Annual Report to Shareholders
RUPAY-BARRINGTON TOTAL RETURN FUND
For the Year Ended
December 31, 1998
<PAGE>
The Rupay-Barrington Total Return Fund
Report from Fritz Bensler, Portfolio Manager
- --------------------------------------------------------------------------------
Dear Shareholders:
For the year ended December 31, 1998, the Rupay-Barrington Total Return Fund
increased in value by 3.98%. This compares to a gain in the S&P 500 Index of
28.6% and a loss in the Russell 2000 Index of 2.6%.
The divergence in returns between the large capitalization stocks as measured
by the S&P 500 Index and the smaller capitalization stocks as measured by the
Russell 2000 Index continues a trend that began five years ago. Since 1994
the S&P 500 has out-gained the Russell 2000 every year, though last years
difference was by far the widest. Last year was also a year in which the
average growth style mutual fund significantly out performed the average
value style mutual fund. I expect these trends to continue into 1999.
Many analysts are predicting slow earnings growth for many companies in 1999.
This environment is usually one in which investors are willing to pay a
premium for companies that can deliver strong and consistent earnings growth.
Smaller capitalization stocks and slower growing companies may have
difficulty in this environment.
During 1998 the Funds ownership of small capitalization stocks and slower
growing value stocks hurt performance. Going into 1999 I have constructed the
Funds portfolio to capitalize on an environment that I believe will favor
large capitalization stocks of companies with expected strong earnings
growth. The Fund's top five holdings at year end were IBM Corp., Fannie Mae,
MCI WorldCom, Inc., Cisco Systems, Inc. and Viacom Inc. Class B shares. All
of these companies should record strong earnings growth this year.
I look forward to 1999 and thank you for your support of the Rupay-Barrington
Total Return Fund.
Sincerely,
Fritz Bensler
Portfolio Manager
February 15, 1999
<PAGE>
Schedule of Portfolio Investments
December 31, 1998
Number
of Market
Shares Security Value
------ -------- -----
COMMON STOCK: 51.52%
BROADCASTING & CABLE TV: 1.91%
300 Cablevision Systems Corp.* $15,056
-------
COMPUTERS: 8.62%
300 Compaq Computer Corp. 12,581
300 IBM Corp. 55,425
------
68,006
------
COMPUTER SOFTWARE: 1.69%
300 BMC Software, Inc.* 13,369
------
ENTERTAINMENT: 4.69%
500 Viacom Inc. Class B* 37,000
------
FINANCIAL: 13.77%
600 The Bank of New York Co., Inc. 24,150
700 Fannie Mae 51,800
300 Morgan Stanley Dean Witter & Co. 21,300
300 Washington Mutual, Inc. 11,456
------
108,706
-------
NETWORKING PRODUCTS: 5.29%
450 Cisco Systems, Inc.* 41,766
------
OFFICE SUPPLIES: 1.54%
1,000 Officemax, Inc.* 12,125
------
PHARMACEUTICALS: 7.06%
600 Schering-Plough Corp. 33,150
300 Warner-Lambert Co. 22,556
------
55,706
------
RETAIL: 1.50%
300 Ross Stores, Inc. 11,813
------
TELECOMMUNICATIONS: 5.45%
600 MCI WorldCom, Inc.* 43,050
------
TOTAL COMMON STOCK:
(Cost: $293,907) 406,597
-------
Principal
Amount
- --------
CORPORATE OBLIGATIONS: 25.34%
$100,000 Fixed Income UIT 12/30/01; 9.25% 100,000
100,000 Graves Financial Bond 12/31/99; 10.00% 100,000
-------
TOTAL CORPORATE OBLIGATIONS:
(Cost:$200,000) 200,000
-------
75,813 SHORT TERM INVESTMENTS: 9.61%
Star Bank Money Market Fund
(Cost: $75,813) 75,813
------
TOTAL INVESTMENTS:
(Cost: $569,720)** 86.47% $682,410
Other assets-net 13.53% 106,784
----- -------
NET ASSETS 100.00% $789,194
====== ========
**Cost for Federal income tax purpose is $569,720 and net unrealized
appreciation consists of:
Gross unrealized appreciation $121,189
Gross unrealized depreciation (8,499)
------
Net unrealized appreciation $112,690
========
*Non-income producing security
See Notes to Financial Statements
<PAGE>
Statement of Assets and Liabilities
December 31, 1998
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ASSETS
Investments at value (Identified $606,597
cost of $493,907)(Notes 1 & 3)
Short term investments 75,813
Dividends and interest receivable 2,610
Due from manager 41,049
Organizational expense 68,027
------
TOTAL ASSETS 794,096
-------
LIABILITIES
Accrued expenses 4,902
-----
TOTAL LIABILITIES 4,902
-----
NET ASSETS $789,194
========
NET ASSET VALUE OFFERING AND REDEMPTION
PRICE PER SHARE ($789,194/79,757 shares outstanding) $9.90
=====
At December 31, 1998 there were 50,000,000 shares of $.01 par value stock
authorized and components of net assets are:
Paid in capital $681,356
Accumulated net realized loss on investments (4,852)
Net unrealized gain on investments 112,690
-------
Net Assets $789,194
========
See Notes to Financial Statements
<PAGE>
Statement of Operations
Year ended December 31, 1998
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INVESTMENT INCOME
Income:
Interest $25,786
Dividends 25,291
------
Total income $51,077
-------
Expenses:
Investment management
fees (Note 2) 13,603
Recordkeeping and administration
services (Note 2) 15,283
Transfer agent fees (Note 2) 17,546
Legal and audit fees 10,000
Custodian and accounting fees (Note 3) 15,893
Distribution fees 5,951
Registration fees 789
Amortization of organization expense 38,004
Miscellaneous 2,983
-----
Total expenses 120,052
Expenses reimbursed or waived (86,049)
Custody fee credits (767)
----
Net expenses 33,236
------
Net investment income 17,841
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (69,862)
Net change in unrealized
appreciation on investments 70,428
------
Net gain on investments 566
---
Net increase in net assets
resulting from operations $18,407
=======
See Notes to Financial Statements
<PAGE>
Statement of Changes in Net Assets
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Years ended December 31,
------------------------
1998 1997
---- ----
OPERATIONS
Net investment income $17,841 $64,010
Net realized gain (loss)
on investments (69,862) 152,327
Net change in unrealized
appreciation (depreciation)
of investments 70,428 193,117
------ -------
Net increase
in net assets resulting
from operations 18,407 409,454
DISTRIBUTION TO
SHAREHOLDERS FROM:
Net investment income
($.16 and $.21 per share, respectivel (18,802) (68,866)
Net realized gain from
investment transaction
($. - and $.70 per share) --- (147,579)
CAPITAL SHARE TRANSACTIONS
Net decrease in
net assets resulting
from capital share
transactions** (1,412,303) (2,916,852)
---------- ----------
Net decrease
in net assets (1,412,698) (2,723,843)
Net assets at
beginning of year 2,201,892 4,925,735
--------- ---------
NET ASSETS at end of year $789,194 $2,201,892
======== ==========
**A summary of capital share transactions follows:
Years ended December 31,
------------------------
1998 1997
---- ----
Shares Value Shares Value
------ ----- ------ -----
Shares sold 15,207 $146,510 74,341 $760,185
Shares
reinvested
from distribution 1,888 18,318 21,591 212,316
Shares
redeemed (164,855) (1,577,131) (375,106) (3,889,353)
-------- ---------- -------- ----------
Net decrease (147,760)($1,412,303) (279,174) ($2,916,852)
======== =========== ======== ===========
See Notes to Financial Statements
<PAGE>
Financial Highlights
For a Share Outstanding Throughout Each Period
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Years ended December 31, Aug 11, 1995*
------------------------ thru
1998 1997 1996 Dec 31, 1995
---- ---- ---- ------------
Per Share Operating
Performance
Net asset value,
beginning of period $9.68 $9.72 $9.67 $10.00
----- ----- ----- ------
Income from investment
operations-
Net investment income 0.15 0.20 0.13 0.04
Net realized and unrealized
gain (loss) on investments 0.23 0.67 0.44 (0.33)
---- ---- ---- -----
Total from investment
operations 0.38 0.87 0.57 (0.29)
---- ---- ---- -----
Less distributions-
Distributions from net
investment income (0.16) (0.21) (0.12) (0.04)
Distributions from realized
gains on investments --- (0.70) (0.40) ---
----- ----- ----- -----
Total distributions (0.16) (0.91) (0.52) (0.04)
----- ----- ----- -----
Net asset value, end of period $9.90 $9.68 $9.72 $9.67
===== ===== ===== =====
Total Return 3.98% 8.91% 5.89% (2.89)%
==== ==== ==== =======
Ratios/Supplemental Data
Net assets, end of period (000's) $789 $2,202 $4,926 $1,126
Ratio to average net assets-(A)
Expenses before reimbursement 7.07% 3.82% 6.29% 5.09%**
Expenses after reimbursement (B) 1.99% 1.95% 1.95% 1.95%**
Expenses-net (C) 1.95% 1.95% 1.95% 1.95%**
Net investment income 1.05% 1.68% 2.06% 1.72%**
Portfolio turnover rate 126.83% 112.02% 1.14% 0.00%
* Commencement of operations
** Annualized
(A) Management fee waivers reduced the expense ratios and increased net
investment income ratios by 5.12% for the period ended December 31, 1998,
1.87% in 1997, 4.34% in 1996 and 3.14% in 1995.
(B) Expense ratio after reimbursment has been increased to include additional
custodian fees, which were offset by custodian fee credits.
(C) Expense ratio-net reflects the effect of the custodian fee credits the fund
received
See Notes to Financial Statements
<PAGE>
Notes to the Financial Statements
December 31, 1998
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NOTE 1-SIGNIFICANT ACCOUNTING POLICIES--The Rupay-Barrington Total Return Fund
is a series of Rupay-Barrington Funds, Inc. (formerly Rupay-Barrington Total
Return Fund, Inc. (the "Fund") is registered under The Investment Company Act of
1940, as a diversified open-end management company.
The investment objective of the fund is to seek capital appreciation, current
income and preservation of capital by investing in a diversified portfolio of
equity securities and fixed income securities.
The following is a summary of significant accounting policies consistently
followed by the Fund. The policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities listed or traded on a
nationally recognized securities exchange are valued at the last quoted
sales price on the date the valuations are made. Securities regularly
traded in the over-the-counter market are valued at the last quoted sales
price on the NASDAQ System. If no sales price is available for a listed or
NASDAQ security, or if the security is not listed on NASDAQ, such security
is valued at a price equal to the mean of the latest bid and ask prices.
B. Federal Income Taxes. The Fund intends to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders. Therefore, no
federal income tax provision is required.
C. Security Transactions. Security transactions are accounted for on the
trade date. The cost of securities sold is determined on a first-in,
first-out basis.
D. Deferred Organizational Expenses. Organizational expenses are being
amortized on a straight line basis over a period not exceeding 60 months
beginning at the Fund's commencement of operations.
E. Distribution to Shareholders. Distributions from investment income and
realized gains, if any, are recorded on the ex-dividend date.
F. Other. Dividend income is recorded on the ex-dividend date. Interest
income is recorded on an accrual basis.
G. Accounting Estimates. In preparing financial statements in conformity with
generally accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 2-INVESTMENT MANAGEMENT AND DISTRIBUTION AGREEMENTS--The Fund has engaged
Rupay-Barrington Advisors, Inc. a wholly-owned subsidiary of Rupay-Barrington
Financial Group Inc., to manage its investments. The Fund pays its Advisors an
investment management fee for investment management and advisory services which
is computed at an annual rate of 0.80 of 1% of the Fund's daily net assets.
Rupay-Barrington Financial Group Inc. has agreed to reimburse the Fund for any
expenses, during the Fund's first five years of operations, which would cause
the Fund's ratio of operating expenses to exceed 1.95% of average net assets.
For the year ended December 31, 1998, a reimbursement of $86,049 was made.
As provided in the Administrative Agreement, the Fund reimbursed Commonwealth
Shareholder Services, Inc. ("CSS"), its Administrative Agent, $15,283 for
providing shareholder services, recordkeeping, administrative services and
blue-sky filings. The Fund compensates CSS for blue-sky filings and certain
shareholder servicing on an hourly rate basis. For other administrative
services, CSS receives .20% of average daily net assets.
Fund Services, Inc. ("FSI") is the Fund's Transfer and Dividend Disbursing
Agent. FSI received $17,546 for its services for the year ended December 31,
1998.
Certain officers and directors of the Fund are also officers and directors of
the investment advisor.
NOTE 3-PURCHASES AND SALES OF SECURITIES\CUSTODY--For the year ended December
31, 1998, the Fund made purchases and sales of securities other than short-term
notes aggregated $1,669,783 and $2,674,948 respectively. The custodian has
provided credits in the amount of $767 against custodian and accounting charges
based on credits on cash balances.
NOTE 4-DISTRIBUTION PLAN--The Fund has adopted a Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Under the plan ,
Rupay-Barrington Securities Corp., a wholly-owned subsidiary of Rupay-Barrington
Financial Group Inc., was entitled to a fee at an annual rate of 0.35 of 1% of
the Fund's daily net assets. Rupay-Barrington Securities Corp. uses these fees
to pay its dealers whose clients hold portfolio shares and for other
distribution-related activities.
<PAGE>
Report of Independent Certified Public Accountants
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To the Shareholders and Board of Directors of
Rupay-Barrington Funds, Inc.
San Francisco, California
We have audited the accompanying statement of assets and
liabilities of Rupay-Barrington Total Return Fund, a series of
Rupay-Barrington Funds, Inc., including the schedule of portfolio
investments as of December 31, 1998, the related statement of
operations for the year then ended, statement of changes in net
assets for each of the two years in the period then ended and the
financial highlights for each of the three years in the period
then ended and for the period August 11, 1995 (commencement of
operations) to December 31, 1995. 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 audits.
We conducted our audits 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 as of December 31, 1998, 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 audits provide 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 Rupay-Barrington Total Return Fund as
of December 31, 1998, the results of its operations for the year
then ended, the changes in its net assets for each of the two
years in the period then ended and the financial highlights for
each of the three years in the period then ended and the period
August 11, 1995 to December 31, 1995, in conformity with
generally accepted accounting principles.
TAIT, WELLER AND BAKER
Philadelphia, Pennsylvania
January 22, 1999
