As filed with the Securities and Exchange Commission on December 17, 1998
1940 Act Registration No. 811-9035
1933 Act File No. 333-65225
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. 1 /X/
Post-Effective Amendment No. / /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 1
(Check appropriate box or boxes)
The Barrett Funds
(Exact Name of Registrant as Specified in Charter)
565 Fifth Avenue, New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
(212) 983-5080
Registrant's Telephone Number, Including Area Code
Robert E. Harvey, 565 Fifth Avenue, New York, New York 10017
(Name and Address of Agent for Service)
Please send copies of communications to
Bruce G. Leto, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Approximate Date of Proposed Public Offering: As soon as practical after the
effective date of this registration statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
<PAGE>
CROSS-REFERENCE SHEET
Prospectus for the Barrett Growth Fund
<TABLE>
<CAPTION>
Part A
Item No. Information Required in a Prospectus
- --------------------------------------------------------------------------------
<S> <C>
Item 1. Front and Back Cover Pages Front and Back Cover Pages
Item 2. Risk/Return Summary: Investment Process, Principal Risks of
Investments, Risks and Investing in the Fund
Performance
Item 3. Risk/Return Summary: Fee Table Fees and Expenses
Item 4. Investment Objectives, Investment Process, Principal Risks of
Principal Investment Investing in the Fund
Item 5. Management's Discussion of Adviser's Investment Performance
Fund Performance
Item 6. Management, Organization and Investment Adviser and Portfolio
Capital Structure Management Team
Item 7. Shareholder Information Purchasing Shares, Selling Shares,
Retirement Investing, Account Options,
Account Instructions, Marketing and
Distribution, Distribution and Taxation
Item 8. Distribution Arrangements Marketing and Distributions,
Distributions and Taxation
Item 9. Financial Highlights Not Applicable
Information
</TABLE>
<PAGE>
Statement of Additional Information
<TABLE>
<CAPTION>
Part B Information Required in a Statement of
Item No. Additional Information
- --------------------------------------------------------------------------------
<S> <C>
Item 10. Cover Page and Table of Cover Page and Table of Contents
Contents
Item 11. Fund History General Information
Item 12. Description of the Fund and Additional Information About the Fund's
Its Investments and Risks Investments, Investment Restrictions
Item 13. Management of the Fund Management of the Trust
Item 14. Control Persons and Management of the Trust
Principal Holders of
Securities
Item 15. Investment Advisory and Management of the Trust, Service Agreements
Other Services
Item 16. Brokerage Allocation and Service Agreements
Other Practices
Item 17. Capital Stock and Other Portfolio Transactions and Turnover
Securities
Item 18. Purchases, Redemption, and Additional Information About Purchases and
Pricing of Shares Sales, Pricing of Securities
Item 19. Taxation of the Fund Tax Status
Item 20. Underwriters Service Agreements
Item 21. Calculation of Performance Investment Performance
Data
Item 22. Financial Statements Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part C
Item No. Other Information.
- -------- ------------------
<S> <C>
Item 23. Exhibits Exhibits
Item 24. Persons Controlled by or Persons Controlled by or Under Common
Under Common Control with Control with the Fund
the Fund
Item 25. Indemnification Indemnification
Item 26. Business and Other Business and Other Connections of the
Connections of the Investment Adviser
Investment Adviser
Item 27. Principal Underwriters Principal Underwriters
Item 28. Location of Accounts and Location of Accounts and Records
Records
Item 29. Management Services Management Services
Item 30. Undertakings Undertakings
</TABLE>
<PAGE>
BARRETT GROWTH FUND
Purchasing high quality
growth stocks at reasonable
prices for long-term capital appreciation
PROSPECTUS
[_________________ , 1998]
THE BARRETT FUNDS
565 Fifth Avenue
New York, NY 10017
(877) 363-6333
Shares of the Barrett Growth Fund are sold on a no-load basis through investment
advisers, consultants, financial planners, brokers, dealers and other investment
professionals. Shares are available for IRAs and retirement plans. The Fund is
not available in all states - please call the Fund or your investment
professional for details.
As with all mutual funds, the U.S. Securities and Exchange Commission has not
approved or disapproved these securities and does not guarantee the accuracy or
completeness of this Prospectus. It is a criminal offense to suggest otherwise.
<PAGE>
Barrett Growth Fund
- ---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Investment Goal and Philosophy................................2
Investment Process............................................2
Principal Risks of Investing in the Fund......................2
Fees and Expenses.............................................3
Investment Adviser and Portfolio Management Team..............4
Adviser's Investment Performance..............................6
More Information About the Fund's
Investments...................................................7
Additional Risk
Information...................................................8
Purchasing Shares.............................................8
Selling Shares................................................9
Account Options..............................................10
Retirement Investing.........................................11
Account Instructions.........................................13
Marketing and Distribution...................................14
Distributions and Taxation...................................14
</TABLE>
(i)
<PAGE>
Barrett Growth Fund
- ---------------------
Investment Goal
and Philosophy
The goal of the Fund is to achieve long-term capital appreciation and to
maximize after-tax returns. The Fund takes a conservative approach to growth
stock investing which emphasizes "Growth at a Reasonable Price." The Fund will
invest in common stocks of high quality companies that the investment adviser
believes have superior growth potential and where the stocks can be purchased at
reasonable prices. The Fund tends to buy and hold stocks in order to reduce
turnover and maximize after-tax returns.
Investment Process
The Fund invests primarily in a diversified portfolio of common stocks of large
and mid-sized U.S. companies selected by the Fund's investment adviser, Barrett
Associates, Inc., which was founded in 1937. The adviser performs comprehensive,
independent research designed to identify companies with proven products and
performance, strong fundamental financial characteristics and attractive growth
prospects. The adviser seeks companies that dominate their markets and benefit
from technological advantages, economies of scale or other factors that limit
the ability of competitors to enter the same markets. The adviser also prefers
companies with superior management and insider ownership, and its portfolio
managers frequently meet with the management of companies to confirm investment
decisions for the Fund.
The investment adviser selects companies for investment by the Fund which it
believes will experience earnings growth in excess of 12% per year or at least
50% higher than the average growth rate of companies in the same industry in the
Standard & Poor's 500 Stock Index. The portfolio management team also evaluates
the fundamental financial characteristics of companies to identify companies
with strong cash flow combined with low or manageable debt burdens. The adviser
believes that such companies are able to sustain attractive growth rates, or
grow through acquisitions or investment in research and development.
Once high quality growth companies are identified, the adviser uses financial
statement and fundamental analysis to identify companies whose stocks can be
purchased at reasonable prices. The Fund generally seeks to avoid investment in
companies whose price-to-earnings ratios are significantly in excess of their
growth rates. The adviser believes that avoiding such overpriced stocks reduces
risk and increases the likelihood that the Fund will be able to achieve its goal
of capital appreciation.
On an ongoing basis, the adviser analyzes the global economic and financial
outlook in order to anticipate and respond to changing business, economic and
political trends that may affect the Fund's existing and prospective
investments. The Fund has a long-term investment outlook. It generally
undertakes a "buy and hold" strategy to reduce portfolio turnover and maximize
after-tax returns. See More Information About the Fund's Investments on page 7.
Principal Risks of
Investing in the Fund
The principal risk of investing in the Fund is that common stock prices are
subject to market, economic and business risks that will cause their prices to
fluctuate over time. While common stocks have historically been a leading choice
of long-term investors, stock prices may decline over short or even extended
periods. Therefore, the value of your investment in the Fund may go up and down
and you could lose money.
In addition, the Fund's investment success depends on the skill of the
investment adviser in evaluating, selecting and monitoring the Fund's assets. If
the adviser's conclusions about growth rates or stock values are incorrect, the
Fund may not perform as anticipated.
2
<PAGE>
Barrett Growth Fund
- ---------------------
The Fund could be adversely affected if the computer systems used by the Fund or
its service providers do not function properly when processing date-related
information on and after January 1, 2000. This is commonly known as the "Year
2000 Issue." The Fund is taking steps that it believes are reasonably designed
to address the Year 2000 Issue with respect to computer systems that it uses.
The Fund is also obtaining reasonable assurances that comparable steps are being
taken by the Fund's other major service providers. At this time, it is
impossible to ensure that these steps will be sufficient to avoid any adverse
impact to the Fund. See More Information about the Risks of the Fund on page 8.
Fees and Expenses
The following tables describe the fees and expenses that you would pay in
connection with an investment in the Fund.
<TABLE>
<CAPTION>
------------------------------------------------
Shareholder Transaction Fees
(Fees paid directly from your investment)
------------------------------------------------
<S> <C>
Maximum Sales Charge on Purchases None
Sales Charge on Reinvested Dividends None
Redemption Fees None*
Exchange Fees None
*Currently, there is a $12.00 wire redemption
fee assessed by the Custodian. These fees are
subject to change.
------------------------------------------------
Annual Fund Operating Expenses
(Expenses that are deducted from Fund assets)
------------------------------------------------
Advisory Fee 1.00%
Distribution and Service (12b-1) Fees 0.16%
Other Expenses 0.96%
Total Fund Operating Expenses 2.12%*
</TABLE>
*Barrett Associates has voluntarily agreed to waive its advisory fee or make
payments to limit Fund expenses to the extent necessary to ensure that Total
Fund Operating Expenses do not exceed 1.70% of average daily net assets for the
first year of operations. In addition, the Fund is new, so the amount of "Other
Expenses" and "Total Operating Expenses" are based on estimated amounts for the
first year of operations and do not reflect any fee waiver or expense
limitation.
The following Expense Example shows the expenses that you could pay over time
and will help you to compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The Example assumes that you invest $10,000 in
the Fund and that you earn a 5% annual return, with no change in Fund expense
levels. The $10,000 and 5% figures are required by SEC rules to aid in
comparisons between funds. Because actual return and expenses will be different,
the Example is for comparison only.
<TABLE>
<CAPTION>
------------------------------------------------
Expense Example 1 Year 3 Years
------------------------------------------------
<S> <C> <C>
Without Fee Waiver or
Expense Limitation* $215 $664
*These dollar amounts do not reflect Barrett Associates' agreement to limit the
Fund's Total Operating Expenses to 1.70% for the first year of operations. With
such expense limit, the amounts paid over 1 and 3 years would equal $173 and
$536
</TABLE>
3
<PAGE>
Barrett Growth Fund
- ---------------------
Investment Adviser and
Portfolio Management Team
Barrett Associates, Inc. serves as the investment adviser for the Fund and is
responsible for managing the investment of the Fund's portfolio of securities.
As investment adviser, the firm identifies companies for investment, determines
when securities should be purchased or sold by the Fund and selects brokers or
dealers to execute transactions for the Fund's portfolio.
Barrett Associates was founded in 1937 and currently manages approximately $1.5
billion of client assets, of which approximately $1.2 billion is invested in
equity securities. The firm has approximately 400 client relationships,
including families, individuals, foundations and other organizations or
entities. Many of the client relationships are in their third generation. The
Fund was organized in order to provide investors with a cost-efficient
opportunity to invest according to Barrett Associates' long-term equity
investing philosophy of "Growth at a Reasonable Price," without being required
to maintain a large account balance.
The Fund pays Barrett Associates a monthly investment advisory fee at the annual
rate of 1.00% of the Fund's average daily net assets. However, Barrett
Associates has voluntarily agreed to waive all or a portion of the advisory fee,
or to make payments to limit Fund expenses, in order to limit the Fund's total
annual operating expenses to 1.70% during the first year of operations. After
the first year, Barrett Associates may continue to control Fund operating
expenses in the future or it may end the arrangement at any time.
Barrett Associates uses a team approach for security selection and decision
making. The eight members of the portfolio management team, which is lead by the
firm's Director of Research, Robert J. Voccola, average over twenty years of
investment management experience per person and have a significant ownership
interest in the firm. The following are the names and backgrounds of the
portfolio managers.
John D. Barrett, II
Chairman and Chief Executive Officer
A graduate of Yale University, Mr. Barrett received his M.B.A. from New York
University, and has over thirty years experience in investment research and
management. Mr. Barrett became a controlling stockholder of Barrett Associates
in 1970. Prior to joining Barrett Associates he was a partner at Clark, Dodge &
Co. Mr. Barrett is responsible for portfolio management and firm policy as well
as for servicing many client relationships. Mr. Barrett also serves as a
Director of various Morgan Stanley mutual funds.
Robert E. Harvey, C.F.A.
President and Chief Operating Officer
Mr. Harvey graduated from Bowdoin College, received an M.B.A. from the
University of Virginia and has twenty two years of investment experience. From
1976 until 1991 he served as an officer and a Managing Director at Scudder,
Stevens and Clark where he was the portfolio manager for the Scudder Growth and
Income Fund and the AARP Growth and Income Fund. Mr. Harvey served as Director
of U.S. Equities at Bessemer Trust from 1991 until 1993. Mr. Harvey joined
Barrett Associates in 1994, and is currently responsible for firm management,
portfolio management, new services and marketing. Mr. Harvey is a stockholder
and Director of The Ashforth Company, which is a controlling stockholder of
Barrett Associates.
4
<PAGE>
Barrett Growth Fund
- ---------------------
James R. Rutherford
Vice Chairman
Mr. Rutherford graduated from Miami University of Ohio and pursued graduate
studies at New York University. He has over thirty years experience in
investment research and management. Prior to joining Barrett in 1973, Mr.
Rutherford was a Portfolio Manager at Manufacturers Hanover Trust and at Clark,
Dodge & Co. Mr. Rutherford serves as a portfolio manager and analyst and
specializes in research concerning the financial, basic industry and consumer
industries.
Robert J. Voccola, C.F.A.
Director of Research
A graduate of Lehigh University, Mr. Voccola received an M.B.A. from Columbia
University Graduate School of Business, and has over twenty-seven years of
investment experience. Prior to joining Barrett Associates in 1987, Mr. Voccola
was a Securities Analyst at Clark, Dodge & Co. and Director of Individual
Account Management at Bernstein Macauley. Mr. Voccola is Barrett Associates'
Director of Research, and a portfolio manager and analyst specializing in the
areas of technology, telecommunications and information services.
Henry A. Collins
Mr. Collins graduated from Brown University and has over thirty years of
investment experience. He was Director of Research at Clark, Dodge & Co. and
later served as Senior Vice President, Director of Research, and a member of the
Board of Directors of Kidder Peabody. Mr. Collins joined Barrett Associates in
1990 and is responsible for portfolio management and securities research in the
technology, telecommunications and healthcare sectors.
Peter H. Shriver, C.F.A.
Mr. Shriver joined Barrett Associates in 1989 and provides portfolio management
and securities research in the healthcare, consumer products & services,
information services, financial and international sectors. Immediately prior to
joining Barrett Associates, Mr. Shriver served as a Securities Analyst at Peter
B. Cannell and Co. and was a Mergers and Acquisition Specialist at Henry
Ansbacher from 1986 until 1989. Mr. Shriver is a graduate of Drake University
and received his M.B.A. from New York University.
Leslie J. Lammers, C.F.A.
Ms. Lammers served as a Private Banker, Team Head and Product Manager at J.P.
Morgan, Inc. from 1979 until 1992, after which she served as Vice President and
Portfolio Manager at Scudder, Stevens and Clark, supervising $250 million of
assets for individuals. Ms. Lammers joined Barrett Associates in 1997 and
specializes in portfolio management and research relating to telecommunications,
the internet/new media and retailing. She graduated from the University of
Texas with a Bachelors of Business Administration.
Christina A. Bater, C.F.P.
Ms. Bater joined Barrett Associates in 1984 after graduating from the University
of Buffalo. She served as a Portfolio Administrator, Trader and Client Service
Specialist until 1992, at which time she assumed securities research
responsibilities. Ms. Bater is currently responsible for portfolio management,
as well as research of companies in the energy, retailing and distribution,
internet/new media and basic industry sectors.
5
<PAGE>
Barrett Growth Fund
- ---------------------
Adviser's Investment
Performance
The tables below show the annual returns and long-term performance record
established by Barrett Associates while managing client accounts according to
the same investment goal and strategies as those used for the Fund. Please note
that the performance results shown are those of the investment adviser and not
the investment results of the Fund. The results are not intended to predict or
suggest the return to be experienced by the Fund or the return an individual
investor might achieve by investing in the Fund.
The Fund's results may be different from the composite performance figures shown
because of, among other things, differences in fees and expenses. The composite
performance figures reflect the deduction of all advisory fees and trading
costs, but do not reflect custody fees, which are paid by clients directly. The
Fund's overall expenses may be higher than the expenses of similarly managed
private accounts of the adviser. If so, the performance of the Fund would be
lower. The Fund's results may also be different because private accounts are not
subject to certain investment limitations, diversification requirements and
other restrictions imposed on mutual funds by the Investment Company Act of 1940
or the Internal Revenue Code which, if applicable, could have adversely affected
the performance of the client accounts.
Barrett Associates Equity Growth Composite(1)
[Bar graph appears here]
<TABLE>
<CAPTION>
Average Annual Total Return as of 6/30/98
Since
1 Year 3 Years 5 Years Inception
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Barrett Associates Equity Growth
Composite 32.1% 31.2% 24.0% 20.2%
S&P 500 Index(2) 30.1% 30.2% 23.1% 20.8%
Lipper Growth Fund Index(3) 25.4% 24.2% 19.3% 19.1%
</TABLE>
(1)The Barrett Associates Equity Growth Composite is an unaudited composite made
up of all fully discretionary "equity growth" accounts of $300,000 or more,
reflects the reinvestment of all capital gains and dividends and also reflects
the deduction of all investment management and brokerage fees. All figures are
total return and the composite is equal weighted by account. Individual account
performance is calculated on the average capital base. This methodology means
that each change in capital for an account during the time period (monthly) is
multiplied by the ratio of days remaining to the total days in the time period.
The sum of the average changes in capital is then added to the beginning market
value to give the average capital base for the time period. This methodology
differs from the standard SEC method which is used to calculate returns for
mutual funds.
6
<PAGE>
Barrett Growth Fund
- ---------------------
More Information about
the Fund's Investments
This section contains more detailed information about the Fund's investments and
its investment process. The Fund's investment objective is long-term capital
appreciation and the maximization of after-tax returns. This objective may be
changed or modified in the future by action of the Fund's Board. Shareholder
approval is not required to modify the investment objective, however,
shareholders would receive advanced written notice of any such change.
Types of Investments. The Fund invests primarily in common stocks of large and
mid-sized U.S. companies, as well as securities of companies that operate
globally, provided their shares are traded on U.S. stock exchanges. It may also
purchase securities with an equity component such as preferred stock, warrants,
rights or other securities that are convertible into or exchangeable for shares
of common stock. The Fund may invest up to 10% of its net assets in foreign
investments, and will normally make such investments through the purchase of
American Depository Receipts (ADRs). ADRs are receipts issued by U.S. banks or
trust companies representing ownership interests of securities issued by foreign
companies.
From time to time, the Fund may purchase options, futures contracts or other
instruments (such as depository receipts) which relate to a particular stock
index. These investments allow the Fund to quickly invest excess cash in order
to gain exposure to the markets until the Fund can purchase individual stocks.
For example, the Fund may purchase S&P 500 Depository Receipts, which are
receipts representing an ownership interest in a portfolio of the stocks that
make up the S&P 500.
The Fund normally intends to remain substantially fully invested in common
stocks and other equity securities. However, the Fund may invest in high quality
money market instruments during times when excess cash is generated or when cash
is held pending investment in suitable growth stocks. Such money market
investments include short-term obligations of the U.S. government, its agencies
or instrumentalities, bank obligations, commercial paper, repurchase agreements
or money market mutual funds. Tax-exempt money market instruments may be used to
minimize the taxable income generated from cash management investing.
The Fund has authority to invest up to 100% of its assets in such short-term
money market instruments for temporary or defensive purposes in response to
extreme or adverse market, economic or other conditions. Under these
circumstances, the Fund may be unable to pursue its investment goal of capital
appreciation.
Stock Selection Process. The investment adviser identifies stocks for investment
using its own research and analysis techniques, and supplements its internal
research with the research and analysis of major U.S. investment and brokerage
firms. When analyzing a company's growth prospects, the adviser considers the
growth in a company's market share and unit sales, as well as growth in overall
revenues and earnings per share. The investment adviser uses a proprietary
database containing detailed financial information of over 6,000 companies to
analyze comparative growth rates, and looks for companies that are growing
substantially faster than their peers in the same industries. The adviser also
analyzes the fundamental financial strength of such companies, as evidenced by
their debt burden or ability to generate excess cash, in order to determine
whether the company's growth rate can be sustained over time.
Once the Fund identifies a high quality growth company, it seeks to purchase the
company's stock at reasonable prices. Using fundamental financial statement
analysis, the adviser compares a company's price-to-earnings ratio with its
growth rate, in order to evaluate the price of the stock relative to its future
earnings. The adviser generally seeks companies with price-to-earnings multiples
as low as one times the company's growth rate. When deciding
7
<PAGE>
Barrett Growth Fund
- ---------------------
between two high quality growth companies, the adviser will normally choose the
company which has a lower ratio of price-to-earnings compared to its growth
rate. This approach is designed to allow the Fund to pay a lower price for the
future earnings stream of one company versus another company with a similar
earnings stream. The Fund may purchase stocks with higher price-to-earnings
ratios relative to their growth rates if market conditions reflect generally
higher stock prices.
The Fund seeks to reduce its exposure to risk by avoiding very small companies
(less than $1 billion market capitalization), companies which have no current
earnings and companies that carry excessive debt burdens.
The Fund has a long-term investment outlook. It generally undertakes a "buy and
hold" strategy to reduce portfolio turnover and maximize after-tax returns. When
the adviser anticipates that individual stocks will be sold, it attempts to
manage the liquidation process to take advantage of longer holding periods for
favorable capital gains tax rates in order to optimize after-tax return to Fund
shareholders.
Additional Risk Information
If the adviser determines that the condition of the financial markets calls for
a temporary or defensive position to reduce risk through a substantial
investment in cash and cash equivalents, such a position would make it difficult
to achieve the objective of capital appreciation.
To the extent that the Fund invests in foreign companies, its investment may
involve political, economic or currency risks not ordinarily associated with
U.S. securities. The Fund may use certain techniques involving a form of
leverage, which could have the effect of magnifying the Fund's gains or losses,
or could result in increased volatility of the Fund's share price. In order to
limit such risks, the Fund limits the percentage of its assets that can be
exposed to such leveraging techniques.
Purchasing Shares
You may purchase shares of the Fund without any sales charge through an
investment adviser, financial planner, broker, dealer or other investment
professional. Shares are also available through "fund supermarkets" or similar
programs which offer access to a broad array of mutual funds. A completed
application must be submitted to the Fund, along with payment of the purchase
price by check or wire. Please note that purchase instructions, mailing
addresses and telephone numbers are set forth in the Account Instructions chart
included on pages 13 of this Prospectus as well as in the attached Shareholder
Application. Please call with any questions.
Minimum Investments. The minimum initial investment is $2,500 and additional
investments must total at least $1,000. The minimum initial investment for
qualified retirement accounts is $1,000 ($500 for Education IRAs) and there is
no minimum for subsequent investments. The Fund may also change or waive its
policies concerning minimum investment amounts at any time.
8
<PAGE>
Barrett Growth Fund
- ---------------------
Purchase Price. You may buy shares at the Fund's net asset value per share
(NAV), which is calculated as of the close of the New York Stock Exchange
(usually 4:00 P.M. eastern time) every day the exchange is open. Your order will
be priced at the next NAV calculated after your order is accepted by the Fund.
The Fund has certain limited arrangements which permit third parties to accept
orders on the Fund's behalf, so that investors can receive the NAV next
calculated after the order is accepted by the third party.
The NAV is determined by dividing the value of the Fund's securities, cash and
other assets, minus all expenses and liabilities, by the number of shares
outstanding. The Fund's securities are valued each day at their market value,
which usually means the last quoted sale price on the security's principal
exchange on that day. If market quotations are not readily available, securities
will be priced at their fair value as determined in good faith by, or under
procedures adopted by, the Board of Trustees. The Fund may use an independent
pricing service to assist in calculating the NAV.
In-Kind Purchases. The Fund may permit investors to purchase shares by
transferring securities to the Fund that meet the Fund's investment objective
and policies. Securities transferred to the Fund will be valued in the same way
that the Fund's portfolio is valued for purposes of calculating its NAV.
General Policies. Shares of the Fund are not offered or available in all states.
You should ask your investment professional or a Fund representative if shares
are available in your state. The Fund reserves the right to reject any purchase
order or to suspend the offering of its shares.
Selling Shares
You may sell your shares at any time. The sale price will be the next NAV
calculated after your order is accepted by the Fund's transfer agent. No fees
are imposed by the Fund when shares are sold. Please note that selling
instructions, mailing addresses and telephone numbers are set forth in the
Account Instructions chart on pages 13 of this Prospectus as well as in the
attached Shareholder Application. Please call with any questions.
How To Sell. You may sell your shares by giving instructions to the Fund's
transfer agent by mail or by telephone. In order to sell by telephone, you will
need to elect the telephone redemption option on the Application. The Fund will
use reasonable procedures to confirm that instructions communicated by telephone
are genuine and, if the procedures are followed, will not be liable for any
losses due to unauthorized or fraudulent telephone transactions. During times of
drastic economic or market changes, the telephone redemption privilege may be
difficult to implement and the Fund reserves the right to suspend this
privilege.
Certain written requests to sell shares require a signature guarantee. For
example, a signature guarantee may be required if you sell a large amount of
shares, if your address of record on the account application has been changed
within the last 30 days, or if you ask that the proceeds be sent to a different
person or address. A signature guarantee is used to help protect you and the
Fund from fraud. You can obtain a signature guarantee from most banks and
securities dealers, but not from a notary public. Please call the Fund to learn
if a signature guarantee is needed or to make sure that it is completed
appropriately in order to avoid any processing delays.
Sale Proceeds. The Fund is responsible for processing requests to sell shares on
a timely basis. Checks are normally mailed or proceeds are wired on the next day
after receipt and acceptance of selling instructions (if received by Firstar
before the close of regular trading on the NYSE). In no event will proceeds be
mailed or wired later than 7 days following such receipt and acceptance (or
earlier if required by applicable law). If the shares being sold have recently
been purchased by check, the Fund reserves the right not to make the sale
proceeds
9
<PAGE>
Barrett Growth Fund
- ---------------------
available until it reasonably believes that the check has been collected. This
could take up to 10 business days.
Sale proceeds may be wired to your predesignated bank account at any commercial
bank in the United States if the amount is $1,000 or more. The receiving bank
may charge a fee for this service. Alternatively, proceeds may be mailed to your
bank or to your account address of record if the address has been established
for a minimum of 60 days.
General Policies. The Fund also reserves the right to make a "redemption
in-kind" if the amount you are redeeming is large enough to affect Fund
operations or if the redemption would otherwise disrupt the Fund. For example,
the Fund may redeem shares in-kind if the amount represents more than 1% of the
Fund's assets. When the Fund makes a "redemption in-kind" it pays the Seller in
portfolio securities rather than cash. In addition, if your account balance
falls below $1,000, the Fund may request that you increase your balance. If it
is still below $1,000 after 60 days, the Fund may automatically close your
account and send you the proceeds.
Account Options
Automatic Investment Plan: Shareholders who wish to make regular additional
investments (monthly, bimonthly, quarterly or yearly) in amounts of $50 or more
to an existing Fund account may do so through the Fund's Automatic Investment
Plan. Under this Plan, your designated bank or other financial institution
debits a preauthorized amount to your checking account on a business day of your
choosing and applies the amount to the purchase of Fund shares. The Fund can
accommodate up to four investments per month as long as there are seven days
between investments. The Fund does not charge a fee for participating in the
Automatic Investment Plan. However, Firstar will charge a $20 service fee
against your Fund account for any purchase under this Plan that does not clear
due to insufficient funds or, if prior to notifying the Fund or Firstar in
writing or by telephone of your intention to terminate your participation in
this Plan, you close your bank account or in any manner prevent withdrawal of
funds from your designated bank account. To use this service, you must authorize
the transfer of funds by completing the Automatic Investment Plan Application,
which may be obtained from either the Fund or Firstar. The Fund reserves the
right to suspend, modify or terminate the Automatic Investment Plan without
notice. Shareholders who wish to make a change to their Automatic Investment
Plan may call the Fund at (877) 363-6333.
Exchange Privileges: You may exchange all or a portion of your shares in the
Fund for shares of the Firstar Money Market Fund. The shareholders of this fund
may also exchange into the Fund where permitted by the various state laws. Once
the Fund receives and accepts an exchange request, the purchase or redemption of
shares will be effected at the Fund's next determined NAV.
Systematic Withdrawal Plan: Shareholders may elect to participate in the Fund's
Systematic Withdrawal Plan. By making this election, you can arrange for
automatic withdrawals from your Fund account into a pre-authorized bank account
according to the schedule you select which may be on a monthly basis or in
certain designated months. The Fund does not charge a fee for participating in
the Systematic Withdrawal Plan. The Systematic Withdrawal option may be in any
amount you select, subject to a $100 minimum. To begin distributions, a
shareholder must have a Fund account valued at $10,000 or more. You may elect
this option by completing the Systematic Withdrawal Plan Application which is
available from Firstar or the Fund. Shareholders who wish to make a change to
their Systematic Withdrawal option may call Firstar or the Fund. Normally,
shareholders should not make automatic investments in a Fund at the same time
they are receiving systematic withdrawals from that Fund because such
shareholders could realize capital gains on the systematic withdrawals from that
Fund while they are automatically investing in that Fund. The Systematic
Withdrawal Plan may be terminated at any time by written notice.
10
<PAGE>
Barrett Growth Fund
- ---------------------
Retirement Investing
You may purchase Fund shares for use in all types of tax-deferred qualified
retirement plans such as Individual Retirement Accounts (IRAs),
employer-sponsored retirement plans (including 401(k) Plans), and tax-sheltered
custodial accounts described in Section 403(b) of the Internal Revenue Code.
Distributions of net investment income and capital gains will be automatically
reinvested in such plans or accounts. Special applications are required for
certain of these plans or accounts, which can be obtained by calling the Fund.
The following is a brief description of the retirement investing options.
Individual Retirement Accounts (IRAs): If you are not an active participant
(and, if a joint return is filed, your spouse is not an active participant) in
an employer-sponsored retirement plan, or if you have an adjusted gross income
within certain specified limits, you are eligible to make a deductible
contribution to an IRA account. If you are not eligible for deductible
contributions, you may still make nondeductible IRA contributions. Distributions
from qualified retirement plans, may be rolled over into an IRA account holding
Fund shares. You can continue to defer Federal income taxes on your IRA account,
your rollover contribution, and on any income that is earned on that
contribution.
Firstar Trust Company makes its services as an IRA Custodian available for each
shareholder account that is established as an IRA. For these services, Firstar
receives an annual fee of $12.50 per account (maximum $25.00 per social security
number), which is paid directly to Firstar by the IRA shareholder. If the annual
fee is not paid by the date due, shares of the Fund owned by the shareholder in
the IRA account will be automatically sold to pay the annual fee. Firstar may,
in its discretion, hold any initial contribution uninvested until the expiration
of the seven-day revocation period. Firstar does not anticipate that it will
exercise its discretion but reserves the right to do so.
Traditional IRA: In a Traditional IRA, amounts contributed to the IRA may be tax
deductible at the time of contribution depending on your income and whether you
are an "active participant" in an employer-sponsored retirement plan. Amounts
invested are permitted to grow tax-free until they are distributed, and then
distributions will be taxed except to the extent that the distribution
represents a return of your own contributions for which you did not claim a
deduction. If you take distributions before age 59 1/2 or fail to begin taking
distributions after age 70 1/2 , you may experience adverse tax consequences.
Roth IRA: In a Roth IRA, amounts contributed to the IRA are not tax deductible
at the time of contribution. Amounts invested are permitted to grow tax-free and
distributions from the IRA are not subject to tax if you have held the IRA for
certain minimum periods of time (generally, until age 59 1/2).
Education IRA: In an Education IRA, nondeductible contributions of up to $500
per year per child are permitted to grow tax-free. Distributions used to pay for
secondary educational expenses are not subject to tax.
Simplified Employee Pension Plan (SEP): A special IRA program is available for
employers under which the employers may establish IRA accounts for their
employees in lieu of establishing tax qualified retirement plans. Known as
SEP-IRA's, they free the employer of many of the recordkeeping requirements of
establishing and maintaining a tax qualified retirement plan trust.
Simple IRA: An IRA may also be used in connection with a SIMPLE Plan established
by employers (or by a self-employed individual). Under a SIMPLE Plan, you may
elect to have your employer make salary reduction contributions or as a
non-elective contribution to all eligible participants whether or not making
salary reduction contributions. A number of special rules apply to SIMPLE Plans,
including (1) a SIMPLE Plan generally is available only to employers with fewer
than 100 employees; (2) contributions must be made on behalf of all employees of
the employer (other than bargaining unit employees) who satisfy certain
11
<PAGE>
Barrett Growth Fund
- ---------------------
minimum participation requirements; (3) contributions are made to a special
SIMPLE IRA that is separate and apart from the other IRAs of employees; (4) the
distribution excise tax (if otherwise applicable) is increased to 25% on
withdrawals during the first two years of participation in a SIMPLE IRA; and (5)
amounts withdrawn during the first two years of participation may be rolled over
tax-free only into another SIMPLE IRA (and not to a Traditional IRA or to a Roth
IRA).
403(b) Plans: The Fund's shares are also available for use by schools,
hospitals, and certain other tax-exempt organizations or associations who wish
to use shares of the Fund as a funding medium for a retirement plan for their
employees. Contributions are made to the 403(b) Plan as a reduction to the
employee's regular compensation. Such contributions, to the extent they do not
exceed applicable limitations (including a generally applicable limitation of
$9,500 per year), are excludable from the gross income of the employee for
Federal Income tax purposes.
401(k) Plans and other Qualified Pension or Profit-Sharing Plans: The Fund's
shares may be used for investment in various employer-sponsored retirement plans
by both self-employed individuals (sole proprietorships and partnerships) and
corporations who wish to use shares of the Fund as a funding medium for a
retirement plan qualified under the Internal Revenue Code. Such plans typically
allow investors to make annual deductible contributions, which may be matched by
their employers up to certain percentages based on the investor's
pre-contribution earned income. Fund shares may be purchased by investors who
wish to contribute to a 401(k) or similar Plan already established through their
employer or otherwise. Please contact the Fund for information about
establishing a 401(k) Plan for your company using the Barrett Growth Fund
together with Firstar Funds as investment options.
12
<PAGE>
Barrett Growth Fund
- ---------------------
Account Instructions
<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT TO SELL SHARES
<S> <C> <C>
Regular Account Minimum: $2,500 Regular Account Minimum: $1,000 All requests to sell shares
Retirement Account Minimum: $1,000 Retirement Account Minimum: None from IRA accounts must be in writing.
In Writing: In Writing: In Writing:
Complete the application. Complete the detachable Write a letter of
investment slip from your instruction that includes:
Make your check* payable to: account statement, or if - your name(s)and signature(s)
"Barrett Growth Fund." the slip is not available, - your account number
include a note specifying - the Fund name
the Fund's name, your - the dollar amount you want to sell
account number and the name Proceeds will be send to the
on the account. address of record unless
specified in the letter and
accompanied by a signature
guarantee.
Mail your application and check to: Mail the slip, along with your check Mail your letter to:
made payable to "Barrett Growth Fund"
to:
Firstar Mutual Fund Services, LLC. Firstar Mutual Fund Services, LLC Firstar Mutual Fund Services, LLC
Third Floor Third Floor Third Floor
615 E. Michigan Street . 615 E. Michigan Street 615 E. Michigan Street
Milwaukee, Wisconsin 53202 Milwaukee, Wisconsin 53202 Milawaukee, Wisconsin 53202
BY TELEPHONE:** BY TELEPHONE:** BY TELEPHONE:**
If your bank is a member of Automated If you have not already completed the When you are ready to sell shares, call
Clearing House (ACH), your account can be portion of the Shareholder Application 1-877-363-6333 and select how you would
set up with the ACH feature. Complete the related to telephone purchases, call 1 like to receive the proceeds:
portion on the Shareholder Application 877-363-6333 to obtain an application.
related to telephone purchases. After the request is completed, call to - Mail check to the address of record
request the amount to be transferred to - Wire funds to a domestic financial
your account. institution
- Mail to a previously designated alternate
address
- Electronically transfer the funds via ACH
BY WIRE: BY WIRE: BY WIRE:
To obtain instructions for Federal Funds To obtain instructions for Federal Be sure the Fund has your bank account
wire purchases for the Fund, please call Funds wire purchases for the Funds, information on file. Proceeds will be
Firstar at 1-877-363-6333. please call Firstar at 1-877-363-6333. wired to your bank. There is a $12.00
wire fee charged for this service.
AUTOMATICALLY: AUTOMATICALLY: AUTOMATICALLY:
AUTOMATIC INVESTMENT PLAN- Indicate on ALL SERVICES - Call us to request a AUTOMATIC WITHDRAWAL PLAN - Call us to
your application which automatic form to add any automatic investing request a form to add the plan.
service(s) you want. Complete and return service. Complete and return the forms Complete the form, specifying the
your application with your investment. along with any other required materials. amount and frequency of withdrawals you
would like. Be sure to maintain an
account balance of $10,000 or more.
</TABLE>
* All checks should be in U.S. Dollars and drawn on U.S. banks. If your
check is returned for any reason, you may be charged for any resulting
fees or losses. Third-party checks will not be accepted.
** Unless you have instructed us otherwise, only one account owner needs to
call in redemption requests. All telephone calls are recorded for your
protection and reasonable procedures are taken to verify the identity of
the caller (such as providing your account number and taxpayer
identification number). If such measures are followed to ensure against
unauthorized transactions, neither the Trust, the Adviser, the Transfer
Agent nor the Distributor will be responsible for any losses. Written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by the telephone. The Fund reserves the right to
refuse a request to sell shares by wire or telephone if it is believed
advisable to do so. Procedures for selling shares of the Fund by wire or
telephone may be modified or terminated at any time.
13
<PAGE>
Barrett Growth Fund
- ---------------------
Marketing and Distribution
The Fund's shares are offered through financial supermarkets and retirement
plans, investment advisers and consultants, financial planners, brokers, dealers
and other investment professionals. The Fund's principal underwriter and
national distributor is T.O. Richardson Securities, Inc. The shares are offered
and sold without any sales charges imposed by the Fund or its distributor.
Investment professionals who offer the Fund's shares are generally paid
separately by their individual clients. If you invest through a third party, the
policies and fees may be different than those described in this Prospectus. For
example, third parties may charge transaction fees or set different minimum
investment amounts.
The Fund has adopted a Distribution and Shareholder Servicing Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Under this Plan, the Fund
will reimburse the distributor or others for amounts spent in connection with
the sales and distribution of its shares or for shareholder servicing
activities. Distribution activities include the preparation, printing and
mailing of prospectuses, shareholder reports and sales materials for marketing
purposes, marketing activities, advertising and payments to brokers or others
who sell shares of the Fund. Shareholder servicing activities include ongoing
maintenance and service of shareholder accounts for the Fund, responding to
inquiries regarding shareholder accounts and acting as agent or intermediary
between shareholders and the Fund or its service providers. The maximum amount
that the Fund may pay is 0.25% per year of the average daily net assets of the
Fund. Because these fees are paid out of the Fund's assets on an ongoing basis,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges. The Fund currently expects that
the fees of the Plan will primarily be used to compensate mutual fund
supermarkets or retirement plan recordkeepers for their activities on behalf of
the Fund and its shareholders.
Firstar Mutual Fund Services, LLC serves as the administrator, transfer agent,
and dividend disbursing agent for the Fund. The Fund may also compensate other
parties who provide transfer agency services in addition to those provided by
Firstar Mutual Fund Services, LLC. Firstar Trust Company serves as the custodian
for the Fund.
Distributions and Taxation
The Fund will distribute substantially all of the net investment income and net
capital gains that it has realized on the sale of securities. These income and
gains distributions will generally be paid once each year, on or before December
31. Distributions will automatically be reinvested in additional shares of the
Fund, unless you elect to have the distributions paid to you in cash. There are
no sales charges or transaction fees for reinvested dividends and all shares
will be purchased at NAV.
Distributions made by the Fund are taxable to most investors (unless the
investment is in an IRA or qualified retirement plan or account), whether
received in cash or additional shares. Income dividends and short-term capital
gains are taxed as ordinary income, while long-term capital gains are taxed as
such, regardless of how long you own your shares of the Fund. The tax status of
distributions made to you, whether ordinary income or long-term capital gain,
will be detailed in your annual tax statement from the Fund. If the Fund
distributes unrealized gains soon after you purchase shares, a portion of your
investment may be returned as a taxable distribution.
A sale or exchange of Fund shares is a taxable event and may result in a capital
gain or loss to you if you are subject to tax. Non-U.S. investors may be subject
to U.S. withholding and state tax. In addition, distributions from the Fund or
gains from the sale or exchange of Fund shares may be subject to state or local
taxes. By law, the Fund must withhold 31% of your taxable distributions and
proceeds if you do not provide a correct taxpayer identification number ("TIN")
or certify that your TIN is correct, or if the IRS instructs the Fund to do so.
14
<PAGE>
Barrett Growth Fund
- ---------------------
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
15
<PAGE>
BARRETT GROWTH FUND
565 Fifth Avenue
New York, NY 10017
(877) 363-6333
INVESTMENT ADVISER
Barrett Associates, Inc.
565 Fifth Avenue
New York, NY 10017
DISTRIBUTOR
T.O. Richardson Securities, Inc.
2 Bridgewater Road
Farmington, Connecticut 06032
ADMINISTRATOR, FUND ACCOUNTANT &
TRANSFER AGENT
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
CUSTODIAN
Firstar Trust Company
615 East Michigan Street
Milwaukee, WI 53202
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
AUDITORS
KPMG Peat Marwick LLP
777 East Wisconsin Avenue
Suite 3100
Milwaukee, WI 53202
ADDITIONAL INFORMATION
A Statement of Additional Information (SAI) contains additional information
about the Fund and is incorporated by reference into this Prospectus. The Fund's
annual and semi-annual reports to shareholders will contain additional
information about the Fund's investments. In the Fund's annual report, you will
find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during each fiscal year.
You may obtain a free copy of these documents by calling or writing the Fund as
shown above. You also may call the toll-free number shown above to request other
information about the Fund and to make shareholder inquiries.
You may review and copy the SAI and other information about the Fund by visiting
the Securities and Exchange Commission's Public Reference Room in Washington,
DC. or by visiting the Commission's Internet site at http://www.sec.gov. Copies
of this information also may be obtained, upon payment of a duplicating fee, by
writing to the Public Reference Section of the Commission, Washington, DC
20549-6009. You may call the Commission at 1-800-SEC-0330 for information about
the operation of the public reference room.
SEC File No. 811-9035
<PAGE>
BARRETT GROWTH FUND
THE BARRETT FUNDS
565 Fifth Avenue
New York, NY 10017
1 (877) 363-6333
STATEMENT OF ADDITIONAL INFORMATION
Dated [ , 1998]
This Statement of Additional Information (SAI) relates to the Barrett
Growth Fund which is a series of The Barrett Funds, a registered open-end
management investment company commonly known as a mutual fund. This SAI is not a
Prospectus and should be read in conjunction with the Prospectus for the Fund
dated [ , 1998]. The Prospectus may be obtained by writing or calling the Fund
at the address and number shown above.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS 2
Convertible Securities 2
Warrants and Rights 3
Illiquid Securities 3
Rule 144A Securities 3
When Issued, Delayed Delivery Securities and Forward Commitments 4
American Depository Receipts 4
U.S. Government Securities 4
Bank Obligations 5
Loans of Portfolio Securities 5
Repurchase Agreements 6
Reverse Repurchase Agreements 6
Borrowing 7
Futures 7
Options 8
Index Options 11
Risks of Options 12
Other Investments 13
INVESTMENT RESTRICTIONS 13
ADDITIONAL INFORMATION ABOUT PURCHASES AND SALES 15
MANAGEMENT OF THE TRUST 19
Investment Adviser and Advisory Agreement 19
CODE OF ETHICS 21
SERVICE AGREEMENTS 21
PORTFOLIO TRANSACTIONS AND TURNOVER 24
DIVIDENDS 29
Additional Information on Distribution and taxes 29
INVESTMENT PERFORMANCE 28
FINANCIAL STATEMENTS 31
</TABLE>
<PAGE>
GENERAL INFORMATION
The Barrett Growth Fund (the "Fund") is a series of The Barrett Funds, a
business trust organized in the state of Delaware on September 30, 1998 (the
"Trust"). The Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), which is
authorized to issue multiple series and classes of shares. Each series
represents interests in a separate portfolio of investments. The Trust is
authorized to issue an unlimited number of shares of beneficial interest, par
value $0.001. The Barrett Growth Fund is the first and only series of the Trust
and is classified as a "diversified" series as that term is defined in the 1940
Act.
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS
The Fund's investment objective is long-term capital appreciation and the
maximization of after-tax returns. The Fund seeks to achieve its objective by
investing primarily in a diversified portfolio of common stocks of large and
mid-sized growth companies. The Fund's investment objective is not fundamental,
and therefore may be changed in the future by action of the Board of Trustees of
the Trust. Shareholders would not be asked to vote on any change in the
investment objective, but would receive ample advanced written notice of any
such change.
The following discussion of investment techniques and instruments
supplements and should be read in conjunction with the investment information
set forth in the Fund's Prospectus. The investment practices described below,
except for the discussion of certain investment restrictions, are not
fundamental and may be changed by the Board of Trustees without the approval of
the shareholders. In seeking to meet its investment objective, the Fund may
invest in any type of security whose characteristics are consistent with the
Fund's investment program. The securities in which the Fund may invest include
those described below.
CONVERTIBLE SECURITIES
Traditional convertible securities include corporate bonds, notes and
preferred stocks that may be converted into or exchanged for common stock, and
other securities that also provide an opportunity for equity participation.
These securities are generally convertible either at a stated price or a stated
rate (that is, for a specific number of shares of common stock or other
security). As with other fixed income securities, the price of a convertible
security to some extent varies inversely with interest rates. While providing a
fixed-income stream (generally higher in yield than the income derivable from a
common stock but lower than that afforded by a non-convertible debt security), a
convertible security also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. As the market price of the underlying common
stock declines, convertible securities tend to trade increasingly on a yield
basis and so may not experience market value declines to the same extent as the
underlying common stock. When the market price of the underlying common stock
increases, the price of a convertible security tends to rise as a
2
<PAGE>
reflection of the value of the underlying common stock. To obtain such a higher
yield, the Fund may be required to pay for a convertible security an amount in
excess of the value of the underlying common stock. Common stock acquired by the
Fund upon conversion of a convertible security will generally be held for so
long as the Adviser anticipates such stock will provide the Fund with
opportunities which are consistent with the Fund's investment objective and
policies.
WARRANTS AND RIGHTS
The Fund may invest in warrants; however, not more than 10% of the Fund's
total assets (at the time of purchase) will be invested in warrants other than
warrants acquired in units or attached to other securities. Warrants are pure
speculation in that they have no voting rights, pay no dividends and have no
rights with respect to the assets of the corporation issuing them. Warrants
basically are options to purchase equity securities at a specific price valid
for a specific period of time. They do not represent ownership of the
securities, but only the right to buy them. Warrants differ from call options in
that warrants are issued by the issuer of the security which may be purchased on
their exercise, whereas call options may be written or issued by anyone. The
prices of warrants do not necessarily move parallel to the prices of the
underlying securities. Rights represent a preemptive right to purchase
additional shares of stock at the time of new issuance, before stock is offered
to the general public, so that the stockholder can retain the same ownership
percentage after the offering.
ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities.
The term "illiquid securities" for this purpose means securities that cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Fund has valued the securities. Illiquid
securities are considered to include generally, among other things, certain
written over-the-counter options, securities or other liquid assets being used
as cover for such options, repurchase agreements with maturities in excess of
seven days, certain loan participation interests and other securities whose
disposition is restricted under the federal securities laws. The Fund's illiquid
investments may include privately placed securities which are not registered for
sale under the Securities Act of 1933, as amended (the "1933 Act").
RULE 144A SECURITIES
The Fund may invest in securities that are restricted as to resale, but
which are regularly traded among qualified institutional buyers because they are
exempt under Rule 144A from the registration requirements of the 1933 Act. The
Board of Trustees of the Trust has instructed the Adviser to consider the
following factors in determining the liquidity of a security purchased under
Rule 144A: (i) the frequency of trades and trading volume for the security; (ii)
whether at least three dealers are willing to purchase or sell the security and
the number of potential purchasers; (iii) whether at least two dealers are
making a market in the security, the method of soliciting offers and the
mechanics of transfer). Although having delegated the day-to-day functions, the
Board of Trustees will continue to monitor and periodically review the Adviser's
3
<PAGE>
selection of Rule 144A securities, as well as the Adviser's determinations as to
their liquidity. Investing in securities under Rule 144A could affect the Fund's
illiquidity to the extent that qualified institutional buyers become, for a
time, uninterested in purchasing these securities. After the purchase of a
security under Rule 144A, the Board of Trustees and the Adviser will continue to
monitor the liquidity of that security to ensure that the Fund has no more than
15% of its net assets in illiquid securities.
When Issued, Delayed Delivery Securities and Forward Commitments
The Fund may enter into forward commitments for the purchase or sale of
securities, including on a "when issued" or "delayed delivery" basis in excess
of customary settlement periods for the type of security involved. In some
cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger, corporate
reorganization or debt restructuring, i.e., a when, as and if issued security.
When such transactions are negotiated, the price is fixed at the time of the
commitment, with payment and delivery taking place in the future, generally a
month or more after the date of the commitment. While the Fund will only enter
into a forward commitment with the intention of actually acquiring the security,
the Fund may sell the security before the settlement date if it is deemed
advisable.
Securities purchased under a forward commitment are subject to market
fluctuation, and no interest (or dividends) accrues to the Fund prior to the
settlement date. The Fund will segregate with its Custodian cash or liquid
high-grade debt securities in an aggregate amount at least equal to the amount
of its outstanding forward commitments.
American Depository Receipts
The Fund may make foreign investments through the purchase and sale of
sponsored or unsponsored American Depository Receipts ("ADRs"). ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. The Fund may
purchase ADRs whether they are "sponsored" or "unsponsored." "Sponsored" ADRs
are issued jointly by the issuer of the underlying security and a depository,
whereas "unsponsored" ADRs are issued without participation of the issuer of the
deposited security. Holders of unsponsored ADRs generally bear all the costs of
such facilities and the depository of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through voting rights to the holders
of such receipts in respect of the deposited securities. Therefore, there may
not be a correlation between information concerning the issuer of the security
and the market value of an unsponsored ADR. ADRs may result in a withholding tax
by the foreign country of source which will have the effect of reducing the
income distributable to shareholders.
4
<PAGE>
U.S. Government Securities
U.S. Government securities are obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities. The U.S. Government does not
guarantee the net asset value of the Funds' shares. Some U.S. Government
securities, such as Treasury bills, notes and bonds, and securities guaranteed
by the Government National Mortgage Association ("GNMA"), are supported by the
full faith and credit of the United States; others, such as those of the Federal
Home Loan Banks, are supported by the right of the issuer to borrow from the
U.S. Treasury; others, such as those of the Federal National Mortgage
Association ("FNMA"), are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; and still others, such as those
of the Student Loan marketing Association, are supported only by the credit of
the instrumentality. U.S. Government securities include securities that have no
coupons, or have been stripped of their unmatured interest coupons, individual
interest coupons from such securities that trade separately, and evidences of
receipt of such securities. Such securities may pay no cash income, and are
purchased at a deep discount from their value at maturity. Because interest on
zero coupon securities is not distributed on a current basis but is, in effect,
compounded, zero coupon securities tend to be subject to greater market risk
than interest-payment securities, such as CATs and TIGRs, which are not issued
by the U.S. Treasury, and are new therefore not U.S. Government securities,
although the underlying bond represented by such receipt is a debt obligation of
the U.S. Treasury. Other zero coupon Treasury securities (STRIPs and CUBEs) are
direct obligations of the U.S. Government.
Bank Obligations
Certificates of deposit are short-term obligations of commercial banks. A
bankers' acceptance is a time draft drawn on a commercial bank by a borrower,
usually in connection with international commercial transactions. Certificates
of deposit may have fixed or variable rates.
Loans of Portfolio Securities
The Fund may lend its investment securities to approved borrowers who need
to borrow securities in order to complete certain transactions, such as covering
short sales, avoiding failures to deliver securities or completing arbitrage
operations. By lending its investment securities, the Fund attempts to increase
its income through the receipt of interest on the loan. Any gain or loss in the
market price of the securities loaned that might occur during the term of the
loan would be for the account of the Fund. The Fund may lend its investment
securities to qualified brokers, dealers, domestic and foreign banks or other
financial institutions, so long as the terms, the structure and the aggregate
amount of such loans are not inconsistent with the 1940 Act or the rules and
regulations or interpretations of the Securities and Exchange Commission (the
"SEC") thereunder, which currently require that: (a) the borrower pledge and
maintain with a Fund collateral consisting of cash, an irrevocable letter of
credit issued by a bank or securities issued or guaranteed by the United States
Government having a value at all times not less than 100% of the value of the
securities loaned; (b) the borrower add to such collateral whenever the price of
5
<PAGE>
the securities loaned rises (i.e., the borrower "marks to the market" on a daily
basis); (c) the loan be made subject to termination by a Fund at any time; and
(d) the Fund receives reasonable interest on the loan (which may include the
Fund investing any cash collateral in interest bearing short-term investments).
All relevant facts and circumstances, including the creditworthiness of the
broker, dealer or institution, will be considered in making decisions with
respect to the lending of securities, subject to review by the Board of
Trustees.
At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Trustees. In addition, voting rights may pass with
the loaned securities, but if a material event occurs affecting an investment on
a loan, the loan must be called and the securities voted.
Repurchase Agreements
When the Fund enters into a repurchase agreement, it purchases securities
from a bank or broker-dealer which simultaneously agrees to repurchase the
securities at a mutually agreed upon time and price, thereby determining the
yield during the term of the agreement. As a result, a repurchase agreement
provides a fixed rate of return insulated from market fluctuations during the
term of the agreement. The term of a repurchase agreement generally is short,
possibly overnight or for a few days, although it may extend over a number of
months (up to one year) from the date of delivery. Repurchase agreements will be
fully collateralized and the collateral will be marked-to-market daily. The Fund
may not enter into a repurchase agreement having more than seven days remaining
to maturity if, as a result, such agreement, together with any other illiquid
securities held by the Fund, would exceed 15% of the value of the net assets of
the Fund.
In the event of bankruptcy or other default by the seller of the security
under a repurchase agreement, the Fund may suffer time delays and incur costs or
possible losses in connections with the disposition of the collateral. In such
event, instead of the contractual fixed rate of return, the rate of return to
the Fund would be dependent upon intervening fluctuations of the market value of
the underlying security and the accrued interest on the security. Although the
Fund would have rights against the seller for breach of contract with respect to
any losses arising from market fluctuations following the failure of the seller
to perform, the ability of the Fund to recover damages from a seller in
bankruptcy or otherwise in default would be reduced.
Repurchase agreements are securities for purposes of the tax
diversification requirements that must be met for pass-through treatment under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, the Fund will limit the value of its repurchase agreements on each
of the quarterly testing dates to ensure compliance with Subchapter M of the
Code.
6
<PAGE>
Reverse Repurchase Agreements
Reverse repurchase agreements involve sales of portfolio securities of the
Fund to member banks of the Federal Reserve System or securities dealers
believed creditworthy, concurrently with an agreement by the Series to
repurchase the same securities at a later date at a fixed price which is
generally equal to the original sales price plus interest. The Fund retains
record ownership and the right to receive interest and principal payments on the
portfolio securities involved. In connection with each reverse repurchase
transaction, the Fund will direct its custodian bank to place cash, U.S.
government securities, equity securities and/or investment and non-investment
grade debt securities in a segregated account of the Series in an amount equal
to the repurchase price. Any assets held in any segregated securities, options,
futures, forward contracts or other derivative transactions shall be liquid,
unencumbered and marked-to-market daily (any such assets held in a segregated
account are referred to in this Statement of Additional Information as
"Segregated Assets").
A reverse repurchase agreement involves the risk that the market value of
the securities retained by the Fund may decline below the price of the
securities the Series has sold but is obligated to repurchase under the
agreement. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, the Fund's use of the
proceeds of the agreement may be restricted pending a determination by the other
party, or its trustee or receiver, whether to enforce the Fund's obligation to
repurchase the securities. Reverse repurchase agreements are considered
borrowings and as such, are subject to the same investment limitations.
Borrowing
The Fund may borrow money as a temporary measure for extraordinary
purposes or to facilitate redemptions subject to the fundamental investment
restriction described below under the heading "Investment Restrictions." The
Fund will not borrow money in excess of 33 1/3% of the value of its total
assets. The Fund has no intention of increasing its net income through
borrowing. Any borrowing will be done from a bank with the required asset
coverage of at least 300%. In the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three days thereafter (not
including Sundays or holidays), or such longer period as the SEC may prescribe
by rules and regulations, reduce the amount of its borrowings to such an extent
that the asset coverage of such borrowings shall be at least 300%.
Futures
The Fund may enter into contracts for the purchase or sale for future
delivery of securities. A purchase of a futures contract means the acquisition
of a contractual right to obtain delivery to the Fund of the securities or
foreign currency called for by the contract at a specified price and future
date. When the Fund enters into a futures transaction, it must deliver to the
futures commission merchant selected by the Fund an amount referred to as
"initial margin."
7
<PAGE>
This amount is maintained by the futures commission merchant in segregated
account at the custodian bank. Thereafter, a "variation margin" may be paid by
the Fund to, or drawn by the Fund from, such account in accordance with controls
set for such accounts, depending upon changes in the price of the underlying
securities subject to the futures contract.
The Fund may enter into futures contracts and engage in options on futures
to the extent that no more than 5% of the Fund's assets are required as futures
contract margin deposits and premiums on options, and may engage in such
transactions to the extent that obligations relating to such futures and related
options on futures transactions represent not more than 25% of the Fund's
assets.
The Fund will enter into futures transactions on domestic exchanges and,
to the extent such transactions have been approved by the Commodity Futures
Trading Commission for sale to customers in the United States, on foreign
exchanges. In addition, the Fund may sell stock index futures in anticipation of
or during a market decline to attempt to offset the decrease in market value of
their common stocks that might otherwise result; and they may purchase such
contracts in order to offset increases in the cost of common stocks that they
intend to purchase. Unlike other futures contracts, a stock index futures
contract specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the termination of
the contract. While futures contracts provide for the delivery of securities,
deliveries usually do not occur. Contracts are generally terminated by entering
into offsetting transactions.
The Fund may enter into futures contracts to protect against the adverse
affects of fluctuations in security prices, interest or foreign exchange rates
without actually buying or selling the securities or foreign currency. For
example, if interest rates are expected to increase, the Fund might enter into
futures contracts for the sale of debt securities. Such a sale would have much
the same effect as selling an equivalent value of the debt securities owned by
the Fund. If interest rates did increase, the value of the debt securities in
the portfolio would decline, but the value of the futures contracts to the Fund
would increase at approximately the same rate, thereby keeping the net asset
value of the Fund from declining as much as it otherwise would have. Similarly,
when it is expected that interest rates will decline, futures contracts may be
purchased to hedge in anticipation of subsequent purchases of securities at
higher prices. Since the fluctuations in the value of futures contracts should
be similar to those of debt securities, the Fund could take advantage of the
anticipated rise in value of debt securities without actually buying them until
the market had stabilized. At that time, the futures contracts could be
liquidated and the Fund could then buy debt securities on the cash market.
To the extent that market prices move in an unexpected direction, the Fund
may not achieve the anticipated benefits of futures contracts or may realize a
loss. For example, if the Fund is hedged against the possibility of an increase
in interest rates which would adversely affect the price of securities held in
its portfolio and interest rates decrease instead, the Fund would lose part or
all of the benefit of the increased value which it has because it would have
offsetting losses in its futures position. In addition, in such situations, if
the Fund had insufficient cash, it may be required to sell securities from its
portfolio to meet daily variation margin requirements. Such sales of securities
may, but will not necessarily, be at increased prices which reflect the rising
market. The Fund may be required to sell securities at a time when it may be
disadvantageous to do so.
Options
The Fund may invest in options that are listed on U.S. exchanges or traded
over-the-counter. Certain over-the-counter options may be illiquid. Thus, it may
not be possible to close options positions and this may have an adverse impact
on the Fund' ability to effectively hedge its securities. The Fund considers
over-the-counter options to be illiquid. Accordingly, the Fund will only invest
in such options to the extent consistent with its 15% limit on investments in
illiquid securities. The Fund may purchase and write call or put options on
securities but will only engage in option strategies for non-speculative
purposes. In addition, the Fund will only engage in option transactions (other
than index options) to the extent that no more than 25% of its total assets are
subject to obligations relating to such options.
8
<PAGE>
Purchasing Call Options - The Fund may purchase call options on
securities. When the Fund purchases a call option, in return for a premium paid
by the Fund to the writer of the option, the Fund obtains the right to buy the
security underlying the option at a specified exercise price at any time during
the term of the option. The writer of the call option has the obligation to
deliver the underlying security against payment of the exercise price. The
advantage of purchasing call options is that the Fund may alter portfolio
characteristics and modify portfolio maturities without incurring the cost
associated with transactions.
The Fund may, following the purchase of a call option, liquidate its
position by effecting a closing sale transaction. This is accomplished by
selling an option of the same series as the option previously purchased. The
Fund will realize a profit from a closing sale transaction if the price received
on the transaction is more than the premium paid to purchase the original call
option; the Fund will realize a loss from a closing sale transaction if the
price received on the transaction is less than the premium paid to purchase the
original call option.
Although the Fund will generally purchase only those call options for
which there appears to be an active secondary market, there is no assurance that
a liquid secondary market on an exchange will exist for any particular option,
or at any particular time, and for some options no secondary market on an
exchange may exist. In such event, it may not be possible to effect closing
transactions in particular options, with the result that the Fund would have to
exercise its options in order to realize any profit and would incur brokerage
commissions upon the exercise of such options and upon the subsequent
disposition of the underlying securities acquired through the exercise of such
options. Further, unless the price of the underlying security changes
sufficiently, a call option purchased by the Fund may expire without any value
to the Fund, in which event it would realize a capital loss which will be
short-term unless the option was held for more than one year.
Covered Call Writing - The Fund may write covered call options from time
to time on such portions of its portfolio, without limit, as Barrett Associates
determines is appropriate in seeking to achieve the Fund's investment objective.
The advantage to the Fund of writing covered calls is that it receives a premium
which is additional income. However, if the security rises in value, the Fund
may not fully participate in the market appreciation.
During the option period for a covered call option, the writer may be
assigned an exercise notice by the broker-dealer through whom such call option
was sold, requiring the writer to deliver the underlying security against
payment of the exercise price. This obligation is terminated upon the expiration
of the option or upon entering a closing purchase transaction. A closing
purchase transaction, in which the Fund, as writer of an option, terminates its
obligation by purchasing an option of the same fund as the option previously
written, cannot be effected with respect to an option once the option writer has
received an exercise notice for such option.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable the
Fund to write another call option on the underlying security with either a
different exercise price or expirations date or both. The Fund may realize a net
gain or loss from a closing purchase transaction depending upon whether the net
amount of the original premium received on the call option is more or less than
the cost of effecting the closing purchase transaction. Any loss incurred in a
closing purchase transaction may be partially or entirely offset by the premium
received from a sale of a different call option on the same underlying security.
Such a loss may also be wholly or partially offset by unrealized appreciation in
the market value of the underlying security. Conversely, a gain resulting from a
closing purchase transaction could be offset in whole or in part by a decline in
the market value of the underlying security.
9
<PAGE>
If a call option expires unexercised, the Fund will realize a short-term
capital gain in the amount of the premium on the option less the commission
paid. Such a gain, however, may be offset by depreciation in the market value of
the underlying security during the option period. If a call option is exercised,
the Fund will realize a gain or loss from the sale of the underlying security
equal to the difference between the cost of the underlying security and the
proceeds of the sale of the security plus the amount of the premium on the
option less the commission paid.
The Fund will write call options only on a covered basis, which means that
the Fund will own the underlying security subject to a call option at all times
during the option period. Unless a closing purchase transaction is effected, the
Fund would be required to continue to hold a security which it might otherwise
wish to sell or deliver a security it would want to hold. The exercise price of
a call option may be below, equal to or above the current market value of the
underlying security at the time the option is written.
Purchasing Put Options - The Fund may purchase put options. The Fund will,
at all times during which it holds a put option, own the security covered by
such option. The purchase of the put on substantially identical securities held
will constitute a short sale for tax purposes, the effect of which is to create
short-term capital gain on the sale of the security and to suspend running of
its holding period (and treat it as commencing on the date of the closing of the
short sale) or that of a security acquired to cover the same if, at the time the
put was acquired, the security had not been held for more than one year.
A put option purchased by the Fund gives it the right to sell one of its
securities for an agreed price up to an agreed date. The Fund intends to
purchase put options in order to protect against a decline in the market value
of the underlying security below the exercise price less the premium paid for
the option ("protective puts"). The ability to purchase put options will allow
the Fund to protect unrealized gains in an appreciated security in their
portfolios without actually selling the security. If the security does not drop
in value, the Fund will lose the value of the premium paid. The Fund may sell a
put option which it has previously purchased prior to the sale of the securities
underlying such option. Such sale will result in a net gain or loss depending on
whether the amount received on the sale is more or less than the premium and
other transaction costs paid on the put option which is sold.
The Fund may sell a put option purchased on individual portfolio
securities. Additionally, the Series may enter into closing sale transactions. A
closing sale transaction is one in which the Fund, when it is the holder of an
outstanding option, liquidates its position by selling an option of the same
series as the option previously purchased.
10
<PAGE>
Writing Put Options - The Fund may also write put options on a secured
basis which means that the Fund will maintain in a segregated account with its
custodian segregated assets in an amount not less than the exercise price of the
option at all times during the option period. The amount of segregated assets
held in the segregated account will be adjusted on a daily basis to reflect
changes in the market value of the securities covered by the put option written
by the Series. Secured put options will generally be written in circumstances
where Barrett Associates wishes to purchase the underlying security for the
Fund's portfolio at a price lower than the current market price of the security.
In such event, the Fund would write a secured put option at an exercise price
which, reduced by the premium received on the option, reflects the lower price
it is willing to pay.
Following the writing of a put option, the Fund may wish to terminate the
obligation to buy the security underlying the option by effecting a closing
purchase transaction. This is accomplished by buying an option of the same
series as the option previously written. The Fund may not, however, effect such
a closing transaction after it has been notified of the exercise of the option.
Straddles - The Fund may write covered straddles consisting of a
combination of a call and a put written on the same underlying security. A
straddle will be covered when sufficient assets are deposited to meet the Fund's
immediate obligations. The Fund may use the same liquid assets to cover both the
call and put options where the exercise price of the call and put are the same,
or the exercise price of the call is higher than that of the put. In such cases,
the Fund will also segregate liquid assets equivalent to the amount, if any, by
which the put is "in the money."
Index Options
The Fund may purchase exchange-listed put and call options on stock
indices and sell such options in closing sale transactions for hedging purposes.
The Fund may purchase call options on broad market indices to temporarily
achieve market exposure when the Fund is not fully invested. The Fund may also
purchase exchange-listed call options on particular market segment indices to
achieve temporary exposure to a specific industry. The Fund may purchase put
options on broad market indices in order to protect its fully invested portfolio
from a general market decline. Put options on market segments may be bought to
protect the Fund from a decline in value of heavily weighted industries in the
Fund's portfolio. Put options on stock indices may be used to protect the Fund'
investments in the case of a major redemption. While the option is open, the
Fund will maintain a segregated account with its custodian in an amount equal to
the market value of the option.
Options on indices are similar to regular options except that an option on
an index gives the holder the right, upon exercise, to receive an amount of cash
if the closing level of the index upon which the option is based is greater than
(in the case of a call) or lesser than (in the case of a put) the exercise price
of the option. This amount of cash is equal to the difference between the
closing price of the index and the exercise price of the option expressed in
dollars times a specified multiple (the "multiplier").
11
<PAGE>
Risks of Options
The purchase and writing of options involves certain risks. During the
option period, the covered call writer has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but, as long as its obligation
as a writer continues, has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying securities at the exercise price. If a
put or call option purchased by the Fund is not sold when it has remaining
value, and if the market price of the underlying security, in the case of a put,
remains equal to or greater than the exercise price or, in the case of a call,
remains less than or equal to the exercise price, the Fund will lose its entire
investment in the option. Also, where a put or call option on a particular
security is purchased to hedge against price movements in a related security,
the price of the put or call option may move more or less than the price of the
related security. There can be no assurance that a liquid market will exist when
a Fund seeks to close out an option position. Furthermore, if trading
restrictions or suspensions are imposed on the options markets, the Fund may be
unable to close out a position.
The Fund's purchases of options on indices will subject them to the
following risks described below. First, because the value of an index option
depends upon movements in the level of the index rather than the price of a
particular security, whether the Fund will realize gain or loss on the purchase
of an option on an index depends upon movements in the level of prices in the
market generally or in an industry or market segment rather than movements in
the level of prices in the market generally or in an industry or market segment
rather than movements in the price of a particular security. Accordingly,
successful use by the Fund of options on indices is subject to Barrett
Associates' ability to predict correctly the direction of movements in the
market generally or in a particular industry. This requires different skills and
techniques than predicting changes in the prices of individual securities.
Second, index prices may be distorted if trading of a substantial number
of securities included in the index is interrupted causing the trading of
options on that index to be halted. If a trading halt occurred, the Fund would
not be able to close put options which it had purchased and the Fund may incur
losses if the underlying index moved adversely before trading resumed. If a
trading halt occurred and restrictions prohibiting the exercise of options were
imposed through the close of trading on the last day before expiration,
exercises on that day would be settled on the basis of a closing index value
that may not reflect current price information for securities representing a
substantial portion of the value of the index.
Third, if the Fund holds an index option and exercises it before final
determination of the closing index value for that day, it runs the risk that the
level of the underlying index may change before closing. If such a change causes
the exercised option to fall "out-of-the-money," the Fund will be required to
pay the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer. Although the
Fund may be able to minimize this risk by withholding exercise instructions
until just before the daily cutoff time or by selling rather than exercising the
option when the index level is close to the exercise price, it may not be
possible to eliminate this risk entirely because the cutoff times for index
options may be earlier than those fixed for other types of options and may occur
before definitive closing index values are announced.
12
<PAGE>
Other Investments
The Board of Trustees may, in the future, authorize the Fund to invest in
securities other than those listed in this SAI and in the prospectus, provided
such investment would be consistent with the Fund's investment objective and
that it would not violate any fundamental investment policies or restrictions.
INVESTMENT RESTRICTIONS
Fundamental Investment Policies and Restrictions: The Fund has adopted the
following fundamental investment restrictions which cannot be changed without
the approval of a "majority of the outstanding voting securities" of the Fund.
Under the 1940 Act, a "majority of the outstanding voting securities" of a fund
means the vote of: (i) more than 50% of the outstanding voting securities of the
fund; or (ii) 67% or more of the voting securities of the fund present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, whichever is less.
Concentration: The Fund will not make investments that will result in the
concentration (as that term may be defined in the 1940 Act, any rule or order
thereunder, or U.S. Securities and Exchange Commission ("SEC") staff
interpretation thereof) of its investments in the securities of issuers
primarily engaged in the same industry, provided that this restriction does not
limit the Fund from investing in obligations issued or guaranteed by the U.S.
government, or its agencies or instrumentalities. The SEC staff currently takes
the position that a fund concentrates its investments in a particular industry
if more than 25% of its net assets is invested in issuers within the industry.
Senior Securities & Borrowing: The Fund may not borrow money or issue senior
securities, except as the 1940 Act, any rule or order thereunder, or SEC staff
interpretation thereof, may permit.
Underwriting: The Fund may not underwrite the securities of other issuers,
except that the Fund may engage in transactions involving the acquisition,
disposition or resale of its portfolio securities, under circumstances where it
may be considered to be an underwriter under the Securities Act of 1933.
Real Estate: The Fund may not purchase or sell real estate, unless acquired as a
result of ownership of securities or other instruments and provided that this
restriction does not prevent the Fund from investing in issuers which invest,
deal or otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
13
<PAGE>
Commodities: The Fund may not purchase or sell physical commodities, unless
acquired as a result of ownership of securities or other instruments and
provided that this restriction does not prevent the Fund from engaging in
transactions involving futures contracts and options thereon or investing in
securities that are secured by physical commodities.
Lending: The Fund may not make loans, provided that this restriction does not
prevent the Fund from purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker/dealers or institutional investors and
investing in loans, including assignments and participation interests.
Non-Fundamental Policies and Restrictions: In addition to the fundamental
policies and investment restrictions described above, and the various general
investment policies described in the Prospectus, the Fund will be subject to the
following investment restrictions, which are considered non-fundamental and may
be changed by the Board of Trustees without shareholder approval.
Other Investment Companies: The Fund is permitted to invest in other investment
companies, including open-end, closed-end or unregistered investment companies,
either within the percentage limits set forth in the 1940 Act, any rule or order
thereunder, or SEC staff interpretation thereof, or without regard to percentage
limits in connection with a merger, reorganization, consolidation or other
similar transaction. However, the Fund may not operate as a "fund of funds"
which invests primarily in the shares of other investment companies as permitted
by Section 12(d)(1)(F) or (G) of the 1940 Act, if its own shares are utilized as
investments by such a "fund of funds."
Illiquid Securities: The Fund may not invest more than 15% of its net assets in
securities which it can not sell or dispose of in the ordinary course of
business within seven days at approximately the value at which the Fund has
valued the investment.
In applying the Fund's fundamental policy concerning concentration that is
described above, it is a matter of non-fundamental policy that investments in
certain categories of companies will not be considered to be investments in a
particular industry. For example: (i) financial service companies will be
classified according to the end users of their services, for example, automobile
finance, bank finance and diversified finance will each be considered a separate
industry; (ii) technology companies will be divided according to their products
and services, for example, hardware, software, information services and
outsourcing, or telecommunications will each be a separate industry; (iii)
asset-backed securities will be classified according to the underlying assets
securing such securities; and (iv) utility companies will be divided according
to their services, for example, gas, gas transmission, electric and telephone
will each be considered a separate industry.
14
<PAGE>
ADDITIONAL INFORMATION ABOUT PURCHASES AND SALES
Purchasing Shares
You may purchase shares of the Fund without any sales charge through an
investment adviser, financial planner, broker, dealer or other investment
professional or through a fund supermarket or retirement plan. Shares of the
Fund are offered on a continuous basis by the distributor. Other persons may
receive compensation for their marketing and shareholder servicing activities in
the form of 12b-1 fees payable by the Fund under its 12b-1 Plan.
The Fund reserves the right to reject any purchase order and to suspend
the offering of shares of the Fund. The minimum initial investment is $2,500 and
additional investments must total at least $1,000. The minimum initial
investment for qualified retirement accounts is $1,000 ($500 for Education IRAs)
and there is no minimum for subsequent investments in these accounts. The Fund
may also change or waive its policies concerning minimum investment amounts at
any time. The Fund's Transfer Agent maintains all shareholder and shareholder
transaction(s) records for the Fund.
The Fund does not intend to issue certificates representing shares
purchased. You will have the same rights of ownership with respect to such
shares as if certificates had been issued.
You may buy shares at the Fund's net asset value per share (NAV), which is
calculated as of the close of the New York Stock Exchange ("NYSE") (usually 4:00
P.M. eastern time) every day the exchange is open. As of the date of this SAI,
the Fund is informed that the NYSE observes the following holidays: New Year's
Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
The NAV is determined by dividing the value of the Fund's securities, cash
and other assets, minus all expenses and liabilities, by the number of shares
outstanding. The Fund's securities are valued each day at their market value,
which usually means the last quoted sale price on the security's principal
exchange on that day. Expenses and fees of the Fund, including management,
distribution and shareholder servicing fees, are accrued daily and taken into
account for the purpose of determining the net asset value.
Cash and receivable are valued at their realizable amounts. Interest is
recorded as accrued and dividends are recorded on the ex-dividend date.
Portfolio securities listed on a securities exchange or on the NASDAQ National
Market System for which market quotations are readily available are valued at
the last quoted sale price of the day or, if there is no such reported sale,
within the range of the most recent quoted bid and ask prices. The current
market value of any option held by the Fund is its last sale price on the
relevant exchange before the time when assets are valued. Lacking any sales that
day or if the last sale price is outside the bid and ask prices, options are
valued within the range of the current closing bid and ask prices if the
valuation is believed to reflect the contract's market value. The value of a
foreign security is determined as of the close of trading on the foreign
exchange on which it is traded or as of the scheduled close of trading on the
NYSE, if that is earlier. Generally, trading in corporate bonds, U.S. government
securities and money market instruments is substantially completed each day at
various times before the scheduled close of the NYSE. The value of these
securities used in computing the NAV of each class is determined as of such
time.
When you buy shares, if you submit a check or a draft that is returned
unpaid to the Fund, the Fund may impose a
15
<PAGE>
$10 charge against your account for each returned item. All checks, drafts,
wires and other payment mediums used to buy or sell shares of the Fund must be
denominated in U.S. dollars. The Fund may, in our sole discretion, either (a)
reject any order to buy or sell shares denominated in any other currency or (b)
honor the transaction or make adjustments to your account for the transaction as
of a date and with a foreign currency exchange factor determined by the drawee
bank.
Selling Shares
Shares of the Fund may be redeemed on any business day that the Fund
calculates its NAV. The sale price will be the next NAV calculated after your
order is accepted by the Fund's transfer agent. No fees are imposed by the Fund
when shares are sold.
You may sell your shares by giving instructions to the Fund's transfer
agent by mail or by telephone. The Fund will use reasonable procedures to
confirm that instructions communicated by telephone are genuine and, if the
procedures are followed, will not be liable for any losses due to unauthorized
or fraudulent telephone transactions. During times of drastic economic or market
changes, the telephone redemption privilege may be difficult to implement and
the Fund reserves the right to suspend this privilege.
Certain written requests to sell shares require a signature guarantee. For
example, a signature guarantee may be required if you sell shares worth $10,000
or more if your address of record on the account application has been changed
within the last 30 days, or if you ask that the proceeds be sent to a different
person or address. A signature guarantee is used to help protect you and the
Fund from fraud. You can obtain a signature guarantee from most banks and
securities dealers, but not from a notary public. Signature guarantees must
appear together with the signature(s) of the registered owner(s), on: (1) a
written request for redemption; or (2) a separate instrument of assignment,
which should specify the total number of shares to be redeemed (this "stock
power" may be obtained from the Fund or from most banks or stock brokers).
If you sell shares through a securities dealer or investment professional,
it is such person's responsibility to transmit the order to the Fund in a timely
fashion. Any loss to you resulting from failure to do so must be settled between
you and such person.
Delivery of the proceeds of a redemption of shares purchased and paid for
by check shortly before the receipt of the request may be delayed until the Fund
determines that the Custodian has completed collection of the purchase check
which may take up to 10 days. Also, redemption requests for accounts for which
purchases were made by wire may be delayed until the Fund receives a completed
application for the account. The Board of Trustees may suspend the right of
redemption or postpone the date of payment during any period when (a) trading on
the New York Stock Exchange is restricted as determined by the SEC or such
exchange is closed for other than weekends and holidays, (b) the SEC has by
order permitted such suspension, or (c)
1
<PAGE>
an emergency, as defined by rules of the SEC, exists during which time the sale
of Fund shares or valuation of securities held by the Fund are not reasonably
practicable.
Redeeming shares through a systematic withdrawal plan may reduce or
exhaust the shares in your account if payments exceed distributions received
from the Fund. This is especially likely to occur if there is a market decline.
If a withdrawal amount exceeds the value of your account, your account will be
closed and the remaining balance in your account will be sent to you. Because
the amount withdrawn under the plan may be more than your actual yield or
income, part of the payment may be a return of your investment.
If dividend checks are returned to the Fund marked "unable to forward" by
the postal service, we will consider this a request by you to change your
dividend option to reinvest all distributions. The proceeds will be reinvested
in additional shares at NAV until we receive new instructions.
If mail is returned as undeliverable or we are unable to locate you or
verify your current mailing address, we may deduct the costs of any efforts to
find you from your account. These costs may include a percentage of the account
when a search company charges a percentage fee in exchange for its location
services.
Distribution or redemption checks sent to you do not earn interest or any
other income during the time the checks remain uncashed. Neither the Fund nor
its affiliates will be liable for any loss caused by your failure to cash such
checks.
The Fund also reserves the right to make a "redemption in-kind" if the
amount you are redeeming is large enough to affect Fund operations or if the
redemption would otherwise disrupt the Fund. For example, the Fund may redeem
shares in-kind if the amount represents more than 1% of the Fund's assets. When
the Fund makes a "redemption in-kind" it pays the Seller in portfolio securities
rather than cash. If shares are redeemed in kind, the redeeming shareholder may
incur brokerage costs in converting the assets to cash. The method of valuing
securities used to make redemptions in kind will be the same as the method of
valuing portfolio securities is described above. Such valuation will be made as
of the same time the redemption price is determined.
2
<PAGE>
In addition, if your account balance falls below $1,000, the Fund may
request that you increase your balance. If it is still below $1,000 after 60
days, the Fund may automatically close your account and send you the proceeds.
MANAGEMENT OF THE TRUST
Trustees and Officers
The Trust is governed by a Board of Trustees which is responsible for
protecting the interests of shareholders. The Trustees are experienced business
persons who meet throughout the year to oversee the Trust's activities, review
contractual arrangements with companies that provide services to the Fund, and
review performance. The names and business addresses of the Trustees and
officers of the Trust, together with information as to their principal
occupations during the past five years, are listed below. The Trustees who are
considered "interested persons" of the investment adviser or of the Trust, as
defined in Section 2(a)(19) of the 1940 Act, are noted with an asterisk (*).
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION(S) HELD PRINCIPAL OCCUPATION(S)
AND AGE WITH REGISTRANT DURING THE PAST 5 YEARS
------- --------------- -----------------------
<S> <C> <C>
John D. Barrett, II* Chairman of the Board of Chief Executive Officer of Barrett Associates,
565 Fifth Avenue Trustees Inc.
New York, NY 10017
Age 63
Robert E. Harvey* President and Trustee President of Barrett Associates, Inc.
565 Fifth Avenue
New York, NY 10017
Age 44
James R. Rutherford* Trustee Managing Director of Barrett Associates, Inc.
565 Fifth Avenue
New York, NY 10017
Age 65
R. Bruce Cameron Trustee Managing Director, Berkshire Capital Corporation
399 Park Avenue, 28th Floor
New York, NY 10022
Age
Gerard E. Jones Trustee Partner of the law firm of Richards & O'Neil,
43 Arch Street LLP
Greenwich, CT 06830
Age
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION(S) HELD PRINCIPAL OCCUPATION(S)
AND AGE WITH REGISTRANT DURING THE PAST 5 YEARS
------- --------------- -----------------------
<S> <C> <C>
Ronald E. Kfoury Trustee President, Analect Consulting
90 Park Aveue
New York, NY 10016
Age
Robert J. Voccola Vice President Managing Director of Barrett Associates, Inc.
565 Fifth Avenue
New York, NY 10017
Age
Henry A. Collins Vice President Managing Director of Barrett Associates, Inc.
565 Fifth Avenue
New York, NY 10017
Age
Peter H. Shriver Vice President & Treasurer Managing Director of Barrett Associates, Inc.
565 Fifth Avenue
New York, NY 10017
Age
Leslie J. Lammers Vice President Managing Director of Barrett Associates, Inc.
565 Fifth Avenue since 1997; previously Vice President of
New York, NY 10017 Scudder, Stevens and Clark, Inc.
Age
Paula J. Elliott Secretary Vice President of Barrett Associates, Inc.
565 Fifth Avenue
New York, NY 10017
Age
</TABLE>
Compensation of Trustees: The Trust does not compensate the Trustees who are
officers or employees of the Adviser or its affiliates. The "independent"
Trustees receive a fee of $250 for each meeting of the Trustees which they
attend in person or by telephone. Trustees are reimbursed for travel and other
out-of-pocket expenses. The Board of Trustees is expected to hold regular
quarterly meetings each year, and would receive the annual compensation shown
below from the Trust for serving on the Board and attending such meetings. The
Trust does not offer any retirement benefits for Trustees. As of December 15,
1998, the officers and Trustees, individually and as a group, owned beneficially
less than 1% of the outstanding shares of the Barrett Growth Fund.
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF TRUSTEE TITLE FROM TRUST
--------------- ----- ----------
<S> <C> <C>
John D. Barrett, II Chairman of the Board None
Robert E. Harvey Trustee and President None
James R. Rutherford Trustee None
R. Bruce Cameron Trustee $1,000
Gerard E. Jones Trustee $1,000
Ronald E. Kfoury Trustee $1,000
</TABLE>
Investment Adviser and Advisory Agreement Barrett Associates, Inc. ("Barrett
Associates" or the "Adviser") having its principal offices located at 565 Fifth
Avenue, New York, NY 10017, is the Fund's investment adviser. Barrett Associates
is registered as an investment adviser under the Investment Advisers Act of 1940
(as amended, the "Advisers Act").
Barrett Associates serves as investment adviser to the Fund pursuant to an
Investment Advisory Agreement with the Trust dated as of November 11, 1998 (the
"Advisory
4
<PAGE>
Agreement"). Under the Advisory Agreement, the Adviser, subject to the
supervision of the Trustees, provides a continuous investment program for each
Fund, including investment research and management with respect to securities,
investments and cash equivalents, in accordance with the Fund's investment
objective, policies and restrictions as set forth in its prospectus, this SAI
and the resolutions of the Trustees. The Adviser is responsible for effecting
all security transactions on behalf of the Fund, including the allocation of
principal business and portfolio brokerage and the negotiation of commissions.
The Adviser also maintains books and records with respect to the securities
transactions of the Fund and furnishes to the Trustees such periodic or other
reports as the Trustees may request.
The Fund is obligated to pay the Adviser a monthly fee equal to an annual
rate of 1.00% of the Fund's average daily net assets. The Adviser has
voluntarily agreed to waive its advisory fee or make payments to limit Fund
expenses to the extent necessary to ensure that total operating expenses of the
Fund do not exceed 1.70% of average daily net assets during the Fund's first
year of operations. This voluntary arrangement may be terminated by the Adviser
at any time. To the extent that the Adviser waives fees or makes payments to
limit Fund expenses, it may seek to recoup such waived fees or expense payments
after this practice is discontinued.
Barrett Associates is an independent, privately-owned firm. Its
stockholders consist of seven senior officers of the firm, together with a
subsidiary of a privately-held real estate firm named The Ashforth Company,
located at 3003 Summer Street, Stamford, Connecticut 06905. The Fund's chairman,
John D. Barrett, II owns 25% of Barrett Associates' outstanding stock and
therefore is deemed to have a controlling interest in the firm under the 1940
Act. The Ashforth Company holds a 53% interest in Barrett Associates, through a
wholly-owned subsidiary, and therefore is also deemed to control the firm. The
remaining shares of the common stock are held by senior officers of Barrett
Associates. The Ashforth Company was founded in 1896. Its principal business is
real estate, with ownership of 1.3 million square feet of office property.
During the term of the Advisory Agreement, the Adviser pays all expenses
incurred by it in connection with its activities thereunder except the cost of
securities (including brokerage commissions, if any) purchased for the Fund. The
services furnished by the Adviser under the Advisory Agreement are not
exclusive, and the Adviser is free to perform similar services for others.
Unless sooner terminated in accordance with its terms, the Advisory
Agreement is initially effective for a period of two years and may be continued
from year to year, provided that such continuance is approved at least annually
by a vote of the holders of a "majority" (as defined in the 1940 Act) of the
outstanding voting securities of the Fund, or by the Trustees, and in either
event by vote of a majority of the Trustees of the Trust who are not parties to
either Advisory Agreement or "interested persons" (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval. The required shareholder approval of any continuance will be
effective with respect to the Fund if a majority of the outstanding voting
securities of the Fund votes to approve such continuance.
<PAGE>
The Advisory Agreement will automatically terminate in the event of its
"assignment" as that term is defined in the 1940 Act, and may be terminated
without penalty at any time upon 60 days' written notice to the other party: (i)
by the majority vote of all the Trustees or by majority vote of the outstanding
voting securities of the Fund; or (ii) by the Adviser.
The Advisory Agreement may be amended by the parties provided, in most
cases, that such amendment is specifically approved by the vote of a majority of
the outstanding voting securities of the Fund and by the vote of a majority of
the Trustees who are not interested persons of the Fund or of the Adviser, cast
in person at a meeting called for the purpose of voting upon such approval.
Under the terms of the Advisory Agreement, the Adviser will be liable to
the Fund or the Trust only for losses resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services, willful misfeasance,
bad faith, gross negligence, or reckless disregard of duty.
The Adviser and the Trust have agreed that the Trust may use the name
"Barrett" only so long as Barrett Associates serves as investment adviser for
the Trust or Fund, or as Barrett Associates may permit.
CODE OF ETHICS
Both the Fund and the investment adviser have adopted a Code of Ethics
that governs the conduct of employees of the Fund and adviser who may have
access to information about the Fund's securities transactions. The Code
recognizes that such persons owe a fiduciary duty to the Fund's shareholders and
must place the interests of shareholders ahead of their own interests. Among
other things, the Code requires preclearance of personal securities
transactions; certain blackout periods for personal trading of securities which
may be considered for purchase or sale by the Fund or other clients of the
adviser; and prohibitions against personal trading of initial public offerings.
Violations of the code are subject to review by the Trustees and could result in
severe penalties.
SERVICE AGREEMENTS
As more fully described below, the Trust has entered into a number of
agreements with Firstar Mutual Funds Services, LLC ("Firstar"), a Wisconsin
limited liability company, pursuant to which management-related and other
services are performed for the Fund. Firstar serves as the Administrator,
Transfer and Dividend Disbursing Agent, and Fund Accountant. Firstar Trust
Company serves as the Fund's custodian. The principal offices of Firstar and
Firstar Trust Company are located at 615 Michigan Avenue, Milwaukee, WI 53202.
Administrator
Pursuant to an Administration Agreement with the Trust dated as of
November 11, 1998 (the "Administration Agreement"), Firstar serves as
Administrator of the Fund and subject to the
<PAGE>
direction and control of the Trustees, supervises all aspects of the operation
of the Fund except those performed by the Fund's Adviser. As administrator,
Firstar receives asset-based fees at the annual rates of 0.06% on the first $200
million of average daily net assets, 0.05% on the next $500 million of average
daily net assets and 0.03% on average daily net assets above $700 million,
subject to a minimum amount of $30,000 per year.
Under the Administration Agreement, Firstar provides certain
administrative services and facilities for the Fund. These services include
preparing and maintaining books, records, tax and financial reports, and
monitoring compliance with state and federal regulatory requirements.
Fund Accounting
Pursuant to an Accounting Agreement with the Trust dated as of November
11, 1998 (the "Accounting Agreement"), Firstar is responsible for accounting
relating to the Fund and its investment transactions; maintaining certain books
and records of the Fund; determining daily the net asset values per share of the
Fund and calculating yield, dividends and capital gain distributions; and
preparing security position, transaction and cash position reports.
Under the Accounting Agreement, Firstar maintains portfolio trading
records and records of brokerage activity in order to provide monthly brokerage
reports which identify brokers and set forth commission amounts. Firstar also
monitors periodic distributions of gains or losses on portfolio sales and
maintains a daily listing of portfolio holdings. Firstar is responsible for
expenses accrued and payment reporting services. Firstar provides tax accounting
services and tax-related financial information to the Trust. Firstar also
monitors compliance with the regulatory requirements relating to maintaining
accounting records.
Transfer Agent
Pursuant to a Transfer Agency Agreement with the Trust dated as of
November 11, 1998 (the "Transfer Agency Agreement"), Firstar also acts as the
Trust's transfer, dividend disbursing and redemption agent. Firstar provides
certain shareholder and other services to the Trust, including: furnishing
account and transaction information; providing mailing labels for the
distribution to the Fund's shareholders of financial reports, prospectuses,
proxy statements and other such materials; providing compliance reporting;
calculating distribution plan and marketing expenses; and maintaining
shareholder account records.
Firstar is responsible for processing orders for Fund shares and ensuring
appropriate participation with the National Securities Clearing Corporation for
transactions with Fund shares. If so requested by the Trust, Firstar will
produce shareholder lists and reports for proxy solicitations. Firstar receives
and processes redemption requests and administers distribution of redemption
proceeds. Firstar also handles shareholder inquiries and provides routine
account information. In addition, Firstar prepares and files appropriate tax
related information concerning dividends and distributions to shareholders
<PAGE>
Custodian
Pursuant to a Custodian servicing Agreement with the Trust dated as of
November 11, 1998 (the "Custodian Agreement"), Firstar Trust Company acts as the
custodian of the Trust's securities and cash. Portfolio securities purchased in
the U.S. are maintained in the custody of the Custodian and may be entered into
the Federal Reserve Book Entry System of the security depository system of the
Depository Trust Corporation. Firstar Trust Company maintains separate accounts
in the name of each Fund of the Trust. Firstar Trust Company is responsible for
holding and making payments of all cash received for the account of the relevant
Fund.
From each account Firstar Trust Company may make payments for the purchase
of securities, payment of interest, taxes, fees and other operating expenses. As
the custodian, Firstar Trust Company is authorized to endorse and collect
checks, drafts or other orders for payment. Firstar Trust Company is responsible
for the release or delivery of portfolio securities. Firstar Trust Company also
monitors compliance with the regulatory requirements of the Treasury Department,
Internal Revenue Service and the laws of the states. Firstar Trust Company is
compensated on the basis of an annual fee based on market value of assets of
each Fund and on fees for certain transactions.
Distributor
T.O. Richardson Securities, Inc. (the "Distributor"), located at 2
Bridgewater Road, Farmington, Connecticut, 06032 serves as the principal
underwriter and national distributor for the shares of the Fund pursuant to a
Distribution Agreement with the Trust dated as of November 11, 1998 (the
"Distribution Agreement"). T.O. Richardson Securities, Inc. is registered as a
broker-dealer under the 1934 Act and each state's securities laws and is a
member of the NASD. The offering of the Fund's shares is continuous. The
Distribution Agreement provides that the Distributor, as agent in connection
with the distribution of Fund shares, will use appropriate efforts to solicit
orders for the sale of Fund shares and undertake such advertising and promotion
as it deems reasonable, including, but not limited to, advertising, compensation
to underwriters, dealers and sales personnel, printing and mailing prospectuses
to persons other than current Fund shareholders, and printing and mailing sales
literature.
Distribution Plan
The Board of Trustees has adopted a Distribution and Shareholder Serving
Plan on behalf of the Fund, in accordance with Rule 12b-1 (the "Rule") under the
1940 Act. The Fund is authorized under the Plan to use the assets of the Fund to
reimburse the Distributor or others for certain activities relating to the
distribution of shares of the Fund to investors and the provision of shareholder
services. The maximum amount payable under the Plan is 0.25% of the Fund's
average net assets on an annual basis. Because these fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will increase the cost
of your investment.
<PAGE>
The NASD's maximum sales charge rule relating to mutual fund shares
establishes limits on all types of sales charges, whether front-end, deferred or
asset-based. This rule may operate to limit the aggregate distribution fees to
which shareholders may be subject under the terms of the Plan.
The Plan authorizes the use of distribution fees to pay, or reimburse
expenses incurred by, banks, broker/dealers and other institutions which provide
distribution assistance and/or shareholder services including, but not limited
to, printing and distributing prospectuses to persons other than Fund
shareholders, printing and distributing advertising and sales literature and
reports to shareholders used in connection with selling shares of the Fund,
furnishing personnel and communications equipment to service shareholder
accounts and prospective shareholder inquiries. Such services may be performed
by the Distributor, the Adviser or others.
The Plan requires that any person authorized to direct the disposition of
monies paid or payable by the Fund pursuant to the Plan or any related agreement
prepare and furnish to the Trustees for their review, at least quarterly,
written reports complying with the requirements of the Rule and setting out the
amounts expended under the Plan and the purposes for which those expenditures
were made. The Plan provides that so long as it is in effect the selection and
nomination of Trustees who are not interested persons of the Trust will be
committed to the discretion of the Trustees then in office who are not
interested persons of the Trust.
Neither the Plan nor any related agreements can take effect until approved
by a majority vote of both all the Trustees and those Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related to the Plan,
cast in person at a meeting called for the purpose of voting on the Plan and the
related agreements. The Trustees approved the Plan on November 11, 1998.
The Plan will continue in effect only so long as its continuance is
specifically approved at least annually by the Trustees in the manner described
above for Trustee approval of the Plan. The Plan for the Fund may be terminated
at any time by a majority vote of the Trustees who are not interested persons of
the Trust and who have no direct or indirect financial interest in the
operations of the Plan or in any agreement related to the Plan or by vote of a
majority of the outstanding voting securities of the Fund.
The Plan may not be amended so as to materially increase the amount of the
distribution fees for the Fund unless the amendment is approved by a vote of at
least a majority of the outstanding voting securities of the Fund. In addition,
no material amendment may be made unless approved by the Trustees in the manner
described above for Trustee approval of the Plan.
Independent Accountants
The Trust's independent accountants, KPMG Peat Marwick LLP, will audit the
Trust's annual financial statements and review the
<PAGE>
Trust's tax returns. KPMG Peat Marwick is located at 777 East Wisconsin Avenue,
Suite 3100, Milwaukee, Wisconsin, 53202.
PORTFOLIO TRANSACTIONS AND TURNOVER
The Fund's portfolio securities transactions are placed by the Investment
Adviser. The objective of the Fund is to obtain the best available prices in its
portfolio transactions, taking into account the costs, promptness of executions
and other qualitative considerations. There is no pre-existing commitment to
place orders with any broker, dealer or member of an exchange. The Investment
Adviser evaluates a wide range of criteria in seeking the most favorable price
and market for the execution of transactions, including the broker's commission
rate, execution capability, positioning and distribution capabilities,
information in regard to the availability of securities, trading patterns,
statistical or factual information, opinions pertaining to trading strategy,
back office efficiency, ability to handle difficult trades, financial stability,
and prior performance in servicing the Investment Adviser and its clients. In
transactions on equity securities and U.S. Government securities executed in the
over-the-counter market, purchases and sales are transacted directly with
principal market-makers except in those circumstances where, in the opinion of
the Investment Adviser, better prices and executions are available elsewhere.
The Investment Adviser, when effecting purchases and sales of portfolio
securities for the account of the Fund, will seek execution of trades either (i)
at the most favorable and competitive rate of commission charged by any broker,
dealer or member of an exchange, or (ii) at a higher rate of commission charges,
if reasonable, in relation to brokerage and research services provided to the
Fund or the Investment Adviser by such member, broker, or dealer. Such services
may include, but are not limited to, any one or more of the following;
information as to the availability of securities for purchase or sale,
statistical or factual information, or opinions pertaining to investments. The
Investment Adviser may use research and services provided by brokers and dealers
in servicing all its clients, including the Fund, and not all such services will
be used by the Investment Adviser in connection with the Fund. In accordance
with the provisions of Section 28(e) of the 1934 Act, the Adviser may from
time-to-time receive services and products which serve both research and
non-research functions. In such event, the Adviser makes a good faith
determination of the anticipated research and non-research use of the product or
service and allocates brokerage only with respect to the research component.
Brokerage may also be allocated to dealers in consideration of the Fund's share
distribution but only when execution and price are comparable to that offered by
other brokers.
The Investment Adviser provides investment advisory services to
individuals and other institutional clients, including corporate pension plans,
profit-sharing and other employee benefit trusts, and other investment pools.
There may be occasions on which other investment advisory clients advised by the
Investment Adviser may also invest in the same securities as the Fund. When
these clients buy or sell the same securities at substantially the same time,
the Investment Adviser may average the transactions as to price and allocate the
amount of available investments in a manner which is believes to be equitable to
each client, including the Fund. On
<PAGE>
the other hand, to the extent permitted by law, the Investment Adviser may
aggregate the securities to be sold or purchased for the Fund with those to be
sold or purchased for other clients managed by it in order to obtain lower
brokerage commissions, if any.
The Fund does not engage in frequent trading and turnover tactics for
short-term gains, however, the Adviser will effect portfolio transactions
without regard to holding period if, in its judgment, such transactions are
advisable in light of a change in circumstances of a particular company or
within a particular industry or in general market, economic or financial
conditions. While the Fund anticipates that its annual portfolio turnover rate
should not exceed 50% under normal conditions, it is impossible to predict
portfolio turnover rates. The portfolio turnover rate is calculated by dividing
the lesser of the Fund's annual sales or purchases of portfolio securities
(exclusive of purchases or sales of securities whose maturities at the time of
acquisition were one year or less) by the monthly average value of the
securities in the portfolio during the year.
SHARES OF BENEFICIAL INTEREST
The Trust is a series business trust that currently offers one series of
shares. The beneficial interest of the Trust is divided into an unlimited number
of shares, with a par value of $0.001 each. Each share has equal dividend,
voting, liquidation and redemption rights. There are no conversion or preemptive
rights. Shares, when issued, will be fully paid and nonassessable. Fractional
shares have proportional voting rights. Shares of the Fund do not have
cumulative voting rights, which means that the holders of more than 50% of the
shares voting for the election of trustees can elect all of the trustees if they
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any person to the Board of Trustees. Shares will be maintained
in open accounts on the books of the Transfer Agent, and certificates for shares
will generally not be issued.
If they deem it advisable and in the best interests of shareholders, the
Trustees may create additional series of shares, each of which represents
interests in a separate portfolio of investments and is subject to separate
liabilities, and may create multiple classes of shares of such series, which may
differ from each other as to expenses and dividends. If additional series or
classes of shares are created, shares of each series or class are entitled to
vote as a series or class only to the extent required by the 1940 Act or as
permitted by the Trustees. Upon the Trust's liquidation, all shareholders of a
series would share pro-rata in the net assets of such series available for
distribution to shareholders of the series, but, as shareholders of such series,
would not be entitled to share in the distribution of assets belonging to any
other series.
DIVIDENDS
A shareholder will automatically receive all income dividends and capital
gain distributions in additional full and fractional shares of the Fund at their
net asset value as of the date of payment unless the shareholder elects to
receive such dividends or distributions in cash. The reinvestment date normally
precedes the payment date by about seven days although the exact timing is
subject to change. Shareholders will receive a confirmation of each new
transaction in their account. The Trust will confirm all account activity,
including the payment
<PAGE>
of dividend and capital gain distributions and transactions made as a result of
an Automatic Withdrawal Plan or an Automatic Investment Plan. Shareholders may
rely on these statements in lieu of stock certificates. Stock certificates
representing shares of the Fund will not be issued.
ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
DISTRIBUTIONS OF NET INVESTMENT INCOME. The Fund receives income generally
in the form of dividends and interest on its investments. This income, less
expenses incurred in the operation of the Fund, constitute its net investment
income from which dividends may be paid to you. Any distributions by the Fund
from such income will be taxable to you as ordinary income, whether you take
them in cash or in additional shares.
DISTRIBUTIONS OF CAPITAL GAINS. The Fund may derive capital gains and
losses in connection with sales or other dispositions of its portfolio
securities. Distributions derived from the excess of net short-term capital gain
over net long-term capital loss will be taxable to you as ordinary income.
Distributions paid from long-term capital gains realized by the Fund will be
taxable to you as long-term capital gain, regardless of how long you have held
your shares in the Fund. Any net short-term or long-term capital gains realized
by the Fund (net of any capital loss carryovers) generally will be distributed
once each year, and may be distributed more frequently, if necessary, in order
to reduce or eliminate federal excise or income taxes on the Fund.
INFORMATION ON THE TAX CHARACTER OF DISTRIBUTIONS. The Fund will inform
you of the amount and character of your distributions at the time they are paid,
and will advise you of the tax status for federal income tax purposes of such
distributions shortly after the close of each calendar year. If you have not
held Fund shares for a full year, you may have designated and distributed to you
as ordinary income or capital gain a percentage of income that is not equal to
the actual amount of such income earned during the period of your investment in
the Fund.
TAXES
ELECTION TO BE TAXED AS A REGULATED INVESTMENT COMPANY. The Fund intends
to be treated as a regulated investment company under Subchapter M of the Code,
and intends to so qualify during the current fiscal year. As a regulated
investment company, the Fund generally pays no federal income tax on the income
and gains it distributes to you. The Board reserves the right not to maintain
the qualification of the Fund as a regulated investment company if it determines
such course of action to be beneficial to you. In such case, the Fund will be
subject to federal, and possibly state, corporate taxes on its taxable income
and gains, and distributions to you will be taxed as ordinary dividend income to
the extent of the Fund's available earnings and profits.
EXCISE TAX DISTRIBUTION REQUIREMENTS. The Code requires the Fund to
distribute at least 98% of its taxable ordinary income earned during the
calendar year and 98% of its capital gain net income earned during the twelve
month period ending October 31 (in addition to
<PAGE>
undistributed amounts from the prior year) to you by December 31 of each year in
order to avoid federal excise taxes. The Fund intends to declare and pay
sufficient dividends in December (or in January that are treated by you as
received in December) but does not guarantee and can give no assurances that its
distributions will be sufficient to eliminate all such taxes.
REDEMPTION OF FUND SHARES. Redemptions and exchanges of Fund shares are
taxable transactions for federal and state income tax purposes that cause you to
recognize a gain or loss. If you hold your shares as a capital asset, the gain
or loss that you realize will be capital gain or loss. Any loss incurred on the
redemption or exchange of shares held for six months or less will be treated as
a long-term capital loss to the extent of any long-term capital gains
distributed to you by the Fund on those shares.
All or a portion of any loss that you realize upon the redemption of your
Fund shares will be disallowed to the extent that you purchase other shares in
the Fund (through reinvestment of dividends or otherwise) within 30 days before
or after your share redemption. Any loss disallowed under these rules will be
added to your tax basis in the new shares you purchase.
DIVIDENDS-RECEIVED DEDUCTION FOR CORPORATIONS. Dividends paid by the Fund
will generally qualify in part for the 70% dividends-received deduction for
corporations, but the portion of the dividends so qualifies depends on the
aggregate taxable qualifying dividend income received by such Fund from domestic
(U.S.) sources. The Fund will send to shareholders a statement each year
advising the amount designated by the Fund as eligible for such treatment. All
dividends (including the deducted portion) must be included in your alternative
minimum taxable income calculation.
INVESTMENT IN COMPLEX SECURITIES. The Fund may invest in complex
securities. Such investments may be subject to numerous special and complicated
tax rules. These rules could affect whether gains and losses recognized by the
Fund are treated as ordinary income or capital gain and/or accelerate the
recognition of income to the Fund or defer the Fund's ability to recognize
losses. In turn, these rules may affect the amount, timing or character of the
income distributed to you by the Fund.
INVESTMENT PERFORMANCE
For purposes of quoting and comparing the performance of the Fund to that
of other mutual funds and to relevant indices in advertisements or in reports to
shareholders, performance will be stated in terms of total return or yield. Both
"total return" and "yield" figures are based on the historical performance of a
fund, show the performance of a hypothetical investment and are not intended to
indicate future performance.
Yield Information.
From time to time, the Fund may advertise a yield figure. A portfolio's
yield is a way of showing the rate of income the portfolio earns on its
investments as a percentage of the portfolio's share price. Under the rules of
the SEC, yield must be calculated according to the following formula:
<PAGE>
YIELD = 2 [ ( a-b + 1 )(6) - 1 ]
-----
cd
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
Yields for the Fund used in advertising are computed by dividing the
Fund's interest and dividend income for a given 30-day period, net of expenses,
by the average number of shares entitled to receive distributions during the
period, dividing this figure by a Fund's offering price (including the 4.50%
sales charge) at the end of the period and annualizing the result (assuming
compounding of income) in order to arrive at an annual percentage rate. Income
is calculated for purposes of yield quotations in accordance with standardized
methods applicable to all stock and bond mutual funds. Dividends from equity
investments are treated as if they were accrued on a daily basis, solely for the
purposes of yield calculations. In general, interest income is reduced with
respect to bonds trading at a premium over their par value by subtracting a
portion of the premium from income on a daily basis, and is increased with
respect to bonds trading at a discount by adding a portion of the discount to
daily income. Capital gains and losses generally are excluded from the
calculation. Income calculated for the purpose of calculating a Fund's yield
differs from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding assumed in
yield calculations, the yield quoted for a Fund may differ from the rate of
distributions the Fund paid over the same period or the rate of income reported
in the Fund's financial statements.
Total Return Performance
Under the rules of the Commission, funds advertising performance must
include total return quotes, "T" below, calculated according to the following
formula:
P(1 + T)(n) = ERV
Where:P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1, 5 or 10 year periods (or fractional
portion thereof).
The average annual total return will be calculated under the foregoing
formula and the time periods used in advertising will be based on rolling
calendar quarters, updated to the last day of the most recent quarter prior to
submission of the advertising for publication, and will
<PAGE>
cover prescribed periods. When the period since inception is less than one year,
the total return quoted will be the aggregate return for the period. In
calculating the ending redeemable value, the maximum sales load is deducted from
the initial $1,000 payment and all dividends and distributions by the Fund are
assumed to have been reinvested at net asset value as described in the
prospectuses on the reinvestment dates during the period. Total return, or "T"
in the formula above, is computed by finding the average annual compounded rates
of return over the prescribed periods (or fractional portions thereof) that
would equate the initial amount invested to the ending redeemable value. Any
sales loads that might in the future be made applicable at the time to
reinvestments would be included as would any recurring account charges that
might be imposed by the Fund.
The Fund may also from time to time include in such advertising an
aggregate total return figure or an average annual total return figure that is
not calculated according to the formula set forth above in order to compare more
accurately the Fund's performance with other measures of investment return. The
Fund may quote an aggregate total return figure in comparing the Fund's total
return with data published by Lipper Analytical Services, Inc. or with the
performance of various indices including, but not limited to, the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index, Russell Indices, the
Value Line Composite Index, the Lehman Brothers Bond, Government Corporate,
Corporate and Aggregate Indices, Merrill Lynch Government & Agency Index,
Merrill Lynch Intermediate Agency Index, Morgan Stanley Capital International
Europe, Australia, Far East Index or the Morgan Stanley Capital International
World Index. For such purposes, each Fund calculates its aggregate total return
for the specified periods of time by assuming the investment of $1,000 in Fund
shares and assuming the reinvestment of each dividend or other distribution at
net asset value on the reinvestment date. Percentage increases are determined by
subtracting the initial value of the investment from the ending value and by
dividing the remainder by the beginning value. The Fund does not, for these
purposes, deduct from the initial value invested any amount representing sales
charges. The Fund would, however, disclose the maximum sales charge and would
also disclose that the performance data does not reflect sales charges and that
the inclusion of sales charges would reduce the performance quoted, if a sales
charge is in effect. To calculate its average annual total return, the aggregate
return is then annualized according to the Commission's formula for total return
quotes, outlined above. When the period since inception is less than one year,
the total return quoted will be the aggregate return for the period.
The Fund may also advertise the performance rankings assigned by various
publications and statistical services, including but not limited to SEI, Lipper
Mutual Performance Analysis, Intersec Research Survey of Non-U.S. Equity Fund
Returns, Frank Russell International Universe, and any other data which may be
presented from time to time by such analyses as Dow Jones, Morningstar, Inc.,
Chase Investment Performance, Wilson Associates, Stanger, CDA Investment
Technologies, Inc., the Consumer Price Index ("CPI"), The Bank Rate Monitor
National Index, IBC/Donaghue's Average/U.S. Government and Agency, or as they
appear in various publications including but not limited to The Wall Street
Journal, Forbes, Barron's, Fortune, Money Magazine, The New York Times,
Financial World, Financial Services Week, USA Today and other regional
publications.
<PAGE>
FINANCIAL STATEMENTS
Barrett Growth Fund
Statement of Assets and Liabilities
December 15, 1998
ASSETS
Cash $100,000
Receivable from sponsor 56,435
Prepaid initial
registration fees 5,100
Prepaid
insurance 10,195
------------
Total Assets 171,730
------------
LIABILITIES
Payable to
sponsor 71,730
------------
Total
Liabilities 71,730
------------
============
NET ASSETS $100,000
============
Capital Shares, $0.001 par
value,
unlimited shares
authorized 10,000
============
Net asset value,
offering and
redemption price per
share
(net assets/shares
outstanding) $10.00
============
<PAGE>
Barrett Growth Fund
Statement of Operations
For the Period September 29, 1998 (inception) through December 15, 1998
EXPENSES
Organization expenses $56,435
Less: Accrued expenses to be
paid by sponsor ($56,435)
============
Net Income
(loss) $0
============
Barrett Growth Fund
Notes to the Financial Statements
For the Period September 29, 1998 (inception) through December 15, 1998
1. Organization
The Barrett Growth Fund (the "Fund") is a series of The Barrett Funds (the
"Trust"), a business trust organized on September 29, 1998 in the state of
Delaware and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end diversified management investment
company. The Barrett Growth Fund is currently the only series of the
Trust. The Fund has had no operations other than those relating to
organizational matters, including the sale of 10,000 shares for cash in
the amount of $100,000, which were sold to Barrett Associates, Inc. (the
"Adviser"), on December 15, 1998.
2. Significant Accounting Policies
(a) Organization and Prepaid Initial Registration Expenses
Expenses incurred by the Trust in connection with the organization
and the initial public offering of shares are expensed as incurred.
These expenses were advanced by the Adviser, and the Adviser has
agreed to voluntarily reimburse the Funds' for these expenses,
subject to potential recovery (see Note 3). Prepaid initial
registration expenses are deferred and amortized over the period of
benefit.
(b) Federal Income Taxes
The Fund intends to comply with the requirements of the Internal
Revenue Code necessary to qualify as a regulated investment company
and to make the requisite distributions of income and capital gains
to its shareholders sufficient to relieve it from all or
substantially all Federal income taxes.
(c) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and use assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
3. Investment Adviser
The Trust has an Investment Advisory Agreement (the "Agreement") with the
Adviser, with whom certain officers and Trustees of the Trust are
affiliated, to furnish investment advisory services to the Fund. Under the
terms of the Agreement, the Trust, on behalf of the Fund, compensates the
Adviser for its management services at the annual rate of 1.00% of the
Fund's average daily net assets.
The Adviser has agreed to voluntarily waive its management fee and/or
reimburse the Fund's other expenses, including organization expenses, to
the extent necessary to ensure that each of the Fund's operating expenses
do not exceed 1.70% of its average daily net assets. Any such waiver or
reimbursement is subject to later adjustment to allow the Adviser to
recoup amounts waived or reimbursed to the extent actual fees and expenses
for a period are less than the expense limitation caps, provided, however,
that the Adviser shall only be entitled to recoup such amounts for a
period of three years from the date such amount was waived or reimbursed.
4. Distribution Plan
The Trust, on behalf of the Fund, has adopted a distribution plan pursuant
to Rule 12b-1 under the 1940 Act (the "12b-1 Plan"), which provides that
the Fund may reimburse the Fund's distributor or others at annual rate of
up to 0.25% of the average daily net assets attributable to its shares.
Payments under the 12b-1 Plan shall be used to compensate or reimburse the
Fund's distributor for services provided and expenses incurred in
connection with the sale of shares and are tied to the amounts of actual
expenses incurred.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Shareholder and Board of Trustees of
Barrett Growth Fund
We have audited the accompanying statement of assets and liabilities of
Barrett Growth Fund (the "Fund"), as of December 15, 1998 and the
related statement of operations for the period September 29, 1998
(inception) through December 15, 1998. These financial statements are the
responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements based upon our audit.
We have conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Fund as of
December 15, 1998 and the results of its operations for the period
September 29, 1998 (inception) through December 15, 1998, in conformity
with generally accepted accounting principles.
/s/ KPMG Peat Marwick
Milwaukee, Wisconsin
December 16, 1998
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS.
(a) (1) Agreement and Declaration of Trust of Registrant dated
September 29 1998 filed previously as Exhibit No. 23(a)(1) to
the Initial Registration Statement on October 1, 1998.
(2) Certificate of Trust of Registrant dated September 29,
1998 filed previously as Exhibit No. 23(a)(2) to the Initial
Registration Statement on October 1, 1998.
(b) By-laws of Barrett Associates, Inc. are filed herewith as
Exhibit No. 23(b).
(c) Not Applicable.
(d) Form of Investment Advisory Agreement between Barrett
Associates, Inc. and The Barrett Funds on behalf of the
Barrett Growth Fund is filed herewith as Exhibit No. 23 (d).
(e) Form of Distribution Agreement between The Barrett Funds and
T.O. Richardson Securities, Inc. is filed herewith as Exhibit
No. 23 (e).
(f) Not Applicable.
(g) Form of Custodian Agreement between the Barrett Funds and
Firstar Trust Company is filed herewith as Exhibit No. 23 (g).
(h) (1) Form of Administration Agreement between the Barrett Funds
and Firstar Mutual Fund Services, LLC is filed herewith as
Exhibit No. 23 (h)(1).
(2) Form of Transfer Agency Agreement between the Barrett
Funds and Firstar Mutual Fund Services, LLC is filed herewith
as Exhibit No. 23 (h)(2).
(3) Form of Accounting Agreement between the Barrett Funds and
Firstar Mutual Fund Services, LLC is filed herewith as Exhibit
No. 23 (h)(3).
<PAGE>
(i) Opinion and consent of Stradley, Ronon, Stevens & Young, LLP is
filed herewith as Exhibit No. 23 (i).
(j) (1) Consent of auditors is filed herewith as Exhibit No. 23 (j)(1).
(2)Power of Attorney dated November 11, 1998 is filed herewith as
Exhibit No. 23(j)(2)
(k) Not Applicable.
(l) Not Applicable.
(m) Rule 12b-1 Plan is filed herewith as Exhibit No.23 (m).
(n) Not Applicable.
(o) Not Applicable.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 25. INDEMNIFICATION.
Reference is made to Article VII, Section 7.02 of the Registrant's
Agreement and Declaration of Trust.
Pursuant to Rule 484 under the Securities Act of 1933, as amended,
the Registrant furnishes the following undertaking: "Insofar as
indemnification for liability arising under the Securities Act of
1933 (the "Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that, in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a
<PAGE>
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final
adjudication of such issue."
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Barrett Associates, Inc, the investment advisor to the Barrett
Growth Fund series provides investment advisory services consisting
of portfolio management for a variety of individuals and
institutions and as of September 29, 1998 had approximately $1.3
billion in assets under management.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal Occupations
During the Past Two
Name and Address Position with the Adviser Years
-----------------------------------------------------------------------------
<S> <C> <C>
John D. Barrett, II Chief Executive Officer
565 Fifth Avenue of Barrett Associates,
New York, New York 10017 Trustee Inc.
Robert E. Harvey
565 Fifth Avenue President of Barrett
New York, New York 10017 Trustee Associates, Inc.
James R. Rutherford
565 Fifth Avenue Managing Director of
New York, New York 10017 Trustee Barrett Associates, Inc.
</TABLE>
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITER.
(a) T.O. Richardson Securities, underwriter for The Barrett Funds, also
serves as distibutor for the following entities:
The Simms Funds
T.O. Richardson Funds
(b) The following tables sets forth information as to the Distributor's
Directors, Officers, Partners and Control Persons:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
ADDRESS WITH UNDERWRITER FUND
<S> <C> <C>
Sam Bailey Director None
2 Bridgewater Road
Farmington, CT 06032
L. Austine Crowe Director None
2 Bridgewater Road
Farmington, CT 06032
Lloyd P. Griffiths Director None
2 Bridgewater Road
Farmington, CT 06032
Kathleen M. Russo Secretary None
2 Bridgewater Road
Farmington, CT 06032
</TABLE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books or other documents of the Registrant required to
be maintained by ss.31(a) of the Investment Company Act of 1940, as
amended, and the rules promulgated thereunder will be located at the
offices of the Registrant and at additional locations as follows:
NAME ADDRESS
Barrett Associates, Inc. 565 Fifth Avenue
New York, NY 10017
Firstar Mutual Fund Services, LLC 615 East Michigan Street
Milwaukee, Wisconsin 53202
Firstar Trust Company 615 East Michigan Street
Milwaukee, Wisconsin 53202
ITEM 29. MANAGEMENT SERVICES.
All management-related service contracts are discussed in Parts A or
B of this Registration Statement.
<PAGE>
ITEM 30. UNDERTAKINGS.
The Registrant hereby undertakes to furnish each person to whom a
Prospectus for one or more of the series of the Registrant is
delivered with a copy of the relevant latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in New
York, NY as of the 15th day of December, 1998.
The Barrett Funds
(Registrant)
By: /s/ Robert E. Harvey
--------------------
Robert E. Harvey
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated below.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/John D.Barrett, II Chairman, Trustee December 15, 1998
- ----------------------------
John D. Barrett, II
/s/Robert E. Harvey President, Trustee December 15, 1998
- ----------------------------
Robert E. Harvey
/s/ James R. Rutherford Trustee December 15, 1998
- ----------------------------
James R. Rutherford
/s/ R, Bruce Cameron* Trustee December 15, 1998
- ----------------------------
R. Bruce Cameron
/s/ Gerard E. Jones* Trustee December 15, 1998
- ----------------------------
Gerard E. Jones
/s./ Ronald E. Kfoury* Trustee December 15, 1998
- ----------------------------
Ronald E. Kfoury
/s/ Peter H. Shriver Treasurer December 15, 1998
- ----------------------------
Peter H. Shriver
</TABLE>
* Attorney-in-Fact pursuant to a Power of Attorney filed herewith.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
- -------------
FORM N-1A EDGAR
EXHIBIT NO. EXHIBIT NO.
<S> <C> <C>
23(b) By-laws of Barrett Associates, Inc. Ex-99.23(b)
23(d) Form of Investment Advisory Agreement Ex-99.23(d)
23(e) Form of Distribution Agreement Ex-99.23(e)
23(g) Form of Custodian Agreement Ex-99.23(g)
23(h)(1) Form of Administration Agreement Ex-99.23(h)(1)
23(h)(2) Form of Transfer Agency Agreement Ex.-99.23(h)(2)
23(h)(3) Form of Accounting Agreement Ex-99.23(h)(3)
23(i) Opinion of counsel Ex-23.23(i)
23(j)(1) Consent of Auditors Ex-23.23(j)(1)
23(j)(2) Power of Attorney Ex-99.23(j)(2)
23(m) Rule 12b-1 Plan Ex-99.23(m)
</TABLE>
EXHIBIT 99.23(b)
BY-LAWS
OF
THE BARRETT FUNDS
ARTICLE I.
Fiscal Year and Offices
Section 1.01. Fiscal Year. Unless otherwise provided by resolution of the
Board of Trustees, the fiscal year of the Trust shall begin on the first day of
July and end on the last day of June.
Section 1.02. Delaware Office. The Board of Trustees shall establish a
registered office in the State of Delaware and shall appoint as the Trust's
registered agent for service of process in the State of Delaware an individual
resident of the State of Delaware or a Delaware corporation or a foreign
corporation authorized to transact business in the State of Delaware; in each
case the business office of such registered agent for service of process shall
be identical with the registered Delaware office of the Trust.
Section 1.03. Other Offices. The Board of Trustees may at any time
establish branch or subordinate offices at any place or places where the Trust
intends to do business.
ARTICLE II.
Meetings of Shareholders
Section 2.01. Place of Meeting. Meetings of the shareholders for the
election of trustees shall be held in such place as shall be fixed by resolution
of the Board of Trustees and stated in the notice of the meeting.
Section 2.02. Annual Meetings. An Annual Meeting of shareholders will not
be held unless the Investment Company Act of 1940 requires the election of
trustees to be acted upon.
Section 2.03. Special Meetings. Special Meetings of the shareholders may
be called at any time by the President, or by a majority of the Board of
Trustees, and shall be called by the Secretary upon written request of the
holders of shares entitled to cast not less than ten percent of all the votes
entitled to be cast at such meeting provided that (a) such request shall state
the purposes of such meeting and the matters proposed to be acted on and (b) the
shareholders requesting such meeting shall have paid to the Trust the reasonable
estimated cost of preparing and mailing the notice thereof, which the Secretary
shall determine and specify to such shareholders. No special meeting need be
called upon the request of shareholders entitled to cast less than a majority of
all votes entitled to be cast at such meeting to consider any matter which is
substantially the same as a matter voted on at any meeting of the shareholders
held during the preceding twelve months. The foregoing provisions of this
section 3 notwithstanding a special meeting of shareholders shall be called upon
the request of the holders of at least ten percent of
1
<PAGE>
the shares entitled to vote for the purpose of consideration removal of a
director from office as provided in section 16(c) of the Investment Company Act
of 1940.
Section 2.04. Notice. Not less than ten, nor more than ninety days before
the date of every Annual or Special Shareholders Meeting, the Secretary shall
cause to be mailed to each shareholder entitled to vote at such meeting at his
(her) address (as it appears on the records of the Trust at the time of mailing)
written notice stating the time and place of the meeting and, in the case of a
Special Meeting of Shareholders, shall be limited to the purposes stated in the
notice. Notice of adjournment of a shareholders meeting to another time or place
need not be given, if such time and place are announced at the meeting.
Section 2.05. Record Date for Meetings. Subject to the provisions of the
Declaration of Trust, the Board of Trustees may fix in advance a date not more
than ninety, nor less than ten days, prior to the date of any annual or special
meeting of the shareholders as a record date for the determination of the
shareholders entitled to receive notice of, and to vote at any meeting and any
adjournment thereof; and in such case such shareholders and only such
shareholders as shall be shareholders of record on the date so fixed shall be
entitled to receive notice of and to vote at such meeting and any adjournment
thereof as the case may be, notwithstanding any transfer of any stock on the
books of the Trust after any such record date fixed as aforesaid.
Section 2.06. Quorum. At any meeting of shareholders, the presence in
person or by proxy of the holders of record of a majority of the shares issued
and outstanding and entitled to vote there shall constitute a quorum for the
transaction of any business at the meeting, except as otherwise provided by the
Investment Company Act of 1940 or in the Trust's Declaration of Trust. If,
however, such quorum shall not be present or represented at any meeting of the
shareholders, the holders of a majority of the shares present or in person or by
proxy shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented to a date not more than 120 days after the original record date.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 2.07. Voting. Each shareholder shall have one vote for each full
share and a fractional vote for each fractional share of stock having voting
power held by such shareholder on the record date set pursuant to Section 5 on
each matter submitted to a vote at a meeting of shareholders. Such vote may be
made in person or by proxy. At all meetings of the shareholders, a quorum being
present, all matters shall be decided by majority vote of the shares of
beneficial interest entitled to vote held by shareholders present in person or
by proxy, unless the question is one for which by express provision of the laws
of the State of Delaware, the Investment Company Act of 1940, as from time to
time amended, or the Declaration of Trust, a different vote is required, in
which case such express provision shall control the decision of such question.
At all meetings of shareholders, unless the voting is conducted by inspectors,
all questions relating to the qualification of voters and the validity of
proxies and the acceptance or rejection of votes shall be decided by the
Chairman of the meeting.
Section 2.08. Inspectors. At any election of trustees, the Board of
Trustees prior thereto may, or, if they have not so acted, the Chairman of the
meeting may appoint one or more
2
<PAGE>
inspectors of election who shall first subscribe an oath of affirmation to
execute faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and shall after the
election make a certificate of the result of the vote taken.
Section 2.09. Stock Ledger and List of Shareholders. It shall be the duty
of the Secretary or Assistant Secretary of the Trust to cause an original or
duplicate share ledger to be maintained at the office of the Trust's transfer
agent. Such share ledger may be in written form or any other form capable of
being converted into written form within a reasonable time for visual
inspection.
Section 2.10. Action Without Meeting. Any action to be taken by
shareholders may be taken without a meeting if (a) all shareholders entitled to
vote on the matter consent to the action in writing, and (b) all shareholders
entitled to notice of the meeting but not entitled to vote at it sign a written
waiver of any right to dissent, and (c) the written consents are filed with the
records of the meetings of shareholders. Such consent shall be treated for all
purposes as a vote at a meeting.
ARTICLE III.
Trustees
Section 3.01. General Powers. The business of the Trust shall be managed
under the direction of its Board of Trustees, which may exercise all powers of
the Trust, except such as are by statute, or the Declaration of Trust, or by
these Bylaws conferred upon or reserved to the shareholders.
Section 3.02. Number and Term of Office. The number of trustees which
shall constitute the whole Board shall be determined from time to time by the
Board of Trustees, but shall not be fewer than the minimum number permitted by
applicable laws, nor more than fifteen. Each trustee elected shall hold office
until his successor is elected and qualified. Trustees need not be shareholders.
Section 3.03. Elections. Provided a quorum is present, the directors shall
be elected by the vote of a plurality of the shares present in person or by
proxy, except that any vacancy on the Board of Trustees may be filled by a
majority vote of the Board of Trustees, although less than a quorum, subject to
the requirements of Section 16(a) of the Investment Company Act of 1940.
Section 3.04. Place of Meeting. Meetings of the Board of Trustees, regular
or special, may be held at any place as the Board may from time to time
determine.
Section 3.05. Quorum. At all meetings of the Board of Trustees, one-third
of the entire Board of Trustees shall constitute a quorum for the transaction of
business provided that in no case may a quorum be less than two persons. The
action of a majority of the trustees present at any meeting at which a quorum is
present shall be the action of the Board of Trustees unless the concurrence of a
greater proportion is required for such action by the Investment Company Act of
1940, these Bylaws or the Declaration of Trust. If a quorum shall not be present
at any meeting of trustees, the trustees present thereat may by a majority vote
adjourn the meeting from
3
<PAGE>
time to time without notice other than announcement at the meeting, until a
quorum shall be present.
Section 3.06. Regular Meetings. Regular meetings of the Board of Trustees
may be held without additional notice at such time and place as shall from time
to time be determined by the Board of Trustees provided that notice of any
change in the time or place of such meetings shall be sent promptly to each
trustee not present at the meeting at which such change was made in the manner
provided for notice of special meetings.
Section 3.07. Special Meetings. Special meetings of the Board of Trustees
may be called by the President on one day's notice to each trustee; Special
meetings shall be called by the President or Secretary in like manner and on
like notice on the written request of two trustees.
Section 3.08. Telephone Meeting. Members of the Board of Trustees or a
committee of the Board of Trustees may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.
Section 3.09. Informal Actions. Any action required or permitted to be
taken at any meeting of the Board of Trustees or of any committee thereof may be
taken without a meeting, if a written consent to such action is signed by all
members of the Board or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or committee.
Section 3.10. Committees. The Board of Directors may by resolution passed
by a majority of the entire Board appoint from among its members an Executive
Committee and other committees composed of two or more directors, and may
delegate to such committees, in the intervals between meetings of the Board of
Trustees, any or all of the powers of the Board of Trustees in the management of
the business and affairs of the Trust.
Section 3.11. Action of Committees. In the absence of an appropriate
resolution of the Board of Trustees, each committee may adopt such rules and
regulations governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable, provided that the quorum shall not be less than two
trustees. The committees shall keep minutes of their proceedings and shall
report the same to the Board of Trustees at the meeting next succeeding, and any
action by the committee shall be subject to revision and alteration by the Board
of Trustees, provided that no rights of third persons shall be affected by any
such revision or alteration. In the absence of any member of such committee, the
members thereof present at any meeting, whether or not they constitute a quorum,
may appoint a member of the Board of Trustees to act in the place of such absent
member.
Section 3.12. Compensation. Any trustee, whether or not he is a salaried
officer or employee of the Trust, may be compensated for his services as trustee
or as a member of a committee of trustees, or as Chairman of the Board or
chairman of a committee by fixed periodic payments or by fees for attendance at
meetings or by both, and in addition may be reimbursed for
4
<PAGE>
transportation and other expenses, all in such manner and amounts as the Board
of Trustees may from time to time determine.
ARTICLE IV.
Notices
Section 4.01. Form. Notices to shareholders shall be in writing and
delivered personally or mailed to the shareholders at their addresses appearing
on the books of the Trust. Notices to trustees shall be oral or by telephone or
telegram or in writing delivered personally or mailed to the trustees at their
addresses appearing on the books of the Trust. Notice by mail shall be deemed to
be given at the time when the same shall be mailed. Subject to the provisions of
the Investment Company Act of 1940, notice to trustees need not state the
purpose of a regular or special meeting.
Section 4.02. Waiver. Whenever any notice of the time, place or purpose of
any meeting of shareholders, trustees or a committee is required to be given
under the provisions of the Declaration of Trust or these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to such notice and
filed with the records of the meeting, whether before or after the holding
thereof, or actual attendance at the meeting of shareholders in person or by
proxy, or at the meeting of Trustees or a committee in person, shall be deemed
equivalent to the giving of such notice to such persons.
ARTICLE V.
Officers
Section 5.01. Executive Officers. The officers of the Trust shall be
chosen by the Board of Trustees and shall include a President, a Secretary and a
Treasurer. The Board of Trustees may, from time to time, elect or appoint a
Controller, one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers. The Board of Trustees, at its discretion, may also appoint a
director as Chairman of the Board who shall perform and execute such executive
and administrative duties and powers as the Board of Trustees shall from time to
time prescribe. The same person may hold two or more offices, except that no
person shall be both President and Vice-President and no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law, the Declaration of Trust or these Bylaws to be
executed, acknowledged or verified by two or more officers.
Section 5.02. Election. The Board of Trustees shall choose a President, a
Secretary and a Treasurer.
Section 5.03. Other Officers. The Board of Trustees from time to time may
appoint such other officers and agents as it shall deem advisable, who shall
hold their offices for such terms and shall exercise powers and perform such
duties as shall be determined from time to time by the Board. The Board of
Trustees from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
5
<PAGE>
Section 5.04. Compensation. The salaries or other compensation of all
officers and agents of the Trust shall be fixed by the Board of Trustees, except
that the Board of Trustees may delegate to any person or group of persons the
power to fix the salary or other compensation of any subordinate officers or
agents appointed pursuant to Section 3 of this Article V.
Section 5.05. Tenure. The officers of the Trust shall serve at the
pleasure of the Board of Trustees. Any officer or agent may be removed by the
affirmative vote of a majority of the Board of Trustees whenever, in its
judgment, the best interests of the Trust will be served thereby. In addition,
any officer or agent appointed pursuant to Section 3 may be removed, either with
or without cause, by any officer upon whom such power of removal shall have been
conferred by the Board of Trustees. Any vacancy occurring in any office of the
Trust by death, resignation, removal or otherwise shall be filled by the Board
of Trustees, unless pursuant to Section 3 the power of appointment has been
conferred by the Board of Trustees on any other officer.
Section 5.06. President. The President shall be the Chief Executive
Officer of the Trust and shall see that all orders and resolutions of the Board
are carried into effect. The President shall also be the Chief Administrative
Officer of the Trust and shall perform such other duties and have such other
powers as the Board of Trustees may from time to time prescribe.
Section 5.07. Chairman of the Board. The Chairman of the Board, if one
shall be chosen, shall perform and execute such executive duties and
administrative powers as the Board of Trustees shall from time to time
prescribe.
Section 5.08. Vice-President. The Vice-Presidents, in order of their
seniority, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and shall perform such other
duties as the Board of Trustees or the President may from time to time
prescribe.
Section 5.09. Secretary. The Secretary shall attend all meetings of the
Board of Trustees and all meetings of the shareholders and record all the
proceedings thereof and shall perform like duties for any committee when
required. He shall give, or cause to be given, notice of meetings of the
shareholders and of the Board of Trustees, shall have charge of the records of
the Trust, including the stock books, and shall perform such other duties as may
be prescribed by the Board of Trustees or Chief Executive Officer, under whose
supervision he shall be. He shall keep in safe custody the seal of the Trust
and, when authorized by the Board of Trustees, shall affix and attest the same
to any instrument requiring it. The Board of Trustees may give general authority
to any other officer to affix the seal of the Trust and to attest the affixing
by his signature.
Section 5.10. Assistant Secretaries. The Assistant Secretaries in order of
their seniority, shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the Board of Trustees shall prescribe.
Section 5.11. Treasurer. The Treasurer, unless another officer has been so
designated, shall be the Chief Financial Officer of the Trust. He shall have
general charge of the finances
6
<PAGE>
and books of account of the Trust. Except as otherwise provided by the Board of
Trustees, he shall have general supervision of the funds and property of the
Trust and of the performance by the custodian of its duties with respect
thereto. He shall render to the Board of Trustees, whenever directed by the
Board, an account of the financial condition of the Trust and of all his
transactions as Treasurer. He shall cause to be prepared annually a full and
correct statement of the affairs of the Trust, including a balance sheet and a
statement of operations for the preceding fiscal year. He shall perform all the
acts incidental to the office of Treasurer, subject to the control of the Board
of Trustees.
Section 5.12. Assistant Treasurer. The Assistant Treasurer shall in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties as the Board of
Trustees may from time to time prescribe.
ARTICLE VI.
Indemnification and Insurance
Section 6.01. Agents, Proceedings and Expenses. For the purpose of this
Article, "agent" means any person who is or was a Trustee or officer of this
Trust and any person who, while a trustee or officer of this Trust, is or was
serving at the request of this Trust as a Trustee, director, officer, partner,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise; "Trust" includes any domestic or
foreign predecessor entity of this Trust in a merger, consolidation, or other
transaction in which the predecessor's existence ceased upon consummation of the
transaction; "proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative;
and "expenses" includes without limitation attorney's fees and any expenses of
establishing a right to indemnification under this Article.
Section 6.02. Actions Other Than by Trust. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed: (a) in the case of conduct in his official
capacity as an agent of the Trust, that his conduct was in the Trust's best
interests and (b) in all other cases, that his conduct was at least not opposed
to the Trust's best interests and (c) in the case of a criminal proceeding, that
he had no reasonable cause to believe the conduct of that person was unlawful.
The termination of any proceeding by judgment, order or settlement shall not of
itself create a presumption that the person did not meet the requisite standard
of conduct set forth in this Section. The termination of any proceeding by
conviction, or a plea of nolo contendere or its equivalent, or an entry of an
order of probation prior to judgment, creates a rebuttable presumption that the
person did not meet the requisite standard of conduct set forth in this Section.
Section 6.03. Actions by the Trust. This Trust shall indemnify any person
who was or is a party or is threatened to be made a party to any proceeding by
or in the right of this Trust to procure a judgment in its favor by reason of
the fact that that person is or was an agent of this
7
<PAGE>
Trust, against expenses actually and reasonably incurred by that person in
connection with the defense or settlement of that action if that person acted in
good faith, in a manner that person believed to be in the best interests of this
Trust and with such care, including reasonable inquiry, as an ordinarily prudent
person in a like position would use under similar circumstances.
Section 6.04. Exclusion of Indemnification. Notwithstanding any provision
to the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any proceeding as to which that person shall
have been adjudged to be liable on the basis that personal benefit
was improperly received by him, whether or not the benefit resulted
from an action taken in the person's official capacity; or
(b) In respect of any proceeding as to which that person shall
have been adjudged to be liable in the performance of that person's
duty to this Trust, unless and only to the extent that the court in
which that action was brought shall determine upon application that
in view of all the relevant circumstances of the case, that person
is fairly and reasonably entitled to indemnity for the expenses
which the court shall determine; however, in such case,
indemnification with respect to any proceeding by or in the right of
the Trust or in which liability shall have been adjudged by reason
of the disabling conduct set forth in the preceding paragraph shall
be limited to expenses; or
(c) Of amounts paid in settling or otherwise disposing of a
proceeding, with or without court approval, or of expenses incurred
in defending a proceeding which is settled or otherwise disposed of
without court approval, unless the required approval set forth in
Section 6 of this Article is obtained.
Section 6.05. Successful Defense by Agent. To the extent that an agent of
this Trust has been successful, on the merits or otherwise, in the defense of
any proceeding referred to in Sections 2 or 3 of this Article before the court
or other body before whom the proceeding was brought, the agent shall be
indemnified against expenses actually and reasonably incurred by the agent in
connection therewith, provided that the Board of Trustees, including a majority
who are disinterested, non-party Trustees, also determines that based upon a
review of the facts, the agent was not liable by reason of the disabling conduct
referred to in Section 4 of this Article.
Section 6.06. Required Approval. Except as provided in Section 5 of this
Article, any indemnification under this Article shall be made by this Trust only
if authorized in the specific case on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
8
<PAGE>
(a) A majority vote of a quorum consisting of Trustees who are
not parties to the proceeding and are not interested persons of the
Trust (as defined in the Investment Company Act of 1940);
(b) A written opinion by an independent legal counsel; or
(c) The shareholders; however, shares held by agents who are
parties to the proceeding may not be voted on the subject matter
under this Sub-Section.
Section 6.07. Advance of Expenses. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding if (a) receipt of a written affirmation by the agent of his good
faith belief that he has met the standard of conduct necessary for
indemnification under this Article and a written undertaking by or on behalf of
the agent, such undertaking being an unlimited general obligation to repay the
amount of the advance if it is ultimately determined that he has not met those
requirements, and (b) a determination that the facts then known to those making
the determination would not preclude indemnification under this Article.
Determinations and authorizations of payments under this Section must be made in
the manner specified in Section 6 of this Article for determining that the
indemnification is permissible.
Section 6.08. Other Contractual Rights. Nothing contained in this Article
shall affect any right to indemnification to which persons other than Trustees
and officers of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
Section 6.09. Limitations. No indemnification or advance shall be made
under this Article, except as provided in Sections 5 or 6 in any circumstances
where it appears:
(a) That it would be inconsistent with a provision of the
Agreement and Declaration of Trust of the Trust, a resolution of the
shareholders, or an agreement in effect at the time of accrual of
the alleged cause of action asserted in the proceeding in which the
expenses were incurred or other amounts were paid which prohibits or
otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 6.10. Insurance. Upon and in the event of a determination by the
Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent or employee of this Trust
against any liability asserted against or incurred by the agent or employee in
such capacity or arising out of the agent's or employee's status as such to the
fullest extent permitted by law.
Section 6.11. Fiduciaries of Employee Benefit Plan. This Article does not
apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee
9
<PAGE>
benefit plan in that person's capacity as such, even though that person may also
be an agent of this Trust as defined in Section 1 of this Article. Nothing
contained in this Article shall limit any right to indemnification to which such
a Trustee, investment manager, or other fiduciary may be entitled by contract or
otherwise which shall be enforceable to the extent permitted by applicable law
other than this Article.
ARTICLE VII.
Shares of Beneficial Interest
Section 7.01. Certificates. A certificate or certificates representing and
certifying the class and the full, but not fractional, number of shares of
beneficial interest owned by each shareholder in the Trust shall not be issued
except as the Board of Trustees may otherwise determine from time to time. Any
such certificate issued shall be signed by facsimile signature or otherwise by
the President or a Vice-President and counter-signed by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer.
Section 7.02. Signature. In case any officer who has signed any
certificate ceases to be an officer of the Trust before the certificate is
issued, the certificate may nevertheless be issued by the Trust with the same
effect as if the officer had not ceased to be such officer as of the date of its
issue.
Section 7.03. Recording and Transfer Without Certificates. The Trust shall
have the full power to participate in any program approved by the Board of
Trustees providing for the recording and transfer of ownership of the Trust's
shares by electronic or other means without the issuance of certificates.
Section 7.04. Lost Certificates. The Board of Trustees may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Trust alleged to have been stolen, lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to have been stolen, lost or destroyed, or
upon other satisfactory evidence of such theft, loss or destruction and may in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such stolen, lost or destroyed certificate or certificates, or his
legal representative, to give the Trust a bond with sufficient surety, to the
Trust to indemnify it against any loss or claim that may be made by reason of
the issuance of a new certificate.
Section 7.05. Transfer of Shares. Transfers of shares of beneficial
interest of the Trust shall be made on the books of the Trust by the holder of
record thereof (in person or by his attorney thereunto duly authorized by a
power of attorney duly executed in writing and filed with the Secretary of the
Trust) (i) if a certificate or certificates have been issued, upon the surrender
of the certificate or certificates, properly endorsed or accompanied by proper
instruments of transfer, representing such shares, or (ii) as otherwise
prescribed by the Board of Trustees. Every certificate exchanged, surrendered
for redemption or otherwise returned to the Trust shall be marked "Canceled"
with the date of cancellation.
10
<PAGE>
Section 7.06. Registered Shareholders. The Trust shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
applicable law or the Declaration of Trust.
Section 7.07. Transfer Agents and Registrars. The Board of Trustees may,
from time to time, appoint or remove transfer agents and or registrars of the
Trust, and they may appoint the same person as both transfer agent and
registrar. Upon any such appointment being made, all certificates representing
shares of beneficial interest thereafter issued shall be countersigned by such
transfer agent and shall not be valid unless so countersigned.
Section 7.08. Stock Ledger. The Trust shall maintain an original stock
ledger containing the names and addresses of all shareholders and the number and
class of shares held by each shareholder. Such stock ledger may be in written
form or any other form capable of being converted into written form within
reasonable time for visual inspection.
ARTICLE VIII.
General Provisions
Section 8.01. Custodianship. Except as otherwise provided by resolution of
the Board of Trustees, the Trust shall place and at all times maintain in the
custody of a custodian (including any sub-custodian for the custodian) all
funds, securities and similar investments owned by the Trust. Subject to the
approval of the Board of Trustees, the custodian may enter into arrangements
with securities depositories, provided such arrangements comply with the
provisions of the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder.
Section 8.02. Execution of Instruments. All deeds, documents, transfers,
contracts, agreements and other instruments requiring execution by the Trust
shall be signed by the President or a Vice President.
Section 8.03. Net Asset Value. The net asset value per share shall be
determined separately as to each class of the Trust's shares, by dividing the
sum of the total market value of the class's investments and other assets, less
any liabilities, by the total outstanding shares of such class, subject to the
Investment Company Act of 1940 and any other applicable Federal securities law
or rule or regulation currently in effect.
ARTICLE IX.
Amendments
The Board of Trustees shall have the power to make, alter and repeal the
Bylaws of the Trust.
EXHIBIT 99.23(d)
THE BARRETT FUNDS
BARRETT GROWTH FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between THE BARRETT FUNDS, a Delaware business
trust (the "Trust"), on behalf of the BARRETT GROWTH FUND (the "Fund"), and
BARRETT ASSOCIATES, INC., a New York Corporation (the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Trust has been organized and operates as an investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") and engages in the business of investing and reinvesting its assets
in securities; and
WHEREAS, the Investment Manager is a registered investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act") and engages
in the business of providing investment management services; and
WHEREAS, the Trust has selected the Investment Manager to serve as the
investment manager for the Fund effective as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Trust on behalf of the Fund hereby employs the Investment Manager
to manage the investment and reinvestment of the Fund's assets and to provide
administration of the Fund not otherwise provided by third party service
providers, subject to the direction of the Board of Trustees and officers of the
Trust, for the period and on the terms hereinafter set forth.
1
<PAGE>
The Investment Manager hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth for
the compensation herein provided. The Investment Manager shall for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or to represent
the Trust or the Fund in any way, or in any way be deemed an agent of the Trust
or the Fund. The Investment Manager shall regularly make decisions as to what
securities and other investments to purchase and sell on behalf of the Fund and
shall effect the purchase and sale of such investments in furtherance of the
Fund's objectives and policies. The Investment Manager shall record and
implement such decisions and shall furnish the Board of Trustees of the Trust
with such information and reports regarding the Fund's investments as the
Investment Manager deems appropriate or as the Trustees of the Trust may
reasonably request. Subject to compliance with the requirements of the 1940 Act,
the Investment Manager may retain as a sub-adviser to the Fund, at the
Investment Manager's own expense, any investment adviser registered under the
Advisers Act.
2. (a) The Trust shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes, and state and federal
registration fees. Directors, officers, and
2
<PAGE>
employees of the Investment Manager may be trustees/directors, officers and
employees of the funds of which the Investment Manager serves as Investment
Manager. Directors, officers and employees of the Investment Manager who are
trustees, officers and/or employees of the Trust shall not receive any
compensation from the Trust for acting in such dual capacity.
In the conduct of the respective businesses of the parties hereto
and in the performance of this Agreement, the Trust and the Investment Manager
may share facilities common to each, with appropriate proration of expenses
between them.
(b) To the extent the Investment Manager incurs any costs by
assuming expenses which are an obligation of a Fund as set forth herein, such
Fund shall promptly reimburse the Investment Manager for such costs and
expenses, except to the extent the Investment Manager has otherwise agreed to
bear such expenses. To the extent the services for which a Fund is obligated to
pay are performed by the Investment Manager, the Investment Manager shall be
entitled to recover from such Fund to the extent of the Investment Manager's
actual costs for providing such services.
3. (a) The Investment Manager shall place and execute Fund orders for the
purchase and sale of portfolio securities with broker-dealers. Subject to
obtaining the best available prices and execution, the Investment Manager is
authorized to place orders for the purchase and sale of portfolio securities for
the Fund with such broker-dealers as it may select from time to time. Subject to
subparagraph (b) below, the Investment Manager is also authorized to place
transactions with broker-dealers who provide research or statistical information
or analyses to the Fund, to the Investment Manager, or to any other client for
which the Investment Manager provides investment management services. Subject to
obtaining the
3
<PAGE>
best available prices and execution, the Investment Manager may also place
brokerage transactions with broker-dealers who sell shares of the Fund.
Broker-dealers who sell shares of the Fund shall only receive orders for the
purchase or sale of portfolio securities to the extent that the placing of such
orders is in compliance with the rules of the U.S. Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. The
Investment Manager also agrees that it will cooperate with the Trust to execute
instructions that brokerage transactions be allocated to broker-dealers who
provide benefits directly to the Fund.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Trust, the Investment Manager is authorized to pay
a member of an exchange, broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
in such instances where the Investment Manager has determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or the Investment
Manager's overall responsibilities with respect to the Fund and to other funds
for which the Investment Manager exercises investment discretion.
(c) The Investment Manager is authorized to direct portfolio
transactions to a broker-dealer which is an affiliated person of the Investment
Manager or the Fund in accordance with such standards and procedures as may be
approved by the Board in accordance with 1940 Act Rule 17e-1, or other rules
promulgated by the Securities and Exchange Commission. Any
4
<PAGE>
transaction placed with an affiliated broker-dealer must (i) be placed at best
price and execution, and (ii) may not be a principal transaction.
4. (a) As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Trust on behalf
of the Fund shall pay to the Investment Manager from the Fund's assets an annual
fee equal to 1.00% of the average daily net assets of the Fund, payable on a
monthly basis.
(b) If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
(c) The Investment Manager may voluntarily reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit expenses which are the responsibility of
the Fund under this Agreement. Any such reduction or payment shall be applicable
only to such specific reduction or payment and shall not constitute an agreement
to reduce any future compensation or reimbursement due to the Investment Manager
hereunder or to continue future payments. Any such reduction will be agreed upon
prior to accrual of the related expense or fee and will be estimated daily. Any
fee withheld shall be voluntarily reduced and any Fund expense paid by the
Investment Manager voluntarily or pursuant to an agreed expense limitation shall
be reimbursed by the appropriate Fund to the Investment Manager in the first,
second, or third (or any combination thereof) fiscal year next succeeding the
fiscal year of the withholding,
5
<PAGE>
reduction, or payment to the extent permitted by applicable law if the aggregate
expenses for the next succeeding fiscal year, second fiscal year or third
succeeding fiscal year do not exceed any limitation to which the Investment
Manager has agreed. Such reimbursement may be paid prior to the Fund's payment
of current expenses if so requested by the Investment Manager even if such
payment may require the Investment Manager to waive or reduce its fees hereunder
or to pay current Fund expenses.
5. The services to be rendered by the Investment Manager to the Trust on
behalf of the Fund under the provisions of this Agreement are not to be deemed
to be exclusive, and the Investment Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
6. The Investment Manager, its directors, officers, employees, and agents
may engage in other businesses, may render investment management services to
other investment companies, or to any other corporation, association, firm or
individual, and may render underwriting services to the Trust on behalf of the
Fund or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross negligence, or
a reckless disregard of the performance of duties of the Investment Manager to
the Fund, the Investment Manager shall not be subject to liabilities to the Fund
or to any shareholder of the Fund for any action or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
8. In accordance with the Agreement and Declaration of Trust of the Trust,
in the event that the Investment Manager ceases to be the Fund's investment
manager for any reason,
6
<PAGE>
the Trust will (unless the Investment Manager otherwise agrees in writing)
promptly take all necessary steps to propose to the Fund's shareholders at the
next regular meeting that the Fund change to a name not including the word
"Barrett."
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Fund. It shall continue in effect for a period of two years
and may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund and only if the terms
and the renewal hereof have been approved by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. Notwithstanding the foregoing, this Agreement may be terminated by the
Trust at any time, without the payment of a penalty, on sixty days written
notice to the Investment Manager of the Trust's intention to do so, pursuant to
action by the Board of Trustees of the Trust or pursuant to a vote of a majority
of the outstanding voting securities of the Fund. The Investment Manager may
terminate this Agreement at any time, without the payment of penalty on sixty
days written notice to the Trust of its intention to do so. Upon termination of
this Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond to a breach of this Agreement committed prior to such termination, and
except for the obligation of the Trust to pay to the Investment Manager the fee
provided in Paragraph 4 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment.
7
<PAGE>
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment" shall
have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals
to be affixed and duly attested and their presents to be signed by their duly
authorized officers this ____ day of _________________, 1998.
Attest: THE BARRETT FUNDS
By:______________________________
Robert E. Harvey, President
Attest: BARRETT ASSOCIATES, INC.
By:______________________________
John D. Barrett, II, Chairman
8
EXHIBIT 99.23(e)
DISTRIBUTION AGREEMENT
between
The Barrett Funds
and
T. 0. Richardson Securities, Inc.
THIS AGREEMENT is made as of the ____ day of ___________, 1998, by and between
The Barrett Funds, a Delaware business trust (the "Fund") and T.O. Richardson
Securities, a corporation organized and existing under the laws of the State of
Connecticut ("TORS").
WHEREAS the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and will
register one or more distinct series of shares of beneficial interest ("Shares")
for sale to the public under the Securities Act of 1933, as amended (the "1933
Act"), and will qualify its shares for sale to the public under various state
securities laws; and
WHEREAS, TORS is registered as a broker-dealer under the Securities Exchange
Act of 1934, as amended (the "1934 Act") and under each state's securities laws,
and is also a member of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS the Fund desires to retain TORS as principal underwriter and national
distributor in connection with the offering and sale of the Shares of each
series listed on Schedule A (as amended from time to time) to this Agreement and
TORS is willing to act as principal underwriter and national distributor for the
Fund on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints TORS as its agent to be the principal
underwriter and national distributor of its Shares and to hold itself out as
available to receive and accept orders for the purchase and redemption of the
Shares on behalf of the Fund, subject to the terms and for the period set forth
in this Agreement. TORS hereby accepts such appointment and agrees to act
hereunder. The Fund understands that any solicitation activities conducted on
behalf of the Fund will be conducted primarily by employees of the Fund's
sponsor who shall become registered representatives of TORS
2. Services and Duties of TORS
(a) TORS agrees to distribute Shares on a best efforts basis from time to time
during the term of this Agreement as agent for the Fund and upon the terms
described in the Registration Statement. As used in this Agreement, the term
"Registration Statement" shall mean the currently effective registration
statement of the Fund, and any supplements thereto, under the 1933 Act and the
1940 Act.
(b) TORS, with the operational assistance of the Fund's transfer agent, will
hold itself available to receive purchase and redemption orders satisfactory to
T.O.R for shares and will accept such orders on behalf of the Fund. Such
purchase orders shall be deemed effective at the time and in the manner set
forth in the Registration Statement.
<PAGE>
(c) TORS, with the operational assistance of the Fund's transfer agent, shall
make Shares available through the National Securities Clearing Corporation's
Fund/SERV System.
(d) TORS and its registered personnel shall provide to investors and potential
investors only such information regarding the Fund as the Fund shall provide or
approve. TORS shall review and file all proposed advertisements and sales
literature with regulators, as appropriate, and consult with the Fund regarding
any comments provided by regulators with respect to such materials.
(e) The offering price of the Shares shall be the price determined in
accordance with, and in the manner set forth in, the most-current Prospectus.
The Fund shall make available to TORS a statement of each computation of net
asset value and the details of entering into such computation.
(f) TORS in its sole discretion may repurchase Shares offered for sale by the
shareholders. Repurchase of Shares by TORS shall be at the price determined in
accordance with, and in the manner set forth in, the most current Prospectus. At
the end of each business day, T.O.R shall notify, by any appropriate means, the
Fund and its transfer agent of the orders for repurchase of Shares received by
TORS since the last such report, the amount to be paid for such Shares, and the
identity of the shareholders offering Shares for repurchase. The Fund reserves
the right to suspend such repurchase right upon written notice to TORS. TORS
further agrees to act as agent for the Fund to receive and transmit promptly to
the Fund's transfer agent shareholder requests for redemption of Shares.
(g) TORS shall not be obligated to sell any certain number of Shares.
(h) TORS shall prepare reports for the Board regarding its activities under
this Agreement as from time to time shall be reasonably requested by the Board.
(i) TORS shall at all times during the term of this Agreement remain
registered as a broker-dealer under the 1934 Act and with all 50 states, and
shall also remain a member in good standing of the NASD. TORS shall immediately
notify the Fund in writing if it receives written notification that such
registrations or membership have been temporarily or permanently suspended,
limited or terminated.
(j) TORS will serve as licensing/regulatory agent for employees and other
personnel of the Fund's sponsor, Barrett Associates, Inc., who will be
registered as TORS broker-dealer representatives.
3. Duties of the Fund.
(a) The Fund shall keep TORS fully informed of its affairs and shall provide
to TORS from time to time copies of all information, financial statements, and
other papers that TORS may reasonably request for use in connection with the
distribution of Shares, including, without limitation, certified copies of any
financial statements prepared for the Fund by its independent public accountant
and such reasonable number of copies of the most current Prospectus, Statement
of Additional Information ("SAI"), and annual and interim reports as TORS may
request, and the Fund shall fully cooperate in the efforts of TORS to distribute
and arrange for the distribution of Shares.
-2-
<PAGE>
(b) The Fund shall maintain a currently effective Registration Statement on
Form N-1A with the Securities and Exchange Commission (the "SEC"), satisfy
proper notice filing and fee payment provisions of applicable states and file
such reports and other documents as may be required under applicable federal and
state laws. The Fund shall notify TORS in writing of the states in which the
Shares may be sold and shall notify TORS in writing of any changes to such
information. The Fund shall bear all expenses related to preparing and
typesetting such Prospectuses, SAI and other materials required by law and such
other expenses, including printing and mailing expenses, related to the Fund's
communication with persons who are shareholders.
(c) The Fund shall not use any advertisements or other sales materials that
have not been (i) submitted to TORS for its review and approval, and (ii) if
required, filed with the appropriate regulators.
(d) The Fund represents and warrants that its Registration Statement and any
advertisements and sales literature (excluding statements relating to TORS and
the services it provides that are based upon written information furnished by
TORS expressly for inclusion therein) of the Fund shall not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that all statements or information furnished to TORS pursuant to Section 3(a)
hereof, shall be true and correct in all material respects.
4. Other Fund Operating Agreements. The Fund and TORS further agree that the
Fund has entered into the Fund Administrative Services Agreement, Fund
Accounting Services Agreement, Transfer Agent Agreement, Custodian Agreement,
and Fulfillment Services Agreement with Firstar Mutual Fund Services, LLC of
Milwaukee, Wisconsin ("FMFS"), copies of which are in the hands of the parties
hereto and to which reference may be had (which agreements are herein
collectively referred to as the "Fund Operating Agreements.") The Fund agrees to
maintain the Fund Operating Agreements in effect during the term of this
Agreement. The parties hereto agree that TORS is a third party beneficiary to
the Fund Operating Agreements and that portions of the duties and services to be
provided by TORS hereunder can be performed by FMFS for TORS' and the Fund's
benefit. The Fund shall be responsible for all amounts due under the Fund
Operating Agreements and TORS shall not be responsible for duplication of duties
or services provided for in the Fund Operating Agreements or any fees or
expenses thereunder.
5. Other Broker-Dealers. TORS in its discretion shall enter into agreements to
sell Shares to such registered and qualified retail dealers, as reasonably
requested by the Fund. In making agreements with such dealers, TORS shall act
only as principal and not as agent for the Fund. The form of any such dealer
agreement shall be mutually agreed upon and approved by the Fund and TORS.
6. Withdrawal of Offering. The Fund reserves the right at any time to withdraw
all offerings of any or all Shares by written notice to TORS at its principal
office. No Shares shall be offered by either TORS or the Fund under any
provisions of this Agreement and no orders for the purchase of Shares hereunder
shall be accepted by the Fund if and so long as effectiveness of the
Registration Statement then in effect or any necessary amendments thereto shall
be
-3-
<PAGE>
suspended under any of the provisions of the 1933 Act, or if and so long as a
current prospectus as required by Section 5(b)(2) of the 1933 Act is not on file
with the SEC.
7. Services Not Exclusive. The services furnished by TORS hereunder are not to
be deemed exclusive. TORS shall be free to furnish similar services to others so
long as its services under this Agreement are not impaired thereby. The Fund
reserves the right to (i) sell Shares to investors on applications received and
accepted by the Fund; (ii) issue Shares in connection with a merger,
consolidation, or recapitalization of the Fund; (iii) issue additional Shares to
holders of Shares; or (iv) issue Shares in connection with any offer of exchange
permitted by Section 11 of the 1940 Act.
8. Expenses of the Fund. The Fund shall bear all costs and expenses of
registering the Shares with the SEC and state and other regulatory bodies, and
shall assume expenses related to communications with shareholders of the Fund
including, but not limited to, (i) fees and disbursements of its counsel and
independent public accountant; (ii) the preparation, filing, and printing of
Registration Statements and/or Prospectuses or SAIs; (iii) the preparation and
mailing of annual and interim reports, Prospectuses, SAIs, and proxy materials
to shareholders; (iv) such other expenses related to the communications with
persons who are shareholders of the Fund; and (v) the qualifications of Shares
for sale under the securities laws of such jurisdictions as shall be selected by
the Fund pursuant to the Paragraph 3(b) hereof, and the costs and expenses
payable to each jurisdiction for continuing qualification therein. In addition,
the Fund shall bear all costs of preparing, printing, mailing, and filing any
advertisements and sales literature. TORS does not assume responsibility for any
expenses not assumed hereunder.
9. Compensation. As compensation for the services performed and the expenses
assumed by TORS under this Agreement including, but not limited to, any
commissions paid for sales of Shares, TORS shall be entitled to the fees and
expenses set forth in Schedule B to this Agreement which are payable promptly
after the last day of each month. Such fees shall be paid to TORS by the Fund
pursuant to its Rule 12b-1 plan or, if Rule 12b-1 payments are not sufficient to
pay such fees and expenses, or if the Rule 12b-1 plan is discontinued, or if the
Fund's sponsor, Barrett Associates, Inc. otherwise determines that Rule 12b-1
fees shall not, in whole or in part, be used to pay TORS, Barrett Associates,
Inc. shall be responsible for the payment of the amount of such fees not covered
by Rule 12b-1 payments.
10. Status of TORS. TORS is an independent contractor and shall be agent of
the Fund only with respect to the sale and redemption of Shares.
11. Indemnification.
(a) The Fund agrees to indemnify, defend, and hold TORS, its officers, and
directors, and any person who controls TORS within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any and all claims, demands, or
liabilities, and expenses (including the cost of investigating or defending such
claims, demands, liabilities, and any counsel fees incurred in connection
therewith) that TORS, its officers and directors, or any such controlling person
may incur under the 1933 Act, or under common law or otherwise, arising out of
or based upon any (i) alleged untrue statement of a material fact contained in
the Registration Statement, Prospectus, SAI, or sales literature; (ii) alleged
omission to state a material fact required to be stated in the Fund's
registration statement or necessary to make the statements therein not
-4-
<PAGE>
misleading; or (iii) failure by the Fund to comply with the terms of the
Agreement; provided, that in no event shall anything contained herein be so
construed as to protect TORS against any liability to the Fund or its
shareholders to which TORS would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations under this Agreement.
(b) The Fund shall not be liable to TORS under this Agreement with respect to
any claim made against TORS or any person indemnified unless TORS or other such
person shall have notified the Fund in writing of the claim within a reasonable
time after the summons or other first written notification giving information of
the nature of the claim shall have been served upon TORS or such other person
(or after TORS or other person shall have received notice of service on any
designated agent). However, failure to notify the Fund of any claim shall not
relieve the Fund from any liability that it may have to TORS or any person
against whom such action is brought otherwise than on account of this Agreement.
(c) The Fund shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this Agreement. If the Fund elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
the Fund and satisfactory indemnified defendants in the suit whose consent shall
not be unreasonably withheld. In the event that the Fund elects to assume the
defense of any suit and retain counsel, the indemnified defendants shall bear
the fees and expenses of any additional counsel retained by them. If the Fund
does not elect to assume the defense of a suit, it will reimburse the
indemnified defendants for the reasonable fees and expenses of any counsel
retained by the indemnified defendants. The Fund agrees to promptly notify TORS
of the commencement of any litigation or proceedings against it or any of its
officers and directors in connection with the issuance or sale of any of its
Shares.
(d) TORS agrees to indemnify, defend, and hold the Fund, its officers and
directors, and any person who controls the Fund within the meaning of Section 15
of the 1933 Act, free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending
against such claims, demands, or liabilities, and any counsel fees incurred in
connection therewith) that the Fund, its directors and officers, or any such
controlling person may incur under the 1933 Act, or under common law or
otherwise, resulting from TORS' willful misfeasance, bad faith, or gross
negligence in the performance of its obligations and duties under this
Agreement, or arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by TORS to the Fund
for use in the Registration Statement, Prospectus, or SAI arising out of or
based upon any alleged omission to state a material fact in connection with such
information required to be stated in any such document or necessary to make such
information not misleading.
(e) TORS shall be entitled to participate, at its own expense, in the defense
or, if it so elects, to assume the defense of any suit brought to enforce the
claim, but if TORS elects to assume the defense, the defense shall be conducted
by counsel chosen by TORS and satisfactory to the indemnified defendants whose
approval shall not be unreasonably withheld. In the event that TORS elects to
assume the defense of any suit and retain counsel, the defendants in the suit
shall bear the fees and expenses of any additional counsel retained by them. If
TORS does not elect to
-5-
<PAGE>
assume the defense of any suit, it will reimburse the indemnified defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
12. Duration and Termination.
(a) This Agreement shall become effective on the date first written above or
such later date as indicated in Schedule A and, unless sooner terminated as
provided herein, will continue in effect for two years from the above written
date. Thereafter, if not terminated, this Agreement shall continue in effect for
successive annual periods, provided that such continuance is specifically
approved at least annually (i) by a vote of a majority of the Fund's Board who
are neither interested persons (as defined in the 1940 Act) of the Fund
("Independent Trustees") or TORS cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of the Fund.
(b) Notwithstanding the foregoing, this Agreement may be terminated in its
entirety at any time, without the payment of any penalty, by vote of the Board,
by vote of a majority of the Independent Trustees, or by vote of a majority of
the outstanding voting securities of the Fund on sixty days' written notice to
TORS or by TORS at any time, without the payment of any penalty, on sixty days'
written notice to the Fund. This Agreement will automatically terminate in the
event of its assignment.
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge, or termination is sought. This Agreement may be amended with the
approval of the Board or of a majority of the outstanding voting securities of
the Fund; provided, that in either case, such amendment also shall be approved
by a majority of the Independent trustees/directors.
14. Limitation of Liability. The Board and shareholders of the Fund shall not
be personally liable for obligations of the Fund in connection with any matter
arising from or in connection with this Agreement. This Agreement is not binding
upon any trustee, officer, or shareholder of the Fund individually, and no such
person shall be individually liable with respect to any action or inaction
resulting from this Agreement.
15. Notice. Any notice required or permitted to be given by either party to
the other shall be deemed sufficient upon receipt in writing at the other
party's principal offices.
16. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule, or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors. As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person," and
"assignment" shall have the same meaning as such terms have in the 1940 Act.
17. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Delaware and the 1940 Act (without regard, however, to the
conflicts of law principles).
-6-
<PAGE>
To the extent that the applicable laws of the state of Delaware conflict with
the applicable provisions of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST: THE BARRETT FUNDS
By:___________________________
ATTEST: T.O. RICHARDSON SECURITIES
By:___________________________
-7-
<PAGE>
SCHEDULE A
to the
DISTRIBUTION AGREEMENT
between
The Barrett Funds
and
T.O. Richardson Securities
Pursuant to Section 1 of the Distribution Agreement between The Barrett Funds
("Fund") and T.O. Richardson Securities ("TORS"), the Fund hereby appoints TORS
as its agent to be the principal underwriter of Fund with respect to its
following series:
Barrett Growth Fund
Dated:_________________ ,1998
EXHIBIT 99.23(g)
CUSTODIAN SERVICING AGREEMENT
THIS AGREEMENT is made and entered into on this ____ day of November, 1998
between The Barrett Funds, a Delaware business trust (hereinafter called the
"Trust"), on behalf of its separate series of shares ("Series"), and Firstar
Bank Milwaukee, N.A., a corporation organized under the laws of the State of
Wisconsin (hereinafter called "Custodian").
WHEREAS, the Trust is an open-ended management investment company which is
registered under the Investment Company Act of 1940, as amended (the "1940Act");
and
WHEREAS, Custodian is a federally regulated banking institution; and
WHEREAS, the Trust desires that its securities and cash shall be hereafter
held and administered by Custodian pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and Custodian agree as follows:
1. Definitions
The word "securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Trust by any two of the
President, a Vice President, the Secretary and the Treasurer of the Trust, or
any other persons duly authorized to sign by the Board of Trustees of the Trust.
The word "Board" shall mean the Board of Trustees of the Trust.
2. Names, Titles, and Signatures of the Trust's Officers
An officer of the Trust will certify to Custodian the names and signatures
of those persons authorized to sign the officers' certificates described in
Section I hereof, and the names of the members of the Board of Trustees,
together with any changes which may occur from time to time.
3. Additional Series
The Trust is authorized to issue separate Series of shares of beneficial
interest representing interests in separate series of shares representing
interests in separate investment portfolios ("Series"). The parties intend that
each Series established by the Trust, now or in the future, be covered by the
terms and conditions of this agreement.
4. Receipt and Disbursement of Money
A. Custodian shall open and maintain a separate account or accounts in the
name of each Series of the Trust, subject only to draft or order by Custodian
acting pursuant to the terms of this
<PAGE>
Agreement. Custodian shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
relevant Series. Custodian shall make payments of cash to, or for the account
of, the relevant Series from such cash only:
(a) for the purchase of securities for the portfolio of the Series
upon the delivery of such securities to Custodian, registered
in the name of the Series or of the nominee of Custodian
referred to in Section 7 or in proper form for transfer;
(b) for the purchase or redemption of shares of beneficial
interest of the Series upon delivery thereof to Custodian, or
upon proper instructions from the Trust;
(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without
limitation thereto, fees for legal, accounting, auditing and
custodian services and expenses for printing and postage);
(d) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Series
held by or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by resolution of
the Board of Trustees of the Trust.
Before making any such payment, Custodian shall receive (and may rely
upon) an officers' certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c), or (d) of this
Subsection A, and also, in respect of item (e), upon receipt of an officers'
certificate specifying the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose to be a proper business
purpose, and naming the person or persons to whom such payment is to be made,
provided, however, that an officers' certificate need not precede the
disbursement of cash for the purpose of purchasing a money market instrument, or
any other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Trust issues appropriate oral
or facsimile instructions to Custodian and an appropriate officers' certificate
is received by Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of the Series of the Trust.
C. Custodian shall, upon receipt of proper instructions, make federal
funds available to the Trust as of specified times agreed upon from time to time
by the Trust and the Custodian in the amount of checks received in payment for
shares of the Series which are deposited into the relevant Series' account.
5. Segregated Accounts
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account(s) for and on behalf of each Series, into which
account(s) may be transferred cash and/or securities.
-2-
<PAGE>
6. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have sole power to release or deliver any portfolio
securities of the Series of the Trust held by it pursuant to this Agreement.
Custodian agrees to transfer, exchange or deliver portfolio securities held by
it hereunder only:
(a) for sales of such securities for the account of the Series of
the Trust upon receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or
otherwise become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities
alone or other securities and cash whether pursuant to any
plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise;
(e) upon conversion of such securities pursuant to their terms
into other securities;
(f) upon exercise of subscription, purchase or other similar
rights represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;
(h) for the purpose of redeeming in kind shares of beneficial
interest of the Series of the Trust upon delivery thereof to
Custodian; or
(i) for other proper business purposes.
As to any deliveries made by Custodian pursuant to items (a), (b), (d),
(e), (f), and (g), securities or cash receivable in exchange therefore shall be
deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian shall
receive (and may rely upon) an officers' certificate requesting such transfer,
exchange or delivery, and stating that it is for a purpose permitted under the
terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this Section 5 and
also, in respect of item (i), upon receipt of an officers' certificate
specifying the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made, provided, however, that an officers' certificate need not precede
any such transfer, exchange or delivery of a money market instrument, or any
other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Trust issues appropriate oral
or facsimile instructions to Custodian and an appropriate officers' certificate
is received by Custodian within two business days thereafter.
-3-
<PAGE>
7. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other income
items held by it for the account of the relevant Series of the Trust, which call
for payment upon presentation and hold the cash received by it upon such payment
for the account of the Trust; (b) collect interest and cash dividends received,
with notice to the Trust, for the account of the Trust; (c) hold for the account
of the 'trust hereunder all stock dividends, rights and similar securities
issued with respect to any securities held by it hereunder; and (d) execute, as
agent on behalf of the Trust, all necessary ownership certificates required by
the Internal Revenue Code or the Income Tax Regulations of the United States
Treasury Department or under the laws of any state now or hereafter in effect,
inserting the Trust's name on such certificates as the owner of the securities
covered thereby, to the extent it may lawfully do so.
8. Registration of Securities
Except as otherwise directed by an officers' certificate, Custodian shall
register all securities, except such as are in bearer form, in the name of a
registered nominee of Custodian as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued hereunder or in any provision of
any subsequent federal tax law exempting such transaction from liability for
stock transfer taxes, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under the
laws of any state. Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times identifiable in
its records.
The Trust shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register in the name of its registered nominee, any securities which it
may hold for the account of the Series of the Trust and which may from time to
time be registered in the name of the Series of the Trust.
9. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Series of the Trust,
except in accordance with the instructions contained in an officers'
certificate. Custodian shall deliver, or cause to be executed and delivered, to
the Corporation all notices, proxies and proxy soliciting materials with
relation to such securities, such proxies to be executed by the registered
holder of such securities (if registered otherwise than in the name of the
Series of the Trust), but without indicating the manner in which such proxies
are to be voted.
10. Transfer Tax and Other Disbursements
The Series of the Trust shall pay or reimburse Custodian from time to time
for any transfer taxes payable upon transfers of securities made hereunder, and
for all other necessary and proper disbursements and expenses made or incurred
by Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection with
securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and
-4-
<PAGE>
any Regulations of the Treasury Department issued thereunder, or under the laws
of any state, to exempt from taxation any exemptable transfers and/or deliveries
of any such securities.
11. Concerning Custodian
Custodian shall be paid as compensation for its services pursuant to this
Agreement such compensation as may from time to time be agreed upon in writing
between the two parties. Until modified in writing, such compensation shall be
as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith upon any
certificate herein described or certified copy of any resolution of the Board,
and may rely on the genuineness of any such document which it may in good faith
believe to have been validly executed.
The Trust agrees to indemnify and hold harmless Custodian and its nominee
from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or by its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the relevant Series
of the Trust for such items.
In the event of any advance of cash for any purpose made by Custodian
resulting from orders or instructions of the Trust, or in the event that
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the Series of the Trust shall be security
therefore.
Custodian agrees to indemnify and hold harmless the Trust from all
charges, expenses, assessments, and claims/liabilities (including counsel fees)
incurred or assessed against it in connection with the performance of this
agreement, except such as may arise from the Trust's own negligent action,
negligent failure to act, or willful misconduct.
12. Subcustodians
Custodian is hereby authorized to engage another bank or trust company as
a Subcustodian for all or any part of the Trust's assets, so long as any such
bank or trust company is a bank or trust company organized under the laws of any
state of the United States, having an aggregate capital, surplus and undivided
profit, as shown by its last published report, of not less than Two Million
Dollars ($2,000,000) and provided further that, if the Custodian utilizes the
services of a Subcustodian, the Custodian shall obtain preapproval by the Trust
and remain fully liable and responsible for any losses caused to the Trust by
the Subcustodian as fully as if the Custodian was directly responsible for any
such losses under the terms of the Custodian Agreement.
Notwithstanding anything contained herein, if the Trust requires the
Custodian to engage specific Subcustodians for the safekeeping and/or clearing
of assets, the Trust agrees to indemnify and hold harmless Custodian from all
claims, expenses and liabilities incurred or assessed against it in connection
with the use of such Subcustodian in regard to the Trust's assets, except as may
arise from its own negligent action, negligent failure to act or willful
misconduct.
-5-
<PAGE>
13. Reports by Custodian
Custodian shall furnish the Trust periodically as agreed upon with a
statement summarizing all transactions and entries for the account of Trust.
Custodian shall furnish to the Trust, at the end of every month, a list of the
portfolio securities showing the aggregate cost of each issue. The books and
records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of auditors
employed by, the Trust.
14. Termination or Assignment
This Agreement may be terminated by the Trust, or by Custodian, on ninety
(90) days notice, given in writing and sent by registered mail to Custodian at
Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202, or
to the Trust at 4 Manhattanville Road, Purchase, NY 10577, as the case may be.
Upon any termination of this Agreement, pending appointment of a successor to
Custodian or a vote of the shareholders of the Series of the Trust to dissolve
or to function without a custodian of its cash, securities and other property,
Custodian shall not deliver cash, securities or other property of the Trust to
the Trust, but may deliver them to a bank or trust company of its own selection,
having an aggregate capital, surplus and undivided profits, as shown by its last
published report of not less than Two Million Dollars ($2,000,000) as a
Custodian for the Trust to be held under terms similar to those of this
Agreement, provided, however, that Custodian shall not be required to make any
such delivery or payment until full payment shall have been made by the Trust of
all liabilities constituting a charge on or against the properties then held by
Custodian or on or against Custodian, and until full payment shall have been
made to Custodian of all its fees, compensation, costs and expenses, subject to
the provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the consent of the
Trust, authorized or approved by a resolution of its Board of Trustees.
15. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board of Trustees of the Trust approves by resolution the
use of such central securities clearing agency or securities depository.
16. Records
To the extent that Custodian in any capacity prepares or maintains any
records required to be maintained and preserved by the Trust pursuant to the
provisions of the Investment Company Act of 1940, as amended, or the rules and
regulations promulgated thereunder, Custodian agrees to make any such records
available to the Trust upon request and to preserve such records for the periods
prescribed in Rule 3 1 a-2 under the Investment Company Act of 1940, as amended.
-6-
<PAGE>
17. Notices
Notices of any kind to be given by either party to the other party shall
be in writing and shall be duly given if mailed or delivered as follows: Notice
to FTC shall be sent to:
Firstar Bank Milwaukee, N.A.
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Trust shall be sent to:
The Barrett Funds
565 Fifth Avenue
New York, NY 10017
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and their respective corporate seals to be affixed hereto as of the
date first above-written by their respective officers thereunto duly authorized.
This agreement may be executed in several counterparts, each of
which is an original.
The Barrett Funds Firstar Bank Milwaukee, N.A.
Sign: ____________________________ Sign: ____________________________
Print:____________________________ Print:____________________________
Title:____________________________ Title:____________________________
Date:_____________________________ Date:_____________________________
Attest:___________________________ Attest:___________________________
-7-
<PAGE>
Schedule A
Mutual Fund Custodial Agent Service
Domestic Portfolios
Annual Fee Schedule
The Barrett GrowthFund
o Annual fee based on market value of assets:
o $0.20 per $1,000 (2.0 basis points)
o Minimum annual fee per Fund: $3,000
o Investment transactions: (purchase, sale, exchange, tender, redemption,
maturity, receipt delivery)
o $12.00 per book entry security (depository or Federal Reserve system)
o $25.00 per definitive security (physical)
o $75.00 per Euroclear
o $ 8.00 per principal reduction on pass-through certificates
o $35.00 per option/future contracts
o Variable Amount Notes: Used as a short-term investment, variable amount notes
offer safety and prevailing high interest rates. Our charge, which is 1/4 of
1%, is deducted from the variable amount note income at the time is credited
to your account.
o Extraordinary expenses: Based on time and complexity involved.
o Out-of-pocket expenses: Charged to the account, including but not limited to:
o $10.00 per variation margin transaction
o $10.00 per Fed wire deposit or withdrawal
o Fees are billed monthly, based on market value at the beginning of the month.
-8-
EXHIBIT 99.23(h)(1)
FUND ADMINISTRATION SERVICING AGREEMENT
This Agreement is made and entered into on this day of November, 1998, by
and between The Barrett Funds, a business trust organized under the laws of the
State of Delaware (hereinafter referred to as the "Trust") on behalf of any of
its series as described in Part IV of this Agreement (each such series is
hereafter referred to as a "Fund" and, collectively as the "Funds"), and Firstar
Mutual Fund Services, LLC, a limited liability company organized under the laws
of the State of Wisconsin (hereinafter referred to as "Firstar").
WHEREAS, The Trust is a open-ended management investment company which is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, Firstar is in the business of providing fund administration
services for the benefit of its customers.
NOW, THEREFORE, the Trust and Firstar do mutually promise and agree as
follows:
I. Appointment of Administrator
The Trust hereby appoints Firstar as Administrator of the Funds on the
terms and conditions set forth in this Agreement, and Firstar hereby
accepts such appointment and agrees to perform the services and duties set
forth in this Agreement in consideration of the compensation provided for
herein.
II. Duties and Responsibilities of Firstar
A. General Fund Management
1. Act as liaison among all fund service providers.
2. Coordinate corporate formalities and Board communication by:
a. preparing and distributing meeting agendas and board
materials including board resolutions and various
financial, administrative and regulatory reports;
b. attending all regular or special board meetings,
preparing and distributing minutes of such meetings and
maintaining the corporate records and minute book for
the Trust;
c. updating trustees' and officers' biographical
information and questionnaires; and
d. evaluating independent auditor.
<PAGE>
3. Audits
a. Prepare appropriate schedules and assist independent
auditors.
b. Provide information to SEC and facilitate audit process.
c. Provide office facilities for auditors and SEC staff as
appropriate.
4. Assist in overall operations of the Trust, including the
provision of office facilities, executive and administrative
services and Firstar personnel to serve as officers of the
Trust to facilitate Trust operations, all at Firstar's expense
with the exception of the costs incurred when attending Board
of Trustee meetings; and to provide stationary and office
supplies at the Trust's expense.
5. Create and maintain operations and compliance calendars and/or
a compliance manual for the Trust, detailing schedules for the
various responsibilities of Firstar.
6. Shareholder Communications. Coordinate printing and
distribution of prospectuses, statements of additional
information, stickers (supplements) to prospectuses or
statements of additional information, annual and semi-annual
shareholder reports and proxy statements.
B. Compliance
1. Regulatory Compliance
a. Periodically monitor compliance with 1940 Act
requirements, including:
1) Asset diversification tests;
2) Total return and yield calculations;
3) Code of ethics for independent, disinterested
trustees;
4) Compliance with fidelity bond coverage
requirements of Rule 17g-1 under the 1940 Act; and
5) Compliance with the NASD sales charge rule,
including the calculation and monitoring of the
sales charge cap and remaining amount for
asset-based sales charges.
b. Periodically monitor and report at Fund's quarterly
board meeting or more frequently as required, compliance
with the policies investment limitations and
reinvestment restrictions of each Fund as set forth in
its prospectus and statement of additional information.
2. Blue Sky Compliance
a. Prepare and file with the appropriate state securities
authorities any and all required compliance or notice
filings relating to the sales, qualification or
registration of the securities of each Fund so as to
enable
-2-
<PAGE>
each Fund to make a continuous offering of its shares in
the fifty states, Puerto Rico, U.S. Virgin Islands, and
Guam ("Blue Sky Jurisdictions").
b. Monitor sales and qualification status and make
appropriate renewal filings in each Blue Sky
Jurisdiction.
c. File prospectuses, statements of additional information
or proxy statements for the Trust in Blue Sky
Jurisdictions as requested by the Trust or such
jurisdictions.
3. SEC Registration and Reporting
a. Assist in the preparation and filing of post-effective
amendments to the Trust's Registration Statement on Form
N-1A to reflect the addition or deletion of Funds,
general amendments, or annual updates including the
preparation of Financial Data Schedules; and prepare and
file supplements ("stickers") to any prospectus or
statement of additional information for a Fund.
b. Prepare and file annual and semi-annual reports to
shareholders as required under the 1940 Act, along with
annual and semiannual reports on Form N-SAR (which shall
be series and class-specific, as appropriate).
c. Assist in the preparation and filing of proxy
statements, as requested by the Trust (matters to be
voted on may be class-specific), prepare minutes of
shareholder meetings, and record ballot results and
interface with proxy solicitation companies as required.
d. Prepare and file documents required to report and
calculate Federal securities registration fees (such as
notices on Form 24F-2).
e. File fidelity bond and any joint insurance agreements as
required by Rule 17g-1 under the 1940 Act.
f. Provide for the EDGAR-ization or other appropriate
preparation of all documents described above which must
be filed electronically with the SEC.
4. IRS Compliance
a. Periodically monitor the Trust's status as a regulated
investment company under Subchapter M of the Internal
Revenue Code, as amended, through review of the
following:
1) Asset diversification requirements;
2) Qualifying income requirements; and
-3-
<PAGE>
3) Distribution requirements.
b. Monitor short testing as required.
c. Calculate required distributions as required (including
excise tax distributions).
C. Financial Reporting
1. Prepare monthly expense reports (by series and class where
appropriate) including expense figures and accruals,
monitoring of expense caps or reimbursements and calculation
of advisory fees and 12b-1 accruals or payments; and calculate
expense ratios for quarterly, semiannual or annual periods.
2. Prepare unaudited financial statements (by series and class
where appropriate) for use in shareholder reports or
prospectuses and statements of additional information.
3. Prepare other monthly operational reports as required
including:
a. Sales figures (including shares sold, redeemed and
reinvested, changes in share price in net sales and
numbers of shareholders);
b. Performance information (including total return or yield
for the month, quarter, year-to-date, fiscal year or
average annual one-, five- or ten-year periods); and
c. Portfolio information (including turnover, top ten
holdings, book gains/losses per share; net income/book
income per share; basis).
4. Provide financial data required by Fund prospectus and
statements of additional information.
5. Prepare financial reports for shareholders, the board, the
SEC, and independent auditors.
6. Supervise the Trust's Custodian and Fund Accountants in the
maintenance of each Funds general ledger and in the
preparation of each Fund's financial statements including
oversight of expense accruals and payments, of the
determination of net asset value of each Fund and of the
Fund's shares, and of the declaration and payment of dividends
and other distributions to shareholders.
D. Tax Reporting
1. Prepare and file on a timely basis appropriate federal and
state tax returns including forms 1120/8613 with any necessary
schedules.
-4-
<PAGE>
2. Prepare state income breakdowns where relevant.
3. File 1099 Miscellaneous for payments to directors and other
service providers.
4. Monitor wash losses.
5. Calculate eligible dividend income for corporate shareholders.
III. Compensation
The Trust agrees to pay Firstar for performance of the duties listed in
this Agreement and the fees and out-of-pocket expenses as set forth in the
attached Schedule A.
These fees may be changed from time to time, subject to mutual written
Agreement between the Trust and Firstar.
The Trust agrees to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
IV. Additional Funds
In the event that the Trust establishes one or more Funds with respect to
which it desires to have Firstar render fund administration services,
under the terms hereof, it shall so notify Firstar in writing, and if
Firstar agrees in writing to provide such services, such Funds will be
subject to the terms and conditions of this Agreement, and shall be
maintained and accounted for by Firstar on a discrete basis. The Funds
currently covered by this Agreement are: The Barrett Growth Fund.
V. Performance of Services; Limitation of Liability
A. Firstar shall exercise reasonable care in the performance of its
duties under this Agreement. Firstar shall not be liable for any
loss suffered by the Fund in connection with matters to which this
Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies beyond
Firstar's control, except a loss resulting from Firstar's refusal or
failure to comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in the
performance of its duties under this Agreement. Notwithstanding any
other provision of this Agreement, the Fund shall indemnify and hold
harmless Firstar from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or without basis in
fact or law) of any and every nature (including reasonable
attorneys' fees) which Firstar may sustain or incur or which may be
asserted against Firstar by any person arising out of any action
taken or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing standards, or (ii) in
reliance upon any written or oral instruction provided to Firstar by
any duly authorized officer of the Trust, such duly authorized
officer to be included in a list of authorized officers furnished to
Firstar and as amended from time to time in writing by resolution of
the Board of Trustees of the Trust.
-5-
<PAGE>
In the event of a mechanical breakdown or failure of communication
or power supplies beyond its control, Firstar shall take all
reasonable steps to minimize service interruptions for any period
that such interruption continues beyond Firstar's control. Firstar
will make every reasonable effort to restore any lost or damaged
data and correct any errors resulting from such a breakdown at the
expense of Firstar. Firstar agrees that it shall, at all times, have
contingency plans, that are comparable to those employed within the
financial services industry, with appropriate parties, making
reasonable provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available.
Representatives of the Trust shall be entitled to inspect Firstar's
premises and operating capabilities at any time during regular
business hours of Firstar, upon reasonable notice to Firstar.
Regardless of the above, Firstar reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the Trust
may be asked to indemnify or hold Firstar harmless, the Trust shall
be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that Firstar
will use all reasonable care to notify the Trust promptly concerning
any situation which presents or appears likely to present the
probability of such a claim for indemnification against the Trust.
The Trust shall have the option to defend Firstar against any claim
which may be the subject of this indemnification. In the event that
the Trust so elects, it will so notify Firstar and thereupon the
Trust shall take over complete defense of the claim, and Firstar
shall in such situation initiate no further legal or other expenses
for which it shall seek indemnification under this section. Firstar
shall in no case confess any claim or make any compromise in any
case in which the Trust will be asked to indemnify Firstar except
with the Trust's prior written consent.
C. Firstar shall indemnify and hold the Trust harmless from and against
any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every
nature (including reasonable attorneys' fees) which may be asserted
against the Trust by any person arising out of any action taken or
omitted to be taken by Firstar as a result of Firstar's refusal or
failure to comply with the terms of this Agreement, its bad faith,
negligence, or willful misconduct.
VI. Confidentiality
Firstar shall handle, in confidence, all information relating to the
Trust's business which is received by Firstar during the course of
rendering any service hereunder.
VII. Data Necessary to Perform Service
The Trust or its agent, which may be Firstar, shall furnish to Firstar the
data necessary to perform the services described herein at times and in
such form as mutually agreed upon.
-6-
<PAGE>
VIII. Terms of Agreement
This Agreement shall become effective on and, unless sooner terminated as
provided herein, shall continue automatically in effect for successive
annual periods, provided that the continuance of the Agreement is approved
by a majority of the Trustees of the Trust. The Agreement may also be
terminated by either party upon giving ninety (90) days prior written
notice to the other party or such shorter period as is mutually agreed
upon by the parties and will terminate automatically on its assignment
unless the parties hereto consent in writing.
IX. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
Firstar's duties or responsibilities hereunder is designated by the Trust
by written notice to Firstar, Firstar will promptly, upon such termination
and at the expense of the Trust, transfer to such successor all relevant
books, records, correspondence, and other data established or maintained
by Firstar under this Agreement in a form reasonably acceptable to the
Trust (if such form differs from the form in which Firstar has maintained,
the Trust shall pay any expenses associated with transferring the data to
such form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Firstar's
personnel in the establishment of books, records, and other data by such
successor.
X. Choice of Law
This Agreement shall be construed in accordance with the laws of the State
of Wisconsin.
XI. Notices
Notices of any kind to be given by either party to the other party shall
be in writing and shall be duly given if mailed or delivered as follows:
Notice to Firstar shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Trust shall be sent to:
The Barrett Funds
565 Fifth Avenue
New York, New York 10017
XII. Records
Firstar shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Trust and as required by the rules and
regulations of appropriate government authorities, in particular, Section
31 of the 1940 Act and the rules thereunder. Firstar agrees that all such
records prepared or maintained by Firstar relating to the services to be
performed by Firstar hereunder are the property of the Trust and will be
preserved, maintained, and made available with such section
-7-
<PAGE>
and rules of the 1940 Act and will be promptly surrendered to the Trust on
and in accordance with its request.
THE BARRETT FUNDS FIRSTAR MUTUAL FUND SERVICES, LLC
By: ______________________________ By: ______________________________
Title:____________________________ Title:____________________________
Date:_____________________________ Date:_____________________________
Attest:___________________________ Attest:___________________________
-8-
<PAGE>
Schedule A
Fund Administration and Compliance
Annual Fee Schedule
o Minimum annual fee per Fund: $30,000
o 6 basis points (.0006) on the first $200,000,000 of average daily net
assets
o 5 basis points (.0005) on the next $500,000,000 of average daily net
assets
o 3 basis points (.0003) on the balance
o Out-of-Pocket expenses, including, but not limited to:
o Postage
o Stationary
o Programming
o Proxies
o Retention of Records
o Special reports
o Federal and state regulatory filing fees
o Certain insurance premiums
o All other out-of-pocket expenses
o Expenses from Board of Trustees meetings
o Auditing & legal expenses
o Fees are billed monthly
-9-
EXHIBIT 99.23(h)(2)
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into on this ____ day of November,
1998, by and between The Barrett Funds, a business trust organized under the
laws of the State of Delaware (hereinafter referred to as the "Trust") on behalf
of any of its separate series as described in Exhibit A to this Agreement (each
such series is hereafter referred to as a "Fund" and collectively as the
"Funds") and Firstar Mutual Fund Services, LLC, a corporation organized under
the laws of the State of Wisconsin (hereinafter referred to as the "Agent").
WHEREAS, the Trust is an open-ended management investment company which is
registered under the Investment Company Act of 1940, as amended (the " 1940
Act"); and
WHEREAS, the Agent is in the business of administering transfer and
dividend disbursing agent functions for the benefit of its customers;
NOW, THEREFORE, the Trust and the Agent do mutually promise and agree as
follows:
1. Terms of Appointment; Duties of the Agent
Subject to the terms and conditions set forth in this Agreement, the Trust
hereby employs and appoints the Agent to act as transfer agent and dividend
disbursing agent.
The Agent shall perform all of the customary services of a transfer agent
and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive and process orders for the purchase of shares of the Funds
received in good order and issue and credit shareholder accounts
with the appropriate number of certified or uncertified shares.
Receive payments by check, Fed wire, or through Automated Clearing
House ("ACH") processing. Prepare and process daily deposit or
delivery of payment and proper supporting documentation to the
Trust's custodian.
B. Establish shareholder accounts with appropriate demographic data,
information regarding participation in plans (i.e., systematic
withdrawal, automatic investment, dividend reinvestment, etc.) and
information regarding tax I.D. certification or non-resident alien
records, including backup withholding. Make changes to shareholder
accounts to reflect changes in demographic data or participation in
plans.
C. Maintain valid and appropriate participation with the National
Securities Clearing Corporation ("NSCC") and provide access to
NSCC's Fund/Serv System for the Funds as agreed from time-to-time
with the Trust.
D. Produce shareholder lists and ad hoc reports for proxy solicitations
or as requested by Trust management, including lists of linked
accounts within Funds or across multiple
<PAGE>
funds to facilitate combined statements, or lists of accounts linked by
social security number, last name and/or address to facilitate household
mailings.
E. Create and produce mailing labels for regular, periodic or special
mailings to shareholders or households.
F. Receive and process redemption requests received in good order by
mail, telephone or other proper method, including automated
processing of systematic withdrawal transactions on a monthly basis.
Deliver appropriate redemption documentation to the Trust's
custodian.
G. Administer distribution of redemption proceeds, in coordination with
Trust's custodian, by check, Fed Wire or ACH processing.
H. Process transfers of shares in accordance with the shareowner's
instructions;
I. Process exchanges between Funds within the same family of Funds upon
request by mail, telephone, or other proper method;
J. Issue and/or cancel certificates as instructed; replace lost,
stolen, or destroyed certificates upon receipt of satisfactory
indemnification or surety bond;
K. Prepare and transmit payments for dividends and distributions
declared by the Trust by providing automated processing of dividend
and capital gains payments with daily, monthly, quarterly, or annual
distributions. Payment options will include reinvestment, directed
payment to another Fund, or cash via mail, Fed Wire or ACH.
L. Record the issuance of shares of the Trust and maintain, pursuant to
Securities Exchange Act of 1934 Rule 17Ad-10(e), a record of the
total number of shares of the Trust which are authorized, issued,
and outstanding;
M. Prepare shareholder meeting lists and, if applicable, mail, receive,
and tabulate proxies;
N. Provide toll-free telephone lines and sufficient personnel to answer
shareholder calls. Telephone representatives should provide routine
account information; respond to requests for information regarding
transaction details including direct and wire purchases,
redemptions, exchanges, transfers, systematic withdrawals, or
purchases, Fund SERV, or wire order trades; assist in problem
solving; and process telephone transactions.
O. Provide silent monitoring of telephone representatives to ensure
quality of customer service and record and maintain tape recordings
of all shareholder calls for a six-month period.
P. Customer inquiries or problems communicated by mail, telephone, or
other proper method should be researched by Agent personnel in a
reasonably prompt manner and any difficulties should be reported to
the Trust. Such inquiries/problems may include
-2-
<PAGE>
shareholder account information, historical account information,
stop payments on checks, transaction details or lost certificates.
Q. Prepare and mail laser printed confirmations and/or account
statements for all purchases, redemptions and other confirmable
transactions on a monthly basis, or as requested by the Trust.
Shareholder account statements should show beginning and ending
share price and account value and daily activity including dividends
and distributions, with share price and transaction amounts.
R. Mail prospectuses (with statements or confirmations if requested),
prospectus stickers or supplements, statements of additional
information and shareholder reports to current shareholders, as
requested by the Trust.
S. Provide appropriate transfer agency services to facilitate
Fund-sponsored IRA and SEP-IRA plans using Firstar Trust Company as
custodian, as well as Fund-sponsored qualified retirement plans
(such as 401(k) and 403(b) plans).
T. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to dividends
and distributions for all shareholders;
U. Provide a Blue Sky System which will enable the Trust to monitor the
total number of Fund shares sold in each state. In addition, the
Trust shall identify to the Agent in writing those transactions and
assets to be treated as exempt from the Blue Sky reporting to the
Trust for each state. The responsibility of the Agent for the
Trust's Blue Sky state registration status is solely limited to the
initial compliance by the Trust and the reporting of such
transactions to the Trust.
2. Compensation
The Trust agrees to pay the Agent for performance of the duties listed in
this Agreement; the fees and out-of-pocket expenses include, but are not limited
to the following: printing, postage, forms, stationery, record retention,
mailing, insertion, programming, labels, shareholder lists and proxy expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Trust and the Agent.
The Trust agrees to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
3. Representations of Agent
The Agent represents and warrants to the Trust that:
A. It is a trust company duly organized, existing and in good standing
under the laws of Wisconsin;
-3-
<PAGE>
B. It is a registered transfer agent under the Securities Exchange Act
of 1934 as amended.
C. It is duly qualified to carry on its business in the state of
Wisconsin;
D. It is empowered under applicable laws and by its charter and bylaws
to enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize it
to enter and perform this Agreement; and
F. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
G. It will comply with all applicable requirements of the Securities
Act of 1933 and the Securities Exchange Act of 1934, as amended, the
Investment Company Act of 1940, as amended, and any laws, rules, and
regulations of governmental authorities having jurisdiction.
4. Representations of the Trust
The Trust represents and warrants to the Agent that:
A. The Trust is an open-ended diversified investment company registered
under the 1940 Act;
B. The Trust is a business Trust organized, existing, and in good
standing under the laws of the State of Delaware;
C. The Trust is empowered under applicable laws and by its Agreement
and Declaration of Trust and bylaws to enter into and perform this
Agreement;
D. All necessary proceedings required by the Agreement and Declaration
of Trust have been taken to authorize it to enter into and perform
this Agreement;
E. The Trust will comply with all applicable requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934, as
amended, the 1940 Act, and any laws, rules, and regulations of
governmental authorities having jurisdiction; and
F. A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made,
with respect to all shares of the Trust being offered for sale.
5. Covenants of the Trust and Agent
The Trust shall furnish the Agent a certified copy of the resolution of
the Board of Trustees of the Trust authorizing the appointment of the Agent and
the execution of this Agreement. The Trust shall
-4-
<PAGE>
provide to the Agent a copy of the Agreement and Declaration of Trust , bylaws
of the Trust and all amendments.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable and as required by
the 1940 Act and related rules. To the extent required by Section 31 of the 1940
Act and the rules thereunder, the Agent agrees that all such records prepared or
maintained by the Agent relating to the services to be performed by the Agent
hereunder are the property of the Trust and will be preserved, maintained and
made available in accordance with such section and rules and will be surrendered
to the Trust on and in accordance with its request.
6. Indemnification; Remedies Upon Breach
The Agent shall exercise reasonable care in the performance of its duties
under this Agreement. The Agent shall not be liable for any loss suffered by the
Fund in connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of communication or
power supplies beyond the Agent's control, except a loss resulting from the
Agent's refusal or failure to comply with the terms of this Agreement or from
bad faith, negligence, or willful misconduct on its part in the performance of
its duties under this Agreement. Notwithstanding any other provision of this
Agreement, the Trust shall indemnify and hold harmless the Agent from and
against any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which the Agent may sustain or incur or which may be
asserted against the Agent by any person arising out of any action taken or
omitted to be taken by it in performing the services hereunder (i) in accordance
with the foregoing standards, or (ii) in reliance upon any written or oral
instruction provided to the Agent by any duly authorized officer of the Trust,
such duly authorized officer to be included in a list of authorized officers
furnished to the Agent attached as Schedule D and as amended from time to time
in writing by resolution of the Board of Trustees of the Trust.
Further, the Trust will indemnify and hold the Agent harmless against any
and all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action, or suit as
a result of the negligence of the Trust or the principal underwriter (unless
contributed to by the Agent's breach of this Agreement or other Agreements
between the Trust and the Agent, or the Agent's own negligence or bad faith); or
as a result of the Agent acting upon telephone instructions relating to the
exchange or redemption of shares received by the Agent and reasonably believed
by the Agent under a standard of care customarily used in the industry to have
originated from the record owner of the subject shares; or as a result of acting
in reliance upon any genuine instrument or stock certificate signed,
countersigned, or executed by any person or persons authorized to sign,
countersign, or execute the same.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, the Agent shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond the Agent's control. The Agent will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from such a
breakdown at the expense of the Agent. The Agent agrees that it shall, at all
times, have reasonable contingency plans that are comparable to those employed
by the financial services industry, with appropriate parties, making reasonable
provision for emergency use of electrical data processing equipment to the
extent appropriate equipment is available. Representatives of the Trust shall be
entitled to inspect the Agent's premises and
-5-
<PAGE>
operating capabilities at any time during regular business hours of the Agent,
upon reasonable notice to the Agent.
Regardless of the above, the Agent reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Trust may be asked to
indemnify or hold the Agent harmless, the Trust shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Agent will use all reasonable care to notify the
Trust promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against the Trust.
The Trust shall have the option to defend the Agent against any claim which may
be the subject of this indemnification. In the event that the Trust so elects,
it will so notify the Agent and thereupon the Trust shall take over complete
defense of the claim, and the Agent shall in such situation initiate no further
legal or other expenses for which it shall seek indemnification under this
section. The Agent shall in no case confess any claim or make any compromise in
any case in which the Trust will be asked to indemnify the Agent except with the
Trust's prior written consent.
The Agent shall indemnify and hold the Trust harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which may be asserted against the Trust by any person arising
out of any action taken or omitted to be taken by the Agent as a result of the
Agent's refusal or failure to comply with the terms of this Agreement, its bad
faith, negligence, or willful misconduct.
7. Confidentiality
The Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Trust and its
shareholders and shall not be disclosed to any other party, except after prior
notification to and approval in writing by the Trust, which approval shall not
be unreasonably withheld and may not be withheld where the Agent may be exposed
to civil or criminal contempt proceedings for failure to comply after being
requested to divulge such information by duly constituted authorities.
8. Records
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Trust and as required by the rules and regulations of
appropriate government authorities, in particular, Section 31 of the 1940 Act
and the rules thereunder. The Agent agrees that all such records prepared or
maintained by the Agent relating to the services to be performed by the Agent
hereunder are the property of the Trust and will be preserved, maintained, and
made available with such section and rules of the 1940 Act and will be promptly
surrendered to the Trust upon and in accordance with its request.
9. Wisconsin Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the state of Wisconsin.
-6-
<PAGE>
10. Term, Amendment, Termination, Assignment, and Notice
A. This Agreement shall become effective on the date above first
written and, unless sooner terminated as provided herein, shall
continue automatically for successive annual periods, provided that
the continuance of the Agreement is approved by a majority of the
Trustees of the Trust.
B. This Agreement may be amended by the mutual written consent of the
parties.
C. This Agreement may be terminated upon ninety (90) day's written
notice given by one party to the other.
D. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of the
other party.
E. Any notice required to be given by the parties to each other under
the terms of this Agreement shall be in writing, addressed and
delivered, or mailed to the principal place of business of the other
party. If to the agent, such notice should to be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
If to the Trust, such notice should be sent to:
The Barrett Funds
565 Fifth Avenue
New York, NY 10017
F. In the event that the Trust gives to the Agent its written intention
to terminate and appoint a successor transfer agent, the Agent
agrees to cooperate in the transfer of its duties and
responsibilities to the successor, including any and all relevant
books, records and other data established or maintained by the Agent
under this Agreement.
G. Should the Trust exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will
be paid by the Trust.
-7-
<PAGE>
The Barrett Funds Firstar Mutual Fund Services, LLC
By: By:
------------------------------- --------------------------------
Date: Date:
------------------------------ ------------------------------
Attest: Attest:
---------------------------- ----------------------------
-8-
<PAGE>
Schedule A
Transfer Agent Servicing Agreement
Annual Fee Schedule
o $16.00 per shareholder account
o Minimum annual fee of $22,000 for the first Fund and $12,000 for each
additional Fund.
o Plus out-of-pocket expenses, including but not limited to:
o Telephone - toll-free lines
o Postage
o Programming
o Stationery/envelopes
o Mailing
o Insurance
o Proxies
o Retention of records
o Microfilm/fiche of records
o Special reports
o All other out-of-pocket expenses
o ACH fees
o Fees are billed monthly
-9-
<PAGE>
Schedule B
Transfer Agent Servicing Agreement
Shareholder Fees
(Charged to Investors)
Defined Contribution
403(b)(7), 401(k)
IRA Accounts Plan Accounts
I. Qualified Plan Fees
Annual maintenance fee per account $12.50 $12.50
Transfer to successor trustee 15.00 15.00
Distribution to a participant (exclusive
of systematic withdrawal plans) 15.00 15.00
Refund of excess contribution 15.00 15.00
II. Additional Shareholder Fees
Amount
Any outgoing wire $12.00/wire
Telephone exchange 5.00/telephone exchange
Return check fee 15.00/return check
Stop payment fee (liquidation, dividend draft check) 15.00/stop paymen
Research fee 5.00/research item
(For requested items of the second calendar
year [or previous] to the request)
These fees are subject to change upon notification by Firstar
Mutual Fund Services, LLC to the mutual fund client
-10-
<PAGE>
Schedule C
Transfer Agent Servicing Agreement
Automatic Investment Plan Processing
ACH Service
o Automatic Investment Plan
o Telephone Purchase, Liquidation
o EFT Payments of Dividends, Capital Gains, SWP's
o $125.00 per month per Fund group
o $0.50 per account set-up and/or change
o $0.50 per item for AIP purchases
o $0.50 per item for EFT payments, purchases
o $3.50 per correction, reversal, or return item
o Fees are billed monthly
-11-
<PAGE>
Schedule D
Transfer Agent Servicing Agreement
Authorized Officers to Give Instructions
-12-
EXHIBIT 99.23(h)(3)
FUND ACCOUNTING SERVICING AGREEMENT
This Agreement between The Barrett Funds, a Delaware business trust
(hereinafter called the "Trust," on behalf of its separate series of shares
("Series") or classes of such Series ("Classes"), all as described herein (as
such part may be amended from time to time), and Firstar Mutual Fund Services,
LLC, a limited liability company organized under the laws of the State of
Wisconsin (hereinafter called "FTC"), is entered into on this _____ day of
November, 1998.
WHEREAS, the Trust, is an open-ended management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, FTC is in the business of providing mutual fund accounting
services to investment companies.
NOW, THEREFORE, the Trust and FTC do mutually promise and agree as
follows:
1. Services. FTC agrees to provide the following mutual fund
accounting services to the Trust on a per Series or per Class basis as
appropriate:
A. Portfolio Accounting Services:
(1) Maintain portfolio trading records (purchase and sale
journals for each Series) on a trade date +1 basis using
security trade information communicated from the Series'
investment manager on a timely basis.
(2) Monitor corporate action to identify and record interest
and dividend income on portfolio securities and maintain
accrual balances as of each valuation date and calculate gross
earnings on investments for the accounting period.
(3) Determine gain/loss on portfolio security sales and
identify them as to short-short, short- or long-term status;
account for periodic distributions of gains or losses to
shareholders and maintain undistributed gain or loss balances
as of each valuation date.
(4) Maintain appropriate records of brokerage activity for
transactions in portfolio securities to enable FTC to provide
monthly brokerage reports showing brokers and commission
amounts.
(5) Maintain a daily listing of portfolio holdings by Series
showing cost, market value, and the percentage of portfolio
comprised of each security.
(6) Reconcile accounting asset listings against custodian's
asset listings on at least a monthly basis and report any
securities balance discrepancies promptly to the Trust and
Custodian.
<PAGE>
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Trust as to methodology, rate or
dollar amount.
(2) Upon receipt of written authorization from the Trust, make
and record payments for Trust expenses.
(3) Account for Trust and Series expenditures and maintain
expense accrual balances at the level of accounting detail, as
agreed upon by FTC and the Trust.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Calculate and maintain daily records of the net asset
value (and offering price if appropriate) of each Series (or
class of such Series if appropriate), at such times (each a
"valuation date") as directed and authorized by the Trust
through FTC's questionnaire and in accordance with: (i)
relevant regulatory requirements; (ii) the Trust's Declaration
of Trust and By-Laws; (iii) the Trust's registration statement
or Form N-IA; and (iv) any procedures approved by the Board of
Trustees of the Trust and supplied to FTC in writing.
(2) In connection with the calculation of relevant net asset
values, FTC shall obtain prices for portfolio securities from
pricing services approved by the Trust, and will apply those
prices to the portfolio securities. For those securities where
market quotations are not readily available, the Board of
Trustees shall approve, in good faith, the method for
determining the fair value for such securities. If the Trust
desires to provide a price which varies from the pricing
source, the Trust shall promptly notify and supply FTC with
the valuation of any such security on each valuation date. All
pricing changes made by the Trust will be in writing and must
specifically identify the securities to be changed by CUSIP,
name of security, new price or rate to be applied, and, if
applicable, the time period for which the new price(s) is/are
effective.
(3) On trade date +1, account for and record purchases, sales,
exchanges, transfers, dividend reinvestments, and other
transactions in shares of the Trust, its Series as reported by
the transfer agent on a timely basis.
(4) Apply equalization accounting as directed by the Trust.
(5) Determine net investment income (earnings) for each Series
of the Trust as of each valuation date. Account for periodic
distributions of earnings to shareholders and maintain
undistributed net investment income balances as of each
valuation date.
-2-
<PAGE>
(6) Maintain a general ledger for the Trust and each of its
Series in the form as agreed upon.
(7) Communicate, at an agreed upon time, the per share price
for each valuation date to the Trust and its investment
advisers as agreed upon from time to time.
D. Tax Accounting Services:
(1) Maintain accounting records for each Series' investment
portfolio to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for each Series' investment
portfolio.
(3) Calculate taxable gain/loss on security sales using the
tax lot relief method designated by the Trust.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions
to the transfer agent to support tax reporting to the
shareholders.
(5) Maintain schedules of dividends paid and payable.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the Trust's
accounting records available to the Trust and its investment
manager, the Securities and Exchange Commission, and the
outside auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder.
2. Changes in Accounting Procedures. Any resolution passed by the Board of
Trustees of the Trust that affects accounting practices and procedures under
this agreement shall be effective upon written receipt and acceptance by the
FTC.
3. Changes in Equipment, Systems, Service, Etc. FTC reserves the right to
make changes from time to time, as it deems advisable, relating to its services,
systems, programs, rules, operating schedules and equipment, so long as such
changes do not adversely affect the service provided to the Trust under this
Agreement.
4. Compensation. FTC shall be compensated for providing the services set
forth in this Agreement in accordance with the Fee Schedule attached hereto as
Exhibit A and as mutually agreed upon and amended from time to time.
-3-
<PAGE>
5. Performance of Service.
A. FTC shall exercise reasonable care in the performance of its
duties under this Agreement. FTC shall not be liable for any loss suffered
by the Fund in connection with matters to which this Agreement relates,
including losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FTC's control, except a loss
resulting from FTC's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence, or willful misconduct on its part
in the performance of its duties under this Agreement. Notwithstanding any
other provision of this Agreement, the Fund shall indemnify and hold
harmless FTC from and against any and all claims, demands, losses,
expenses, and liabilities (whether with or without basis in fact or law)
of any and every nature (including reasonable attorneys' fees) which FTC
may sustain or incur or which may be asserted against FTC by any person
arising out of any action taken or omitted to be taken by it in performing
the services hereunder (i) in accordance with the foregoing standards, or
(ii) in reliance upon any written or oral instruction provided to FTC by
any duly authorized officer of the Fund, such duly authorized officer to
be included in a list of authorized officers furnished to FTC and as
amended from time to time in writing by resolution of the Board of
Directors of the Fund.
In the event of a mechanical breakdown or failure of communication
or power supplies beyond its control, FTC shall take all reasonable steps
to minimize service interruptions for any period that such interruption
continues beyond FTC's control. FTC will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from
such a breakdown at the expense of FTC. FTC agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available.
Representatives of the Fund shall be entitled to inspect FTC's premises
and operating capabilities at any time during regular business hours of
FTC, upon reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the Trust may be
asked to indemnify or hold FTC harmless, the Trust shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that FTC will use all reasonable
care to notify the Trust promptly concerning any situation which presents
or appears likely to present the probability of such a claim for
indemnification against the Trust. The Trust shall have the option to
defend FTC against any claim which may be the subject of this
indemnification. In the event that the Fund so elects, it will so notify
FTC and thereupon the Trust shall take over complete defense of the claim,
and FTC shall in such situation initiate no further legal or other
expenses for which it shall seek indemnification under this section. FTC
shall in no case confess any claim or make any compromise in any case in
which the Trust will be asked to indemnify FTC except with the Trust's
prior written consent.
C. FTC shall indemnify and hold the Trust harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the
-4-
<PAGE>
Trust by any person arising out of any action taken or omitted to be taken
by FTC as a result of FTC's refusal or failure to comply with the terms of
this Agreement, its bad faith, negligence, or willful misconduct.
6. Records. FTC shall keep records relating to the services to be
performed hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Trust and as required by the rules and
regulations of appropriate government authorities, in particular, Section 31 of
the 1940 Act and the rules thereunder. FTC agrees that all such records prepared
or maintained by FTC relating to the services to be performed by FTC hereunder
are the property of the Trust and will be preserved, maintained, and made
available with such section and rules of the 1940 Act and will be promptly
surrendered to the Trust on and in accordance with its request.
7. Confidentiality. FTC shall handle in confidence all information
relating to the Trust's or its investment manager's business, which is received
by FTC during the course of rendering any service hereunder.
8. Data Necessary to Perform Services. The Trust or its agent, which may
be FTC, shall furnish to FTC the data necessary to perform the services
described herein at times and in such form as mutually agreed upon.
9. Notification of Error. The Trust will notify FTC of any balancing or
control error caused by FTC within three (3) business days after receipt of any
reports rendered by FTC to the Trust, or within three (3) business days after
discovery of any error or omission not covered in the balancing or control
procedure, or within three (3) business days of receiving notice from any
shareholder.
10. Additional Series. In the event that the Trust establishes one or more
Series or Classes of shares with respect to which it desires to have FTC render
accounting services, under the terms hereof, it shall so notify FTC in writing,
and if FTC agrees in writing to provide such services, such series will be
subject to the terms and conditions of this Agreement, and shall be maintained
and accounted for by FTC on a discrete basis. The series and classes currently
covered by this Agreement are: "The Barrett Growth Fund."
11. Term of Agreement. This Agreement shall become effective on
___________ and, unless sooner terminated as provided herein, shall continue
automatically in effect for successive annual periods, provided that the
continuance of the Agreement is approved by a majority of the Trustees of the
Trust. The Agreement may also be terminated by either party upon giving ninety
(90) days prior written notice to the other party or such shorter period as is
mutually agreed upon by the parties and will terminate automatically upon its
assignment unless the parties offer consent in writing. However, this Agreement
may be replaced or modified by a subsequent agreement between the parties.
12. Duties in the Event of Termination. In the event that in connection
with termination a Successor to any of FTC's duties or responsibilities
hereunder is designated by Trust by written notice to FTC, FTC will promptly,
upon such termination and at the expense of Trust, transfer to such Successor
all relevant books, records, correspondence and other data established or
maintained by FTC under this Agreement in a form reasonably acceptable to Trust
(if such form differs from the form in which FTC has maintained the same, Trust
shall pay any expenses associated with transferring the same to such
-5-
<PAGE>
form), and will cooperate in the transfer of such duties and responsibilities,
including provision for assistance from FTC's personnel in the establishment of
books, records and other data by such successor.
13. Notices. Notices of any kind to be given by either party to the other
party shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FTC shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Trust shall be sent to:
The Barrett Funds
565 Fifth Avenue
New York, New York 10017
14. Choice of Law. This Agreement shall be construed in accordance with
the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the due execution hereof on the date first above
written.
THE BARRETT FUNDS FIRSTAR TRUST COMPANY
By: By:
----------------------------- --------------------------------
Title: Title:
--------------------------- ----------------------------
Date: Date:
--------------------------- ----------------------------
Attest: Attest:
------------------------- ----------------------------
-6-
<PAGE>
Schedule A
Fund Valuation and Accounting
Domestic Portfolios
Annual Fee Schedule
Fixed Income Funds
o Annual fee per fund based on market value of assets;
o $25,000 for the first $40,000,000
o 2/100 of 1% (2 basis points) on the next $200,000,000
o 1/100 of 1% (1 basis point) on the balance
o out-of-pocket expenses, including daily pricing service
Equity/Balance Funds
o Annual fee per fund based on market value of assets;
o $23,000 for the first $40,000,000
o 1/100 of 1% (1 basis point) on the next $200,000,000
O 5/1000 of 1% (1/2 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
Money Market Funds
o Annual fee per fund based on market value of assets:
o $25,000 for the first $40,000,000
o 1/100 of 1% (1 basis point) on the next $200,000,000
o 5/1000 of 1% (1/2 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
All fees and out-of-pocket expenses are billed monthly.
-7-
<PAGE>
Schedule B
Fund Valuation and Accounting Asset Pricing Cost
Charge per Item per Valuation
Asset Type (daily, weekly, etc.)
Domestic and Canadian Equities $0.15
Options $0.15
Corporate/Government/Agency Bonds $0.50
CMOs $0.80
International Equities and Bonds $0.50
Municipal Bonds $0.80
Money Market Instruments $0.80
Pricing costs are billed monthly.
-8-
Law Office
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Direct Dial: (215) 564-8115
December 17, 1998
The Barrett Funds
565 Fifth Avenue
New York, NY 10017
Re: Legal Opinion-Securities Act of 1933
------------------------------------
Ladies and Gentlemen:
We have examined the Agreement and Declaration of Trust (the
"Declaration"), of The Barrett Funds (the "Fund"), a series business trust
organized under the Delaware Business Trust Act, the By-Laws of the Fund, and
its proposed form of Share Certificates (if any), all as amended to date, and
the various pertinent corporate proceedings we deem material. We have also
examined the Notification of Registration and the Registration Statements filed
under the Investment Company Act of 1940, as amended (the "Investment Company
Act") and the Securities Act of 1933, as amended (the "Securities Act"), all as
amended to date, as well as other items we deem material to this opinion.
The Fund is authorized by the Declaration to issue an unlimited
number of shares of beneficial interest at a par value of $0.001 and has
designated a single series of shares as the Barrett Growth Fund series. The
Declaration also empowers the Board to designate any additional series or
classes and allocate shares to such series or classes.
The Fund has filed with the U.S. Securities and Exchange Commission,
a registration statement under the Securities Act, which registration statement
is deemed to register an indefinite number of shares of the Fund pursuant to the
provisions of Section 24(f) of the Investment Company Act. You have further
advised us that the Fund will file a Notice pursuant to Rule 24f-2 under the
Investment Company Act each year in order to perfect the registration of the
shares sold by the Fund during each fiscal year during which such registration
of an indefinite number of shares remains in effect.
You have also informed us that the shares of the Fund will be sold
in accordance with the Fund's usual method of distributing its registered
shares, under which prospectuses are
<PAGE>
The Barrett Funds
December 17, 1998
Page 2
made available for delivery to offerees and purchasers of such shares in
accordance with Section 5(b) of the Securities Act.
Based upon the foregoing information and examination, so long as the
Fund remains a valid and subsisting entity under the laws of its state of
organization, and the registration of an indefinite number of shares of the Fund
remains effective, the authorized shares of the Fund when issued for the
consideration set by the Board of Trustees pursuant to the Declaration, and
subject to compliance with Rule 24f-2, will be legally outstanding, fully-paid,
and non-assessable shares, and the holders of such shares will have all the
rights provided for with respect to such holding by the Declaration and the laws
of the State of Delaware.
We hereby consent to the use of this opinion, in lieu of any other,
as an exhibit to the Registration Statement of the Fund, along with any
amendments thereto, covering the registration of the shares of the Fund under
the Securities Act and the applications, registration statements or notice
filings, and amendments thereto, filed in accordance with the securities laws of
the several states in which shares of the Fund are offered, and we further
consent to reference in the registration statement of the Fund to the fact that
this opinion concerning the legality of the issue has been rendered by us.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
BY: ______________________________
Bruce G. Leto
CONSENT OF INDEPENDENT ACCOUNTANTS
The Shareholder and Board of Trustees
Barrett Growth Fund:
We consent to the use of our report and the reference to our firm under the
heading "Independent Accountants" in the Statement of Additional Information.
/s/ KPMG Peat Marwick
Milwaukee, Wisconsin
December 15, 1998
EXHIBIT 99.23(j)(2)
POWER OF ATTORNEY
The undersigned Officers and Trustees of The Barrett Funds (the "Trust")
hereby appoint Robert E. Harvey and Paula J. Elliott as attorneys-in-fact and
agents, with the power, to execute, and to file any of the documents referred to
below relating to the initial registration of the Trust as an investment company
under the Investment Company Act of 1940, as amended (the "Act") and the
registration of the Trust's securities under the Securities Act of 1933, as
amended (the "Securities Act") including the Trust's Registration Statement on
Form N-1A, any and all amendments thereto, including all exhibits and any
documents required to be filed with respect thereto with any regulatory
authority, including applications for exemptive order rulings. Each of the
undersigned grants to the said attorneys full authority to do every act
necessary to be done in order to effectuate the same as fully, to all intents
and purposes, as he could do if personally present, thereby ratifying all that
said attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
The undersigned officers and Trustees hereby execute this Power of
Attorney as of this 11th day of November, 1998.
Name Title
/s/ John D. Barrett, II Chairman, Trustee
------------------------
John D. Barrett, II
/s/ Robert E. Harvey President, Trustee
------------------------
Robert E. Harvey
/s/ R. Bruce Cameron Trustee
------------------------
R. Bruce Cameron
/s/ Gerard E. Jones Trustee
------------------------
Gerard E. Jones
/s/ James R. Rutherford Trustee
------------------------
James R. Rutherford
/s/ Ronald E. Kfoury Trustee
------------------------
Ronald E. Kfoury
/s/ Peter H. Shriver Treasurer
------------------------
Peter H. Shriver
EXHIBIT 99.23(m)
DISTRIBUTION PLAN OF THE BARRETT FUNDS
(Relating to The Barrett Growth Fund)
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act")
by The Barrett Funds (the "Trust") for the use of The Barrett Growth Fund series
of the Trust (the "Fund"). The Plan has been approved by a majority of the Board
of Trustees of the Trust, including a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan (the "non-interested trustees"), cast in
person at a meeting called for the purpose of voting on such Plan.
In reviewing the Plan, the Board of Trustees concluded that adoption of
the Plan would be prudent and in the best interests of the Fund and its
shareholders. Such approval included a determination that in the exercise of
their reasonable business judgment and in light of their fiduciary duties, there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
The provisions of the Plan are:
1. (a) The Trust shall reimburse the Investment Manager, the Distributor
or others for expenses incurred by such parties in the promotion and
distribution of the shares of the Fund, including but not limited to, the
printing of prospectuses and reports used for sales purposes, expenses of
preparation of sales literature and related expenses, advertisements, and other
distribution-related expenses, as well as any distribution fees paid to
securities dealers or others who have executed a servicing agreement with the
Trust or the Distributor on behalf of the Fund, which form of agreement has been
approved from time to time by the Board, including the non-interested trustees.
(b) The maximum amount which may be reimbursed by the Fund pursuant
to this Plan shall be 0.25% per annum of the Fund's average daily net assets.
Such reimbursement shall be paid on a monthly or quarterly basis as determined
by the Board. In no event, shall the payments made under this Plan, plus any
other payments deemed to be made pursuant to the Plan, exceed the amount
permitted to be paid pursuant to the Conduct Rules of the National Association
of Securities Dealers, Inc.
2. The Investment Manager and Distributor shall collect and monitor the
documentation of payments made under Paragraphs 1 and 2 above, and shall furnish
to the Board of Trustees of the Trust, for their review, on a quarterly basis, a
written report of the monies reimbursed to them and others, and the purpose of
any such payment made, under the Plan as to the Fund, and shall furnish the
Board of Trustees of the Trust with such other information as the Board may
reasonably request in connection with the payments made under the Plan as to the
Fund in order to enable the Board of Trustees to make an informed determination
of whether the Plan should be continued.
3. The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually by
the Trust's Board of Trustees,
<PAGE>
including the non-interested trustees, cast in person at a meeting called for
the purpose of voting on the Plan.
4. The Plan, or any agreements entered into pursuant to this Plan, may be
terminated at any time, without penalty, on not more than sixty (60) days'
written notice by (a) the vote of a majority of the outstanding voting
securities of the Fund, (b) the vote of a majority of the non-interested
trustees, on not more than sixty (60) days' written notice, or (c) the
Distributor, and shall terminate automatically in the event of any act that
constitutes an assignment of the investment management agreement between the
Trust on behalf of the Fund and the Investment Manager.
5. The Plan and any agreements entered into pursuant to this Plan may not
be amended to increase materially the amount to be spent by the Trust for
distribution pursuant to Paragraph 2 above without approval by a majority of the
Trust's outstanding voting securities.
6. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by the non-interested trustees cast in
person at a meeting called for the purpose of voting on any such amendment.
7. So long as the Plan is in effect, the selection and nomination of the
non-interested trustees of the Trust shall be committed to the discretion of
such non-interested trustees.
8. This Plan shall take effect on the ____ day of ____________, 1998.
