085 ----------- MEDICAL - HMO - 4.27% 10,100 UnitedHealth Group Inc. ..................... 880,922 12,500 WellPoint Health Networks Inc.* ............. 916,250 ----------- 1,797,172 ----------- MEDICAL - HOSPITALS - 2.16% 18,400 Tenet Healthcare Corp.* ..................... 910,800 ----------- MEDICAL - WHOLESALE DRUG DISTRIBUTORS - 2.33% 15,800 Cardinal Health, Inc. ....................... 982,760 ----------- MEDICAL INSTRUMENTS - 2.34% 31,200 Boston Scientific Corp.* .................... 984,672 ----------- MULTI-LINE INSURANCE - 1.87% 22,200 Cincinnati Financial Corp. .................. 789,876 ----------- MULTIMEDIA - 4.06% 11,900 E.W. Scripps Co. (The), Class A ............. 824,670 12,300 Gannett Co., Inc. ........................... 887,814 ----------- 1,712,484 -----------
The accompanying notes are an integral part of the financail statements. 25 T H E B E A R S T E A R N S F U N D S Alpha Growth Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) OIL - FIELD SERVICES - 1.79% 29,000 BJ Services Co.* ............................ $ 754,000 ----------- PAPER & RELATED PRODUCTS - 1.77% 22,300 International Paper Co. ..................... 744,597 ----------- PIPELINES - 2.09% 61,900 TransCanada PipeLines Ltd. .................. 879,599 ----------- RADIO - 2.43% 28,600 Westwood One, Inc.* ......................... 1,022,450 ----------- RETAIL - APPAREL/SHOE - 1.76% 51,800 Limited Brands .............................. 742,812 ----------- RETAIL - AUTO PARTS - 2.32% 12,400 AutoZone, Inc.* ............................. 977,864 ----------- RETAIL - BEDDING - 2.33% 30,100 Bed Bath & Beyond Inc.* ..................... 980,357 ----------- RETAIL - DISCOUNT - 1.91% 30,000 Family Dollar Stores, Inc. .................. 806,400 ----------- RETAIL - REGIONAL DEPARTMENT STORES - 1.95% 13,500 Kohl's Corp.* ............................... 820,935 ----------- RETAIL - RESTAURANTS - 2.29% 46,800 Starbucks Corp.* ............................ 965,952 ----------- SAVINGS & LOAN/THRIFTS - EASTERN U.S. - 1.84% 18,600 GreenPoint Financial Corp. .................. 776,364 ----------- SCHOOLS - 2.36% 22,900 Apollo Group, Inc., Class A* ................ 994,547 ----------- STEEL - PRODUCERS - 1.45% 16,100 Nucor Corp. ................................. 610,190 ----------- TOBACCO - 2.15% 23,600 Gallaher Group plc, ADR ..................... 903,880 ----------- TRANSPORT - SERVICES - 2.08% 31,300 Expeditors International of Washington, Inc. .......................... 874,522 ----------- Total Common Stocks (cost - $43,568,070) ...................... 41,842,565 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ SHORT-TERM INVESTMENT -- 2.90% INVESTMENT COMPANY - 2.90% 1,222,676 Federated Investors, Trust for Short-Term U.S. Government Securities, 1.45%** (cost - $1,222,676) ....................... $ 1,222,676 ----------- Total Investments -- 102.20% (cost - $44,790,746) 43,065,241 Liabilities in excess of other assets -- (2.20)% ......................... (927,835) ----------- Net Assets -- 100.00% ....................... $42,137,406 ===========
- ------- ADR American Depositary Receipts. * Non-income producing security. ** Money market fund; interest rate reflects SEC seven-day yield at September 30, 2002. The accompanting notes are an integral part of the financial statement. 26 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, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS -- 98.27% AUSTRALIA - 6.92% AIRLINES - 0.75% 236,900 Qantas Airways Ltd. ......................... $ 460,859 ----------- COMMERCIAL BANKS - NON-U.S. - 3.52% 98,700 Commonwealth Bank of Australia .............. 1,616,516 31,000 National Australia Bank Ltd. ................ 563,984 ----------- 2,180,500 ----------- DIVERSIFIED MINERALS - 2.33% 293,082 BHP Billiton Ltd. ........................... 1,441,310 ----------- METAL - DIVERSIFIED - 0.32% 321,700 M.I.M. Holdings Ltd. ........................ 197,537 ----------- Total Australia (cost - $4,700,788) ......... 4,280,206 ----------- CANADA - 1.41% COMMERCIAL BANKS - NON-U.S. - 1.41% 12,600 Bank of Montreal ............................ 293,036 17,400 Royal Bank Of Canada ........................ 578,099 ----------- Total Canada (cost - $885,265) .............. 871,135 ----------- CHINA - 1.32% ELECTRIC - GENERATION - 1.32% 1,048,000 Huaneng Power International, Inc. (cost - $689,306) ......................... 819,633 ----------- FINLAND - 0.38% PAPER & RELATED PRODUCTS - 0.38% 8,500 UPM-Kymmene Oyj (cost - $317,054) ........... 233,535 ----------- FRANCE - 8.78% AUTO/TRUCK PARTS & EQUIPMENT - 0.41% 8,800 Valeo SA .................................... 252,475 ----------- COSMETICS & TOILETRIES - 2.33% 20,000 L' Oreal SA ................................. 1,442,918 ----------- FOOD - MISCELLANEOUS/DIVERSIFIED - 0.66% 3,400 Groupe Danone ............................... 409,947 ----------- FOOD - RETAIL - 0.47% 7,200 Carrefour SA ................................ 288,900 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ FRANCE (CONTINUED) HOTELS & MOTELS - 0.37% 7,900 Accor SA .................................... $ 230,714 ----------- MONEY CENTER BANKS - 1.16% 22,100 BNP Paribas SA .............................. 720,330 ----------- OIL COMPANIES - INTEGRATED - 2.79% 13,100 Total Fina Elf SA ........................... 1,724,504 ----------- RUBBER - TIRES - 0.59% 12,900 Compagnie Generale des Etablissments Michelin, Class B ......................... 362,329 ----------- Total France (cost - $6,538,613) ............ 5,432,117 ----------- GERMANY - 3.84% AUTO - CARS/LIGHT TRUCKS - 2.04% 30,400 Bayerische Motoren Werke (BMW) AG ........... 974,938 700 Porsche AG 290,560 ----------- 1,265,498 CHEMICALS - DIVERSIFIED - 0.42% 7,400 BASF AG ..................................... 257,432 ----------- SOAP & CLEANING PREPARATIONS - 0.91% 8,900 Henkel KGaA ................................. 562,936 ----------- STEEL - PRODUCERS - 0.47% 27,200 ThyssenKrupp AG ............................. 288,979 ----------- Total Germany (cost - $2,838,082) ........... 2,374,845 ----------- HONG KONG - 4.08% DIVERSIFIED OPERATIONS - 0.30% 46,500 Swire Pacific Ltd., Class A ................. 183,625 ----------- ELECTRIC - INTEGRATED - 0.35% 52,500 CLP Holdings Ltd. ........................... 218,088 ----------- GAS - DISTRIBUTION - 1.14% 527,000 Hong Kong & China Gas Co., Ltd. ............. 706,081 ----------- OIL COMPANIES - EXPLORATION & PRODUCTION - 1.44% 638,500 CNOOC Ltd. .................................. 888,215 ----------- REAL ESTATE OPERATORS/DEVELOPERS - 0.85% 51,000 Henderson Land Development Co., Ltd. ........ 150,392 64,000 Sun Hung Kai Properties Ltd. ................ 375,814 ----------- 526,206 ----------- Total Hong Kong (cost - $2,861,745) ......... 2,522,215 -----------
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 International Equity Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) IRELAND - 2.66% COMMERCIAL BANKS - NON-U.S. - 2.66% 167,500 Bank of Ireland (cost - $1,663,556) ......... $1,645,470 ----------- ITALY - 1.56% OIL COMPANIES - INTEGRATED - 1.56% 70,600 ENI S.p.A (cost - $1,064,489) ............... 968,463 ----------- JAPAN - 19.05% AUTO - CARS/LIGHT TRUCKS - 3.97% 41,000 Honda Motor Co., Ltd. ....................... 1,660,342 107,000 Nissan Motor Co., Ltd. ...................... 794,546 ----------- 2,454,888 ----------- BUILDING PRODUCTS - DOORS & WINDOWS - 0.50% 50,000 Asahi Glass Co., Ltd. ....................... 307,212 ----------- CHEMICALS - DIVERSIFIED - 1.43% 20,600 Shin-Etsu Chemical Co., Ltd. ................ 681,929 53,000 Sumitomo Chemical Co., Ltd. ................. 203,310 ----------- 885,239 ----------- COSMETICS & TOILETRIES - 2.12% 62,000 Shiseido Co., Ltd. .......................... 739,987 26,000 Kao Corp. ................................... 573,435 ----------- 1,313,422 ----------- DIVERSIFIED MINERALS - 0.40% 60,000 Sumitomo Metal Mining Co. Ltd. .............. 247,413 ----------- ELECTRIC PRODUCTS - MISCELLANEOUS - 0.51% 33,000 Sharp Corp. ................................. 316,880 ----------- ELECTRONIC COMPONENTS - SEMICONDUCTORS - 0.57% 3,000 Rohm Co., Ltd. .............................. 352,144 ----------- ELECTRONIC MEASURING INSTRUMENTS - 0.57% 2,100 Keyence Corp. ............................... 352,587 ----------- FINANCE - INVESTMENT BANKING/BROKERAGE - 1.02% 48,000 Nomura Holdings, Inc. ...................... 630,853 ----------- OFFICE AUTOMATION & EQUIPMENT - 2.17% 41,000 Canon Inc. .................................. 1,340,398 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ JAPAN (CONTINUED) OPTICAL SUPPLIES - 0.54% 5,400 Hoya Corp. .................................. $ 334,894 ----------- PAPER & RELATED PRODUCTS - 0.40% 52,000 Oji Paper Co., Ltd .......................... 245,605 ----------- PETROCHEMICALS - 0.34% 49,000 Mitsui Chemicals, Inc. ...................... 210,506 ----------- PRINTING - COMMERCIAL - 0.31% 22,000 Toppan Printing Co., Ltd. ................... 194,266 ----------- RETAIL - APPAREL/SHOE - 0.31% 3,100 Shimamura Co., Ltd. ......................... 193,527 ----------- RETAIL - MISCELLANEOUS/DIVERSIFIED - 3.36% 53,000 Ito-Yokado Co., Ltd. ........................ 2,080,992 ----------- TRANSPORT - TRUCK - 0.53% 73,000 Nippon Express Co., Ltd. .................... 329,202 ----------- Total Japan (cost - $13,546,640) ............ 11,790,028 ----------- NETHERLANDS - 3.56% APPAREL MANUFACTURERS - 0.41% 3,000 Gucci Group NV .............................. 252,609 ----------- BREWERY - 2.21% 34,900 Heineken NV ................................. 1,369,664 ----------- FOOD - MISCELLANEOUS/DIVERSIFIED - 0.59% 6,200 Unilever NV ................................. 367,035 ----------- PUBLISHING - BOOKS - 0.35% 18,200 Reed Elsevier NV 217,464 ----------- Total Netherlands (cost - $2,452,992) ....... 2,206,772 ----------- NEW ZEALAND - 0.26% TELECOM SERVICES - 0.26% 70,500 Telecom Corporation of New Zealand, Ltd. (cost - $159,559) ......................... 162,677 ----------- NORWAY - 2.27% DIVERSIFIED MANUFACTURING OPERATIONS - 1.31% 21,500 Norsk Hydro ASA ............................. 809,427 ----------- TELECOMMUNICATION EQUIPMENT - 0.96% 61,000 Tandberg ASA* ............................... 596,764 ----------- Total Norway (cost - $1,585,636) ............ 1,406,191 -----------
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 International Equity Portfolio PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) RUSSIA - 0.70% OIL COMPANIES - INTEGRATED - 0.70% 3,200 YUKOS, ADR (cost - $471,086) ................ $ 430,699 ----------- SINGAPORE - 7.88% ELECTRONIC COMPONENTS - MISCELLANEOUS - 0.33% 34,000 Venture Corp., Ltd. ......................... 202,780 ----------- MONEY CENTER BANKS - 6.55% 213,000 DBS Group Holdings Ltd. ..................... 1,342,261 230,000 Oversea-Chinese Banking Corp. Ltd. .......... 1,242,334 220,000 United Overseas Bank Ltd. ................... 1,473,020 ----------- 4,057,615 ----------- PUBLISHING - NEWSPAPERS - 0.76% 44,000 Singapore Press Holdings Ltd. ............... 470,376 ----------- REAL ESTATE OPERATORS/DEVELOPERS - 0.24% 56,000 City Developments Ltd. ...................... 148,090 ----------- Total Singapore (cost - $6,121,390) ......... 4,878,861 ----------- SOUTH KOREA - 7.26% COMMERCIAL BANKS - NON-U.S. - 2.90% 50,700 Kookmin Bank, ADR ........................... 1,796,301 ----------- ELECTRONIC COMPONENTS - SEMICONDUCTORS - 3.79% 19,300 Samsung Electronics Co., Ltd., GDR (a) ..... 2,346,181 ----------- STEEL - PRODUCERS - 0.57% 16,300 POSCO, ADR .................................. 351,754 ----------- Total South Korea (cost - $4,905,824) ....... 4,494,236 ----------- SWEDEN - 1.47% APPLIANCES - 0.58% 23,600 Electrolux AB, Series B ..................... 356,322 ----------- RETAIL - APPAREL/SHOE - 0.89% 31,800 Hennes & Mauritz AB (H&M) ................... 552,149 ----------- Total Sweden (cost - $1,033,635) ............ 908,471 ----------- SWITZERLAND - 8.41% CHEMICALS - SPECIALTY - 1.57% 9,900 Ciba Specialty Chemicals AG ................. 652,519 5,800 Syngenta AG* ................................ 316,535 ----------- 969,054 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ SWITZERLAND (CONTINUED) FOOD - MISCELLANEOUS/DIVERSIFIED - 2.49% 7,060 Nestle SA ................................... $ 1,543,117 ----------- MEDICAL - DRUGS - 4.35% 40,680 Novartis AG ................................. 1,608,478 16,000 Roche Holding AG ............................ 1,082,270 ----------- 2,690,748 ----------- Total Switzerland (cost - $5,412,005) ....... 5,202,919 ----------- THAILAND - 0.47% COMMERCIAL BANKS - NON-U.S. - 0.47% 235,000 Bangkok Bank Public Co., Ltd.* (cost - $404,252) ......................... 287,910 ----------- UNITED KINGDOM - 15.99% AUTO/TRUCK PARTS & EQUIPMENT - 0.31% 50,600 GKN plc, Ord 50p ............................ 193,961 ----------- BEVERAGES - WINE/SPIRITS - 1.66% 83,000 Diageo plc, Ord 29p ......................... 1,029,849 ----------- CHEMICALS - DIVERSIFIED - 0.63% 28,600 BOC Group plc, Ord 25p ...................... 389,945 ----------- FOOD - MISCELLANEOUS/DIVERSIFIED - 2.23% 152,100 Unilever plc, Ord 1.4p ...................... 1,380,141 ----------- MEDICAL PRODUCTS - 0.53% 54,000 Smith & Nephew plc, Ord 12.222p ............. 326,094 ----------- METAL - DIVERSIFIED - 0.68% 26,300 Rio Tinto plc, Ord 10p ...................... 422,693 ----------- MONEY CENTER BANKS - 2.64% 112,000 HSBC Holdings plc, Ord 10p .................. 1,152,367 25,500 Royal Bank of Scotland Group plc, Ord 25p ... 481,216 ----------- 1,633,583 ----------- OIL COMPANIES - INTEGRATED - 1.29% 119,600 BP plc, Ord 17p ............................. 799,353 ----------- PUBLISHING - BOOKS - 0.66% 47,300 Reed Elsevier plc, Ord 12.5p ................ 406,508 ----------- RETAIL - APPAREL/SHOE - 1.38% 58,400 Next plc, Ord 10p ........................... 853,192 -----------
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, 2002 (UNAUDITED)
- ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) UNITED KINGDOM (CONTINUED) RETAIL - MAJOR DEPARTMENT STORES - 0.93% 114,223 Marks & Spencer Group plc, Ord 25p .......... $ 576,603 ----------- SOAP & CLEANING PREPARATIONS - 2.75% 90,100 Reckitt Benckiser plc, Ord 10.526p .......... 1,700,294 ----------- TOBACCO - 0.30% 11,600 Imperial Tobacco Group plc, Ord 10p ......... 183,334 ----------- Total United Kingdom (cost - $10,083,051) ...................... 9,895,550 ----------- Total Common Stocks (cost - $67,734,968) ...................... 60,811,933 ----------- - ------------------------------------------------------------------------ SHARES VALUE - ------------------------------------------------------------------------ SHORT TERM INVESTMENTS -- 4.95% UNITED STATES - 4.95% INVESTMENT COMPANIES - 4.95% 566,982 Federated Automated Government Money Trust, 1.26%** ...................... $ 566,982 2,494,811 Federated Investors, Trust for Short-Term U.S. Government Securities, 1.45%** ....... 2,494,811 ----------- Total Short-Term Investments (cost - $3,061,793) ....................... 3,061,793 ----------- Total Investments -- 103.22% (cost - $70,796,761) ...................... 63,873,726 Liabilities in excess of other assets -- (3.22)% ......................... (1,988,875) ----------- Net Assets -- 100.00% ....................... $61,884,851 ===========
- ------- ADR American Depositary Receipts. GDR Global Depositary Receipts. * Non-income producing security. ** Money market fund; interest rate reflects SEC seven-day yield at September 30, 2002. (a) SEC Rule 144A security. Such securities are traded only among qualified institutional buyers. 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 STATEMENTS OF ASSETS & LIABILITIES SEPTEMBER 30, 2002 (UNAUDITED)
S&P STARS INTRINSIC SMALL CAP S&P STARS OPPORTUNITIES THE INSIDERS VALUE VALUE PORTFOLIO PORTFOLIO SELECT FUND PORTFOLIO PORTFOLIO -------------- ------------- ------------ ----------- ----------- ASSETS Investments, at value (cost - $1,917,790,079, $59,922,039, $34,404,284, $70,846,688, $66,488,024, $44,790,746, $70,796,761, respectively) .................$1,381,229,094 $53,273,468 $29,887,915 $55,558,426 $56,379,152 Cash -- 248,218 -- -- -- Deposit with broker for securities sold short ................................. 8,705,558 874,358 -- -- -- Collateral received for securities loaned .... 37,060,338 391,000 -- -- 1,685,070 Dividend, interest and reclaims receivable ... 924,210 30,909 34,050 87,010 75,531 Receivable for Portfolio shares sold ......... 832,097 35,328 113,245 38,081 6,495 Receivable for investments sold .............. 9,371,018 373,930 -- 173,863 195,807 Unrealized gain on open forward foreign currency exchange contracts ........ -- -- -- -- -- Deferred organization expenses and other assets ........................... 38,787 52,197 31,046 32,005 28,931 -------------- ----------- ----------- ----------- ----------- Total assets ............................ 1,438,161,102 55,279,408 30,066,256 55,889,385 58,370,986 -------------- ----------- ----------- ----------- ----------- LIABILITIES Securities sold short, at value (proceeds received - $9,392,104, $794,257, respectively) .............................. 8,979,900 746,510 -- -- -- Payable upon return for securities loaned .... 37,060,338 391,000 -- -- 1,685,070 Load payable ................................. 3,147,100 -- -- -- -- Payable for investments purchased ............ 8,398,362 959,978 -- 328,131 1,274,087 Payable for Portfolio shares redeemed ........ 9,439,218 216,216 69,883 125,012 1,394,665 Advisory fee payable ......................... 689,841 2,061 15,918 10,987 1,745 Administration fee payable ................... 219,513 6,953 3,925 7,087 7,137 Distributions and service fees payable (Class A, B, and C Shares) ................. 2,765,095 111,475 63,650 80,858 66,330 Custodian fee payable ........................ 37,285 5,777 2,221 2,956 3,161 Accrued expenses ............................. 1,353,845 82,127 98,581 88,222 99,660 -------------- ----------- ----------- ----------- ----------- Total Liabilities ....................... 72,090,497 2,522,097 254,178 643,253 4,531,855 -------------- ----------- ----------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value (unlimited shares of beneficial interest authorized) ................................ 87,318 4,999 2,486 3,886 3,735 Paid-in capital .............................. 2,766,738,838 68,014,559 34,955,664 70,644,321 63,205,783 Undistributed net investment income/(loss) .............................. (11,997,329) (410,609) (24,892) 453,489 56,803 Accumulated net realized gain/(loss) from investments, foreign currency related transactions and securities sold short, if any ..................................... (852,609,441) (8,250,814) (604,811) (567,302) 681,682 Net unrealized depreciation on investments, foreign currency related transactions and securities sold short, if any ..................................... (536,148,781) (6,600,824) (4,516,369) (15,288,262) (10,108,872) -------------- ----------- ----------- ----------- ----------- Net assets ..............................$1,366,070,605 $52,757,311 $29,812,078 $55,246,132 $53,839,131 -------------- ----------- ----------- ----------- ----------- ALPHA INTERNATIONAL GROWTH EQUITY PORTFOLIO PORTFOLIO ----------- ------------- ASSETS Investments, at value (cost - $1,917,790,079, $59,922,039, $34,404,284, $70,846,688, $66,488,024, $44,790,746, $70,796,761, respectively) ................. $43,065,241 $63,873,726 Cash ......................................... -- -- Deposit with broker for securities sold short ................................. -- -- Collateral received for securities loaned .... -- -- Dividend, interest and reclaims receivable ... 49,122 221,530 Receivable for Portfolio shares sold ......... 214,774 49,191 Receivable for investments sold .............. -- 167,046 Unrealized gain on open forward foreign currency exchange contracts ........ -- 13,687 Deferred organization expenses and other assets ........................... 40,474 37,738 ----------- ----------- Total assets ............................ 43,369,611 64,362,918 ----------- ----------- LIABILITIES Securities sold short, at value (proceeds received - $9,392,104, $794,257, respectively) .............................. -- -- Payable upon return for securities loaned .... -- -- Load payable ................................. -- -- Payable for investments purchased ............ 967,359 1,528,293 Payable for Portfolio shares redeemed ........ 101,837 688,082 Advisory fee payable ......................... 333 54,033 Administration fee payable ................... 5,301 8,182 Distributions and service fees payable (Class A, B, and C Shares) ................. 74,429 96,336 Custodian fee payable ........................ 5,756 9,828 Accrued expenses ............................. 77,190 93,313 ----------- ----------- Total Liabilities ....................... 1,232,205 2,478,067 ----------- ----------- NET ASSETS Capital stock, $0.001 par value (unlimited shares of beneficial interest authorized) ................................ 2,697 5,371 Paid-in capital .............................. 44,369,040 119,580,777 Undistributed net investment income/(loss) .............................. (90,838) 297,468 Accumulated net realized gain/(loss) from investments, foreign currency related transactions and securities sold short, if any ..................................... (417,988) (51,112,847) Net unrealized depreciation on investments, foreign currency related transactions and securities sold short, if any ..................................... (1,725,505) (6,885,918) ----------- ----------- Net assets .............................. $42,137,406 $61,884,851 ----------- -----------
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 STATEMENTS OF ASSETS & LIABILITIES SEPTEMBER 30, 2002 (UNAUDITED)
S&P STARS INTRINSIC SMALL CAP S&P STARS OPPORTUNITIES THE INSIDERS VALUE VALUE PORTFOLIO PORTFOLIO SELECT FUND PORTFOLIO PORTFOLIO -------------- ------------- ------------ ----------- ----------- CLASS A Net assets ................................... $ 589,385,059 $22,705,562 $14,067,918 $15,881,489 $15,041,157 -------------- ----------- ----------- ----------- ----------- Shares of beneficial interest outstanding .... 37,233,834 2,144,904 1,149,535 1,113,150 1,041,714 -------------- ----------- ----------- ----------- ----------- Net asset value per share .................... $15.83 $10.59 $12.24 $14.27 $14.44 ====== ====== ====== ====== ====== Maximum offering price per share (net asset value plus sales charge of 5.50%* of the offering price) .............. $16.75 $11.21 $12.95 $15.10 $15.28 ====== ====== ====== ====== ====== CLASS B Net assets ................................... $ 365,820,433 $16,190,278 $ 9,015,527 $ 9,011,523 $ 5,467,223 -------------- ----------- ----------- ----------- ----------- Shares of beneficial interest outstanding .... 23,781,526 1,538,566 766,944 646,229 391,189 -------------- ----------- ----------- ----------- ----------- Net asset value and offering price per share** ................................ $15.38 $10.52 $11.76 $13.94 $13.98 ====== ====== ====== ====== ====== CLASS C Net assets ................................... $ 300,672,869 $12,704,484 $ 6,261,542 $10,699,416 $10,513,313 -------------- ----------- ----------- ----------- ----------- Shares of beneficial interest outstanding .... 19,556,632 1,206,576 532,685 763,026 751,317 -------------- ----------- ----------- ----------- ----------- Net asset value and offering price per share** ................................ $15.37 $10.53 $11.75 $14.02 $13.99 ====== ====== ====== ====== ====== CLASS Y Net assets ................................... $ 110,192,244 $ 1,156,987 $ 467,091 $19,653,704 $22,817,438 -------------- ----------- ----------- ----------- ----------- Shares of beneficial interest outstanding .... 6,745,850 108,845 37,182 1,363,535 1,550,677 -------------- ----------- ----------- ----------- ----------- Net asset value, offering and redemption price per share ............................ $16.33 $10.63 $12.56 $14.41 $14.71 ====== ====== ====== ====== ====== ALPHA INTERNATIONAL GROWTH EQUITY PORTFOLIO PORTFOLIO ----------- ------------- CLASS A Net assets ...................................$24,229,507 $23,522,025 ----------- ----------- Shares of beneficial interest outstanding .... 1,534,900 2,027,857 ----------- ----------- Net asset value per share .................... $15.79 $11.60 ====== ====== Maximum offering price per share (net asset value plus sales charge of 5.50%* of the offering price) .............. $16.71 $12.28 ====== ====== CLASS B Net assets ...................................$10,353,118 $ 5,467,768 ----------- ----------- Shares of beneficial interest outstanding .... 671,955 483,142 ----------- ----------- Net asset value and offering price per share** ................................ $15.41 $11.32 ====== ====== CLASS C Net assets ...................................$ 7,554,781 $16,420,410 ----------- ----------- Shares of beneficial interest outstanding .... 490,564 1,450,967 ----------- ----------- Net asset value and offering price per share** ................................ $15.40 $11.32 ====== ====== CLASS Y Net assets ................................... -- $16,474,648 ----------- ----------- Shares of beneficial interest outstanding .... -- 1,409,357 ----------- ----------- Net asset value, offering and redemption price per share ............................ -- $11.69 ====== ======
- --------- * 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. 32 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, 2002 (UNAUDITED)
S&P STARS INTRINSIC SMALL CAP S&P STARS OPPORTUNITIES THE INSIDERS VALUE VALUE PORTFOLIO PORTFOLIO SELECT FUND PORTFOLIO PORTFOLIO -------------- ------------- ------------ ----------- ----------- INVESTMENT INCOME Dividends .................................... $ 4,143,228 $ 156,921 $ 291,898 $ 721,127 $ 533,351 Interest ..................................... 132,249 5,477 30,455 14,757 22,195 Securities lending income .................... 92,802 324 -- -- 4,288 Less: Foreign taxes withheld ............. -- -- -- -- -- ------------- ------------ ------------ ------------ ------------ 4,368,279 162,722 322,353 735,884 559,834 ------------- ------------ ------------ ------------ ------------ EXPENSES Advisory Fees ................................ 7,236,719 244,224 108,564 249,715 264,061 Administration fees .......................... 1,241,185 48,845 27,490 49,943 52,812 Distribution and service fees - Class A ...... 2,106,304 69,051 43,813 49,592 49,258 Distribution and service fees - Class B ...... 2,518,885 100,127 53,333 53,307 33,912 Distribution and service fees - Class C ...... 2,110,082 78,692 39,381 65,356 67,808 Accounting fees .............................. 314,758 23,019 13,608 20,144 24,742 Legal and auditing fees ...................... 50,013 27,324 28,188 27,904 29,494 Custodian fees and expenses .................. 109,790 14,662 6,010 6,614 10,737 Insurance expenses ........................... 4,740 494 3,490 3,490 3,569 Amortization of organization expenses ........ -- -- -- -- -- Federal and state registration fees ......... 76,038 3,589 20,544 23,404 22,204 Reports and notices to shareholders .......... 178,482 5,014 2,497 3,926 4,098 Transfer agent fees and expenses ............. 1,695,800 76,140 80,543 85,775 92,685 Trustees' fees and expenses .................. 6,268 5,578 5,571 5,370 5,380 Other ........................................ 76,366 2,299 1,504 1,712 1,568 ------------- ------------ ------------ ------------ ------------ Total expenses before waivers and related reimbursements ................. 17,725,430 699,058 434,536 646,252 662,328 Less: waivers and related reimbursements ......................... (1,359,822) (125,727) (87,291) (145,066) (159,297) ------------- ------------ ------------ ------------ ------------ Total expenses after waivers and related reimbursements ................. 16,365,608 573,331 347,245 501,186 503,031 ------------- ------------ ------------ ------------ ------------ Net investment income/(loss) ................. (11,997,329) (410,609) (24,892) 234,698 56,803 ------------- ------------ ------------ ------------ ------------ NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS Net realized gain/(loss) from: Investments ................................ (348,397,503) (8,537,818) (515,311) (478,654) (3,355,606) Foreign currency related transactions ..... -- -- -- -- -- Securities sold short ...................... 5,221,158 348,590 -- -- -- Net change in unrealized appreciation/ (depreciation) on investments and foreign currency related transactions, if any (549,126,644) (11,098,076) (10,835,777) (21,941,702) (20,514,262) Securities sold short ...................... 412,204 57,848 -- -- -- ------------- ------------ ------------ ------------ ------------ Net realized and unrealized loss on investments ............................. (891,890,785) (19,229,456) (11,351,088) (22,420,356) (23,869,868) ------------- ------------ ------------ ------------ ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $(903,888,114) $(19,640,065) $(11,375,980) $(22,185,658) $(23,813,065) ============= ============ ============ ============ ============ ALPHA INTERNATIONAL GROWTH EQUITY PORTFOLIO PORTFOLIO ----------- ------------- INVESTMENT INCOME Dividends .................................... $ 194,839 $ 932,250 Interest ..................................... 52,460 134,609 Securities lending income .................... -- 297 Less: Foreign taxes withheld ............. -- (91,256) ----------- ------------ 247,299 975,900 ----------- ------------ EXPENSES Advisory Fees ................................ 136,692 377,692 Administration fees .......................... 32,071 56,654 Distribution and service fees - Class A ...... 61,411 72,190 Distribution and service fees - Class B ...... 52,163 33,982 Distribution and service fees - Class C ...... 35,311 100,144 Accounting fees .............................. 15,105 22,100 Legal and auditing fees ...................... 27,124 31,687 Custodian fees and expenses ................. 9,715 31,038 Insurance expenses ........................... 3,490 3,665 Amortization of organization expenses ........ 3,964 14,007 Federal and state registration fees ......... 22,509 25,049 Reports and notices to shareholders .......... 2,407 6,518 Transfer agent fees and expenses ............. 66,782 79,530 Trustees' fees and expenses .................. 5,578 5,516 Other ........................................ 1,504 2,255 ----------- ------------ Total expenses before waivers and related reimbursements ................. 475,826 862,027 Less: waivers and related reimbursements ........................ (137,689) (183,595) ----------- ------------ Total expenses after waivers and related reimbursements ................. 338,137 678,432 ----------- ------------ Net investment income/(loss) ................. (90,838) 297,468 ----------- ------------ NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS Net realized gain/(loss) from: Investments ............................... 3,070,152 (5,315,348) Foreign currency related transactions ...... -- (837,550) Securities sold short ...................... -- -- Net change in unrealized appreciation/ (depreciation) on investments and foreign currency related transactions, if any (10,536,096) (10,947,509) Securities sold short ...................... -- -- ----------- ------------ Net realized and unrealized loss on investments ............................. (7,465,944) (17,100,407) ----------- ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $(7,556,782) $(16,802,939) =========== ============
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 CHANGES IN NET ASSETS
S&P STARS OPPORTUNITIES S&P STARS PORTFOLIO PORTFOLIO ------------------------------------ ------------------------------------- FOR THE FOR THE FOR THE FOR THE PERIOD SIX MONTHS ENDED FISCAL YEAR ENDED SIX MONTHS ENDED OCTOBER 1, 2001* SEPTEMBER 30, 2002 MARCH 31, SEPTEMBER 30, 2002 THROUGH MARCH 31, (unaudited) 2002 (unaudited) 2002 ------------------ ----------------- ------------------- ------------------ INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) ......... $ (11,997,329) $ (35,959,530) $ (410,609) $ (239,747) Net realized gain/(loss) from investments, foreign currency related transactions and securities sold short, if any.................. (343,176,345) (344,992,054) (8,189,228) 177,671 Net change in unrealized appreciation/ (depreciation) on investments, foreign currency related transactions and securities sold short, if any ...................... (548,714,440) 73,379,674 (11,040,228) 4,439,404 -------------- -------------- ------------ ------------ Net increase/(decrease) in net assets, resulting from operations... (903,888,114) (307,571,910) (19,640,065) 4,377,328 -------------- -------------- ------------ ------------ 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 ..................... -- -- -- -- Class B Shares ..................... -- -- -- -- Class C Shares ..................... -- -- -- -- Class Y Shares ..................... -- -- -- -- -------------- -------------- ------------ ------------ -- -- -- -- -------------- -------------- ------------ ------------ SHARES OF BENEFICIAL INTEREST Net proceeds from the sale of shares . 106,691,178 902,204,412 19,101,289 72,480,849 Cost of shares repurchased ........... (433,407,203) (508,590,833) (16,736,000) (6,826,090) Shares issued in reinvestment of dividends ........................... -- -- -- -- -------------- -------------- ------------ ------------ Net increase/(decrease) in net assets derived from shares of beneficial interest transact .................. (326,716,025) 393,613,579 2,365,289 65,654,759 -------------- -------------- ------------ ------------ Total increase/(decrease) in net assets .............................. (1,230,604,139) 86,041,669 (17,274,776) 70,032,087 -------------- -------------- ------------ ------------ NET ASSETS Beginning of period .................. 2,596,674,744 2,510,633,075 70,032,087 -- -------------- -------------- ------------ ------------ End of period** ...................... $1,366,070,605 $2,596,674,744 $ 52,757,311 $ 70,032,087 ============== ============== ============ ============ THE INSIDERS SELECT FUND ------------------------------------ FOR THE FOR THE SIX MONTHS ENDED FISCAL YEAR ENDED SEPTEMBER 30, 2002 MARCH 31, (unaudited) 2002 ----------------- ----------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) ......... $ (24,892) $ (90,796) Net realized gain/(loss) from investments, foreign currency related transactions and securities sold short, if any.................. (515,311) 12,305 Net change in unrealized appreciation/ (depreciation) on investments, foreign currency related transactions and securities sold short, if any ...................... (10,835,777) 1,476,933 ------------ ------------ Net increase/(decrease) in net assets, resulting from operations... (11,375,980) 1,398,442 ------------ ------------ 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 ..................... -- (1,609,248) Class B Shares ..................... -- (957,044) Class C Shares ..................... -- (802,040) Class Y Shares ..................... -- (68,330) ------------ ------------ -- (3,436,662) ------------ ------------ SHARES OF BENEFICIAL INTEREST Net proceeds from the sale of shares . 8,207,214 13,976,474 Cost of shares repurchased ........... (5,702,091) (9,339,567) Shares issued in reinvestment of dividends ........................... -- 3,201,070 ------------ ------------ Net increase/(decrease) in net assets derived from shares of beneficial interest transact .................. 2,505,123 7,837,977 ------------ ------------ Total increase/(decrease) in net assets .............................. (8,870,857) 5,799,757 ------------ ------------ NET ASSETS Beginning of period .................. 38,682,935 32,883,178 ------------ ------------ End of period** ...................... $ 29,812,078 $ 38,682,935 ============ ============
* Commencement of operations ......... ** Includes undistributed net investment income as follows:
FOR THE FOR THE SIX MONTHS ENDED FISCAL YEAR SEPTEMBER 30, 2002 ENDED (unaudited) MARCH 31, 2002 ------------------ -------------- Intrinsic Value Portfolio $453,489 $218,791 Small Cap Value Portfolio 56,803 -- International Equity Portfolio 297,468 --
The accompanying notes are an integral part of the financial statements. 34
INTRINSIC VALUE PORTFOLIO SMALL CAP VALUE PORTFOLIO ------------------------------------- ------------------------------------- FOR THE FOR THE FOR THE FOR THE PERIOD SIX MONTHS ENDED FISCAL YEAR ENDED SIX MONTHS ENDED FISCAL YEAR ENDED SEPTEMBER 30, 2002 MARCH 31, SEPTEMBER 30, 2002 THROUGH MARCH 31, (UNAUDITED) 2002 (UNAUDITED) 2002 ------------------ ----------------- ----------------- ----------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) ......... $ 234,698 $ 212,434 $ 56,803 $ (111,729) Net realized gain/(loss) from investments, foreign currency related transactions and securities sold short, if any.................. (478,654) 6,021 (3,355,606) 5,377,979 Net change in unrealized appreciation/ (depreciation) on investments, foreign currency related transactions and securities sold short, if any ...................... (21,941,702) 1,982,246 (20,514,262) 7,192,546 ------------ ------------ ------------ ------------ Net increase/(decrease) in net assets, resulting from operations... (22,185,658) 2,200,701 (23,813,065) 12,458,796 ------------ ------------ ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income Class A Shares ..................... -- (9,294) -- -- Class B Shares ..................... -- -- -- -- Class C Shares ..................... -- -- -- -- Class Y Shares ..................... -- (29,318) -- -- ------------ ------------ ------------ ------------ -- (38,612) -- -- ------------ ------------ ------------ ------------ Net realized capital gains Class A Shares ..................... -- (451,116) -- (1,013,046) Class B Shares ..................... -- (203,076) -- (300,405) Class C Shares ..................... -- (270,475) -- (723,299) Class Y Shares ..................... -- (474,371) -- (1,443,389) ------------ ------------ ------------ ------------ -- (1,399,038) -- (3,480,139) ------------ ------------ ------------ ------------ SHARES OF BENEFICIAL INTEREST Net proceeds from the sale of shares . 20,179,518 49,387,251 8,627,952 29,204,613 Cost of shares repurchased ........... (9,302,749) (13,354,763) (12,773,618) (25,898,472) Shares issued in reinvestment of dividends ........................... -- 1,376,746 5,402 3,103,122 ------------ ------------ ------------ ------------ Net increase/(decrease) in net assets derived from shares of beneficial interest transact .................. 10,876,769 37,409,234 (4,140,264) 6,409,263 ------------ ------------ ------------ ------------ Total increase/(decrease) in net assets .............................. (11,308,889) 38,172,285 (27,953,329) 15,387,920 NET ASSETS Beginning of period .................. 66,555,021 28,382,736 81,792,460 66,404,540 ------------ ------------ ------------ ------------ End of period** ...................... $ 55,246,132 $ 66,555,021 $ 53,839,131 $ 81,792,460 ============ ============ ============ ============ ALPHA GROWTH PORTFOLIO INTERNATIONAL EQUITY PORTFOLIO ------------------------------------- ------------------------------------- FOR THE FOR THE FOR THE FOR THE PERIOD SIX MONTHS ENDED FISCAL YEAR ENDED SIX MONTHS ENDED FISCAL YEAR ENDED SEPTEMBER 30, 2002 MARCH 31, SEPTEMBER 30, 2002 MARCH 31, (UNAUDITED) 2002 (UNAUDITED) 2002 ------------------ ----------------- ----------------- ----------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) ......... $ (90,838) $ (192,256) $ 297,468 $ (198,779) Net realized gain/(loss) from investments, foreign currency related transactions and securities sold short, if any.................. 3,070,152 (1,271,500) (6,152,898) (26,169,644) Net change in unrealized appreciation/ (depreciation) on investments, foreign currency related transactions and securities sold short, if any ...................... (10,536,096) 5,113,617 (10,947,509) 11,419,276 ------------ ------------ ------------ ------------ Net increase/(decrease) in net assets, resulting from operations... (7,556,782) 3,649,861 (16,802,939) (14,949,147) ------------ ------------ ------------ ------------ 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 ..................... -- -- -- -- Class B Shares ..................... -- -- -- -- Class C Shares ..................... -- -- -- -- Class Y Shares ..................... -- -- -- -- ------------ ------------ ------------ ------------ -- -- -- -- ------------ ------------ ------------ ------------ SHARES OF BENEFICIAL INTEREST Net proceeds from the sale of shares . 20,883,031 17,614,962 9,823,349 69,154,576 Cost of shares repurchased ........... (9,972,230) (12,211,138) (12,980,075) (64,044,379) Shares issued in reinvestment of dividends ........................... -- -- -- -- Net increase/(decrease) in net assets derived from shares of beneficial interest transact .................. 10,910,801 5,403,824 (3,156,726) 5,110,197 ------------ ------------ ------------ ------------ Total increase/(decrease) in net assets .............................. 3,354,019 9,053,685 (19,959,665) (9,838,950) ------------ ------------ ------------ ------------ NET ASSETS Beginning of period .................. 38,783,387 29,729,702 81,844,516 91,683,466 ------------ ------------ ------------ ------------ End of period** ...................... $ 42,137,406 $ 38,783,387 $ 61,884,851 $ 81,844,516 ============ ============ ============ ============
35 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 NET ASSET REALIZED AND DISTRIBUTIONS ASSET VALUE, NET UNREALIZED FROM NET VALUE, BEGINNING INVESTMENT GAIN/(LOSS) ON REALIZED END OF OF PERIOD LOSS**(1) INVESTMENTS**(2) CAPITAL GAINS PERIOD ----------- ------------ ---------------- ------------- ------ S&P STARS PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) $25.11 $(0.12) $(9.16) -- $15.83 For the fiscal year ended March 31, 2002 .............. 27.85 (0.30) (2.44) -- 25.11 For the fiscal year ended March 31, 2001 .............. 36.42 (0.27) (7.82) $(0.48) 27.85 For the fiscal year ended March 31, 2000 .............. 24.39 (0.21) 12.53 (0.29) 36.42 For the fiscal year ended March 31, 1999 .............. 19.97 (0.12) 5.46 (0.92) 24.39 For the fiscal year ended March 31, 1998 .............. 16.13 (0.13) 6.69 (2.72) 19.97 CLASS B For the six months ended September 30, 2002 (unaudited) 24.46 (0.17) (8.91) -- 15.38 For the fiscal year ended March 31, 2002 .............. 27.26 (0.41) (2.39) -- 24.46 For the fiscal year ended March 31, 2001 .............. 35.83 (0.37) (7.72) (0.48) 27.26 For the fiscal year ended March 31, 2000 .............. 24.11 (0.27) 12.28 (0.29) 35.83 For the fiscal year ended March 31, 1999 .............. 19.86 (0.12) 5.29 (0.92) 24.11 For the period January 5, 1998* through March 31, 1998 17.37 (0.04) 2.53 -- 19.86 CLASS C For the six months ended September 30, 2002 (unaudited) 24.45 (0.17) (8.91) -- 15.37 For the fiscal year ended March 31, 2002 .............. 27.25 (0.42) (2.38) -- 24.45 For the fiscal year ended March 31, 2001 .............. 35.82 (0.38) (7.71) (0.48) 27.25 For the fiscal year ended March 31, 2000 .............. 24.10 (0.30) 12.31 (0.29) 35.82 For the fiscal year ended March 31, 1999 .............. 19.85 (0.22) 5.39 (0.92) 24.10 For the fiscal year ended March 31, 1998 .............. 16.06 (0.22) 6.65 (2.64) 19.85 CLASS Y For the six months ended September 30, 2002 (unaudited) 25.82 (0.06) (9.43) -- 16.33 For the fiscal year ended March 31, 2002 .............. 28.49 (0.16) (2.51) -- 25.82 For the fiscal year ended March 31, 2001 .............. 37.05 (0.14) (7.94) (0.48) 28.49 For the fiscal year ended March 31, 2000 .............. 24.68 (0.12) 12.78 (0.29) 37.05 For the fiscal year ended March 31, 1999 .............. 20.11 (0.05) 5.54 (0.92) 24.68 For the fiscal year ended March 31, 1998 .............. 16.23 (0.05) 6.74 (2.81) 20.11 - ------------- * Commencement of initial public offering. ** 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 the sales and repurchases of Portfolio shares in relation to fluctuating net asset values during the respective periods. Net realized and unrealized gain/(loss) on investments include short sale transactions, if any. (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. The accompanying notes are an integral part of the financial statements. 36 TOTAL NET ASSETS, RATIO OF INVESTMENT END OF PERIOD EXPENSES TO RETURN(3) (000's omitted) AVERAGE NET ASSETS(1) ---------- --------------- --------------------- CLASS A For the six months ended September 30, 2002 (unaudited) (36.98)% $ 589,385 1.50%(5) For the fiscal year ended March 31, 2002 .............. (9.80) 1,151,482 1.50 For the fiscal year ended March 31, 2001 .............. (22.36) 1,173,464 1.50 For the fiscal year ended March 31, 2000 .............. 50.82 673,550 1.50 For the fiscal year ended March 31, 1999 .............. 27.46 206,130 1.50 For the fiscal year ended March 31, 1998 .............. 43.53 109,591 1.50(6) CLASS B For the six months ended September 30, 2002 (unaudited) (37.12) 365,820 2.00(5) For the fiscal year ended March 31, 2002 .............. (10.27) 672,833 2.00 For the fiscal year ended March 31, 2001 .............. (22.73) 620,784 2.00 For the fiscal year ended March 31, 2000 .............. 50.13 300,693 2.00 For the fiscal year ended March 31, 1999 .............. 26.75 49,319 2.00 For the period January 5, 1998* through March 31, 1998 14.34(4) 5,800 2.00(5) CLASS C For the six months ended September 30, 2002 (unaudited) (37.14) 300,673 2.00(5) For the fiscal year ended March 31, 2002 .............. (10.28) 568,726 2.00 For the fiscal year ended March 31, 2001 .............. (22.74) 540,150 2.00 For the fiscal year ended March 31, 2000 .............. 50.15 314,794 2.00 For the fiscal year ended March 31, 1999 .............. 26.75 97,654 2.00 For the fiscal year ended March 31, 1998 .............. 42.80 63,330 2.00(6) CLASS Y For the six months ended September 30, 2002 (unaudited) (36.75) 110,192 1.00(5) For the fiscal year ended March 31, 2002 .............. (9.37) 203,633 1.00 For the fiscal year ended March 31, 2001 .............. (21.95) 176,235 1.00 For the fiscal year ended March 31, 2000 .............. 51.61 154,015 1.00 For the fiscal year ended March 31, 1999 .............. 28.02 52,483 1.00 For the fiscal year ended March 31, 1998 .............. 44.22 35,652 1.00(6) INCREASE/(DECREASE) REFLECTED IN RATIO OF EXPENSE AND NET INVESTMENT NET INVESTMENT LOSS RATIOS PORTFOLIO LOSS TO DUE TO WAIVERS AND TURNOVER AVERAGE NET ASSETS(1) RELATED REIMBURSEMENTS RATE --------------------- -------------------------- --------- CLASS A For the six months ended September 30, 2002 (unaudited) (1.03)%(5) 0.14%(5) 68.94% For the fiscal year ended March 31, 2002 .............. (1.12) 0.08 110.80 For the fiscal year ended March 31, 2001 .............. (1.04) 0.10 42.93 For the fiscal year ended March 31, 2000 .............. (1.12) 0.18 54.67 For the fiscal year ended March 31, 1999 .............. (0.73) 0.27 76.17 For the fiscal year ended March 31, 1998 .............. (0.83)(6) 0.38 172.78(7) CLASS B For the six months ended September 30, 2002 (unaudited) (1.53)(5) 0.14(5) 68.94 For the fiscal year ended March 31, 2002 .............. (1.65) 0.08 110.80 For the fiscal year ended March 31, 2001 .............. (1.58) 0.10 42.93 For the fiscal year ended March 31, 2000 .............. (1.63) 0.18 54.67 For the fiscal year ended March 31, 1999 .............. (1.23) 0.27 76.17 For the period January 5, 1998* through March 31, 1998 (1.47)(4)(5) 0.53(4)(5) 172.78(7) CLASS C For the six months ended September 30, 2002 (unaudited) (1.53)(5) 0.14(5) 68.94 For the fiscal year ended March 31, 2002 .............. (1.65) 0.08 110.80 For the fiscal year ended March 31, 2001 .............. (1.58) 0.10 42.93 For the fiscal year ended March 31, 2000 .............. (1.63) 0.18 54.67 For the fiscal year ended March 31, 1999 .............. (1.23) 0.27 76.17 For the fiscal year ended March 31, 1998 .............. (1.32)(6) 0.38 172.78(7) CLASS Y For the six months ended September 30, 2002 (unaudited) (0.53)(5) 0.14(5) 68.94 For the fiscal year ended March 31, 2002 .............. (0.65) 0.08 110.80 For the fiscal year ended March 31, 2001 .............. (0.47) 0.10 42.93 For the fiscal year ended March 31, 2000 .............. (0.56) 0.18 54.67 For the fiscal year ended March 31, 1999 .............. (0.23) 0.27 76.17 For the fiscal year ended March 31, 1998 .............. (0.32)(6) 0.38 172.78(7)
- ------------- (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 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. 37 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 NET ASSET REALIZED AND ASSET VALUE, NET UNREALIZED VALUE, TOTAL BEGINNING INVESTMENT GAIN/(LOSS) ON END OF INVESTMENT OF PERIOD LOSS**(1) INVESTMENTS**(2) PERIOD RETURN(3) --------- ---------- ---------------- ------ ---------- S&P STARS OPPORTUNITIES PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited)....... $14.27 $(0.06) $(3.62) $10.59 (25.79)% For the period October 1, 2001* through March 31, 2002 ....... 12.00 (0.04) 2.31 14.27 18.92 CLASS B For the six months ended September 30, 2002 (unaudited)....... 14.23 (0.10) (3.61) 10.52 (26.07) For the period October 1, 2001* through March 31, 2002 ....... 12.00 (0.06) 2.29 14.23 18.58 CLASS C For the six months ended September 30, 2002 (unaudited)....... 14.23 (0.10) (3.60) 10.53 (26.00) For the period October 1, 2001* through March 31, 2002 ....... 12.00 (0.06) 2.29 14.23 18.58 CLASS Y For the six months ended September 30, 2002 (unaudited)....... 14.30 (0.03) (3.64) 10.63 (25.66) For the period October 1, 2001* through March 31, 2002 ....... 12.00 (0.02) 2.32 14.30 19.17 - ------------- * 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 the sales and repurchases of Portfolio shares in relation to fluctuating net asset values during the respective periods. Net realized and unrealized gain/(loss) on investments include short sale transactions. The accompanying notes are an integral part of the financial statements. 38 RATIO OF NET ASSETS, RATIO OF NET INVESTMENT END OF PERIOD EXPENSES TO LOSS TO (000's omitted) AVERAGE NET ASSETS(1) AVERAGE NET ASSETS(1) --------------- --------------------- --------------------- CLASS A For the six months ended September 30, 2002 (unaudited)............ $22,706 1.50%(4) (1.01)%(4) For the period October 1, 2001* through March 31, 2002 ............ 30,004 1.50(4) (0.90)(4) CLASS B For the six months ended September 30, 2002 (unaudited)............ 16,190 2.00(4) (1.50)(4) For the period October 1, 2001* through March 31, 2002 ............ 21,094 2.00(4) (1.48)(4) CLASS C For the six months ended September 30, 2002 (unaudited)............ 12,704 2.00(4) (1.50)(4) For the period October 1, 2001* through March 31, 2002 ............ 16,412 2.00(4) (1.43)(4) CLASS Y For the six months ended September 30, 2002 (unaudited)............ 1,157 1.00(4) (0.42)(4) For the period October 1, 2001* through March 31, 2002 ............ 2,522 1.00(4) (0.40)(4) INCREASE/(DECREASE) REFLECTED IN EXPENSE AND NET INVESTMENT LOSS RATIOS PORTFOLIO DUE TO WAIVERS AND TURNOVER RELATED REIMBURSEMENTS RATE ---------------------- --------- CLASS A For the six months ended September 30, 2002 (unaudited)......... 0.41%(4) 96.79% For the period October 1, 2001* through March 31, 2002 ......... 0.85(4) 66.89 CLASS B For the six months ended September 30, 2002 (unaudited)......... 0.41(4) 96.79 For the period October 1, 2001* through March 31, 2002 ......... 0.85(4) 66.89 CLASS C For the six months ended September 30, 2002 (unaudited)......... 0.41(4) 96.79 For the period October 1, 2001* through March 31, 2002 ......... 0.85(4) 66.89 CLASS Y For the six months ended September 30, 2002 (unaudited)......... 0.41(4) 96.79 For the period October 1, 2001* through March 31, 2002 ......... 0.85(4) 66.89
- ------------- (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) Annualized. 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 REALIZED AND DIVIDENDS DISTRIBUTIONS VALUE, NET UNREALIZED FROM NET FROM NET BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT REALIZED OF PERIOD INCOME/(LOSS)**(1) INVESTMENTS**(2) INCOME CAPITAL GAINS --------- ------------------ ---------------- ---------- ------------- THE INSIDERS SELECT FUND CLASS A For the six months ended September 30, 2002 (unaudited) $16.87 $ 0.01 $(4.64) -- -- For the fiscal year ended March 31, 2002 .............. 17.84 (0.01) 0.73 -- $(1.69) For the fiscal year ended March 31, 2001 .............. 16.90 0.01 3.05 -- (2.12) 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) CLASS B For the six months ended September 30, 2002 (unaudited) 16.24 (0.02) (4.46) -- -- For the fiscal year ended March 31, 2002 .............. 17.32 (0.07) 0.68 -- (1.69) For the fiscal year ended March 31, 2001 .............. 16.54 (0.05) 2.95 -- (2.12) 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, 2002 (unaudited) 16.24 (0.02) (4.47) -- -- For the fiscal year ended March 31, 2002 .............. 17.32 (0.08) 0.69 -- (1.69) For the fiscal year ended March 31, 2001 .............. 16.54 (0.07) 2.97 -- (2.12) 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) CLASS Y For the six months ended September 30, 2002 (unaudited) 17.27 0.04 (4.75) -- -- For the fiscal year ended March 31, 2002 .............. 18.13 0.07 0.76 -- (1.69) For the fiscal year ended March 31, 2001 .............. 17.09 0.09 3.07 -- (2.12) 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)
- ----------- * Commencement of initial public offering. ** 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 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. 40
NET ASSET VALUE, TOTAL NET ASSETS, RATIO OF END OF INVESTMENT END OF PERIOD EXPENSES TO PERIOD RETURN(3) (000's OMITTED) AVERAGE NET ASSETS(1) ------- ---------- --------------- --------------------- THE INSIDERS SELECT FUND CLASS A For the six months ended September 30, 2002 (unaudited) $12.24 (27.45)% $14,068 1.65%(5) For the fiscal year ended March 31, 2002 .............. 16.87 4.62 19,060 1.65 For the fiscal year ended March 31, 2001 .............. 17.84 17.92 17,372 1.65 For the fiscal year ended March 31, 2000 .............. 16.90 0.40 15,187 1.65 For the fiscal year ended March 31, 1999 .............. 17.02 0.29 24,395 1.65 For the fiscal year ended March 31, 1998 .............. 17.88 46.02 21,912 1.65 CLASS B For the six months ended September 30, 2002 (unaudited) 11.76 (27.59) 9,016 2.15(5) For the fiscal year ended March 31, 2002 .............. 16.24 4.11 10,357 2.15 For the fiscal year ended March 31, 2001 .............. 17.32 17.32 7,378 2.15 For the fiscal year ended March 31, 2000 .............. 16.54 (0.13) 5,469 2.15 For the fiscal year ended March 31, 1999 .............. 16.75 (0.16) 8,426 2.15 For the period January 6, 1998* through March 31, 1998 17.69 12.53(4) 2,253 2.15(5) CLASS C For the six months ended September 30, 2002 (unaudited) 11.75 (27.65) 6,262 2.15(5) For the fiscal year ended March 31, 2002 .............. 16.24 4.11 8,566 2.15 For the fiscal year ended March 31, 2001 .............. 17.32 17.32 7,328 2.15 For the fiscal year ended March 31, 2000 .............. 16.54 (0.07) 6,908 2.15 For the fiscal year ended March 31, 1999 .............. 16.74 (0.16) 11,902 2.15 For the fiscal year ended March 31, 1998 .............. 17.68 45.17 12,297 2.15 CLASS Y For the six months ended September 30, 2002 (unaudited) 12.56 (27.27) 467 1.15(5) For the fiscal year ended March 31, 2002 .............. 17.27 5.17 701 1.15 For the fiscal year ended March 31, 2001 .............. 18.13 18.30 805 1.15 For the fiscal year ended March 31, 2000 .............. 17.09 0.72 796 1.15 For the fiscal year ended March 31, 1999 .............. 17.33 0.85 914 1.15 For the fiscal year ended March 31, 1998 .............. 18.09 46.68 1,265 1.15 INCREASE/(DECREASE) REFLECTED IN RATIO OF EXPENSE AND NET NET INVESTMENT INVESTMENT INCOME/(LOSS) RATIOS PORTFOLIO INCOME/(LOSS) TO DUE TO WAIVERS AND TURNOVER AVERAGE NET ASSETS(1) RELATED REIMBURSEMENTS RATE --------------------- ------------------------------- --------- THE INSIDERS SELECT FUND CLASS A For the six months ended September 30, 2002 (unaudited) 0.10%(5) 0.55%(5) 11.76% For the fiscal year ended March 31, 2002 .............. (0.04) 1.23 57.26 For the fiscal year ended March 31, 2001 .............. 0.08 1.14 99.36 For the fiscal year ended March 31, 2000 .............. 0.10 0.81 76.06 For the fiscal year ended March 31, 1999 .............. 0.02 0.81 99.71 For the fiscal year ended March 31, 1998 .............. 0.03 1.09 115.64 CLASS B For the six months ended September 30, 2002 (unaudited) (0.40)(5) 0.55(5) 11.76 For the fiscal year ended March 31, 2002 .............. (0.49) 1.23 57.26 For the fiscal year ended March 31, 2001 .............. (0.42) 1.14 99.36 For the fiscal year ended March 31, 2000 .............. (0.40) 0.81 76.06 For the fiscal year ended March 31, 1999 .............. 0.03 0.81 99.71 For the period January 6, 1998* through March 31, 1998 (0.95)(4)(5) 1.82(4)(5) 115.64 CLASS C For the six months ended September 30, 2002 (unaudited) (0.40)(5) 0.55(5) 11.76 For the fiscal year ended March 31, 2002 .............. (0.52) 1.23 57.26 For the fiscal year ended March 31, 2001 .............. (0.42) 1.14 99.36 For the fiscal year ended March 31, 2000 .............. (0.40) 0.81 76.06 For the fiscal year ended March 31, 1999 .............. 0.02 0.81 99.71 For the fiscal year ended March 31, 1998 .............. (0.46) 1.10 115.64 CLASS Y For the six months ended September 30, 2002 (unaudited) 0.60(5) 0.55(5) 11.76 For the fiscal year ended March 31, 2002 .............. 0.39 1.23 57.26 For the fiscal year ended March 31, 2001 .............. 0.58 1.14 99.36 For the fiscal year ended March 31, 2000 .............. 0.60 0.81 76.06 For the fiscal year ended March 31, 1999 .............. 0.02 0.81 99.71 For the fiscal year ended March 31, 1998 .............. 0.55 1.07 115.64
- ----------- (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 initial public offerings. (5) Annualized. 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 REALIZED AND DIVIDENDS DISTRIBUTIONS VALUE, NET UNREALIZED FROM NET FROM NET BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT REALIZED OF PERIOD INCOME/(LOSS)**(1) INVESTMENTS**(2) INCOME CAPITAL GAINS --------- ------------------ ---------------- ---------- ------------- INTRINSIC VALUE PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) $20.04 $0.05 $(5.82) -- -- For the fiscal year ended March 31, 2002.............. 19.63 0.04 0.87 $(0.01) $(0.49) For the fiscal year ended March 31, 2001.............. 16.71 0.11 3.85 (0.13) (0.91) 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) CLASS B For the six months ended September 30, 2002 (unaudited) 19.65 0.02 (5.73) -- -- For the fiscal year ended March 31, 2002.............. 19.35 (0.02) 0.81 -- (0.49) For the fiscal year ended March 31, 2001.............. 16.49 0.03 3.78 (0.04) (0.91) 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, 2002 (unaudited) 19.74 0.01 (5.73) -- -- For the fiscal year ended March 31, 2002.............. 19.43 (0.01) 0.81 -- (0.49) For the fiscal year ended March 31, 2001.............. 16.55 0.02 3.80 (0.03) (0.91) 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) CLASS Y For the six months ended September 30, 2002 (unaudited) 20.17 0.09 (5.85) -- -- For the fiscal year ended March 31, 2002.............. 19.67 0.11 0.91 (0.03) (0.49) For the fiscal year ended March 31, 2001.............. 16.73 0.26 3.80 (0.21) (0.91) 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)
- ----------- * 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 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. 42
NET ASSET VALUE, TOTAL NET ASSETS, RATIO OF END OF INVESTMENT END OF PERIOD EXPENSES TO PERIOD RETURN(3) (000's OMITTED) AVERAGE NET ASSETS(1) ------- ---------- --------------- --------------------- INTRINSIC VALUE PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) $14.27 (28.79)% $15,881 1.50%(5) For the fiscal year ended March 31, 2002.............. 20.04 4.72 20,953 1.50 For the fiscal year ended March 31, 2001.............. 19.63 23.79 11,983 1.50 For the fiscal year ended March 31, 2000.............. 16.71 (4.91) 7,950 1.50 For the fiscal year ended March 31, 1999.............. 19.74 3.68 9,677 1.50 For the fiscal year ended March 31, 1998.............. 20.83 44.59 8,358 1.50 CLASS B For the six months ended September 30, 2002 (unaudited) 13.94 (29.06) 9,012 2.00(5) For the fiscal year ended March 31, 2002.............. 19.65 4.17 9,733 2.00 For the fiscal year ended March 31, 2001.............. 19.35 23.19 3,687 2.00 For the fiscal year ended March 31, 2000.............. 16.49 (5.41) 1,379 2.00 For the fiscal year ended March 31, 1999.............. 19.51 3.21 1,911 2.00 For the period January 28, 1998* through March 31, 1998 20.66 13.70(4) 446 2.00(5) CLASS C For the six months ended September 30, 2002 (unaudited) 14.02 (28.98) 10,699 2.00(5) For the fiscal year ended March 31, 2002.............. 19.74 4.20 13,528 2.00 For the fiscal year ended March 31, 2001.............. 19.43 23.16 5,675 2.00 For the fiscal year ended March 31, 2000.............. 16.55 (5.39) 3,359 2.00 For the fiscal year ended March 31, 1999.............. 19.57 3.22 5,250 2.00 For the fiscal year ended March 31, 1998.............. 20.66 43.94 4,987 2.00 CLASS Y For the six months ended September 30, 2002 (unaudited) 14.41 (28.56) 19,654 1.00(5) For the fiscal year ended March 31, 2002.............. 20.17 5.28 22,341 1.00 For the fiscal year ended March 31, 2001.............. 19.67 24.38 7,038 1.00 For the fiscal year ended March 31, 2000.............. 16.73 (4.51) 3,438 1.00 For the fiscal year ended March 31, 1999.............. 19.78 4.29 4,741 1.00 For the fiscal year ended March 31, 1998.............. 20.84 45.27 7,263 1.00 INCREASE/(DECREASE) REFLECTED IN RATIO OF EXPENSE AND NET NET INVESTMENT INVESTMENT INCOME/(LOSS) RATIOS PORTFOLIO INCOME/(LOSS) TO DUE TO WAIVERS AND TURNOVER AVERAGE NET ASSETS(1) RELATED REIMBURSEMENTS RATE --------------------- ------------------------------- --------- INTRINSIC VALUE PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) 0.58%(5) 0.44%(5) 20.58% For the fiscal year ended March 31, 2002.............. 0.38 0.75 20.60 For the fiscal year ended March 31, 2001.............. 0.72 1.50 60.46 For the fiscal year ended March 31, 2000.............. 0.56 1.78 55.66 For the fiscal year ended March 31, 1999.............. 0.54 1.46 38.27 For the fiscal year ended March 31, 1998.............. 0.32 1.73 61.75 CLASS B For the six months ended September 30, 2002 (unaudited) 0.36(5) 0.44(5) 20.58 For the fiscal year ended March 31, 2002.............. (0.07) 0.75 20.60 For the fiscal year ended March 31, 2001.............. 0.15 1.50 60.46 For the fiscal year ended March 31, 2000.............. 0.03 1.75 55.66 For the fiscal year ended March 31, 1999.............. 0.08 1.46 38.27 For the period January 28, 1998* through March 31, 1998 (0.73)(4)(5) 1.05(4)(5) 61.75 CLASS C For the six months ended September 30, 2002 (unaudited) 0.17(5) 0.44(5) 20.58 For the fiscal year ended March 31, 2002.............. 0.02 0.75 20.60 For the fiscal year ended March 31, 2001.............. 0.11 1.50 60.46 For the fiscal year ended March 31, 2000.............. 0.03 1.75 55.66 For the fiscal year ended March 31, 1999.............. 0.08 1.46 38.27 For the fiscal year ended March 31, 1998.............. (0.19) 1.73 61.75 CLASS Y For the six months ended September 30, 2002 (unaudited) 1.28(5) 0.44(5) 20.58 For the fiscal year ended March 31, 2002.............. 0.92 0.75 20.60 For the fiscal year ended March 31, 2001.............. 1.65 1.50 60.46 For the fiscal year ended March 31, 2000.............. 0.98 1.77 55.66 For the fiscal year ended March 31, 1999.............. 1.08 1.46 38.27 For the fiscal year ended March 31, 1998.............. 0.83 1.76 61.75
- ----------- (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 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 NET ASSET NET REALIZED AND DISTRIBUTIONS ASSET VALUE, INVESTMENT UNREALIZED FROM NET VALUE, BEGINNING INCOME/ GAIN/(LOSS) ON REALIZED END OF OF PERIOD (LOSS)**(1) INVESTMENTS**(2) CAPITAL GAINS PERIOD --------- ----------- ---------------- ------------- ------ SMALL CAP VALUE PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) .. $20.39 $0.01 $(5.96) -- $14.44 For the fiscal year ended March 31, 2002 ................. 18.13 (0.04) 3.30 $(1.00) 20.39 For the fiscal year ended March 31, 2001 ................. 23.10 (0.14) (2.61) (2.22) 18.13 For the fiscal year ended March 31, 2000 ................. 17.93 (0.15) 6.69 (1.37) 23.10 For the fiscal year ended March 31, 1999 ................. 23.65 (0.13) (4.65) (0.94) 17.93 For the fiscal year ended March 31, 1998 ................. 17.48 (0.14) 8.06 (1.75) 23.65 CLASS B For the six months ended September 30, 2002 (unaudited) .. 19.82 (0.03) (5.81) -- 13.98 For the fiscal year ended March 31, 2002 ................. 17.76 (0.12) 3.18 (1.00) 19.82 For the fiscal year ended March 31, 2001 ................. 22.80 (0.20) (2.62) (2.22) 17.76 For the fiscal year ended March 31, 2000 ................. 17.71 (0.24) 6.60 (1.27) 22.80 For the fiscal year ended March 31, 1999 ................. 23.48 (0.16) (4.67) (0.94) 17.71 For the period January 21, 1998* through March 31, 1998 .. 19.95 -- 3.53 -- 23.48 CLASS C For the six months ended September 30, 2002 (unaudited) .. 19.83 (0.03) (5.81) -- 13.99 For the fiscal year ended March 31, 2002 ................. 17.77 (0.12) 3.18 (1.00) 19.83 For the fiscal year ended March 31, 2001 ................. 22.80 (0.22) (2.59) (2.22) 17.77 For the fiscal year ended March 31, 2000 ................. 17.70 (0.26) 6.62 (1.26) 22.80 For the fiscal year ended March 31, 1999 ................. 23.48 (0.26) (4.58) (0.94) 17.70 For the fiscal year ended March 31, 1998 ................. 17.38 (0.24) 8.00 (1.66) 23.48 CLASS Y For the six months ended September 30, 2002 (unaudited) .. 20.73 0.06 (6.08) -- 14.71 For the fiscal year ended March 31, 2002 ................. 18.34 0.05 3.34 (1.00) 20.73 For the fiscal year ended March 31, 2001 ................. 23.23 (0.03) (2.64) (2.22) 18.34 For the fiscal year ended March 31, 2000 ................. 18.03 (0.05) 6.72 (1.47) 23.23 For the fiscal year ended March 31, 1999 ................. 23.65 (0.02) (4.66) (0.94) 18.03 For the fiscal year ended March 31, 1998 ................. 17.47 (0.04) 8.06 (1.84) 23.65
- ---------- * 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 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) REFLECTED IN EXPENSE AND RATIO OF NET INVESTMENT NET INCOME/(LOSS) RATIO OF INVESTMENT RATIOS DUE TO TOTAL NET ASSETS, EXPENSES TO INCOME/(LOSS) WAIVERS AND PORTFOLIO INVESTMENT END OF PERIOD AVERAGE TO AVERAGE RELATED TURNOVER RETURN(3) (000's OMITTED) NET ASSETS(1) NET ASSETS(1) REIMBURSEMENTS RATE ---------- --------------- ------------- ------------- -------------- --------- SMALL CAP VALUE PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) ............................. (29.18)% $15,041 1.50%(5) 0.10%(5) 0.45%(5) 49.40% For the fiscal year ended March 31, 2002 ... 18.51 23,902 1.50 (0.24) 0.53 75.76 For the fiscal year ended March 31, 2001 ... (11.64) 17,194 1.50 (0.63) 1.02 65.32 For the fiscal year ended March 31, 2000 ... 38.21 24,086 1.50 (0.75) 0.65 65.85 For the fiscal year ended March 31, 1999 ... (20.26) 18,520 1.50 (0.60) 0.65 84.12 For the fiscal year ended March 31, 1998 ... 46.86 25,111 1.50 (0.71) 0.76 90.39 CLASS B For the six months ended September 30, 2002 (unaudited) ............................. (29.47) 5,467 2.00(5) (0.40)(5) 0.45(5) 49.40 For the fiscal year ended March 31, 2002 ... 17.76 6,944 2.00 (0.74) 0.53 75.76 For the fiscal year ended March 31, 2001 ... (12.12) 4,301 2.00 (1.14) 1.02 65.32 For the fiscal year ended March 31, 2000 ... 37.53 4,030 2.00 (1.24) 0.65 65.85 For the fiscal year ended March 31, 1999 ... (20.63) 2,716 2.00 (1.10) 0.65 84.12 For the period January 21, 1998* through March 31, 1998 .......................... 17.69(4) 901 2.00(5) (1.49)(4)(5) 1.31(4)(5) 90.39 CLASS C For the six months ended September 30, 2002 (unaudited) ............................. (29.45) 10,513 2.00(5) (0.40)(5) 0.45(5) 49.40 For the fiscal year ended March 31, 2002 ... 17.75 16,112 2.00 (0.74) 0.53 75.76 For the fiscal year ended March 31, 2001 ... (12.07) 11,460 2.00 (1.14) 1.02 65.32 For the fiscal year ended March 31, 2000 ... 37.54 13,399 2.00 (1.24) 0.65 65.85 For the fiscal year ended March 31, 1999 ... (20.67) 11,112 2.00 (1.10) 0.65 84.12 For the fiscal year ended March 31, 1998 ... 46.10 18,082 2.00 (1.21) 0.76 90.39 CLASS Y For the six months ended September 30, 2002 (unaudited) ............................. (29.04) 22,817 1.00(5) 0.60(5) 0.45(5) 49.40 For the fiscal year ended March 31, 2002 ... 19.02 34,834 1.00 0.26 0.53 75.76 For the fiscal year ended March 31, 2001 ... (11.22) 33,449 1.00 (0.13) 1.02 65.32 For the fiscal year ended March 31, 2000 ... 38.86 31,091 1.00 (0.24) 0.65 65.85 For the fiscal year ended March 31, 1999 ... (19.84) 24,087 1.00 (0.10) 0.65 84.12 For the fiscal year ended March 31, 1998 ... 47.54 31,141 1.00 (0.21) 0.77 90.39
- ---------- (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 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 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 NET ASSET REALIZED AND DISTRIBUTIONS ASSET VALUE, NET UNREALIZED FROM NET VALUE, BEGINNING INVESTMENT GAIN/(LOSS) ON REALIZED END OF OF PERIOD LOSS**(1) INVESTMENTS**(2) CAPITAL GAINS PERIOD --------- ---------- ---------------- ------------- ------ ALPHA GROWTH PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) .. $18.84 $(0.02) $(3.03) -- $15.79 For the fiscal year ended March 31, 2002 ................. 16.75 (0.03) 2.12 -- 18.84 For the fiscal year ended March 31, 2001 ................. 21.21 (0.09) (4.37) -- 16.75 For the fiscal year ended March 31, 2000 ................. 17.32 (0.07) 3.96 -- 21.21 For the fiscal year ended March 31, 1999 ................. 13.40 (0.07) 4.01 $(0.02) 17.32 For the period December 29, 1997* through March 31, 1998 . 12.00 (0.01) 1.41 -- 13.40 CLASS B For the six months ended September 30, 2002 (unaudited) .. 18.41 (0.05) (2.95) -- 15.41 For the fiscal year ended March 31, 2002 ................. 16.46 (0.06) 2.01 -- 18.41 For the fiscal year ended March 31, 2001 ................. 20.93 (0.17) (4.30) -- 16.46 For the fiscal year ended March 31, 2000 ................. 17.18 (0.16) 3.91 -- 20.93 For the fiscal year ended March 31, 1999 ................. 13.38 (0.13) 3.95 (0.02) 17.18 For the period December 29, 1997* through March 31, 1998 . 12.00 (0.01) 1.39 -- 13.38 CLASS C For the six months ended September 30, 2002 (unaudited) .. 18.42 (0.05) (2.97) -- 15.40 For the fiscal year ended March 31, 2002 ................. 16.46 (0.06) 2.02 -- 18.42 For the fiscal year ended March 31, 2001 ................. 20.94 (0.17) (4.31) -- 16.46 For the fiscal year ended March 31, 2000 ................. 17.19 (0.18) 3.93 -- 20.94 For the fiscal year ended March 31, 1999 ................. 13.38 (0.13) 3.96 (0.02) 17.19 For the period December 29, 1997* through March 31, 1998 . 12.00 (0.01) 1.39 -- 13.38
- ---------- * 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 the sales and repurchases of Portfolio shares in relation to fluctuating net asset values during the respective periods. The accompanying notes are an integral part of the financial statements. 46
(INCREASE)/ (DECREASE) REFLECTED IN RATIO OF EXPENSE AND NET NET INVESTMENT RATIO OF INVESTMENT LOSS RATIOS DUE TOTAL NET ASSETS, EXPENSES TO (LOSS) TO TO WAIVERS AND PORTFOLIO INVESTMENT END OF PERIOD AVERAGE AVERAGE RELATED TURNOVER RETURN(3) (000's OMITTED) NET ASSETS(1) NET ASSETS(1) REIMBURSEMENTS RATE ---------- --------------- ------------- ------------- --------------- --------- ALPHA GROWTH PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) ............................. (16.19)% $24,230 1.40%(4) (0.24%)(4) 0.65%(4) 104.51% For the fiscal year ended March 31, 2002 ... 12.48 23,176 1.40 (0.42) 1.06 82.40 For the fiscal year ended March 31, 2001 ... (21.03) 17,316 1.40 (0.46) 0.97 81.37 For the fiscal year ended March 31, 2000 ... 22.46 22,580 1.40 (0.63) 1.33 56.26 For the fiscal year ended March 31, 1999 ... 29.47 6,542 1.40 (0.57) 2.89 84.49 For the period December 29, 1997* through March 31, 1998 .......................... 11.67 3,201 1.40(4) (0.30)(4) 5.01(4) 28.91 CLASS B For the six months ended September 30, 2002 (unaudited) ............................. (16.30) 10,353 1.90(4) (0.71)(4) 0.66(4) 104.51 For the fiscal year ended March 31, 2002 ... 11.85 9,061 1.90 (0.92) 1.06 82.40 For the fiscal year ended March 31, 2001 ... (21.36) 7,441 1.90 (0.96) 0.97 81.37 For the fiscal year ended March 31, 2000 ... 21.83 9,124 1.90 (1.11) 1.33 56.26 For the fiscal year ended March 31, 1999 ... 28.61 4,460 1.90 (1.07) 2.89 84.49 For the period December 29, 1997* through March 31, 1998 .......................... 11.50 2,399 1.90(4) (0.78)(4) 5.27(4) 28.91 CLASS C For the six months ended September 30, 2002 (unaudited) ............................. (16.40) 7,555 1.90(4) (0.68)(4) 0.66(4) 104.51 For the fiscal year ended March 31, 2002 ... 11.91 6,546 1.90 (0.92) 1.06 82.40 For the fiscal year ended March 31, 2001 ... (21.40) 4,973 1.90 (0.96) 0.97 81.37 For the fiscal year ended March 31, 2000 ... 21.81 6,398 1.90 (1.09) 1.33 56.26 For the fiscal year ended March 31, 1999 ... 28.69 3,304 1.90 (1.07) 2.89 84.49 For the period December 29, 1997* through March 31, 1998 .......................... 11.50 1,687 1.90(4) (0.62)(4) 5.52(4) 28.91
- ---------- (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) Annualized. 47 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 REALIZED AND DIVIDENDS DISTRIBUTIONS VALUE, NET UNREALIZED FROM NET FROM NET BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT REALIZED OF PERIOD INCOME/(LOSS)***(1) INVESTMENTS***(2) INCOME CAPITAL GAINS --------- ------------------- ----------------- ---------- ------------- INTERNATIONAL EQUITY PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) $14.64 $0.03 $(3.07) -- -- For the fiscal year ended March 31, 2002 ............... 17.55 (0.04) (2.87) -- -- For the fiscal year ended March 31, 2001 ............... 27.84 (0.06) (9.92) -- $(0.31) 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, 2002 (unaudited) 14.32 (0.01) (2.99) -- -- For the fiscal year ended March 31, 2002 ............... 17.26 (0.12) (2.82) -- -- For the fiscal year ended March 31, 2001 ............... 27.52 (0.18) (9.77) -- (0.31) 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, 2002 (unaudited) 14.32 (0.01) (2.99) -- -- For the fiscal year ended March 31, 2002 ............... 17.25 (0.10) (2.83) -- -- For the fiscal year ended March 31, 2001 ............... 27.52 (0.15) (9.81) -- (0.31) 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 -- -- CLASS Y For the six months ended September 30, 2002 (unaudited) 14.69 0.06 (3.06) -- -- For the period July 5, 2001** through March 31, 2002 ... 16.75 0.06 (2.12) -- -- - ------------- * Commencement of operations. ** Commencement of initial public offering. *** 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 reimbursements. (2) The amounts shown for a share outstanding throughout the respective periods are not in accord with the changes in the aggregate gains and losses on investments during the respective periods because of the timing of the sales and repurchases of Portfolio shares in relation to fluctuating net asset values during the respective periods. The accompanying notes are an integral part of the financial statements. 48 NET ASSET VALUE, TOTAL NET ASSETS, RATIO OF END OF INVESTMENT END OF PERIOD EXPENSES TO PERIOD RETURN(3) (000'S OMITTED) AVERAGE NET ASSETS(1) ------ --------- --------------- --------------------- INTERNATIONAL EQUITY PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) $11.60 (20.77)% $23,522 1.75%(5) For the fiscal year ended March 31, 2002 ............... 14.64 (16.58) 31,455 1.75 For the fiscal year ended March 31, 2001 ............... 17.55 (35.99) 54,096 1.75 For the fiscal year ended March 31, 2000 ............... 27.84 85.67 61,508 1.75 For the fiscal year ended March 31, 1999 ............... 15.14 9.97 8,299 1.75 For the period December 29, 1997* through March 31, 1998 13.77 14.75 3,765 1.75(5) CLASS B For the six months ended September 30, 2002 (unaudited) 11.32 (20.95) 5,468 2.25(5) For the fiscal year ended March 31, 2002 ............... 14.32 (17.03) 7,751 2.25 For the fiscal year ended March 31, 2001 ............... 17.26 (36.30) 11,754 2.25 For the fiscal year ended March 31, 2000 ............... 27.52 84.66 15,656 2.25 For the fiscal year ended March 31, 1999 ............... 15.05 9.48 3,156 2.25 For the period December 29, 1997* through March 31, 1998 13.75 14.58 2,137 2.25(5) CLASS C For the six months ended September 30, 2002 (unaudited) 11.32 (20.95) 16,420 2.25(5) For the fiscal year ended March 31, 2002 ............... 14.32 (16.99) 21,025 2.25 For the fiscal year ended March 31, 2001 ............... 17.25 (36.34) 25,833 2.25 For the fiscal year ended March 31, 2000 ............... 27.52 84.65 18,238 2.25 For the fiscal year ended March 31, 1999 ............... 15.05 9.48 2,926 2.25 For the period December 29, 1997* through March 31, 1998 13.75 14.58 2,173 2.25(5) CLASS Y For the six months ended September 30, 2002 (unaudited) 11.69 (20.42) 16,475 1.25(5) For the period July 5, 2001** through March 31, 2002 ... 14.69 (12.30)(4) 21,614 1.25(5) INCREASE/(DECREASE) REFLECTED IN RATIO OF EXPENSE AND NET NET INVESTMENT INVESTMENT INCOME/(LOSS) RATIOS PORTFOLIO INCOME/(LOSS) TO DUE TO WAIVERS AND TURNOVER AVERAGE NET ASSETS(1) RELATED REIMBURSEMENTS RATE --------------------- ------------------------------- --------- INTERNATIONAL EQUITY PORTFOLIO CLASS A For the six months ended September 30, 2002 (unaudited) 0.39%(5) 0.49%(5) 64.45% For the fiscal year ended March 31, 2002 ............... (0.09) 0.57 168.32 For the fiscal year ended March 31, 2001 ............... (0.31) 0.53 168.04 For the fiscal year ended March 31, 2000 ............... (0.77) 1.12 96.36 For the fiscal year ended March 31, 1999 ............... 0.05 2.38 114.68 For the period December 29, 1997* through March 31, 1998 0.53(5) 4.06(5) 3.26 CLASS B For the six months ended September 30, 2002 (unaudited) (0.11)(5) 0.49(5) 64.45 For the fiscal year ended March 31, 2002 ............... (0.59) 0.57 168.32 For the fiscal year ended March 31, 2001 ............... (0.81) 0.53 168.04 For the fiscal year ended March 31, 2000 ............... (1.27) 1.12 96.36 For the fiscal year ended March 31, 1999 ............... (0.45) 2.38 114.68 For the period December 29, 1997* through March 31, 1998 (0.06)(5) 4.04(5) 3.26 CLASS C For the six months ended September 30, 2002 (unaudited) (0.11)(5) 0.49(5) 64.45 For the fiscal year ended March 31, 2002 ............... (0.59) 0.57 168.32 For the fiscal year ended March 31, 2001 ............... (0.81) 0.53 168.04 For the fiscal year ended March 31, 2000 ............... (1.27) 1.12 96.36 For the fiscal year ended March 31, 1999 ............... (0.45) 2.38 114.68 For the period December 29, 1997* through March 31, 1998 (0.06)(5) 4.04(5) 3.26 CLASS Y For the six months ended September 30, 2002 (unaudited) 0.89(5) 0.49(5) 64.45 For the period July 5, 2001** through March 31, 2002 ... 0.55(4)(5) 0.51(4)(5) 168.32
- ------------- (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 initial public offerings. (5) Annualized. 49 T H E B E A R S T E A R N S F U N D S S&P STARS PORTFOLIO S&P STARS OPPORTUNITIES PORTFOLIO THE INSIDERS SELECT FUND INTRINSIC VALUE PORTFOLIO SMALL CAP VALUE PORTFOLIO ALPHA GROWTH 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 "SEC") under the Investment Company Act of 1940, as amended (the "Investment Company Act"), as an open-end management investment company. The Fund currently consists of ten separate portfolios: six diversified portfolios, Intrinsic Value Portfolio ("Intrinsic Value") (formerly, Large Cap Value Portfolio), Small Cap Value Portfolio ("Small Cap"), 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"), Alpha Growth Portfolio ("Alpha Growth") (formerly, Focus List Portfolio) and S&P STARS Opportunities Portfolio ("S&P STARS Opportunities") (each a "Portfolio" and collectively, the "Portfolios"). 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 Alpha Growth have not commenced its initial public offering. 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. At the quarterly Board of Trustees meeting held on May 6, 2002, the Trustees of the Balanced Portfolio approved the liquidation and termination of the portfolio pursuant to a Plan of Liquidation and Termination. As a result, the portfolio was liquidated and substantially all of its assets were distributed to shareholders on July 1, 2002. MANAGEMENT ESTIMATES--The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that may affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. PORTFOLIO VALUATION--Each Portfolio calculates the net asset value of and completes orders to purchase or repurchase its shares of beneficial interest as of the close of regular trading on the New York Stock Exchange (the "Exchange") (generally 4:00 p.m. Eastern time) on each day that the Exchange is open for trading. Equity securities, including written covered call options, 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 ("Pricing Services") approved by the Fund's 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. Other assets and securities for which no quotations are readily available or which are restricted as to sale (or resale) are valued by such methods as the Fund's Board of Trustees deems in good faith to reflect the fair value. Restricted securities, as well as securities or other assets for which market quotations are not readily available, or are not valued by a Pricing Service approved by the Fund's Board of Trustees, are valued at fair value as determined in good faith by Bear Stearns Asset Management Inc.'s 50 ("BSAM" or the "Adviser") Valuation Committee, pursuant to procedures approved by the Fund's Board of Trustees. The Board reviews the methods of valuation quarterly. Short-term investments (those acquired with remaining maturities of 60 days or less) are valued at cost, plus or minus any amortized discount or premium, which approximates market value. Expenses and fees, including the respective investment advisory, administration and distribution fees, are accrued daily and taken into account for the purpose of determining the net asset value of each Portfolio's shares. Because of the differences in operating expenses incurred by each class, the per share net asset value of each class may 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. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Each Portfolio's net investment income (other than distribution and service 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. SHORT SELLING--When the Portfolio makes a short sale, an amount equal to the proceeds received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the short sale. Until the Portfolio replaces the borrowed security, the Portfolio will maintain a segregated account with cash, U.S. government securities or other liquid securities sufficient to cover its short position on a daily basis. Short sales represent obligations of the Portfolio to make future delivery of specific securities and correspondingly create an obligation to purchase the security at market prices prevailing at the later delivery date (or to deliver the security if already owned by the Portfolio). Upon the termination of a short sale, the Portfolio will recognize a gain, limited to the price at which the Portfolio sold the security short, if the market price is less than the proceeds originally received. The Portfolio will recognize a loss, unlimited in magnitude, if the market price at termination is greater than the proceeds originally received. As a result, short sales create the risk that the Portfolio's ultimate obligation to satisfy the delivery requirements may exceed the amount of the proceeds initially received or the liability recorded in the financial statements. S&P STARS and S&P STARS Opportunities are the only Portfolios that have engaged in short sales for the six months ended September 30, 2002. S&P STARS has segregated sufficient liquid assets in a separate account as collateral for open short sales. Securities sold short at September 30, 2002 for S&P STARS were as follows:
MARKET UNREALIZED SECURITY PROCEEDS VALUE GAIN/(LOSS) - -------- -------- --------- ----------- Cognex Corp.............................................................. $4,620,149 $3,338,400 $1,281,749 El Paso Corp............................................................. 2,732,707 3,721,500 (988,793) Teradyne, Inc............................................................ 2,039,248 1,920,000 119,248 ---------- ---------- ---------- Total.................................................................... $9,392,104 $8,979,900 $ 412,204 ========== ========== ==========
S&P STARS Opportunities has segregated sufficient liquid assets in a separate account as collateral for open short sales. Securities sold short at September 30, 2002 for S&P STARS Opportunities were as follows:
MARKET UNREALIZED SECURITY PROCEEDS VALUE GAIN - -------- ---------- --------- ----------- Cox Communications, Inc., Class A............................................. $338,261 $319,670 $18,591 Robert Half International Inc................................................. 285,151 269,790 15,361 Steelcase Inc., Class A....................................................... 170,845 157,050 13,795 Total......................................................................... $794,257 $746,510 $47,747
51 SECURITIES LENDING--Loans of securities are required to be initially secured by collateral at least equal to 102% of the market value of the securities on loan and maintained at a level at least equal to the value of loaned securities. 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, 2002, were as follows:
MARKET VALUE OF MARKET VALUE PORTFOLIO SECURITIES ON LOAN OF COLLATERAL+ - --------- ------------------- -------------- S&P STARS................................................................. $36,225,430 $37,060,338 Small Cap................................................................. 1,591,758 1,685,070 S&P STARS Opportunities................................................... 331,500 391,000
+ Cash collateral received is invested in various money market funds. In addition, International Equity engaged in security lending transactions during the six months ended September 30, 2002. All such income is included in the Statements of Operations. No other Portfolios had engaged in security lending transactions during the six months ended September 30, 2002. Pursuant to an exemptive order received from the Securities and Exchange Commission (the "Order"), Custodial Trust Company ("CTC"), a wholly-owned subsidiary of The Bear Stearns Companies Inc. and custodian to each of the Portfolios, and an affiliate of BSAM, Bear Stearns Funds Management Inc. ("BSFM" or the "Administrator") and Bear, Stearns & Co. Inc., ("Bear Stearns" or the "Distributor") served as the securities lending agent for the Portfolios and subject to the Order participates in the lending income earned by the Portfolios. During the period, CTC has been compensated approximately $5,006, $124 and $606 from S&P STARS, S&P STARS Opportunities and Small Cap Value, respectively. In addition, the Order permits (subject to limitations) that a Portfolio's securities may be loaned to affiliates. During the period, Bear, Stearns Securities Corp., an affiliate to the Portfolios received rebates in connection with such loans amounting to $12,183, $35 and $654, for S&P STARS, S&P STARS Opportunities and Small Cap Value, respectively. FOREIGN CURRENCY TRANSLATION--The books and records of the Portfolios are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities and other assets and liabilities stated in foreign currencies are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the rate of exchange prevailing on the respective dates of such transactions. The resulting exchange gains and losses are included in the Statements of Operations. The Portfolios do not generally isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. However, the Portfolios do isolate the effect of fluctuations in foreign exchange rates when determining the gain or loss upon the sale or maturity of foreign currency-denominated debt obligations pursuant to U.S. federal income tax regulations; such amount is categorized as foreign exchange gain or loss for both financial reporting and income tax reporting purposes. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Portfolios may enter into forward foreign currency exchange contracts ("forward currency contracts") to hedge against adverse changes in the relationship of the U.S. dollar to foreign currencies. The Portfolios may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Portfolios may also use these contracts to hedge the U.S. dollar value of securities it already owns denominated in foreign currencies. Forward currency contracts are valued at the forward rate, and are marked-to-market daily. The change in market value is recorded by the Portfolio as an unrealized gain or loss. When the contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value of the current contract at the time it was opened and the value at the time it was closed. The use of forward currency contracts does not eliminate fluctuations in the underlying prices of the Portfolio's securities, but it does establish a rate of exchange that can be achieved in the future. Although forward currency contracts limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of currency increase. In addition, the Portfolio could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. For the six months ended September 30, 2002, only International Equity entered into such forward currency contracts. International Equity's open forward currency contracts at September 30, 2002, were as follows:
DELIVERY VALUE SETTLEMENT UNREALIZED CURRENCY (LOCAL CURRENCY) DATE COMMITMENT VALUE GAIN/(LOSS) - -------- ---------------- ----------- ---------- -------- ----------- SALE: Euro........................................ 6,840,000 11/14/02 $6,646,052 $6,745,232 $ (99,180) Japanese Yen................................ 686,150,000 11/14/02 5,760,497 5,650,211 110,286 ---------- $ 11,106 ==========
52 U.S. FEDERAL TAX STATUS--Each Portfolio intends to distribute substantially all of its taxable income and 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, 2002, the Portfolios indicated below 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 2010. 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. The Portfolios which had capital loss carryforwards at March 31, 2002 were as follows:
AMOUNT EXPIRING IN GROSS CAPITAL LOSS -------------------------------------------- PORTFOLIO CARRYFORWARD 2007 2009 2010 - --------- ----------------- ---------- ------------ ----------- S&P STARS...................................... $299,778,313 -- $75,578,722 $224,199,591 Alpha Growth................................... 3,321,972 $393,572 1,828,927 1,099,473 International Equity........................... 33,435,556 -- 10,929,861 22,505,695
For U.S. federal income tax purposes, net realized capital losses or foreign exchange losses incurred after October 31, 2001 within the prior fiscal year are deemed to arise on the first day of the current fiscal year. S&P STARS, Intrinsic Value, Alpha Growth and International Equity incurred and elected to defer such losses of $164,381,531, $206,072, $166,168, and $11,072,943, respectively. DIVIDENDS AND DISTRIBUTIONS--Each Portfolio intends to distribute at least annually 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, 2002, BSAM, 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, S&P STARS Opportunities, Intrinsic Value and Small Cap, 0.65% of average daily net assets for Alpha Growth, and 1.00% of average daily net assets for Intemational Equity. For Insiders Select, BSAM is entitled to receive from the Portfolio a monthly fee equal to an annual rate of 1.00% of the Portfolio's average daily net assets. In addition, BSAM is entitled to a monthly performance adjustment fee which may increase or decrease the total advisory fee by up to 0.50% per year of the value of Insiders Select's average daily net assets. For the six months ended September 30, 2002, the performance adjustment fee decreased the total advisory fee by $91,625 or 0.25% based on the value of Insider Select's average daily net assets due to the 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, 2002. As a result the annual rate was adjusted to 0.75% before any reduction for fee waivers or expense reimbursements. 53 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 (and not the Portfolio) calculated on an annual basis equal to 0.20% of the Portfolio's total average daily net assets to the extent the International Equity's average daily net assets are in excess of $25 million and below $50 million at the relevant month end, 0.45% of the International Equity's total average daily net assets to the extent the International Equity's average daily net assets are in excess of $50 million and below $65 million at the relevant month end and 0.60% of the International Equity's total average daily net assets to the extent the International Equity's net assets in excess of $65 million at the relevant month end. For the six months ended September 30, 2002, Marvin & Palmer earned a fee of $89,972. For the six months ended September 30, 2002, BSFM served as administrator to each Portfolio pursuant to an Administration Agreement. The Administrator is entitled to receive from each Portfolio a monthly fee equal to an annual rate of 0.15% of each Portfolio's average daily net assets up to $1 billion, 0.12% of the next $1 billion, 0.10% of the next $3 billion and 0.08% of the average daily net assets above $5 billion. For the six months ended September 30, 2002, BSAM has continued its undertaking 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 CLASS B CLASS C CLASS Y - --------- -------- ------- ------- -------- S&P STARS.................................................................... 1.50% 2.00% 2.00% 1.00% S&P STARS Opportunities...................................................... 1.50 2.00 2.00 1.00 Insiders Select.............................................................. 1.65 2.15 2.15 1.15 Intrinsic Value.............................................................. 1.50 2.00 2.00 1.00 Small Cap.................................................................... 1.50 2.00 2.00 1.00 Alpha Growth................................................................. 1.40 1.90 1.90 -- International Equity......................................................... 1.75 2.25 2.25 1.25
As necessary, this limitation is affected by waivers by the Adviser of its advisory fees and reimbursements of expenses exceeding the advisory fee. For the six months ended September 30, 2002, the investment advisory fee waivers and reimbursements of expenses (in order to maintain the expense limitation) were as follows:
PORTFOLIO ADVISORY FEE WAIVERS EXPENSE REIMBURSEMENTS - --------- -------------------- ---------------------- S&P STARS.............................................................. $1,359,822 -- S&P STARS Opportunities................................................ 125,727 -- Insiders Select........................................................ 87,291 -- Intrinsic Value........................................................ 145,066 -- Small Cap.............................................................. 159,297 -- Alpha Growth........................................................... 136,692 $997 International Equity................................................... 183,595 --
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, 2002, Bear Stearns, an affiliate of the Adviser and the Administrator, earned approximately $828,741, $49,091, $10,206, $9,465, $3,444 and $66,637 in brokerage commissions from portfolio transactions executed on behalf of S&P STARS, S&P STARS Opportunities, Insiders Select, Intrinsic Value, Small Cap and Alpha Growth, respectively. 54 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% 0.25% 0.75% 0.25% 0.75% 0.25% S&P STARS Opportunities................... 0.25 0.25 0.75 0.25 0.75 0.25 Insiders Select........................... 0.25 0.25 0.75 0.25 0.75 0.25 Intrinsic Value........................... 0.25 0.25 0.75 0.25 0.75 0.25 Small Cap................................. 0.25 0.25 0.75 0.25 0.75 0.25 Alpha Growth.............................. 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
Such fees are based on the average daily net assets in each class of the respective Portfolios and are accrued daily and paid quarterly or at such intervals as the Board of Trustees may determine. The fees paid to Bear Stearns under the Distribution Plan are payable without regard to actual expenses incurred. Bear Stearns uses the distribution fee to pay broker-dealers or other financial institutions whose clients hold each Portfolio's shares and other distribution-related activities. Bear Stearns uses shareholder servicing fees to pay broker-dealers or other financial institutions that provide personal service in connection with the maintenance of shareholder accounts. For the six months ended September 30, 2002, 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............................................................. $4,524,877 $2,210,394 S&P STARS Opportunities............................................... 168,640 79,230 Insiders Select....................................................... 91,443 45,084 Intrinsic Value....................................................... 113,795 54,460 Small Cap............................................................. 100,921 50,057 Alpha Growth.......................................................... 96,313 52,572 International Equity.................................................. 136,691 69,625
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. 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, 2002, Bear Stearns has advised each Portfolio that it received the amounts noted below in front-end sales charges resulting from sales of Class A shares and contingent deferred sales charges ("CDSC") upon certain redemptions by Class A. B and C shareholders, respectively. The amounts were as follows:
CDSC CDSC CDSC FRONT-END SALES CHARGES CLASS A CLASS B CLASS C PORTFOLIO CLASS A SHARES SHARES SHARES SHARES - --------- ----------------------- -------- ----------- ---------- S&P STARS........................................ $841,396 $13,915 $1,919,220 $113,697 S&P STARS Opportunities.......................... 133,968 684 54,656 19,113 Insiders Select.................................. 33,519 30 23,261 1,410 Intrinsic Value.................................. 32,795 12 34,261 2,052 Small Cap........................................ 26,478 -- 12,780 1,449 Alpha Growth..................................... 66,521 -- 32,128 1,796 International Equity............................. 21,900 -- 29,320 571
55 INVESTMENTS IN SECURITIES For U.S. federal income tax purposes, the cost of securities owned, gross appreciation, gross depreciation and net unrealized depreciation of investments at September 30, 2002 for each Portfolio were as follows:
GROSS GROSS NET PORTFOLIO COST APPRECIATION DEPRECIATION DEPRECIATION - --------- --------------- ------------- ------------- ------------- S&P STARS...................... $1,946,403,142 $62,727,803 $627,901,851 $565,174,048 S&P STARS Opportunities........ 60,056,843 1,832,717 8,616,09 6,783,375 Insiders Select................ 34,546,322 2,763,878 7,422,285 4,658,407 Intrinsic Value................ 70,898,212 1,918,829 17,258,615 15,339,786 Small Cap...................... 66,596,407 3,221,591 13,438,846 10,217,255 Alpha Growth................... 44,790,746 1,062,581 2,788,086 1,725,505 International Equity........... 70,859,657 1,546,677 8,532,608 6,985,931
For the six months ended September 30, 2002, aggregate purchases and sales of investment securities (excluding short-term investments) for each Portfolio were as follows:
PORTFOLIO PURCHASES SALES - --------- --------------- -------------- S&P STARS...................................................................... $1,341,690,648 $1,668,315,773 S&P STARS Opportunities........................................................ 64,492,128 61,149,521 Insiders Select................................................................ 6,299,164 3,882,344 Intrinsic Value................................................................ 26,358,737 13,065,314 Small Cap...................................................................... 33,240,006 35,211,331 Alpha Growth................................................................... 54,923,199 37,343,577 International Equity........................................................... 47,230,091 46,633,688
INVESTMENTS IN AFFILIATES A summary of transactions for each issuer, which is or was an affiliate at or during the six months ended September 30, 2002, were as follows:
NUMBER OF CAPITAL UNREALIZED PORTFOLIO AFFILIATE SHARES LOSS LOSS VALUE - --------- -------------------- ------------- ----------- --------------- ------------ S&P STARS CNET Networks, Inc. 8,090,000 -- $39,653,058 $ 8,899,000 Intuitive Surgical, Inc. 3,210,000 $640,730 10,851,476 25,647,900 SportsLine.com, Inc. 3,870,000 -- 32,752,311 4,644,000
SHARES OF BENEFICIAL INTEREST Each Portfolio offers Class A, B, C and Y shares. Class A shares are sold with a front-end sales charge of up to 5.50% for each Portfolio. Class B shares are sold with a CDSC of up to 5.00% within six years of purchase. Class C shares are sold with a CDSC of 1.00% within the first year of purchase. There is no sales charge or CDSC on Class Y shares, which are offered primarily to institutional investors. 56 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, 2002 Shares................................. 2,527,122 11,144,189 -- 194,277 174,553 -- Value.................................. $ 52,472,406 $219,102,692 -- $2,976,942 $2,588,241 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 14,368,636 10,651,161 -- 384,291 323,743 95,352 Value.................................. $395,690,142 $281,440,211 -- $6,621,242 $5,591,340 $1,514,178 CLASS B FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 1,062,544 4,792,486 -- 242,648 113,358 -- Value.................................. $ 21,627,696 $ 91,366,953 -- $3,614,906 $1,563,287 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 8,494,754 3,756,954 -- 270,831 119,236 60,118 Value.................................. $229,724,959 $ 96,832,796 -- $4,571,486 $1,900,056 $ 920,405 CLASS C FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 1,153,507 4,856,965 -- 111,674 106,429 -- Value.................................. $ 23,420,103 $ 92,409,376 -- $1,615,366 $1,493,137 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 7,209,028 3,770,094 -- 164,299 105,639 45,664 Value.................................. $194,284,555 $ 96,254,761 -- $2,778,796 $1,705,742 $ 699,111 CLASS Y FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 431,023 1,571,311 -- -- 3,385 -- Value.................................. $ 9,170,973 $ 30,528,182 -- -- $ 57,426 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 2,961,302 1,260,352 -- 311 8,310 4,151 Value.................................. $ 82,504,756 $ 34,063,065 -- $ 4,950 $ 142,429 $ 67,376 S&P STARS OPPORTUNITIES --------------------------------------- SALES REPURCHASES REINVESTMENTS ----------- ----------- ------------- CLASS A FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 634,959 593,105 -- Value.................................. $ 8,271,081 $7,172,543 -- FOR THE PERIOD OCTOBER 1, 2001* THROUGH MARCH 31, 2002 Shares................................. 2,325,455 222,405 -- Value.................................. $31,028,865 $3,017,221 -- CLASS B FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 419,174 362,865 -- Value.................................. $ 5,516,662 $4,403,555 -- FOR THE PERIOD OCTOBER 1, 2001* THROUGH MARCH 31, 2002 Shares................................. 1,578,013 95,756 -- Value.................................. $21,236,871 $1,286,791 -- CLASS C FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 397,454 344,387 -- Value.................................. $ 5,190,477 $4,140,124 -- FOR THE PERIOD OCTOBER 1, 2001* THROUGH MARCH 31, 2002 Shares................................. 1,288,530 135,021 -- Value.................................. $17,195,434 $1,810,728 -- CLASS Y FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 10,272 77,773 -- Value.................................. $ 123,069 $1,019,778 -- FOR THE PERIOD OCTOBER 1, 2001* THROUGH MARCH 31, 2002 Shares................................. 228,429 52,083 -- Value.................................. $ 3,019,679 $ 711,350 --
- -------------- * Commencement of operations. 57
INTRINSIC VALUE SMALL CAP --------------------------------------- ------------------------------------- SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS ----------- ----------- ------------- --------- ----------- ------------- CLASS A FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 268,562 201,239 -- 134,843 265,593 262 Value.................................. $ 4,901,718 $3,468,774 -- $ 2,542,451 $ 4,802,144 $ 5,402 FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 669,302 256,724 22,742 586,779 412,601 49,702 Value.................................. $13,051,249 $4,904,724 $436,638 $11,408,425 $ 7,900,324 $ 925,947 CLASS B FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 293,129 142,215 -- 155,267 114,400 -- Value.................................. $ 5,290,873 $2,332,587 -- $ 2,850,920 $ 1,926,248 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 566,093 271,529 10,167 164,001 70,927 15,031 Value.................................. $10,849,923 $5,133,383 $191,757 $ 3,253,319 $ 1,283,967 $ 272,654 CLASS C FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 197,535 119,982 -- 62,044 123,192 -- Value.................................. $ 3,521,106 $2,014,809 -- $ 1,128,941 $ 2,150,354 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 470,809 90,971 13,470 222,060 87,502 32,859 Value.................................. $ 8,981,522 $1,715,561 $255,120 $ 4,265,305 $ 1,626,664 $ 506,392 CLASS Y FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 339,904 84,091 -- 109,943 239,975 -- Value.................................. $ 6,465,821 $1,486,579 -- $ 2,105,640 $ 3,894,872 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 808,588 84,184 25,556 535,829 747,698 69,176 Value.................................. $16,504,557 $1,601,095 $493,231 $10,277,564 $15,087,517 $1,308,129 ALPHA GROWTH INTERNATIONAL EQUITY ------------------------------------- ------------------------------------- SALES REPURCHASES REINVESTMENTS SALES REPURCHASES REINVESTMENTS --------- ----------- ------------- ------- ------------ ------------- CLASS A FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 658,669 354,248 -- 479,358 600,310 -- Value.................................. $11,604,377 $6,160,991 -- $ 6,441,023 $ 7,990,449 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 627,708 430,929 -- 1,978,777 2,912,106 -- Value.................................. $11,013,070 $7,410,507 -- $33,391,989 $47,655,604 -- CLASS B FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 321,931 142,134 -- 33,053 91,120 -- Value.................................. $ 5,568,081 $2,369,199 -- $ 434,406 $ 1,220,442 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 193,946 153,981 -- 84,838 224,692 -- Value.................................. $ 3,401,228 $2,575,446 -- $ 1,318,717 $ 3,399,318 -- CLASS C FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. 219,572 84,375 -- 86,637 104,095 -- Value.................................. $ 3,710,573 $1,442,040 -- $ 1,213,747 $ 1,302,385 -- FOR THE FISCAL YEAR ENDED MARCH 31, 2002 Shares................................. 185,401 132,091 -- 744,550 773,372 -- Value.................................. $ 3,200,664 $2,225,185 -- $12,251,095 $12,713,567 -- CLASS Y FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Shares................................. -- -- -- 127,727 189,510 -- Value.................................. -- -- -- $ 1,734,173 $ 2,466,799 -- FOR THE PERIOD JULY 5, 2001* THROUGH MARCH 31, 2002 Shares................................. -- -- -- 1,490,131 18,991 -- Value.................................. -- -- -- $22,192,775 $ 275,890 --
- --------------- * Commencement of its initial public offering. 58 CREDIT FACILITY The Fund has entered into a demand promissory note arrangement with JPMorgan Chase 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 total 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 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 credit facility during the six months ended September 30, 2002, were as follows:
MAXIMUM LOAN AMOUNT PORTFOLIO AVERAGE LOAN BALANCE OUTSTANDING AVERAGE INTEREST RATE - --------- -------------------- ------------------ --------------------- S&P STARS......................................... $5,001,873 $32,824,600 2.35% S&P STARS Opportunities........................... 25,380 801,900 2.27
S&P STARS Portfolio had $3,147,100 outstanding under the line of credit facility at September 30, 2002. All other Portfolios had no amounts outstanding under the line of credit facility at September 30, 2002. 59 THE BEAR STEARNS FUNDS 383 MADISON AVENUE, NEW YORK, NY 10179 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 DISTRIBUTOR Bear Stearns Asset Bear, Stearns & Co. Inc. Management Inc. 383 Madison Avenue 383 Madison Avenue New York, NY 10179 New York, NY 10179 COUNSEL SUB-ADVISER Kramer Levin INTERNATIONAL EQUITY Naftalis & Frankel LLP PORTFOLIO 919 Third Avenue Marvin &Palmer New York, NY 10022 Associates, Inc. 1201 N. Market Street TRANSFER AND DIVIDEND Suite 2300 DISBURSEMENT AGENT Wilmington, DE19801 PFPC Inc. Bellevue Corporate Center ADMINISTRATOR 400 Bellevue Parkway Bear Stearns Funds Wilmington, DE 19809 Management Inc. 383 Madison Avenue INDEPENDENT AUDITORS New York, NY 10179 Deloitte & Touche LLP Two World Financial Center CUSTODIAN New York, NY 10281 Custodial Trust Company 101 Carnegie Center Princeton, NJ 08540 The financial information included herein is taken from the records of each Portfolio without examination by independent auditors who do not express an opinion thereon. 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 and S&P STARS Opportunities Portfolio are not sponsored, managed, advised, sold or promoted by Standard & Poor's. -----END PRIVACY-ENHANCED MESSAGE-----