BARRETT
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GROWTH FUND
[logo]
Annual Report
For the Period December 29, 1998
through June 30, 1999
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BARRETT
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GROWTH FUND
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Dear Fellow Shareholder:
LETTER TO
SHAREHOLDERS The Barrett Growth Fund completed its first six months with
AUGUST 20, 1999 a total return of over 9%. The Fund performed well in the
second calendar quarter as your managers continued the
initial task of investing cash contributions in high quality
growth stocks that meet our criteria. By June 30, 1999, the
Fund was 95% invested in such stocks. The Fund's quarterly
appreciation was achieved despite the increase in interest
rates engineered by the Federal Reserve Board. Strong growth
in corporate profits, which fed an overall rise in the stock
market, offset the interest rate rise. Results for the
quarter and since inception are shown below as of 6/30/99:
TOTAL RETURN
-------------- SECOND QUARTER SINCE INCEPTION (12-29-98)
---------------- ----------------------------
Barrett Growth Fund 5.3% 9.4%
S&P 500 7.0% 11.3%
Russell 3000 7.7% 11.3%
During the quarter, Information Services was the best
performing sector, while Financial Services and Software and
Electronics also moved ahead nicely. Our large weighting in
the Consumer and Healthcare sectors restrained our overall
performance, as the market favored more cyclical stocks. We
expect the values of the healthcare stocks will improve in
time as their earnings continue to grow strongly. Several
technology-related holdings that were previously hurt by
Year 2000 issues rebounded sharply, including Computer
Sciences, Computer Associates and Oracle. The Fund's sector
weightings as a percent of equities are shown below:
[Pie chart here]
Financial Services 21.1%
Software & Electronics 17.2%
Health Care 15.8%
Consumer Products & Services 13.1%
Telecom Services & Equipment 12.5%
Information Services 9.2%
Energy 5.9%
Basic Industry 5.2%
Here is a list of the five best The largest positions as of
performing stocks in the second quarter: June 30, 1999 were as follows:
Five Largest Equity
BEST PERFORMING POSITIONS AS PERCENT OF EQUITY
COMPANY % CHANGE COMPANY %
Computer Associates +54% Cisco Systems 4.9%
Franklin Resources +44% Intel Corporation 4.5%
Oracle +41% Computer Sciences Corp. 4.1%
Goldman Sachs(*) +36% Microsoft Corp. 3.9%
Allied Signal +28% Computer Associates 3.6%
(*) Since date of Purchase
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BARRETT
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GROWTH FUND
Our disciplines require us to identify and purchase, at
reasonable prices, the stocks of well-managed, rapidly
growing companies that control their destinies. In
particular, we look for companies that have the ability to
lead their respective industries. Additionally, we look for
significant stock ownership of each company by its top
officers, as indication of their commitment to the company's
future. These are the securities that we can hold for the
long-term.
The companies in your portfolio are currently reporting
terrific earnings that meet or exceed our expectations. We
believe that growth in the economy and subdued inflation
will continue to provide a positive backdrop for your
companies in the year ahead. In particular, opportunities
for growth in technology-related businesses remain
outstanding.
Thank you for choosing The Barrett Growth Fund. Note that
you can now visit our web site at www.barrettassociates.com
for monthly updates on the Fund. For daily pricing, the
Fund's ticker symbol is BGRWX. Should you have any
questions, please call toll-free (877) 363-6333. Sincerely,
Robert E. Harvey
/s/ Robert E. Harvey
President
[Line Chart Here]
Barrett
Growth S&P Russell
Fund 500 3000
- ------------------------------------
12/29/98 10000 10000 10000
12/31/98 10020 9900 9986
1/31/99 10510 10314 10327
2/28/99 10180 9993 9960
3/31/99 10390 10393 10324
4/30/99 10450 10795 10796
5/31/99 10270 10540 10587
6/30/99 10940 11125 11132
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THIS CHART ASSUMES AN INITIAL GROSS INVESTMENT OF $10,000 MADE ON 12/29/98
(COMMENCEMENT OF OPERATIONS). RETURNS SHOWN INCLUDE THE REINVESTMENT OF ALL
DIVIDENDS. IN THE ABSENCE OF FEE WAIVERS AND REIMBURSEMENTS, TOTAL RETURN WOULD
BE REDUCED. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT YOUR SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
RUSSELL 3000 INDEX - An unmanged index which measures the performance of those
companies within the 3,000 largest U.S. companies based on total market
capitalization, which represents approximately 98% of the investable U.S. equity
market.
S&P 500 INDEX - An unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes in
the aggregate market value of the 500 stocks which represent all major
industries.
SINCE 12/29/98 (COMMENCEMENT OF OPERATIONS)
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Barrett Growth Fund 9.40%
S&P 500 11.25%
Russell 3000 11.32%
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BARRETT
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GROWTH FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
MARKET
SHARES VALUE
- -------- --------
COMMON STOCKS - 94.68%
Business Services - 4.82%
5,000 Automatic Data
Processing, Inc. $ 220,000
7,000 Equifax, Inc. 249,813
----------
469,813
----------
Computer Services &
Outsourcing - 3.90%
5,500 Computer Sciences
Corporation * 380,531
----------
Consumer Products - 4.72%
2,000 The Clorox Company 213,625
5,000 Colgate-Palmolive Company 246,875
----------
460,500
----------
Electronics - 5.70%
7,000 Intel Corporation 416,500
2,500 Network Appliance, Inc. * 139,687
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556,187
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Energy - 5.59%
4,000 Anadarko Petroleum
Corporation 147,250
2,000 BP Amoco Plc ADR 217,000
4,000 Halliburton Company 181,000
----------
545,250
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Financial Services - 17.63%
2,500 American International
Group, Inc. 292,656
4,000 Fannie Mae 273,500
6,000 Franklin Resources, Inc. 243,750
MARKET
SHARES VALUE
- -------- --------
Financial Services (continued)
3,000 The Goldman Sachs
Group, Inc. $ 216,750
1,500 Providian Financial
Corporation 140,250
3,500 State Street Corporation 298,812
4,000 Zions Bancorporation 254,000
----------
1,719,718
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Industrial - 4.90%
4,000 AlliedSignal, Inc. 252,000
2,000 General Electric Company 226,000
----------
478,000
----------
Media & Entertainment - 4.12%
1,000 America Online, Inc. * 110,500
6,000 Carnival Corporation 291,000
----------
401,500
----------
Medical Devices &
Services - 4.96%
8,000 IMS Health Incorporated 250,000
3,000 Medtronic, Inc. 233,625
----------
483,625
----------
Pharmaceuticals - 10.04%
2,500 Abbott Laboratories 113,750
3,000 Amgen, Inc. * 182,625
3,500 Eli Lilly and Company 250,688
6,000 Pfizer, Inc. 219,500
4,000 Schering-Plough Corporation 212,000
----------
978,563
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See accompanying Notes to the Financial Statements
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BARRETT
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GROWTH FUND
Schedule of Investments
June 30, 1999
MARKET
SHARES VALUE
- -------- --------
Real Estate - 2.31%
5,000 Equity Residential
Properties Trust $ 225,313
----------
Retailing - 3.59%
3,000 Dayton Hudson Corporation 195,000
5,000 Staples, Inc. * 154,687
----------
349,687
----------
Software - 10.63%
6,000 Computer Associates
International, Inc. 330,000
4,000 Microsoft Corporation * 360,750
3,000 Oracle Corporation * 111,375
6,000 Transaction Systems
Architects, Inc. * 234,000
----------
1,036,125
----------
Telecommunication & Data
Network Equipment - 6.70%
7,000 Cisco Systems, Inc. * 451,063
3,000 Lucent Technologies, Inc. 202,313
----------
653,376
----------
Telecommunication
Services - 5.07%
3,000 MCI WorldCom, Inc. * 258,187
1,200 Vodafone AirTouch Plc ADR 236,400
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494,587
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Total common stocks
(Cost $8,464,602) $9,232,775
==========
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------
U.S. TREASURY
OBLIGATIONS - 0.26%
$ 5,000 U.S. Treasury Note, 5.250%,
due 01/31/2001 $ 4,984
20,000 U.S. Treasury Note, 5.375%,
due 02/15/2001 19,969
-----------
Total U.S. Treasury
Obligations (Cost $25,905) 24,953
-----------
VARIABLE RATE
DEMAND NOTES # - 5.02%
$72,792 Warner-Lambert
Company, 4.91% $ 72,792
354,256 Wisconsin Corporate Central
Credit Union, 4.89% 354,256
62,845 Wisconsin Electric Power
Company, 4.91% 62,845
-----------
Total variable rate demand
notes (Cost $489,893) 489,893
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Total investments - 99.96%
(Cost $8,980,400) 9,747,621
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Other assets in excess of
liabilities - 0.04% 4,123
-----------
Total Net Assets - 100.00%
$9,751,744
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* Non-income producing security.
# Variable rate demand notes are considered short-term obligations and are
payable on demand at the market value. Interest rates change periodically
at specified dates. The rates shown are as of June 30, 1999.
See accompanying Notes to the Financial Statements
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BARRETT
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GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
ASSETS:
Investments in securities,
at market value
(cost: $8,980,400) $9,747,621
Cash 18,000
Accrued dividends and interest 8,196
Receivable from Adviser 10,283
Prepaid assets 23,746
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Total assets 9,807,846
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LIABILITIES:
Accrued expenses 56,102
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Total liabilities 56,102
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Net assets applicable to
outstanding capital stock $9,751,744
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NET ASSETS CONSIST OF:
Capital stock $7,782,126
Accumulated net realized
gain on investments 1,202,397
Unrealized appreciation
on investments 767,221
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Total Net Assets $9,751,744
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Shares outstanding (unlimited
shares of $0.001 par value
authorized) 891,544
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Net asset value, offering and
redemption price per share $ 10.94
==========
STATEMENT OF OPERATIONS
DECEMBER 29, 1998* THROUGH JUNE 30, 1999
INVESTMENT INCOME:
Dividend income (net of
withholding tax of $245) $ 31,971
Interest income 15,352
-----------
Total investment income 47,323
-----------
EXPENSES:
Investment advisory fee 39,293
Organizational expenses 56,435
Administration fees 16,008
Shareholder servicing fees
and expenses 25,555
Fund accounting fees 12,252
Custody fees 6,592
Federal and state registration 7,656
Professional fees 18,923
Reports to shareholders 5,172
Trustees fees and expenses 1,656
Distribution expenses 9,823
Other expenses 5,704
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Total expenses before
Adviser reimbursement 205,069
Less fees and expenses
reimbursed and waived
by Adviser (148,318)
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Net expenses 56,751
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Net investment loss (9,428)
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NET REALIZED AND
UNREALIZED GAINS:
Net realized gain on investments 1,202,397
Net change in unrealized
appreciation on investments 767,221
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Net realized and unrealized
gains on investments 1,969,618
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Net increase in net assets
resulting from operations $1,960,190
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* Commencement of operations.
See accompanying Notes to the Financial Statements
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BARRETT
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GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 29, 1998*
THROUGH
JUNE 30, 1999
------------------
OPERATIONS:
Net investment loss $ (9,428)
Net realized gain on investments 1,202,397
Net change in unrealized appreciation on investments 767,221
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Net increase in assets resulting from operations 1,960,190
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CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 7,729,359
Cost of shares redeemed (37,805)
----------
Net increase in net assets from capital share transactions 7,691,554
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TOTAL INCREASE IN NET ASSETS 9,651,744
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NET ASSETS:
Beginning of period $ 100,000
----------
End of year $9,751,744
==========
* Commencement of operations.
See accompanying Notes to the Financial Statements
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BARRETT
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GROWTH FUND
FINANCIAL HIGHLIGHTS
DECEMBER 29, 1998*
Per share data for a share of capital stock outstanding THROUGH
for the entire period and selected information for the JUNE 30, 1999
period are as follows: ------------------
NET ASSET VALUE
Beginning of period $10.00
------
OPERATIONS
Net investment loss (0.01)(1)
Net realized and unrealized gains on investments 0.95
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Total from operations 0.94
------
NET ASSET VALUE
End of period $10.94
======
Total return 9.40%
Net assets at end of period (000s omitted) $9,752
RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense reimbursement 5.22%(2)
After expense reimbursement 1.44%(2)
RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS
Before expense reimbursement (4.02)%(2)
After expense reimbursement (0.24)%(2)
Portfolio turnover rate 30%
* Commencement of operations.
1 Net investment income per share is calculated using the ending balance of
undistributed net investment income prior to consideration of adjustments
for permanent book to tax differences.
2 Annualized.
See accompanying Notes to the Financial Statements
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BARRETT
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GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD DECEMBER 29, 1998 THROUGH JUNE 30, 1999
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 commenced
operations on December 29, 1998. Barrett Associates Inc.,
serves as the investment adviser (the "Adviser") for the
Fund and is responsible for managing the Fund's portfolio of
securities.
2. SIGNIFICANT a) Organization and Prepaid Initial Registration Expenses
ACCOUNTING Expenses incurred by the Trust in connection with the
POLICIES organization and the initial public offering of shares were
expensed as incurred. These expenses were advanced by the
Adviser, and the Adviser has agreed to voluntarily reimburse
the Fund for these expenses, subject to potential recovery
(see Note 3). Prepaid initial registration expenses are
deferred and amortized over the period of benefit.
b) Investment Valuation
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 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. Corporate bonds,
U.S. government securities and money market instruments are
valued at the close of the NYSE. The value of these
securities used in computing the NAV of each class is
determined as of such time. Variable rate demand notes are
valued at amortized cost, which approximates market value.
c) 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. Therefore, no federal income tax provision is
required. Generally accepted accounting principles require
that permanent differences between financial reporting and
tax reporting be reclassified between various components of
net assets. As a result of permanent book-to-tax
differences, accumulated net investment loss has been
increased by $9,428 and capital stock has been decreased by
$9,428.
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BARRETT
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GROWTH FUND
d) 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.
e) Other
Investment and shareholder transactions are recorded on
trade date. The Fund determines the gain or loss realized
from the investment transactions by comparing the cost of
the security lot sold with the net sales proceeds. Dividend
income is recognized on the ex-dividend date or as soon as
information is available to the Fund, and interest income is
recognized on an accrual basis. Discounts and premiums on
securities purchased are amortized over the life of the
respective security.
3. AGREEMENTS 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.
For the period December 29, 1998 (commencement of
operations) through March 31, 1999, the adviser agreed to
voluntarily waive its management fee and/or reimburse the
Fund's other expenses, including organizational expenses, to
the extent necessary to ensure that the Fund's total
operating expenses do not exceed 1.70% of average daily net
assets.
Effective April 1, 1999, the Adviser has agreed to
voluntarily waive its management fee and/or reimburse the
Fund's other expenses to the extent necessary to ensure that
the Fund's total operating expenses do not exceed 1.25% of
its average daily net assets until June 30, 2000. 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.
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BARRETT
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GROWTH FUND
4. DISTRIBUTION The Trust, on behalf of the Fund, has adopted a distribution
PLAN 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 an 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 or others for
services provided and expenses incurred in connection with
the sale of shares and are tied to the amounts of actual
expenses incurred.
5. INVESTMENT The aggregate purchases and sales of securities, excluding
TRANSACTIONS short-term investments, by the Fund for the period December
29, 1998 through June 30, 1999, were as follows:
PURCHASES SALES
------------- -------------
U.S. Government $ 2,552,238 $ 2,527,471
Other $ 9,009,761 $ 1,734,449
At June 30, 1999, gross unrealized appreciation and
depreciation of investments for tax purposes were are
follows:
Appreciation $1,829,905
(Depreciation) (203,151)
----------
Net unrealized appreciation on investments $1,626,754
==========
At June 30, 1999, the cost of investments for tax purposes
was $8,120,867.
DECEMBER 29, 1998
THROUGH
JUNE 30, 1999
-----------------
6. SHARES OF Shares sold 885,202
BENEFICIAL Shares reinvested --
INTEREST Shares redeemed (3,658)
----------
Net increase in shares 881,544
Shares outstanding:
Beginning of period 10,000
----------
End of period 891,544
==========
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BARRETT
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GROWTH FUND
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INDEPENDENT The Shareholders and Board of Trustees
AUDITORS' of The Barrett Growth Fund:
REPORT
We have audited the accompanying statement of assets and
liabilities of The Barrett Growth Fund (the "Fund")
including the schedule of investments, as of June 30, 1999,
and the related statements of operations, changes in net
assets and financial highlights for the period December 29,
1998 (commencement of operations) through June 30, 1999.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and
financial highlights based on our audit.
We 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 and financial highlights
are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures
included confirmation of securities owned, by correspondence
with the custodian. 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 that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of the Fund as of June 30,
1999 and the results of its operations, changes in its net
assets, and financial highlights for the period December 29,
1998 through June 30, 1999, in conformity with generally
accepted accounting principles.
/S/ KPMG LLP
Chicago, Illinois
July 20, 1999
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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, CT 06032
ADMINISTRATOR, FUND ACCOUNTANT & TRANSFER AGENT
FIRSTAR MUTUAL FUND SERVICES, LLC
615 East Michigan Street
Milwaukee, WI 53202
CUSTODIAN
FIRSTAR BANK MILWAUKEE, N.A.
615 East Michigan Street
Milwaukee, WI 53202
LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG, LLP
2600 One Commerce Square
Philadelphia, PA 19103
AUDITORS
KPMG LLP
303 East Wacker Drive
Chicago, IL 60601
