BARTLETT CAPITAL TRUST, 497, 1996-08-06

BARTLETT CAPITAL TRUST
497, 1996-08-06

Previous: KRUPP REALTY LTD PARTNERSHIP IV, 10-Q, 1996-08-06

Next: DEL TACO RESTAURANT PROPERTIES I, 10-Q, 1996-08-06

<PAGE> 1

PROSPECTUS
AUGUST 1, 1996
TABLE OF CONTENTS

<TABLE>
<S> <C>
Fund Expenses......................................... 2
Financial Highlights.................................. 3
Investment Objectives and Strategies.................. 10
General............................................... 16
Trustees and Officers................................. 17
Purchase of Shares.................................... 18
Redemption of Shares.................................. 20
Exchange Privilege.................................... 23
Operation of the Trusts............................... 23
Calculation of Share Price............................ 25
Dividends and Distributions........................... 27
Taxes................................................. 27
Investment Policies, Techniques and Risk
Considerations....................................... 28
Portfolio Management Policies for
Bartlett Cash Reserves Fund.......................... 42
Investment Limitations................................ 43
General Information................................... 44
Investment Performance................................ 45
</TABLE>

- --------------------------------------------------------------------------------

BARTLETT VALUE INTERNATIONAL FUND seeks capital appreciation by investing
primarily in foreign equity securities believed by its Advisor, Bartlett & Co.,
to be attractively priced relative to their intrinsic value. Income is a
secondary consideration. The Fund provides a means for individuals and
institutional investors to invest a portion of their assets outside the United
States. Foreign investments involve opportunities and risks not typically
associated with domestic investments.

BARTLETT BASIC VALUE FUND seeks capital appreciation by investing primarily in
common stocks or securities convertible into common stocks that are believed by
its Advisor, Bartlett & Co., to be attractively priced relative to their
intrinsic value. Income is a secondary consideration.

BARTLETT FIXED INCOME FUND seeks to provide a high level of current income by
investing primarily in high quality intermediate-term bonds. Capital
appreciation is a secondary consideration.

BARTLETT SHORT TERM BOND FUND seeks to provide a high level of current income
while maintaining a high degree of principal stability by investing primarily in
high quality short-term bonds.

BARTLETT CASH RESERVES FUND seeks the highest level of current income consistent
with stability of principal and liquidity. The Fund is a money market fund
designed for the short-term cash balances of corporations, institutions and
individuals.

AN INVESTMENT IN THE BARTLETT CASH RESERVES FUND IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

SHARES OF THESE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT
ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT
AGENCY, ENTITY OR PERSON. THE PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

Each Fund is a "no-load" fund. There are no sales or redemption charges, and
the Funds have no 12b-1 plans. The Bartlett Value International Fund, the
Bartlett Basic Value Fund, the Bartlett Fixed Income Fund and the Bartlett Short
Term Bond Fund are separate series of Bartlett Capital Trust. The Bartlett Cash
Reserves Fund is a series of Bartlett Management Trust. Both Trusts are
diversified open-end investment companies.

This Prospectus sets forth concisely the information about the Funds that you
ought to know before investing. Please read and retain this Prospectus for
future reference. Statements of Additional Information for the Funds dated
August 1, 1996 have been filed with the Securities and Exchange Commission and
are hereby incorporated by reference in their entirety. A copy of any Statement
can be obtained at no charge by calling the numbers listed below.

FOR INFORMATION OR ASSISTANCE IN OPENING AN ACCOUNT, PLEASE
CALL:

<TABLE>
<S> <C>
NATIONWIDE (TOLL FREE).................. (800)800-3609
CINCINNATI.............................. (513)345-6212
</TABLE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

BARTLETT CAPITAL TRUST BARTLETT MANAGEMENT TRUST
<PAGE> 2

The purpose of the table below is to assist shareholders in understanding
the costs and expenses that shareholders of each Fund will bear directly or
indirectly. The expense information is based upon the operating expenses
incurred during the fiscal year ended March 31, 1996. The expenses are expressed
as a percentage of average net assets. The Example should not be considered a
representation of past or future performance or expenses, both of which will
vary.

Shareholders should be aware that the Funds are no-load funds and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Funds. Unlike most other mutual funds,
the management fees paid by the Funds include transfer agency, pricing,
custodial, auditing and legal services, and general administrative and other
operating expenses.
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
- -----------------------------------------

<TABLE>
<CAPTION>
BARTLETT VALUE BARTLETT BARTLETT BARTLETT BARTLETT
INTERNATIONAL BASIC VALUE FIXED INCOME SHORT TERM CASH RESERVES
FUND FUND FUND BOND FUND FUND
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maximum Sales Load on Purchases None None None None None
Maximum Sales Load on Reinvested
Dividends None None None None None
Deferred Sales Load None None None None None
Redemption Fee None None None None None
Exchange Fee None None None None None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
- ----------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
Management Fees* 1.83% 1.17% 1.00% .85% .78%
12b-1 Fees None None None None None

<CAPTION>
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Fund Operating Expenses* 1.83% 1.17% 1.00% .85% .78%
</TABLE>

*The Fund's total operating expenses are equal to the management fee paid to the
Advisor. Unlike most other mutual funds, the management fees paid by the Funds
include transfer agency, pricing, custodial, auditing and legal services, and
general administrative and other operating expenses.

2
<PAGE> 3

EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------
<S> <C> <C> <C> <C>
BARTLETT VALUE INTERNATIONAL FUND...................... $19 $58 $99 $215
BARTLETT BASIC VALUE FUND.............................. $12 $37 $64 $142
BARTLETT FIXED INCOME FUND............................. $10 $32 $55 $122
BARTLETT SHORT TERM BOND FUND.......................... $ 9 $27 $47 $105
BARTLETT CASH RESERVES FUND............................ $ 8 $25 $43 $ 97
</TABLE>

The following condensed financial information for all periods presented for
Bartlett Value International Fund, Bartlett Basic Value Fund, Bartlett Fixed
Income Fund and Bartlett Short Term Bond Fund and, for periods ending subsequent
to June 30, 1988, for Bartlett Cash Reserves Fund, has been audited by Arthur
Andersen LLP. The condensed financial information is an integral part of
Bartlett Capital Trust's and Bartlett Management Trust's audited financial
statements and should be read in conjunction with the financial statements. The
financial statements (excluding total return) for Bartlett Management Trust for
the period ending June 30, 1988 were audited by another independent public
accountant. The financial statements as of March 31, 1996 and related auditors'
report appear in the Annual Report to Shareholders and are incorporated by
reference in the applicable Statements of Additional Information of the Trusts.
The annual report is available to shareholders without charge by calling
Bartlett & Co. at 800-800-3609 or Legg Mason Funds Marketing Department at
800-822-5544.

3
<PAGE> 4

---------------------------------------------------------------------------
---------------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
BARTLETT VALUE INTERNATIONAL FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92 3/31/91 3/31/90(a)
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $11.64 $12.46 $10.08 $9.93 $9.09 $9.79 $10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income .13 .09 .07 .12 .18 .30 .08
Net Realized and Unrealized Gains
(Losses) on Securities 1.33 (.21) 2.38 .15 .88 (.70) (.05)
- ---------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations 1.46 (.12) 2.45 .27 1.06 (.40) .03
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment Income (.13) (.09) (.07) (.10) (.22) (.28) (.08)
In Excess of Net Investment Income (.01) -- -- -- -- -- --
Distributions From Realized Gains (.37) (.61) -- (.02) -- (.02) (.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.51) (.70) (.07) (.12) (.22) (.30) (.24)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.59 $11.64 $12.46 $10.08 $9.93 $9.09 $9.79
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 12.76% (1.18%) 24.42% 2.71% 11.88% (3.84%) 0.59%(c)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000's) $72,041 $57,664 $49,607 $29,572 $22,042 $23,661 $20,557
Ratios Net of Fees Waived by Advisor(b):
Ratio of Net Expenses to Average
Net Assets 1.83% 1.83% 1.88% 2.00% 2.00% 1.99% 1.41%(c)
Ratio of Net Investment Income
to Average Net Assets 1.06% .80% .55% 1.13% 1.79% 3.31% 1.80%(c)
Portfolio Turnover Rate 38% 24% 19% 19% 27% 39% 155%(c)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) From the date of the public offering of the Bartlett Value International
Fund (October 6, 1989) through March 31, 1990.
(b) The Advisor has periodically absorbed expenses of the Bartlett Value
International Fund through management fee waivers. If the Advisor had not
waived any fees, the ratios of net expenses to average net assets would have
been 1.94% and 2.14% and the ratios of net investment income to average net
assets would have been .49% and 1.07% for the periods ended March 31, 1994
and 1990, respectively.
(c) Annualized.

4
<PAGE> 5

---------------------------------------------------------------------------
---------------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
BARTLETT BASIC VALUE FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR

YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $15.39 $14.89 $14.76 $13.47 $12.60
- ---------------------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income .30 .27 .22 .30 .36
Net Realized and Unrealized Gains
(Losses) on Securities 3.32 1.53 .28 1.57 .87
- ---------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations 3.62 1.80 .50 1.87 1.23
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment Income (.24) (.27) (.23) (.30) (.36)
Distributions From Realized Gains (.83) (1.03) (.14) (.28) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.07) (1.30) (.37) (.58) (.36)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $17.94 $15.39 $14.89 $14.76 $13.47
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 24.05% 12.67% 3.42% 14.22% 9.91%
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000's) $125,636 $102,721 $94,289 $103,507 $88,536
Ratio of Expenses to Average
Net Assets 1.17% 1.20% 1.20% 1.21% 1.22%
Ratio of Net Investment Income
to Average Net Assets 1.79% 1.81% 1.48% 2.14% 2.77%
Portfolio Turnover Rate 25% 26% 33% 43% 49%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

5
<PAGE> 6

---------------------------------------------------------------------------
---------------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
BARTLETT BASIC VALUE FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR

YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
3/31/91 3/31/90 3/31/89 3/31/88 3/31/87
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $12.34 $12.56 $12.44 $12.96 $13.13
- ---------------------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income .46 .62 .57 .35 .46
Net Realized and Unrealized Gains
(Losses) on Securities .26 .21 1.20 (.51) 1.07
- ---------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations .72 .83 1.77 (.16) 1.53
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment Income (.46) (.62) (.56) (.36) (.45)
Distributions From Realized Gains -- (.43) (1.09) -- (1.25)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.46) (1.05) (1.65) (.36) (1.70)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.60 $12.34 $12.56 $12.44 $12.96
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 6.29% 6.49% 15.61% (1.24%) 11.38%
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000's) $96,165 $105,842 $100,333 $80,583 $91,091
Ratio of Expenses to Average
Net Assets 1.21% 1.19% 1.23% 1.57% 1.28%
Ratio of Net Investment Income
to Average Net Assets 3.87% 4.81% 4.57% 2.75% 3.49%
Portfolio Turnover Rate 92% 77% 99% 97% 58%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

6
<PAGE> 7

---------------------------------------------------------------------------
---------------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
BARTLETT FIXED INCOME FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92 3/31/91 3/31/90 3/31/89 3/31/88 3/31/87(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $9.70 $10.02 $10.48 $9.93 $9.63 $9.46 $9.36 $9.76 $10.18 $10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income From Investment
Operations:
Net Investment Income .57 .54 .48 .59 .67 .73 .82 .86 .83 .87
Net Realized and
Unrealized Gains
(Losses) on Securities .20 (.32) (.30) .55 .31 .17 .10 (.40) (.42) .18
- ---------------------------------------------------------------------------------------------------------------------------------
Total From Investment
Operations .77 .22 .18 1.14 .98 .90 .92 .46 .41 1.05
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net
Investment Income (.57) (.54) (.48) (.59) (.68) (.73) (.82) (.86) (.83) (.87)
Distributions From
Realized Gains -- -- (.16) -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.57) (.54) (.64) (.59) (.68) (.73) (.82) (.86) (.83) (.87)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $9.90 $9.70 $10.02 $10.48 $9.93 $9.63 $9.46 $9.36 $9.76 $10.18
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 8.04% 2.41% 1.70% 11.81% 10.46% 9.86% 10.07% 4.83% 4.41% 11.27%(e)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net
Assets, End of Period (000's) $79,377 $91,349 $111,414 $135,487 $147,992 $159,218 $156,587 $158,536 $157,116 $145,138
Ratio of Expenses to
Average
Net Assets(b) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% .93%(e)
Ratio of Net Investment
Income to Average Net
Assets 5.74% 5.60% 4.58% 5.81% 6.85% 7.68% 8.56% 8.95% 8.56% 8.57%(e)
Portfolio Turnover Rate 131% 118% 163% 175% 126% 165% 95% 104% 205% 192%(e)
Amount of Debt Outstanding
at End of Period $-- $-- $-- $-- $-- $-- $-- $-- $-- $--
Average Amount of Debt
Outstanding During the
Period (c) (000's) $-- $255 $2,550 $12,627 $6,601 $-- $-- $-- $-- $--
Average Number of Shares
Outstanding During the
Period (d) (000's) 8,954 10,270 12,095 13,689 15,577 -- -- -- -- --
Average Amount of Debt Per
Share During the Period $-- $0.02 $0.21 $0.92 $0.42 $-- $-- $-- $-- $--
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Income earned and expenses incurred by the Fund from the date of the initial
purchase of shares by the Trust's Advisor (April 1, 1986) through the
initial public offering (April 22, 1986) were insignificant.
(b) Ratios do not include interest paid on reverse repurchase agreements.
(c) The average amount of debt outstanding during the period was calculated by
aggregating borrowings at the end of each day and dividing that sum by the
number of days in the period.
(d) The average number of shares outstanding during the period was calculated by
averaging the number of shares outstanding at the end of each month in the
period.
(e) Annualized.

7
<PAGE> 8

---------------------------------------------------------------------------
---------------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
BARTLETT CASH RESERVES FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<CAPTION>
NINE
YEAR YEAR YEAR YEAR YEAR YEAR MONTHS YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92 3/31/91 3/31/90 6/30/89 6/30/88(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income From Investment
Operations:
Net Investment Income .05 .04 .03 .03 .05 .07 .06 .08 .02
- ---------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations .05 .04 .03 .03 .05 .07 .06 .08 .02
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment
Income (.05) (.04) (.03) (.03) (.05) (.07) (.06) (.08) (.02)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.05) (.04) (.03) (.03) (.05) (.07) (.06) (.08) (.02)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 5.13% 4.22% 2.69% 3.26% 5.07% 7.32% 8.13%(c) 8.42% 6.95%(c)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
(000's) $48,464 $90,172 $77,558 $65,962 $75,867 $130,250 $105,503 $100,531 $71,780
Ratios Net of Fees Waived by
Advisor (b):
Ratio of Net Expenses to
Average Net Assets .78% .78% .77% .72% .67% .73% .75%(c) .86% .35%(c)
Ratio of Net Investment Income
to Average Net Assets 5.13% 4.16% 2.71% 3.26% 5.05% 7.08% 7.97%(c) 8.11% 6.56%(c)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) No income was earned or expense incurred by the Fund from the date of
organization (January 4, 1988) through the initial public offering date
(February 16, 1988).
(b) The Advisor has periodically absorbed expenses of the Bartlett Cash Reserves
Fund through management fee waiver. If the Advisor had not waived any fees,
the ratios of net expenses to average net assets would have been .88%, .90%,
.90%, .90%, .90%, .89%, and .88%, and the ratios of net investment income to
average net assets would have been 2.60%, 3.07%, 4.82%, 6.91%, 7.83%, 8.07%
and 6.03% for the periods ended March 31, 1994 through 1988, respectively.
(c) Annualized.

8
<PAGE> 9

---------------------------------------------------------------------------
---------------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
BARTLETT SHORT TERM BOND FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
3/31/96 3/31/95 3/31/94(a)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.66 $9.94 $10.00
- -----------------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income .54 .53 .06
Net Realized and Unrealized Gains
(Losses) on Securities .11 (.28) (.06)
- -----------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations .65 .25 .00
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment Income (.54) (.53) (.06)
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.54) (.53) (.06)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.77 $9.66 $9.94
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 6.87% 2.58% .04%(b)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000's) $15,286 $19,748 $22,288
Ratio of Expenses to Average
Net Assets .85% .85% .85%(c)
Ratio of Net Investment Income
to Average Net Assets 5.70% 5.38% 4.55%(c)
Portfolio Turnover Rate 145% 158% 202%(c)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) The period is from the date of the public offering of the Bartlett Short
Term Bond Fund (February 4, 1994) through March 31, 1994.
(b) Total return is for the period February 4, 1994 through March 31, 1994.
(c) Annualized.

9
<PAGE> 10

VALUE-ORIENTED STRATEGY

The investment advisor to the Funds, Bartlett & Co. ("the Advisor") uses an
active, value-oriented investment strategy in the management of the Bartlett
Value International Fund, the Bartlett Basic Value Fund, the Bartlett Fixed
Income Fund, the Bartlett Short Term Bond Fund and the Bartlett Cash Reserves
Fund.

Under this approach, the Advisor seeks to identify undervalued securities.
Evaluation of equity securities by the Advisor is based upon analysis of several
factors, including:

- low or declining debt levels

- comparatively low price to cash flow ratios

- comparatively low price to asset value ratios

Similarly, the Advisor seeks to identify undervalued fixed income
securities based upon an ongoing analysis of the following three major factors:

- yield curve -- evaluating the relative attractiveness of individual bond
maturities along the yield curve

- sector spreads -- monitoring the relative attractiveness between U.S.
Treasuries and other fixed income sectors, such as corporates, mortgages
and municipals

- credit quality -- seeking out issuers whose trend in credit quality is
stable or improving

The Advisor also employs a disciplined approach to the sell process.
Securities are sold from a Fund's portfolio when their relative valuations are
no longer favorable, generally when one of three triggering events occurs:

- a pre-determined price objective has been met

- a more attractive investment opportunity becomes available

- a change in the underlying fundamentals, such as a downgrade in ratings

The Bartlett Value International Fund provides a means for individuals and
institutional investors to invest a portion of their assets outside the United
States. The investment objective of the Bartlett Value International Fund is to
seek capital appreciation. The Fund seeks its objective by investing primarily
in foreign equity securities believed by the Advisor to be attractively priced
relative to their intrinsic value. Income is a secondary consideration.

The Fund invests primarily in equity securities of non-U.S. issuers
generally consisting of common stocks, common stock

10
<PAGE> 11

equivalents and preferred stocks. The Fund also may invest indirectly in foreign
equity securities by purchasing American Depositary Receipts, European
Depositary Receipts or other similar securities and by purchasing shares of
closed-end investment companies that hold foreign equity securities in their
portfolios.

However, there is no requirement that the Fund invest exclusively in
foreign equity securities. The Fund may invest in other types of foreign
securities such as debt obligations of foreign companies, foreign governments,
foreign governmental agencies and international organizations. In addition, the
Fund may invest a portion of its assets in U.S. government obligations, debt and
equity obligations of U.S. issuers, and repurchase agreements, and may hold a
portion of its assets in cash and U.S. dollar denominated time deposits.

In seeking its objective, the Fund intends to diversify its investments
among issuers representing various countries. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in non-United States
issuers and at least three different foreign countries will be represented in
the Fund's portfolio. The Fund may invest in countries in Western Europe, the
Far East, Canada, Australia and other geographic regions. The Fund may, from
time to time, have more than 25% of its assets invested in any major industrial
or developed country which in the view of the Advisor poses no unique investment
risk. If circumstances warrant, for temporary, defensive purposes, the Fund may
invest substantially all of its assets in one or two countries.

The Advisor selects portfolio securities on the basis of what the Advisor
considers to be the intrinsic value of each security. In analyzing the intrinsic
value of a specific security, particular emphasis is given to such
characteristics as relative price/earnings ratio, dividend yield, and price/book
value ratio. In making investment decisions, the Advisor considers all other
pertinent factors affecting the intrinsic value of a security, including
financial, tax, social, political and national conditions.

Although the Fund provides a means for individuals and institutional
investors to invest a portion of their assets outside the U.S., it should not be
considered a complete investment program. In addition, investments in foreign
securities may be subject to risks not typically associated with investments in
domestic securities. See "Foreign Securities" for a more complete discussion of
certain risks associated with investments in foreign securities.

See "General" at page 16 and "Investment Policies, Techniques and Risk
Considerations" beginning at page 28 for a more detailed discussion of risks
associated with the securities and investment techniques discussed above.

11
<PAGE> 12

The investment objective of the Bartlett Basic Value Fund is to seek
capital appreciation. The Fund seeks its objective by investing primarily in
common stocks or securities convertible into common stocks that the Advisor
believes to be selling at attractive prices relative to their intrinsic value.
Income is a secondary consideration. In determining whether a specific security
represents investment value, particular emphasis is given to such
characteristics as low debt, relative price/earnings ratio, dividend yield, and
price/book value ratio. The Fund seeks to diversify its investments across
industry sectors. The Fund's investments may include foreign securities.

In seeking its objective, the Bartlett Basic Value Fund invests only in
securities of companies with at least three years of operating history. Due to
the Bartlett Basic Value Fund's disciplined investment methodology, and the
cyclical nature of the economy and investment markets, there will be times when
the Advisor is unable to purchase reasonably valued common stocks and common
stock equivalents. At these times, the Fund may hold all or a portion of its
assets in fixed income securities.

For a further discussion of the risks associated with these securities and
techniques, see "General" at page 16 and "Investment Policies, Techniques and
Risk Considerations," beginning on page 28.

The investment objective of the Bartlett Fixed Income Fund is to seek a
high level of current income by investing primarily in high quality
intermediate-term bonds. Capital appreciation is a secondary consideration.

The Fund seeks to limit price volatility by investing primarily in
intermediate-term bonds, although it also may invest in short-and long-term
bonds. Historically, the Fund's dollar weighted average effective portfolio
maturity has ranged between four to eight years. Fixed income securities with
intermediate-term maturities generally have greater price stability than that of
long-term bonds that offer somewhat higher yields, but less price stability than
that of short-term bonds that offer somewhat lower yields.

The Fund seeks to achieve its objective by:

- maintaining at least 65% of the total assets of the Fund, under normal
circumstances, in U.S. Government securities or high quality fixed income
securities rated AA or higher by Standard & Poor's ("S&P"), Moody's
Investor Services, Inc. ("Moody's"), Duff & Phelps ("D&P") or Fitch
Investors Services ("Fitch") (or if

12
<PAGE> 13

unrated, judged by the Advisor to be of comparable quality);

- purchasing fixed income securities of predominately investment-grade
quality, while reserving the right to invest no more than 5% of its
assets in securities below investment grade;

- focusing on intermediate-term fixed income investments, although it may
also invest in short-term and long-term fixed income investments; and

- using a "bottom up" value-oriented investment strategy to identify
undervalued fixed income securities or sectors.

Under normal circumstances, at least 65% of the total assets of the Fund
will be invested in a portfolio of U. S. Government securities or high quality
bonds rated AA or higher by S&P, Moody's, D&P or Fitch. The Fund's portfolio
securities will include U.S. Government obligations, securities of foreign
governments, domestic or foreign corporate debt securities, municipal
obligations, mortgage-related securities, financial service industry
obligations, preferred stock and repurchase agreements. Bonds are debt
securities with a maturity of one year or more at issuance. Eligible securities
will include unrated securities judged by the Advisor to be comparable to
securities rated AA or higher.

The Fund generally will invest the remainder of its portfolio in debt
securities rated at the time of purchase as investment grade (BBB by S&P, Baa by
Moody's, BBB by D&P or BBB by Fitch). If the rating of a security held in the
portfolio is downgraded below investment grade, the Advisor will determine
whether it is in the best interest of the Fund's shareholders to continue to
hold such security. The Fund may invest in fixed income securities which are
unrated if they are judged by the Advisor to be of investment grade or higher
quality.

The Fund reserves the right to invest no more than five percent of its
portfolio in debt securities rated at the time of purchase as below investment
grade. Such securities commonly are known as "junk bonds" and entail default and
other risks (including weakened capacity to pay interest and repay principal)
greater than those associated with higher-rated securities. See "Fixed Income
Securities" for a further discussion of quality ratings, as well as the
discussion of ratings under "Additional Information About Fund Investments" in
the Statement of Additional Information.

For a further discussion of the risks associated with these securities and
techniques, see "General" at page 16 and "Investment Policies, Techniques and
Risk Considerations" beginning on page 28.

The investment objective of the Bartlett Short Term Bond Fund is to seek a
high level of current income while maintaining a high degree of principal
stability by investing primarily in high quality short-term bonds.

13
<PAGE> 14

The Fund is designed for individual, institutional and corporate investors
who seek:

- higher current income than is normally provided by money market
investments;

- greater price stability than is generally available from intermediate or
long-term bonds; and

- the relative safety provided by higher quality fixed income securities.

Money market funds usually are managed for total price stability, but
generally tend to provide somewhat lower yields than do short-term bond funds.
Unlike money market funds, the Bartlett Short Term Bond Fund does not maintain a
stable net asset value of $1.00 per share. Investors seeking high levels of
price stability may find the Fund attractive compared to intermediate- or
long-term bond funds that generally offer somewhat higher yields, but less price
stability.

Certain investors may view the Fund as an alternative to a bank certificate
of deposit ("CD"). Although an investment in the Fund is not federally insured
and there is no guarantee of price stability, an investment in the Fund may be
redeemed at its current value at any time without incurring early withdrawal
penalties generally associated with CDs. The Fund also may provide a higher
yield than CDs. The Fund may be appropriate for Individual Retirement Accounts
("IRAs"), 401(k) plans and other retirement plans which compound income on a
tax-deferred basis.

The Fund seeks to achieve its objective by:

- purchasing fixed income securities of at least investment-grade quality;

- maintaining at least 65% of the total assets of the Fund, under normal
circumstances, in U.S. Government securities or high quality fixed income
securities rated AA or higher by S&P, Moody's, D&P or Fitch (or if
unrated, judged by the Advisor to be of comparable quality);

- focusing on short-term fixed income investments, normally maintaining a
dollar weighted average effective portfolio maturity from one to three
years; and

- using a "bottom up" value-oriented investment strategy to identify
undervalued fixed income securities or sectors.

The share price of the Fund will fluctuate. However, the Fund seeks to
maintain a high degree of principal stability by:

- maintaining a relatively short portfolio maturity;

- investing in higher quality securities;

- investing in undervalued securities, which tend to experience less
negative price volatility; and

- investing in some securities whose prices exhibit a low, no or negative
correlation to broad movements in interest rates.

To maintain a shorter portfolio maturity, the Fund will not invest in
individual securities with remaining expected maturities longer than ten years
from the date of purchase (although the face maturity may be longer than ten
years). The "expected" maturity of a security and the "effective" portfolio
maturity will take into account the availability of demand features and
anticipated calls or prepayments of

14
<PAGE> 15

securities to shorten the face maturity of the security or portfolio.

Under normal circumstances, at least 65% of the total assets of the Fund
will be invested in a portfolio of high quality securities rated AA or higher by
S&P, Moody's, D&P, or Fitch. These securities will include U.S. Government
securities (including bonds, notes and bills issued by the U.S. Treasury and
securities issued by agencies of the U.S. Government), securities of foreign
governments, domestic or foreign high-grade corporate debt securities (including
bonds, notes and debentures), mortgage-related securities, financial service
industry obligations, municipal obligations, repurchase agreements and other
asset-backed securities. Eligible securities will include unrated securities
judged by the Advisor to be comparable to securities rated AA or higher. Under
normal circumstances, at least 65% of the total assets of the Fund will be
invested in bonds, which are debt securities with a maturity of one year or more
at issuance.

The Fund will not invest in any debt security rated at the time of purchase
lower than investment grade (BBB by S&P, Baa by Moody's, BBB by D&P or BBB by
Fitch). If the rating of a security held in the portfolio is downgraded below
investment grade, the Advisor will determine whether it is in the best interest
of the Fund's shareholders to continue to hold such security. The Fund may
invest in fixed income securities which are unrated if they are judged by the
Advisor to be of investment grade or higher quality. See "Fixed Income
Securities" for a further discussion of quality ratings, as well as the
discussion of ratings under "Additional Information About Fund Investments" in
the Statement of Additional Information.

In addition, the Fund may invest in money market instruments (including
commercial paper) reverse repurchase agreements and privately placed debt
obligations. The Fund also may purchase securities on a when-issued or forward
delivery basis and utilize foreign currency transactions, hedging and other
investment strategies. See "Investment Policies and Techniques."

For a further discussion of the risks associated with these securities and
techniques, see "General" at page 16 and "Investment Policies, Techniques and
Risk Considerations" beginning on page 28.

The investment objective of the Bartlett Cash Reserves Fund is to produce
the highest level of current income consistent with stability of principal and
liquidity. The Fund is a money market fund designed for the investment of
short-term cash reserves, and the Advisor believes the Fund is an appropriate
investment for corporations, pension and profit sharing plans, and other
institutional and individual investors.

In seeking its objective, the Fund invests in a broad range of short-term
money market securities, which may include: (i) U.S. government obligations,
(ii) corporate debt securities (including commercial paper), (iii) municipal
obligations, (iv) mortgage-

15
<PAGE> 16

related securities, (v) financial services industry (including bank and savings
and loan association) obligations, (vi) repurchase agreements involving these
securities, (vii) U.S. dollar denominated foreign securities (securities issued
by foreign issuers, including foreign governments and foreign branches of U.S.
banks) and (viii) shares of money market funds. See "Investment Policies and
Techniques" for a more detailed discussion of the Fund's investment practices.

The Fund seeks to maintain a stable net asset value of $1.00 per share
pursuant to a rule of the Securities and Exchange Commission, which requires
that the Fund's portfolio meet certain maturity, quality and diversification
standards. Those standards are described in "Portfolio Management Policies for
the Bartlett Cash Reserves Fund."

The Fund under normal market conditions will invest at least 25% of its
total assets in the financial services industry, and an investment in the Fund
should be made with an understanding of the characteristics of the industry and
the risks which such an investment may entail. See "Financial Service Industry
Obligations" for a discussion of these matters.

In addition to the securities and investment techniques described above,
the Bartlett Basic Value Fund, the Bartlett Fixed Income Fund and the Bartlett
Short Term Bond Fund may invest in a wide variety of other securities, including
U.S. Government securities, mortgage-related securities, municipal obligations,
asset- or receivable-backed securities and foreign securities, and they may
employ several investment techniques, including the use of options, hedging
programs, currency transactions, repurchase agreements, reverse repurchase
agreements and dollar rolls, lending of portfolio securities and forward
commitment transactions. See "Investment Policies, Techniques and Risk
Considerations" beginning on page 28.

For temporary defensive purposes, each of the Bartlett Mutual Funds (other
than the Bartlett Cash Reserves Fund) may hold all or a portion of its assets in
money market instruments, cash equivalents (fixed income securities with
maturities of less than one year), securities of other no-load registered
investment companies or repurchase agreements. See "Investment Policies,
Techniques and Risk Considerations" beginning on page 28.

As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, no Fund can give any assurance that its investment objective will
be achieved. The values of fixed income securities fluctuate inversely to
interest rate changes. Current yields or rates of total return quoted by a Fund
may be higher or lower than past quotations, and there can be no assurance that
any current yield or rate of total return will be maintained.

16
<PAGE> 17

---------------------------------------------------------------------------
---------------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
TRUSTEES AND OFFICERS
The names of the Trustees and officers of Bartlett Capital Trust and
Bartlett Management Trust are shown below. Each Trustee who is an "interested
person" of either Trust, as defined in the Investment Company Act of 1940, is
indicated by an asterisk.

<TABLE>
<CAPTION>
POSITION WITH POSITION WITH BARTLETT
NAME BARTLETT CAPITAL TRUST MANAGEMENT TRUST
<S> <C> <C>
*Dale H. Rabiner, CFA Trustee, Chairman of the Vice President
Board and President
*James B. Reynolds, CFA Vice President Trustee, Chairman of the Board
and President
Lorrence T. Kellar Trustee Trustee
Philip J. Ringo Trustee Trustee
Alan R. Schriber Trustee Trustee
William P. Sheehan Trustee Trustee
Marie K. Karpinski Vice President and Vice President and Treasurer
Treasurer
Kathi D. Bair Secretary Secretary
Brian M. Eakes Assistant Secretary Assistant Secretary
Blanche P. Roche Assistant Secretary Assistant Secretary
Thomas A. Steele, CPA Assistant Treasurer and Assistant Treasurer and Assistant
Assistant Secretary Secretary
R. Stuart Crickmer, CFA,CPA Vice President Vice President
Madelynn M. Matlock, CFA Vice President
James A. Miller, CFA Vice President
Donna M. Prieshoff Vice President Vice President
Troy R. Snider,CFA Vice President
Woodrow H. Uible, CFA Vice President
</TABLE>

The principal occupations of the executive officers and Trustees of the
Trusts during the past five years are set forth below:

Dale H. Rabiner, CFA, 36 East Fourth Street, Cincinnati, Ohio is a Senior
Portfolio Manager and a Managing Director of Bartlett & Co.

James B. Reynolds, CFA, 36 East Fourth Street, Cincinnati, Ohio is a Senior
Portfolio Manager and a Managing Director of Bartlett & Co.

Lorrence T. Kellar, 1014 Vine Street, Cincinnati, Ohio is Vice
President -- Real Estate Services for KMart Corp., an international retailer.

Philip J. Ringo, 102 Pickering Way, Exton, Pennsylvania is the President
and Chief Executive Officer of Chemical Lehman Tank Lines, Inc. a bulk motor
carrier. Prior

17
<PAGE> 18

to July, 1995, he was Chairman of the Board and Chief Executive Officer of
Morgan Drive Away, Inc., a transporter of mobile homes, recreational vehicles
and other commodities. Prior to August, 1992, he was Chief Executive Officer and
President of Energy Innovations, Inc., Dayton, Ohio, a monitoring and
communications equipment firm.

Alan R. Schriber, 133 South Main Street, Batesville, Indiana is the
President of ARS Broadcasting Corp., a company which owns and operates radio
stations.

William P. Sheehan, 65 East State Street, Columbus, Ohio is a member of the
State of Ohio Employment Relations Board.

R. Stuart Crickmer, CPA, CFA, 36 East Fourth Street, Cincinnati, Ohio is a
Portfolio Manager and Fixed Income Analyst for Bartlett & Co.

Marie K. Karpinski, CPA, 7 East Redwood Street, Baltimore, Maryland is Vice
President and Treasurer of the Legg Mason funds, Worldwide Value Fund, Inc. and
the Western Asset Trust, Inc.

Madelynn M. Matlock, CFA, 36 East Fourth Street, Cincinnati, Ohio is the
Director of International Equities for Bartlett & Co.

James A. Miller, CFA, 36 East Fourth Street, Cincinnati, Ohio is a Senior
Portfolio Manager, President and a Director of Bartlett & Co.

Donna M. Prieshoff, 36 East Fourth Street, Cincinnati, Ohio is the Director
of Operations of Bartlett & Co.

Troy R. Snider, CFA, 36 East Fourth Street, Cincinnati, Ohio has been a
Fixed Income Analyst of Bartlett & Co. since April, 1991. Prior thereto he was
an energy analyst with Duff & Phelps, an investment research firm.

Woodrow H. Uible, CFA, 36 East Fourth Street, Cincinnati, Ohio is a Senior
Portfolio Manager of Bartlett & Co.

Shares of each Fund are sold without a sales charge at the next price
calculated after receipt of the order in proper form by the Fund. A minimum
investment of $5,000 is required to open an account in any Fund ($250 for IRAs
or other tax sheltered retirement plans). Additional purchases may be made in
any Fund in amounts of $100 or more. In its discretion, the Fund may waive such
minimums for investments made by employer sponsored qualified retirement plans
or through automatic investment programs, investments made through brokerage
firms or other financial institutions, or for investments made by advisory
clients of Bartlett & Co. and employees of Bartlett & Co. and their families.

If your check or wire does not clear, or if any telephone purchase must be
cancelled due to nonpayment, you will be responsible for any loss incurred. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in any of the Funds as reimbursement for any

18
<PAGE> 19

loss incurred. You may be prohibited or restricted from making future purchases
in any of the Funds.

INITIAL INVESTMENTS BY MAIL

You may purchase shares of each Fund by completing and signing the
investment application form which accompanies this Prospectus and mailing it,
together with a check made payable to Bartlett Mutual Funds (subject to the
above minimum amounts), c/o Bartlett & Co., 36 E. Fourth St., Cincinnati, Ohio
45202.

Your order for shares of the Bartlett Cash Reserves Fund will not be
complete until the Fund has received federal funds. If a check for purchase of
shares is not drawn on federal funds, shares will be purchased at the next share
price calculated after the check is converted into federal funds (normally two
days or less).

INITIAL INVESTMENTS BY WIRE

You also may purchase shares of each Fund by bank wire. Prior to your
initial investment by wire, you must telephone Bartlett & Co. (Nationwide call
toll free 800-800-3609; in Cincinnati call 513-345-6212) to advise it of the
investment and to receive instructions. You should be prepared to give the
name(s) of the Fund in which you wish to invest, the name(s) in which the
account is to be registered, the address, telephone number and taxpayer
identification number for the account(s) and the name of the bank which will
wire the money.

Then, you must instruct your bank (which must be a member of, or have a
corresponding relationship with a member of, the Federal Reserve System) to wire
federal funds to:

Northern Trust Company
Chicago, Illinois 60675
ABA #0710-0015-2
A/C #57711 Legg Mason Wood Walker,
Incorporated

Your purchase will be effected at the share price next determined after
receipt of your wire. Any wire purchase for which a specific Fund is not
indicated will be invested in the Bartlett Cash Reserves Fund.

You are required to mail a signed application to Bartlett Mutual Funds at
the above address in order to complete your initial wire purchase. Your bank may
impose a charge for sending your wire. There is presently no fee for the receipt
of wired funds, but the right to charge shareholders for this service is
reserved by the Fund.

ADDITIONAL INVESTMENTS

You may purchase additional shares of each Fund at any time by mail or by
bank wire (minimum of $100). In its discretion, the Fund may waive such minimums
for investments made by employer sponsored qualified retirement plans or through
automatic investment programs, investments made through brokerage firms or other
financial institutions, or for investments made by advisory clients of Bartlett
& Co. and employees of Bartlett & Co. and their families. Each additional
purchase request must contain your name, your client number(s), the name of your
account(s), your account number(s) and the Fund(s) in which you wish to invest.
Checks should be made payable to Bartlett Mutual Funds and should be sent to the
Bartlett Mutual Funds' address. A bank wire should be sent as outlined above.

19
<PAGE> 20

AUTOMATIC INVESTMENT PROGRAM

You also may be able to purchase shares of any Fund through an automatic
investment program. By using such a program, funds are automatically transferred
from your payroll check or your bank checking or savings account into your Fund
account on a regular basis. This type of automatic investment program is offered
free of charge. For further information, you or your employer may contact the
Bartlett Mutual Funds.

TAX SHELTERED RETIREMENT PLANS

Shares of any Fund are available for purchase in connection with the
following tax sheltered retirement plans:

-- individual retirement account (IRA) plans for individuals and their
non-employed spouses

-- Keogh Plans (H.R. 10) for self-employed individuals

-- qualified pension and profit-sharing plans for employees, including
those profit-sharing plans with a 401(k) provision

-- 403(b) retirement plans for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Internal Revenue Code.

OTHER PURCHASE INFORMATION

Shares of each Fund also may be purchased through a broker at the share
price next determined after receipt by the broker of your order in proper form.
The broker may charge a fee for its services in connection with the purchase.
The Funds do not issue share certificates. You will receive a confirmation of
all investments in or withdrawals from your account in the Bartlett Value
International Fund, the Bartlett Basic Value Fund, the Bartlett Fixed Income
Fund and the Bartlett Short Term Bond Fund. You will receive a confirmation of
your initial investment and a statement of subsequent investments and
withdrawals at least monthly from the Bartlett Cash Reserves Fund. The rights to
limit the amount of purchases and to refuse to sell to any person are reserved
by each Fund.

You may exchange securities that you own for shares of any Fund, provided
the securities meet the Fund's investment criteria and the Advisor deems them to
be a desirable investment for the Fund. Any exchange will be a taxable event and
you may incur certain transaction costs relating to the exchange. Contact
Bartlett Mutual Funds for additional information.

You may redeem any part of your account in any Fund by mail or telephone.
Each Fund will redeem your shares without charge at the next share price
calculated after receipt of your properly completed request for withdrawal.

BY MAIL

To redeem shares by mail, you must send a letter to Bartlett Mutual Funds,
c/o Legg Mason Funds Processing, P.O. Box 1476, Baltimore, MD 21203-1476,

20
<PAGE> 21

stating your client number(s), your account number(s), the Fund(s) from which
the shares are to be redeemed and the number or dollar amount of the shares to
be redeemed. Although such requests will be accepted by the Bartlett Mutual
Funds in Cincinnati, processing delays may occur if such requests are sent to
the Cincinnati address. The letter must be signed by each shareholder, including
each joint owner, exactly as the shareholder's name appears on the Fund's client
registration. Although you are not required to do so currently, for withdrawals
in excess of $5,000, the Trust may require that signatures be guaranteed by a
domestic commercial bank or trust company or by a member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of a Fund or Bartlett & Co., a shareholder,
prior to redemption, may be required to furnish additional legal documents to
insure proper authorization.

BY TELEPHONE

You may request a redemption of your shares in any Fund by calling Bartlett
Mutual Funds at 800-800-3609 or Legg Mason Funds Marketing Department at
800-822-5544 and requesting that proceeds be mailed to you or wired to your bank
or brokerage firm. It is not necessary for you to first make a written election
to initiate a telephone redemption. The redemption will be effected at the next
determined share price. The proceeds will then be made payable to the registered
shareholder and mailed to the address registered on the account, or wired to
your bank or brokerage firm, as previously authorized by you on your application
or in some other written form. The Trusts, Boston Financial Data Services, Inc.
("Transfer Agent") and State Street Bank and Trust Co. ("Custodian") will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. Such procedures will include recording telephone instructions and
requiring a form of personal identification from the caller. There is no charge
for wire redemptions; however, the Fund reserves the right, upon 30 days'
written notice, to charge for this service. Any charges for wire redemptions
will be deducted from the shareholder's Fund account by redemption of shares.

The Trusts, the Transfer Agent and the Custodian are not liable for
following instructions communicated by telephone that they reasonably believe to
be genuine. However, if they do not employ reasonable procedures to confirm that
telephone instructions are genuine, they may be liable for any losses due to
unauthorized or fraudulent instructions. The telephone redemption procedure may
be terminated at any time by the Fund or the Transfer Agent. During periods of
extreme market activity it is possible that shareholders may encounter some
difficulty in telephoning the Funds, although neither the Funds nor the Transfer
Agent has ever experienced difficulties in receiving, and in a timely fashion
responding to, telephone requests for redemptions or exchanges. If you are
unable to reach the Funds by telephone, you may request a redemption or exchange
by mail.

CHECKWRITING PRIVILEGES

Shareholders of the Bartlett Short Term Bond Fund and the Bartlett Cash
Reserves Fund also may elect to write checks on their accounts with those Funds.
With this feature, shareholders may redeem by check, provided that the checks(s)
contain the proper signatures, and that the appropriate authorizations are
provided to the Bartlett Mutual Funds. Ordinarily, shares will be redeemed on
the day a check drawn on the Bartlett Mutual Fund Account is presented in proper
form to the Transfer Agent. However,

21
<PAGE> 22

Bartlett Mutual Fund shares purchased by check may not be redeemed by writing a
check against the account until the purchase check has been collected, which
normally may take up to fifteen days.

There will be no charge for this service, but checks written against a Fund
account must be for at least $500 in the case of the Bartlett Cash Reserves Fund
or $1,000 in the case of the Bartlett Short Term Bond Fund. An investment in a
Fund will continue to earn dividends until a check is presented to the Fund for
payment. As would occur with a bank check, if there are insufficient funds to
cover the withdrawal amount, the check will be returned by the Fund's Transfer
Agent. Shareholders should not attempt to close an account by check, because the
exact account balance at the time the check clears likely will be different from
the account balance at the time the check is written.

Shareholders should be aware that a redemption by check entails a sale of
shares in the Fund and thus may have tax consequences.

Shareholders should be aware that the checkwriting feature is not available
for certain retirement plans or accounts.

OTHER REDEMPTION INFORMATION

Each Fund generally will make payment on the next business day, but in no
event later than seven days, after it accepts your request, except under unusual
circumstances as determined by the Securities and Exchange Commission. However,
payment for redemption made against shares purchased by check will be made only
after the check has been collected, which normally may take up to fifteen days.
To eliminate this delay, you may purchase shares by certified check or bank
wire.

Shares of each Fund also may be redeemed through a broker which may charge
a fee for its services in connection with the redemption.

Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $5,000 due to redemption ($250 for tax
sheltered retirement plans), or such other minimum amount as the Fund may
determine from time to time. A shareholder may increase the value of his or her
shares in the Fund to the minimum amount within the 30 day period. The shares of
each Fund are subject to redemption at any time if the Board of Trustees of the
applicable Trust determines in its sole discretion that failure to so redeem may
have materially adverse consequences to all or any of the shareholders of the
Trust or any Fund of the Trust. The net asset value of your shares will
fluctuate with the value of the underlying securities, and your account at the
time of redemption may be worth more or less than the amount you invested.
However, it is anticipated that the Bartlett Cash Reserves Fund will maintain a
stable net asset value of $1.00.

22
<PAGE> 23

The Funds have made arrangements to enable you, if your investment
objectives change, to exchange shares of any Fund without sales charge for
shares of any other Bartlett Fund and any Bartlett Fund offered in the future.
An exchange is generally a taxable event and shareholders should consult their
tax advisors about the tax effect of an exchange. Exchanges may only be made for
shares of Bartlett Funds then offering shares for sale in your state of
residence. Exchanges are subject to the applicable minimum initial investment
requirement.

You may request exchanges in writing or by telephone. It is not necessary
for you to first make a written election to initiate a telephone exchange. The
Trusts and the Transfer Agent are not liable for following exchange instructions
communicated by telephone that they reasonably believe to be genuine. However,
if they do not employ reasonable procedures to confirm that telephone
instructions are genuine, they may be liable for any losses due to unauthorized
or fraudulent instructions. Procedures employed will include recording telephone
instructions and requiring a form of personal identification from the caller.
Shareholders will be given 60 days' prior notice of any modifications or
termination of this Exchange Privilege.

In addition, an excessive number of exchanges may be disadvantageous to the
shareholders of the Funds, in that such exchanges increase transaction costs and
may require the maintenance of excessive cash positions, both of which may
reduce investment returns. Therefore, each Fund reserves the right to limit the
amount of any exchange or at any time temporarily or permanently terminate the
exchange privilege for any person who makes more than twelve exchanges into or
out of any Fund in any twelve month period.

Bartlett Capital Trust is a diversified, open-end management investment
company organized as a Massachusetts business trust on October 31, 1982.
Bartlett Management Trust is a diversified, open-end management investment
company organized as an Ohio business trust on July 16, 1984. The business
activities of each Trust are supervised by its Board of Trustees. Like other
mutual funds, the Trusts retain various organizations to perform specialized
services.

THE ADVISOR

Each Trust retains Bartlett & Co., 36 East Fourth Street, Cincinnati, Ohio
(the "Advisor") to manage its investments. The Advisor, a wholly owned
subsidiary of Legg Mason, Inc. ("Legg Mason"), is an investment advisory firm
which has provided investment advice to individuals, corporations, pension and
profit sharing plans and trust accounts since 1898.

23
<PAGE> 24

In return for its services, the Advisor receives a monthly fee from each
Fund, computed and accrued daily, based on the Fund's average net assets. For
the year ended March 31, 1996, the Bartlett Basic Value Fund paid the Advisor a
fee equal to 1.17% of its daily net assets; the Bartlett Fixed Income Fund paid
the Advisor a fee equal to 1.00% of its average daily net assets; the Bartlett
Value International Fund paid the Advisor a fee equal to 1.83% of its average
daily net assets; the Bartlett Short Term Bond Fund paid the Advisor a fee equal
to .85% of its average daily net assets; and the Bartlett Cash Reserves Fund
paid the Advisor a fee equal to .78% of its average daily net assets.

Unlike most other mutual funds, the management fees paid by the Funds to
the Advisor include transfer agency, pricing, custodial, auditing and legal
services, and general administrative and other operating expenses. The Advisor
pays all of the expenses of each Fund except brokerage, taxes, interest and
extraordinary expenses. The rates of the advisory fees paid by most investment
companies to their investment advisors is lower than the rates of the advisory
fees paid by the Bartlett Value International Fund, the Bartlett Basic Value
Fund, the Bartlett Fixed Income Fund, the Bartlett Short Term Bond Fund and the
Bartlett Cash Reserves Fund. In this regard, it should be noted that most
investment companies pay their own operating expenses, while each Fund's
expenses (except those specified above) are paid by the Advisor. In addition,
the expenses of the Bartlett Value International Fund, like those
of other international funds, generally can be expected to be higher than
expenses of investment companies investing in domestic securities due to the
greater costs of custody, communications and investment advisory services for
foreign securities.

Each Trust retains Legg Mason Fund Adviser, Inc. (the "Administrator"), an
affiliate of the Advisor, to manage the Trust's business affairs and provide the
Trust with administrative services, including all regulatory reporting and
necessary office equipment, personnel and facilities. The Administrator is
compensated for its services by the Advisor, which compensation is limited to
reimbursement for the allocable salary and benefits costs in providing the
services. Each Trust retains Boston Financial Data Services, Inc., 2 Heritage
Drive, North Quincy, Massachusetts to serve as transfer agent, dividend paying
agent and shareholder service agent. The services of the Administrator and the
Transfer Agent are operating expenses paid by the Advisor.

Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Funds as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Advisor (not the Funds) may pay certain financial
institutions (which may include banks, securities dealers and other industry
professionals) a servicing fee for performing certain administrative functions
for Fund shareholders to the extent these institutions are allowed to do so by
applicable statute, rule or regulation. In addition, registered representatives
of broker/dealers (including affiliates of the Advisor) may receive compensation
from the broker/dealer based upon the number of shares of the Funds purchased by
clients of such broker/dealers.

THE BARTLETT MUTUAL FUNDS
PORTFOLIO MANAGERS

Dale H. Rabiner, CFA, Chairman of the Board of Trustees and President of
the Bartlett Capital Trust and Vice President of

24
<PAGE> 25

the Bartlett Management Trust is responsible for managing the portfolios of the
Bartlett Fixed Income Fund, the Bartlett Short Term Bond Fund and the Bartlett
Cash Reserves Fund. Mr. Rabiner is a Senior Portfolio Manager of the Advisor.
Mr. Rabiner has been employed by the Advisor since 1983 and has served since
then as Director of its Fixed Income Group. In managing the Fund's portfolio,
Mr. Rabiner works closely with other members of the Advisor's Fixed Income Group
who specialize in fixed income securities.

James A. Miller, CFA, Vice President of the Bartlett Capital Trust, and
Woodrow H. Uible, CFA, Vice President of the Bartlett Capital Trust, are
responsible for co-managing the portfolio of the Bartlett Basic Value Fund. Mr.
Miller is a Senior Portfolio Manager, President and a Director of the Advisor.
Mr. Miller joined the Advisor in 1977, and is a member of its Institutional
Investment Group. Mr. Uible is a Senior Portfolio Manager of the Advisor. Mr.
Uible has been employed by the Advisor since 1980. He chairs the Advisor's
Equity Investment Group, and is responsible for the Advisor's equity investment
processes. Messrs. Miller and Uible work closely with other members of the
Advisor's Equity Investment and Institutional Investment Groups who specialize
in equity securities.

Madelynn M. Matlock, CFA, Vice President of the Bartlett Capital Trust, is
primarily responsible for managing the portfolio of the Bartlett Value
International Fund. Ms. Matlock, Director of International Investment for the
Advisor, joined the Advisor in 1981. She also served as Director of Research for
the Advisor from 1983 to 1992.

The share prices (net asset values) of the Bartlett Value International
Fund, the Bartlett Basic Value Fund, the Bartlett Fixed Income Fund and the
Bartlett Short Term Bond Fund are calculated once daily, as of the close of
trading on the New York Stock Exchange ("NYSE") (generally, 4:00 p.m., New York
time), on each day the Trust and the custodian of the applicable Fund are open
for business. The net asset value of shares of the Bartlett Cash Reserves Fund
is calculated twice daily as of 12:00 p.m. and 4:00 p.m., New York time, on any
day when the Trusts and the Fund's custodian are open for business. The price of
the shares of a Fund will also be calculated on other days if there is
sufficient trading in the Fund's portfolio securities that its net asset value
might be materially affected. The net asset value per share of each Fund is
computed by dividing the sum of the value of the securities held by the Fund
plus any cash or other assets minus all liabilities (including estimated accrued
expenses) by the total number of shares outstanding at such time, rounded to the
nearest cent. For the Bartlett Cash Reserves Fund, which is a money market fund,
this is known as the penny-rounding method of pricing.

Equity securities, options and commodities listed on exchanges are valued
at the last sale price as of the close of business on the day the securities are
being valued. Listed securities not traded on a

25
<PAGE> 26

particular day and securities traded in the over-the-counter market are valued
at the mean between closing bid and ask prices quoted by brokers or dealers that
make markets in the securities. Portfolio securities which are traded both in
the over-the-counter market and on an exchange are valued according to the
broadest and most representative market.

Fixed income securities generally are valued by using market quotations, or
independent pricing services which use prices provided by market makers or
estimates of market values. However, if the Advisor believes the market value of
a security will be more accurately reflected thereby, it will use market value
estimates obtained from yield spreads relating to securities with similar
characteristics as to credit quality, coupon rate, maturity and other factors.

Fixed income securities having a maturity of less than 60 days (except for
those in the Bartlett Cash Reserves Fund) are valued at amortized cost.
Securities and other assets of a Fund for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Advisor, subject to review of the Board of Trustees. Any of the Funds may use
pricing services to determine the market value of its portfolio securities,
subject to the Advisor's review. If the Board of Trustees determines in good
faith that another method of valuing options and futures contracts is necessary
to appraise their fair value, such other method will be used.

For valuation purposes, quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents at the time of pricing. In
computing the net asset value of a Fund, the values of foreign portfolio
securities are generally based upon market quotations which, depending upon the
exchange or market, may be last sale price, last bid price, or the mean between
last bid and asked prices as of, in each case, the close of the appropriate
exchange or another designated time.

Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day on which the NYSE is open. Trading of these securities
may not take place on every NYSE business day. In addition, trading may take
place in various foreign markets on Saturdays or on other days when the NYSE is
not open and on which a Fund's share price is not calculated. Therefore, the
value of the portfolio of a Fund holding foreign securities may be significantly
affected on days when shares of the Fund may not be purchased or redeemed.

The calculation of the share price of a Fund holding foreign securities in
its portfolio does not take place contemporaneously with the determination of
the values of many of the foreign portfolio securities used in such calculation.
Events affecting the values of foreign portfolio securities that occur between
the time their prices are determined and the calculation of the Fund's share
price will not be reflected in the calculation unless the Advisor determines,
subject to review by the Board of Trustees, that the particular event would
materially affect net asset value, in which case an adjustment will be made.

26
<PAGE> 27

Each Fund intends to distribute substantially all of its net investment
income, if any, in the form of dividends to its shareholders. The Bartlett Value
International Fund and the Bartlett Basic Value Fund each intend to declare and
pay dividends on a quarterly basis. The Bartlett Fixed Income Fund, the Bartlett
Short Term Bond Fund and the Bartlett Cash Reserves Fund each intend to declare
dividends daily and pay them monthly. Each Fund intends to distribute net
long-term and net short-term capital gains, if any, at least once a year.

Distributions from each Fund are made pursuant to one of the following
options:

SHARE OPTION. Income distributions and capital gains distributions
reinvested in additional shares.

INCOME OPTION. Income distributions in cash; capital gains distributions
reinvested in additional shares.

CASH OPTION. Income distributions and capital gains distributions in cash.

You should indicate your choice of options on the application. If no option
is specified on your application, distributions will automatically be reinvested
in additional shares. You may change the option you have chosen by sending a
written request to Bartlett Mutual Funds indicating the Fund(s) for which the
change in option is requested. All distributions (regardless of the option you
select) will be based on the share price in effect on the payable date.
Reinvestment of distributions in additional shares are also made on the payable
date; however, distributions in cash may be mailed to the shareholder several
days subsequent to the payable date.

Each Fund has qualified and intends to qualify each year as a "regulated
investment company" under federal tax law. By so qualifying, the Fund will not
be subject to federal income taxes to the extent that it distributes
substantially all of its net investment income and any net realized capital
gains.

For federal income tax purposes, each Fund is treated as a separate entity
for the purpose of computing taxable net income and net realized capital gains
and losses. Dividends paid by each Fund from ordinary income are taxable to
shareholders as ordinary income, but may be eligible in part for the dividends
received deduction for corporations. Any distributions designated as being made
from net realized long-term capital gains are taxable to shareholders as long
term capital gains regardless of the

27
<PAGE> 28

holding period of the shareholder. The tax consequences described in this
section apply whether distributions are taken in cash or reinvested in
additional shares.

Each Fund will mail a statement to each shareholder setting forth the
federal income tax status of distributions made during the year. Dividends and
capital gains distributions also may be subject to state and local taxes.

Income received by the Bartlett Value International Fund and any other Fund
holding foreign securities may be subject to foreign tax withholding. Tax
treaties between certain countries and the U.S. may reduce or eliminate such
taxes. Shareholders may be entitled to claim tax credits or deductions, subject
to provisions and limitations of the Internal Revenue Code, for foreign income
taxes paid by the Fund. The Fund will notify its shareholders if such credit or
deduction is available.

Shareholders of each Fund are urged to consult their own tax advisers
regarding specific questions as to federal, state or local taxes, applicable
foreign tax credits and deductions and the tax effect of distributions,
redemptions and the use of the Exchange Privilege.

Unless a shareholder of a Fund furnishes his certified taxpayer
identification number (social security number for individuals) and certifies
that he is not subject to backup withholding, the Fund will be required to
withhold and remit to the U.S. Treasury 31% of the dividend, distributions and
redemption proceeds payable to the shareholder. Shareholders should be aware
that, under regulations promulgated by the Internal Revenue Service, a Fund may
be fined $50 annually for each account for which a certified taxpayer
identification number is not provided. In the event that such a fine is imposed
with respect to a specific account in any year, the Fund will make a
corresponding charge against the account.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT POLICIES, TECHNIQUES AND RISK CONSIDERATIONS

This section contains general information about various types of securities
and investment techniques. Each Fund may invest in any security or employ any
investment technique described in this section unless specifically noted
otherwise. Each Fund may purchase combinations of different types of securities
provided that the securities in the combination are permissible investments of
the Fund.

EQUITY SECURITIES

Each Fund (other than the Bartlett Cash Reserves Fund) may invest in equity
securities. Equity securities include common stock, preferred stock and common
stock equivalents such as convertible preferred stock, convertible debentures,
rights and warrants.

CONVERTIBLE PREFERRED STOCK is preferred stock that can be converted into
common stock pursuant to its terms. CONVERTIBLE DEBENTURES are debt

28
<PAGE> 29

instruments that can be converted into common stock pursuant to their terms.

WARRANTS are options to purchase equity securities at a specified price
valid for a specific time period. RIGHTS are similar to warrants, but normally
have a short duration and are distributed by the issuer to its shareholders. A
Fund may not invest more than 5% of its net assets at the time of purchase in
rights and warrants other than those that have been acquired in units or
attached to other securities. No more than 2% of net assets at the time of
purchase may be invested in warrants which are not listed on either the New York
Stock Exchange or the American Stock Exchange.

FIXED INCOME SECURITIES

Fixed income securities include corporate debt securities, municipal
obligations, mortgage related securities, asset-backed and receivable-backed
securities, U.S. government obligations and participation interests in such
securities. Certain fixed income securities are floating rate obligations or
variable rate obligations. Certain fixed income securities may carry demand
features that permit a Fund to sell the obligation back to the issuer or to a
third party at a specified price upon short notice at any time or prior to
specific dates. Preferred stock and certain common stock equivalents may also be
considered to be fixed income securities. Financial service industry obligations
are fixed income securities issued by a specific industry. Under normal
circumstances, at least 65% of the total assets of the Bartlett Fixed Income
Fund will be invested in fixed income securities other than floating rate and
variable rate obligations.

CORPORATE DEBT SECURITIES AND MUNICIPAL OBLIGATIONS. Each Fund is
permitted to invest in CORPORATE DEBT SECURITIES, i.e., long-term and short-term
debt obligations issued by companies (such as publicly issued and privately
placed bonds, notes and commercial paper). Corporate debt securities include
variable amount master demand notes. These obligations permit the investment of
fluctuating amounts at varying rates of interest pursuant to direct arrangements
between a Fund, as lender, and the borrower. Variable amount master demand notes
are direct lending arrangements between the lender and borrower and are not
generally transferable. A Fund may invest in such notes only if the Board of
Trustees believes that the notes are of comparable quality to the other
obligations in which the Fund may invest. Variable amount master demand notes
may be deemed illiquid under certain circumstances and a Fund's investment in
such notes would be limited to the extent that it is not permitted to invest
more than 10% of the value of its net assets in illiquid investments.

Each Fund is also permitted to invest in municipal obligations. MUNICIPAL
OBLIGATIONS are debt obligations issued by or on behalf of states, territories
and possessions of the United States and the District of Columbia, and their
political subdivisions, agencies, authorities and instrumentalities and other
qualifying issuers which pay interest that is, in the opinion of bond counsel to
the issuer, exempt from federal income tax. Each Fund may also invest less than
5% of its assets in participation interests in municipal obligations.

Each Fund (except the Bartlett Cash Reserves Fund -- see "Portfolio
Management Policies for the Bartlett Cash Reserves Fund" and the Bartlett Short
Term Bond Fund) may invest in debt obligations (such as corporate debt
securities and municipal obligations) in any rating category of the recognized
rating

29
<PAGE> 30

services, including issues that are in default, and may invest in unrated debt
obligations. Most foreign debt obligations are not rated (see "Foreign
Securities").

SECURITIES RATINGS. Generally, investments in securities in the lower
rating categories or comparable unrated securities provide higher yields but
involve greater price volatility and risk of loss of principal and interest than
investments in securities with higher ratings. Securities rated lower than Baa
by Moody's or BBB by S&P (commonly known as "junk bonds") are below investment
grade and have speculative characteristics. None of the Funds intends to invest
more than 5% of its net assets in securities below investment grade; neither the
Bartlett Short Term Bond Fund nor the Bartlett Cash Reserves Fund may purchase
any securities that are below investment grade at the time of purchase.

Lower ratings reflect a greater possibility that an adverse change in
financial condition will affect the ability of the issuer to make payments of
principal and interest than is the case with higher grade securities. In
addition, lower-rated securities will also be affected by the market's
perception of their credit quality and the outlook for economic growth. In the
past, economic downturns or an increase in interest rates have under certain
circumstances caused a higher incidence of default by the issuers of these
securities and may do so in the future, especially in the case of highly
leveraged issuers. The prices for these securities may be affected by
legislative and regulatory developments. For example, new federal rules require
that savings and loan associations gradually reduce their holdings of high yield
securities. An effect of such legislation may be to significantly depress the
prices of outstanding lower-rated securities. The market for lower-rated
securities may be less liquid than the market for securities with higher
ratings. Furthermore, the liquidity of lower-rated securities may be affected by
the market's perception of their credit quality. Therefore, judgment may at
times play a greater role in valuing these securities than in the case of
higher-rated securities, and it also may be more difficult during certain
adverse market conditions to sell lower-rated securities at their fair value to
meet redemption requests or to respond to changes in the market.

Although the above risks apply to all lower-rated securities, the
investment risk increases when the rating of the security is below investment
grade. The lowest-rated securities (D by S&P and C by Moody's) are regarded as
having extremely poor prospects of ever attaining any real investment standing,
and, in fact, may be in default of payment of interest or repayment of
principal. To the extent a Fund (other than the Bartlett Short Term Bond Fund
and the Bartlett Cash Reserves Fund) invests in these lower-rated securities,
the achievement of its investment objective may be more dependent on the
Advisor's own credit analysis than in the case of a Fund investing in
higher-rated securities.

Each Fund (other than the Bartlett Short Term Bond Fund and the Bartlett
Cash Reserves Fund) may invest in securities which are in lower rating
categories or are unrated if the Advisor determines that the securities provide
the opportunity of meeting the Fund's objective without presenting excessive
risk. The Advisor will consider all factors which it deems appropriate,
including ratings, in making investment decisions for a Fund and will attempt to
minimize investment risks through diversification, investment analysis and
monitoring of general economic conditions and trends. While the Advisor may
refer to ratings, it does not rely exclusively on ratings, but makes its own

30
<PAGE> 31

independent and ongoing review of credit quality.

LOAN PARTICIPATION INTERESTS. Loan participation interests are interests
in debt obligations (such as corporate loans) that are owned by banks or other
financial institutions. Loan participation interests are subject to the credit
risks generally associated with the corporate borrower; however, certain loan
participation interests may be backed by irrevocable letters of credit or a
guarantee of the bank or financial institution. Certain loan participation
interests may carry demand features that permit a Fund to sell the obligations
back to the financial intermediaries for the full amount of the Fund's interest
in the debt obligation plus accrued interest upon short notice at any time or
prior to specific dates. In the event of a default by the corporate borrower, a
Fund may be required to assert its rights through the financial intermediary
which may subject the Fund to delays, expenses and risks that are greater than
those that would have been involved if the Fund had purchased a direct
obligation (such as commercial paper) of such borrower. Moreover, under the
terms of the loan participation the Fund may be regarded as a creditor of the
bank or financial institution (rather than of the corporate borrower), so that
the Fund may also be subject to the risk that the financial intermediary may
become insolvent. Further, in the event of the bankruptcy or insolvency of the
corporate borrower, the loan participation may be subject to certain defenses
that can be asserted by such borrower as a result of improper conduct by the
financial intermediary. Loan participation interests which do not carry
unconditional demand features that can be exercised within seven days or less
are deemed illiquid and a Fund's investment in such interests would be limited
to the extent that it is not permitted to invest more than 10% of the value of
its net assets in illiquid investments.

MORTGAGE-RELATED SECURITIES. Each Fund may invest in mortgage-related
securities. Mortgage-related securities provide capital for mortgage loans made
to residential homeowners, including securities which represent interests in
pools of mortgage loans made by lenders such as savings and loan institutions,
mortgage bankers, commercial banks and others. Pools of mortgage loans are
assembled for sale to investors (such as the Funds) by various governmental,
government-related and private organizations, such as dealers. The market value
of mortgage-related securities will fluctuate as a result of changes in interest
rates and mortgage rates.

Interests in pools of mortgage loans generally provide a monthly payment
which consists of both interest and principal payments. In effect, these
payments are a "pass-through" of the monthly payments made by the individual
borrowers on their residential mortgage loans, net of any fees paid to the
issuer or guarantor of such securities. Additional payments are caused by
repayments of principal resulting from the sale of the underlying residential
property, refinancing or foreclosure, net of fees or costs which may be
incurred. Some mortgage-related securities (such as securities issued by the
Government National Mortgage Association) are described as "modified
pass-through" because they entitle the holder to receive all interest and
principal payments owed on the mortgage pool, net of certain fees, regardless of
whether the mortgagor actually makes the payment.

Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers, such as dealers,

31
<PAGE> 32

create pass-through pools of conventional residential mortgage loans. Such
issuers also may be the originators of the underlying mortgage loans as well as
the guarantors of the mortgage-related securities. Pools created by such
non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government guarantees of payments with respect to such pools. However, timely
payment of interest and principal of these pools is supported by various forms
of insurance or guarantees, including individual loan, title, pool and hazard
insurance. There can be no assurance that the private insurers can meet their
obligations under the policies. A Fund may buy mortgage-related securities
without insurance or guarantees if, through an examination of the loan
experience and practices of the persons creating the pools, the Advisor
determines that the securities are appropriate investments for the Fund.

Another type of security representing an interest in a pool of mortgage
loans is known as a collateralized mortgage obligation ("CMO"). CMOs represent
interests in a short-term, intermediate-term or long-term portion of a mortgage
pool. Each portion of the pool receives monthly interest payments, but the
principal repayments pass through to the short-term CMO first and the long-term
CMO last. A CMO permits an investor to more accurately predict the rate of
principal repayments. CMOs are issued by private issuers, such as
broker/dealers, and government agencies, such as the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation. Investments in CMOs
are subject to the same risks as direct investments in the underlying mortgage-
backed securities. In addition, in the event of a bankruptcy or other default of
a broker who issued the CMO held by a Fund, the Fund could experience both
delays in liquidating its position and losses. Each Fund (other than the
Bartlett Short Term Bond Fund and the Bartlett Cash Reserves Fund) may invest in
CMOs in any rating category of the recognized rating services and may invest in
unrated CMOs. Each Fund may also invest in "stripped" CMOs, which represent only
the income portion or the principal portion of the CMO.

The Advisor expects that governmental, government-related or private
entities may create mortgage loan pools offering pass-through investments in
addition to those described above. The mortgages underlying these securities may
be second mortgages or alternative mortgage instruments (for example, mortgage
instruments whose principal or interest payments may vary or whose terms to
maturity may differ from customary long-term fixed rate mortgages). As new types
of mortgage-related securities are developed and offered to investors, the
Advisor will, consistent with a Fund's investment objective and policies,
consider making investments in such new types of securities. The Prospectus of a
Fund will be amended with any necessary additional disclosure prior to the Fund
investing in such securities.

The average life of securities representing interests in pools of mortgage
loans is likely to be substantially less than the original maturity of the
mortgage pools as a result of prepayments or foreclosures of such mortgages.
Prepayments are passed through to the registered holder with the regular monthly
payments of principal and interest, and have the effect of reducing future
payments. To the extent the mortgages underlying a security representing an
interest in a pool of mortgages are prepaid, a Fund may experience a loss (if
the price at which the respective security was

32
<PAGE> 33

acquired by the Fund was at a premium over par, which represents the price at
which the security will be redeemed upon prepayment) or a gain (if the price at
which the respective security was acquired by the Fund was at a discount from
par). In addition, prepayments of such securities held by a Fund will reduce the
share price of the Fund to the extent the market value of the securities at the
time of prepayment exceeds their par value, and will increase the share price of
the Fund to the extent the par value of the securities exceeds their market
value at the time of prepayment. Prepayments may occur with greater frequency in
periods of declining mortgage rates because, among other reasons, it may be
possible for mortgagors to refinance their outstanding mortgages at lower
interest rates.

Although the market for mortgage-related securities issued by private
organizations is becoming increasingly liquid, such securities may not be
readily marketable. No Fund will purchase mortgage-related securities for which
there is no established market (including CMOs and direct investments in
mortgages as described below) or any other investments which the Advisor deems
to be illiquid pursuant to criteria established by the Board of Trustees if, as
a result, more than 10% of the value of the Fund's net assets would be invested
in such illiquid securities and investments.

Mortgage-related securities include investments made directly in mortgages
secured by real estate. When a Fund makes a direct investment in mortgages, the
Fund, rather than a financial intermediary, becomes the mortgagee with respect
to such loans purchased by the Fund.

ASSET-BACKED AND RECEIVABLE-BACKED SECURITIES. Each Fund is permitted to
invest in asset-backed and receivable-backed securities. Several types of
asset-backed and receivable-backed securities are available to investors,
including CARs(SM) (Certificates for Automobile Receivables(SM)) and interests
in pools of credit card receivables. CARs(SM) represent a pool (the "Pool") of
motor vehicle retail installment sales contracts and security interests in the
vehicles securing the contracts. Payments of principal and interest on CARs(SM)
are passed through monthly to certificate holders. Such payments may be
guaranteed up to certain amounts and for a certain time period by a letter of
credit issued by a financial institution unaffiliated with the Pool. Early
prepayment of principal on the underlying vehicle sales contracts may reduce the
overall return to an investor. If the letter of credit is exhausted and if the
full amount of the underlying sales contracts are not repaid, certificate
holders may experience losses on CARs(SM) or delays in payment. Certificates
representing pools of credit card receivables have characteristics similar to
CARs(SM), however, the underlying receivables are not secured.

Consistent with each Fund's investment objective and subject to the review
and approval of the Board of Trustees, each Fund also may invest in other types
of asset-backed and receivable-backed securities. The Prospectus of a Fund will
be amended with any necessary additional disclosure prior to the Fund investing
in such securities.

FLOATING AND VARIABLE RATE OBLIGATIONS. Fixed income securities may be
offered in the form of floating and variable rate obligations. FLOATING RATE
OBLIGATIONS have an interest rate which is fixed to a specified interest rate,
such as a bank prime rate, and is automatically adjusted when the specified
interest rate changes. VARIABLE RATE OBLIGATIONS have an interest rate which is
adjusted at specified intervals to a specified interest rate. Periodic interest
rate adjustments help stabilize the obligations' market values.

33
<PAGE> 34

A Fund may purchase these obligations from the issuers or may purchase
participation interests in pools of these obligations from banks or other
financial institutions. Variable and floating rate obligations usually carry
demand features that permit a Fund to sell the obligations back to the issuers
or to financial intermediaries at par value plus accrued interest upon short
notice at any time or prior to specific dates. The inability of the issuer or
financial intermediary to repurchase an obligation on demand could affect the
liquidity of the Fund's portfolio. Frequently, obligations with demand features
are secured by letters of credit or comparable guarantees. The Bartlett Cash
Reserves Fund determines maturity of variable and floating rate securities in
accordance with Securities and Exchange Commission rules applicable to money
market funds which allow the Fund to consider certain of such instruments as
having maturities shorter than the maturity date on the face of the instrument.
Floating and variable rate obligations which do not carry unconditional demand
features that can be exercised within seven days or less are deemed illiquid
unless the Board determines otherwise. A Fund's investment in illiquid floating
and variable rate obligations would be limited to the extent that it is not
permitted to invest more than 10% of the value of its net assets in illiquid
investments.

FINANCIAL SERVICE INDUSTRY OBLIGATIONS. Fixed income securities issued by
domestic and foreign banks, domestic savings and loan associations, consumer and
industrial finance companies, securities brokerage companies, real estate-
related companies, leasing companies, and a variety of firms in all segments of
the insurance field such as multiline, property and casualty, and life insurance
are referred to in this Prospectus as financial service industry obligations.
Such obligations include certificates of deposit, bankers' acceptances and other
debt obligations. Each Fund may invest in financial service industry
obligations. The financial services industry is subject to extensive
governmental regulations which may limit both the amounts and types of loans
which may be made and interest rates which may be charged. In addition, the
profitability of the industry is largely dependent upon the availability and
cost of funds for lending purposes, general economic conditions and exposure to
credit losses arising from possible financial difficulties of borrowers. Those
financial services companies which are engaged in insurance underwriting may be
exposed to adverse competitive conditions which may result in underwriting
losses. If a Fund's portfolio contains obligations issued by foreign branches of
U.S. banks or those issued by foreign banks, it may be subject to additional
investment risks. For example, possible actions by foreign governments,
including the adoption of governmental restrictions, nationalization of foreign
deposits or establishment of exchange controls, might adversely affect the
payment of principal and interest on the obligations issued by those branches.
In addition, foreign branches of U.S. banks and foreign banks are not subject to
all of the federal and state laws and regulations applicable to U.S. banks. The
risks associated with investments in this industry are particularly relevant to
the Bartlett Cash Reserves Fund because under normal market conditions its
investments will be concentrated in the industry.

U.S. GOVERNMENT OBLIGATIONS AND RELATED SECURITIES. U.S. government
obligations include a variety of securities which are issued or guaranteed by
the United States Treasury, by various agencies of the United States government
or by

34
<PAGE> 35

various instrumentalities that have been established or sponsored by the United
States government. U.S. Treasury securities and securities issued by the
Government National Mortgage Association and Small Business Administration are
backed by the "full faith and credit" of the United States government. Other
U.S. government obligations may or may not be backed by the "full faith and
credit" of the United States. In the case of securities not backed by the "full
faith and credit" of the United States, the investor must look principally to
the agency issuing or guaranteeing the obligation (such as the Federal Farm
Credit System, the Federal Home Loan Banks, the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation) for ultimate
repayment, and may not be able to assert a claim against the United States
itself in the event the agency or instrumentality does not meet its commitments.

Participation interests in U.S. government obligations are pro rata
interests in such obligations which are generally underwritten by government
securities dealers. Certificates of safekeeping for U.S. government obligations
are documentary receipts for such obligations. Both participation interests and
certificates of safekeeping are traded on exchanges and in the over-the-counter
market.

Each Fund may invest in U.S. government obligations and related
participation interests. In addition, each Fund may invest in custodial receipts
that evidence ownership of future interest payments, principal payments or both
on certain U.S. government obligations. Such obligations are held in custody by
a bank on behalf of the owners. These custodial receipts are known by various
names, including Treasury Receipts, Treasury Investors Growth Receipts ("TIGRs")
and Certificates of Accrual on Treasury Securities ("CATS"). Custodial receipts
generally are not considered obligations of the U.S. government for purposes of
securities laws. The Funds will consider all interest-only or principal-only
fixed income securities as illiquid.

STRUCTURED SECURITIES. Each of the Funds (except the Bartlett Value
International Fund and the Bartlett Cash Reserves Fund) may invest in structured
securities which are derived from securities which are issued by U.S. government
agencies and are denominated in U.S. dollars. These short maturity notes differ
from traditional government agency securities in that the return (principal
and/or interest) is linked to the performance of a diversified array of
financial indices.

An investment in structured securities entails risks not associated with
investments in conventional debt securities. However, the Funds use these
securities only as a hedge or to protect a Fund portfolio against rising
interest rates. Structured securities are privately issued securities, although
they are traded in the secondary market. The secondary market for such
securities is affected by factors independent of the creditworthiness of the
issuer and the value of the index, such as the volatility of the index, time
remaining to maturity and the amount of such securities outstanding.

FOREIGN SECURITIES

FOREIGN EQUITY SECURITIES include common stock, preferred stock and common
stock equivalents issued by foreign companies. Each Fund (other than the
Bartlett Cash Reserves Fund) may invest, without limitation, in foreign equity
securities.

35
<PAGE> 36

American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and other similar securities convertible into securities of foreign
companies provide a means for investing indirectly in foreign equity securities.
ADRS are receipts typically issued by a U.S. bank evidencing ownership of the
underlying foreign securities. EDRS are receipts typically issued by a European
bank evidencing ownership of the underlying foreign securities. To the extent
the ADR or EDR is issued by a bank unaffiliated with the foreign company issuer
of the underlying security, the bank has no obligation to disclose material
information about the foreign company issuer.

In addition, the Bartlett Value International Fund may invest in any
closed-end investment company that holds foreign equity securities in its
portfolio provided the securities held by such investment company are otherwise
permitted investments for the Fund.

FOREIGN FIXED INCOME SECURITIES include corporate debt obligations issued
by foreign companies and debt obligations of foreign governments or
international organizations. This category may include floating rate
obligations, variable rate obligations, Yankee dollar obligations (U.S. dollar
denominated obligations issued by foreign companies and traded on U.S. markets)
and Eurodollar obligations (U.S. dollar denominated obligations issued by
foreign companies and traded on foreign markets). To the extent that the
Bartlett Fixed Income Fund and the Bartlett Short Term Bond Fund invest in
foreign securities, they intend to invest only in securities of developed
countries.

FOREIGN GOVERNMENT OBLIGATIONS generally consist of debt securities
supported by national, state or provincial governments or similar political
units or governmental agencies. Such obligations may or may not be backed by the
national government's full faith and credit and general taxing powers.
Investments in foreign securities also include OBLIGATIONS ISSUED BY
INTERNATIONAL ORGANIZATIONS. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank. In
addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.

Each Fund may include foreign fixed income securities and foreign
government obligations securities in its portfolio. The Bartlett Value
International Fund under normal conditions will invest at least 65% of its
assets in foreign securities. For purposes of this 65% test, foreign securities
includes securities of issuers: (1) which are organized under the laws of a
foreign country; (2) for which the principal trading market is in a foreign
country; or (3) which derive at least 50% of their revenues or profits from
goods produced or sold, investments made, or services performed in foreign
countries or which have at least 50% of their assets situated in foreign
countries.

Purchases of foreign securities are usually made in foreign currencies and,
as a result, a Fund may incur currency conversion

36
<PAGE> 37

costs and may be affected favorably or unfavorably by changes in the value of
foreign currencies against the U.S. dollar. However, since the Bartlett Cash
Reserves Fund may only purchase U.S. dollar denominated foreign securities, it
will not be subject to these risks. In addition, there may be less information
publicly available about a foreign company than about a U.S. company, and
foreign companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.

OPTION TRANSACTIONS

The Bartlett Basic Value Fund, the Bartlett Fixed Income Fund and the
Bartlett Short Term Bond Fund may engage in option transactions involving equity
securities, debt securities, futures contracts and stock indexes. The Bartlett
Value International Fund may engage in option transactions involving foreign
currencies, foreign stock indexes and futures contracts. The Bartlett Cash
Reserves Fund may not engage in option transactions.

To cover the potential obligations involved in option transactions, a Fund
will own the underlying equity security, debt security, futures contract or
foreign currency or the Fund will segregate with the Custodian (a) high grade
liquid debt assets sufficient to purchase the underlying equity security, debt
security, futures contract or foreign currency or (b) high grade liquid debt
assets equal to the market value of the stock index. A Fund will only engage in
options on futures contracts for hedging purposes (see "Hedging Program" below).
Option transactions involve the following principal risks: (a) the loss of a
greater percentage of the Fund's investment than a direct investment in the
underlying instrument, (b) the loss of opportunity to profit from price
movements in the underlying instrument, and (c) the inability to effect a
closing transaction on a particular option.

There is no restriction on the percentage of a Fund's total assets which
may be committed to transactions in options (except options on futures contracts
as discussed below and as indicated in the "State Restrictions" section of the
applicable Statement of Additional Information). However, the Securities and
Exchange Commission considers over-the-counter options to be illiquid. As long
as the Commission maintains this position, a Fund will not engage in an
over-the-counter option transaction if such transaction would cause the value of
such options purchased by the Fund and the assets used to cover such options
written (sold) by the Fund, together with the value of other illiquid securities
held by the Fund, to exceed 10% of the net assets of the Fund. The policy of
each Fund with respect to options is fundamental, although the particular
practices followed with respect to options, such as the procedures used to cover
or secure options

37
<PAGE> 38

which a Fund writes, are not deemed fundamental and may be changed by the Board
of Trustees without shareholder vote.

A more complete description of the characteristics, risks and possible
benefits of option transactions is included in the Funds' Statements of
Additional Information.

HEDGING PROGRAM

Any Fund (except the Bartlett Cash Reserves Fund) may hedge all or a
portion of its portfolio investments through the use of options, futures
contracts and options on futures contracts. Any Fund (except the Bartlett Cash
Reserves Fund) may hedge currency risks associated with investments in foreign
securities and in particular may hedge its portfolio through the use of forward
foreign currency transactions as described below. The objective of a hedging
program is to protect a profit or offset a loss in a portfolio security from
future price erosion or to assure a definite price for a security, stock index,
futures contract or currency. There are transactional costs connected with a
hedging program.

The principal risks associated with hedging transactions are: (a) possible
imperfect correlation between the prices of the options and futures contracts
and the market value of a Fund's portfolio securities, (b) possible lack of a
liquid secondary market for closing out an option or futures contract
transaction, (c) the need for additional skills and techniques beyond normal
portfolio management, and (d) losses resulting from market movements not
anticipated by the Advisor.

No Fund may purchase or sell futures contracts or purchase related options
if, immediately thereafter, more than one-third of its net assets would be
hedged. In addition, no Fund may enter into transactions involving futures
contracts and related options if such transactions would result in more than 5%
of the fair market value of the Fund's assets being deposited as initial margin
for such transactions. A Fund's ability to engage in the hedging transactions
and strategies described above may be limited by the tax requirement that the
Fund derive less than 30% of its gross income from the sale or other disposition
of stock or securities held for less than three months.

A more complete description of the characteristics, risks and possible
benefits of hedging transactions is included in the Statement of Additional
Information.

FOREIGN CURRENCY TRANSACTIONS

Each Fund (other than the Bartlett Cash Reserves Fund) can purchase
securities denominated in a foreign currency. When a Fund purchases or sells a
security denominated in a foreign currency, it may be required to settle the
purchase transaction in the relevant foreign currency or to receive the proceeds
of the sale in the relevant foreign currency. In either event, the Fund will be
obligated to acquire or dispose of the foreign currency by selling or buying an
equivalent amount of U.S. dollars. To effect the conversion of the amount of
foreign currency involved in the purchase or sale of a foreign security, the
Fund may purchase or sell such foreign currency on a "spot" (i.e., cash) basis.

In addition, the Fund may wish to lock in the U.S. dollar value of the
transaction at or near the time of the purchase or sale at the exchange rate or
rates then prevailing between the U.S. dollar and the currency in which the
foreign security is denominated. Therefore, the Fund may enter into a forward
foreign currency exchange contract. A forward foreign currency exchange contract
involves an obligation to purchase

38
<PAGE> 39

or sell a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a price set at
the time of the contract. These contracts are traded directly between currency
traders (usually large commercial banks) and their customers. By entering into a
forward contract in U.S. dollars for the purchase or sale of the amount of
foreign currency involved in an underlying security transaction, the Fund is
able to protect itself against a possible loss between trade and settlement
dates resulting from an adverse change in the relationship between the U.S.
dollar and such foreign currency. This process is known as transaction hedging.
Transaction hedging may protect the Fund from a possible loss, but will limit
potential gains which might result from a positive change in the currency
relationships.

Some or all of a Fund's portfolio securities (except those of the Bartlett
Cash Reserves Fund) may be denominated in foreign currencies. As a result, in
addition to the risk of change in the market value of portfolio securities, the
value of the portfolio in U.S. dollars is subject to fluctuations in the
exchange rate between such foreign currencies and the U.S. dollar. When it is
desirable to limit or reduce exposure in a foreign currency in order to moderate
potential changes in the U.S. dollar value of the portfolio, the Fund may enter
into a forward foreign currency exchange contract to sell, for a fixed amount of
U.S. dollars, the amount of foreign currency approximating the value of some or
all of the Fund's portfolio securities denominated in such foreign currency.
This technique is known as portfolio hedging. Hedging against a decline in the
value of currency does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of such securities decline. The Fund
may also employ forward foreign currency exchange contracts to hedge against an
increase in the value of the currency in which the securities the Fund intends
to buy are denominated.

A Fund may also hedge its foreign currency exchange rate risk by engaging
in currency futures contracts and options transactions described above. No Fund
will engage in foreign currency transactions for speculative purposes.

INVESTMENT TECHNIQUES

REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements.
Repurchase agreements are transactions by which a Fund purchases a security and
simultaneously commits to resell that security to the seller at an agreed upon
price and date. In the event of a bankruptcy or other default of the seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying security and losses. To minimize these possibilities, each Fund
intends to enter into repurchase agreements only with the Custodian, other banks
that serve as custodian for the Funds, banks having assets in excess of $1
billion and primary government securities dealers determined by the Advisor
(subject to review by the Board of Trustees) to be creditworthy.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. Each Fund (except the
Bartlett Value International Fund) may enter into reverse repurchase agreements.
Reverse repurchase agreements involve sales of portfolio securities by a Fund to
member banks of the Federal Reserve System or recognized securities dealers,
concurrently with an agreement by the Fund 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

39
<PAGE> 40

to receive interest and principal payments on the portfolio security involved.
The Fund's objective in such a transaction would be to obtain funds to pursue
additional investment opportunities whose yield would exceed the cost of the
reverse repurchase transaction. Generally, the use of reverse repurchase
agreements should reduce portfolio turnover and increase yield.

In connection with each reverse repurchase agreement, a Fund will direct
its Custodian to place cash or U.S. government obligations in a separate account
in an amount equal to the repurchase price. In the event of bankruptcy or other
default by the purchaser, the Fund could experience both delays in repurchasing
the portfolio securities and losses.

Each Fund also may enter into DOLLAR ROLL TRANSACTIONS with certain broker/
dealers and banks. For all purposes (including borrowing restrictions) the Funds
treat dollar roll transactions as reverse repurchase agreements. Dollar roll
transactions consist of the sale by a Fund of mortgage-backed securities
combined with a commitment to purchase similar (although not identical)
securities at a future date at the same price. The Fund would receive a fee for
entering into the commitment to purchase. The principal risk of dollar roll
transactions is that if the broker/dealer or bank to whom the Fund sells the
securities underlying a dollar roll transaction becomes insolvent, the Fund's
right to purchase similar securities may be restricted. Similarly, the value of
the securities may change adversely over the term of the dollar roll transaction
and the securities that the Fund is required to repurchase may be worth less
than the securities originally held by the Fund. Finally, the return earned by
the Fund with the proceeds of a dollar roll transaction may not exceed
transaction costs.

LOANS OF PORTFOLIO SECURITIES. Each Fund may make short- and long-term
loans of its portfolio securities. Under the lending policy authorized by the
Board of Trustees and implemented by the Advisor in response to requests of
broker/dealers or institutional investors which the Advisor deems qualified, the
borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time to vote on
any matter which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral. No loan of securities will be made if, as a result, the aggregate
amount of such loans would exceed 25% of the value of the Fund's total assets.

SHORT SALES. Each Fund (except the Bartlett Value International Fund) may
sell a security short in anticipation of a decline in the market value of the
security. When a Fund engages in a short sale, it sells a security which it does
not own. To complete the transaction, the Fund must borrow the security in order
to deliver it to the buyer. The Fund must replace the borrowed security by
purchasing it at the market price at the time of replacement, which may be more
or less than the price at which the Fund sold the security. The Fund will incur
a loss as a result of the short sale if the price of the security increases
between the date of the short sale and the date on which the Fund replaces the
borrowed security. The Fund will realize a profit if the security declines in
price between those dates.

40
<PAGE> 41

In connection with its short sales, a Fund will be required to maintain a
segregated account with its Custodian of cash or high grade liquid debt assets
equal to the market value of the securities sold less any collateral deposited
with its broker. The Fund will limit its short sales so that no more than 25% of
its net assets (less all its liabilities other than obligations under the short
sales) will be deposited as collateral and allocated to the segregated account.
However, the segregated account and deposits will not necessarily limit the
Fund's potential loss on a short sale, which is unlimited. Each Fund's policy
with respect to short sales is fundamental, although the particular practices
followed with respect to short sales, such as the percentage of the Fund's
assets which may be deposited as collateral or allocated to the segregated
account, are not deemed fundamental and may be changed by the Board of Trustees
without the vote of the Fund's shareholders.

SHORT SALES AGAINST THE BOX. Each Fund may make short sales "against the
box." Short sales "against the box" are transactions in which a security
identical to one owned by the Fund is borrowed and sold short. The transaction
may serve to defer a gain or loss for federal income tax purposes. There is no
limit as to the percentage of a Fund's assets that may be committed to short
sales "against the box."

FORWARD COMMITMENTS. Each Fund may purchase or sell securities on a
"forward commitment" basis, including purchases on a "when-issued" basis, a
"when, as and if issued basis" and a "to-be-announced" basis. When such
transactions are negotiated, the price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Normally, the settlement date occurs
within two months after the transaction, but delayed settlements beyond two
months may be negotiated. During the period between a commitment and settlement,
no payment is made by the purchaser for the securities purchased and, thus, no
interest accrues to the purchaser from the transaction. In a "when, as and if
issued" transaction, the issuance of the security depends upon the occurrence of
a subsequent event, such as approval of a merger, corporate reorganization or
debt restructuring. In a "to-be-announced" transaction, a Fund has committed to
purchase or sell securities for which all specific information is not yet known
at the time of the trade, particularly the face amount in Government National
Mortgage Association securities transactions.

The use of forward commitments enables a Fund to hedge against anticipated
changes in interest rates and prices. Forward commitment securities may be sold
prior to the settlement date, but a Fund will enter into forward commitment
transactions only with the intention of actually receiving or delivering the
securities, as the case may be. Any significant commitment of a Fund's assets to
the purchase of securities on a forward commitment basis may increase the
possibility that its net asset value will fluctuate. In addition, if a Fund
chooses to dispose of the right to receive or deliver a forward commitment
security prior to the settlement date, it may incur a gain or loss. Purchases of
forward commitment securities also involve a risk of loss if the value of the
securities declines prior to the settlement date or if the seller fails to
deliver after the value of the securities has risen.

Each Fund will direct its Custodian to place cash or U.S. government
obligations in a separate account in an amount equal to the commitments of the
Fund to purchase securities as a result of its forward commitment obligations.
With respect to

41
<PAGE> 42

forward commitments to sell securities, the Fund will direct its Custodian to
place the securities in a separate account. The Fund will direct its Custodian
to segregate such assets for "when, as and if issued" commitments only when it
determines that issuance of the security is probable. When a separate account is
maintained in connection with forward commitment transactions to purchase
securities, the assets deposited in the separate account will be valued daily at
market for the purpose of determining the adequacy of the assets in the account.

ILLIQUID SECURITIES. The portfolio of each Fund may contain illiquid
securities. A Fund will not invest more than 10% of its net assets in securities
for which there are legal or contractual restrictions on resale or other
illiquid securities. Illiquid securities generally include securities which
cannot be disposed of promptly and in the ordinary course of business without
taking a reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be illiquid: repurchase agreements and time deposits maturing in
more than seven days, options traded in the over-the-counter market, nonpublicly
offered securities, stripped CMOs, CMOs for which there is no established
market, direct investments in mortgages and restricted securities. Certain types
of variable amount master demand notes, loan participation interests and
floating and variable rate obligations are also considered to be illiquid.

OTHER INVESTMENT COMPANIES. Each Fund is permitted to invest in other
investment companies at any time, except that Bartlett Cash Reserves Fund may
invest only in investment companies which are money market funds. A Fund will
not invest more than 10% of its total assets in securities of other investment
companies or invest more than 5% of its total assets in securities of any
investment company and will not purchase more than 3% of the outstanding voting
stock of any investment company. If the Fund acquires securities of another
investment company, the shareholders of the Fund may be subject to duplicative
management fees. Investments by the Fund in CMOs and foreign banks that are
deemed to be investment companies under the Investment Company Act of 1940 will
be included in the limitation on investments in other investment companies
(except that the 10% limitation does not apply to debt securities and non-voting
preferred stock of foreign banks).

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT POLICIES FOR BARTLETT CASH RESERVES FUND

The Bartlett Cash Reserves Fund seeks to maintain a stable net asset value
of $1.00 per share pursuant to Rule 2a-7 under the Investment Company Act of
1940. In accordance with Rule 2a-7, the Fund will maintain a dollar-weighted
average portfolio of 90 days or less, purchase only instruments having remaining
maturities of 397 days or less (except for U.S. government obligations, which
will have remaining maturities of 762 days or less) and invest only in U.S.
dollar denominated securities determined in accordance with procedures
established by the Board of Trustees to present minimal credit risks and which
are rated in one of the two highest rating categories for debt

42
<PAGE> 43

obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the instrument was rated by only
one such organization) or, if unrated, are of comparable quality as determined
in accordance with procedures established by the Board of Trustees.

In addition, the Fund will not invest more than 5% of its total assets in:
(1) securities of any one issuer (other than cash or U.S. government
obligations), except that the Fund may invest more than 5% of its total assets
in securities of an issuer in the highest rating category for up to three
business days or (2) securities rated in the second highest rating category.
Investments in securities of any one issuer in the second highest rating
category are further limited to the greater of 1% of total assets or $1,000,000.
As to each security, these percentages are measured at the time the Fund
purchases the security. Securities of an issuer include securities
collateralizing a repurchase agreement and puts issued by the issuer (except for
unconditional puts if no more than 10% of the Fund's total assets is invested in
securities issued or guaranteed by the issuer of the unconditional put).

Each Fund has adopted several investment limitations to reduce the risk of
an investment in the Fund. Some of these limitations are summarized below. The
limitations as well as other investment limitations applicable to each Fund are
set forth in their entirety under "Investment Limitations" in the applicable
Statement of Additional
Information.

BORROWING MONEY. The Fund will not borrow money, except (a) from a bank,
provided that immediately after such borrowing there is an asset coverage of
300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude a Fund (other than the
Bartlett Value International Fund) from entering into reverse repurchase
transactions and dollar rolls, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions and dollar rolls.

PLEDGING. The Fund will not mortgage, pledge, hypothecate or in any manner
transfer, as security for indebtedness, any assets of the Fund except as may be
necessary in connection with borrowings described in limitation (1) above.
(Margin deposits, security interests, liens and collateral arrangements with
respect to transactions involving options, futures contracts, short sales and
other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.)

Borrowing, reverse repurchase agreements and dollar rolls magnify the
potential for gain or loss on the portfolio securities of a Fund and, therefore,
increase the possibility of fluctuation in the Fund's net asset value. This is
the speculative factor

43
<PAGE> 44

known as leverage. To reduce the risks of borrowing, reverse repurchase
agreements
and dollar rolls, each Fund has adopted the limitations described above.

FUNDAMENTAL POLICIES. The investment limitations set forth in the
Statements of Additional Information may not be changed without the affirmative
vote of the majority of the outstanding shares of the applicable Fund.

INVESTMENT OBJECTIVES. The investment objective of each Fund may be
changed without the affirmative vote of a majority of the outstanding shares of
the Fund. However, shareholders of any Fund will be given a minimum of 30 days'
prior written notice before any change in investment objective becomes
effective.

SHORT-TERM TRADING. None of the Funds intends to purchase or sell
securities for short-term trading purposes.

PORTFOLIO TURNOVER. Although none of the Funds will purchase or sell
securities for short-term trading purposes, each Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Advisor believes that market conditions, creditworthiness factors or general
economic conditions warrant such action. The sale of existing portfolio
securities and the repurchase of replacement securities is known as the
"portfolio turnover." Due to the shorter average portfolio maturities of the
Bartlett Cash Reserves Fund and the Bartlett Short Term Bond Fund, these Funds
may be expected to have a higher- than-average portfolio turnover rate. Although
it has somewhat longer maturities, the Bartlett Fixed Income Fund has a
higher-than-average portfolio turnover because those longer maturities subject
that Fund to greater market volatility, and therefore, more trading in response
to changing market conditions.

A 100% turnover rate would occur if all of the portfolio securities were
replaced once in a one-year period. Higher portfolio turnover rates will result
in greater aggregate brokerage commissions or dealer spreads, and may result in
the realization of greater net short-term capital gains or net long-term capital
gains for tax purposes. See "Taxes."

SHAREHOLDER RIGHTS. Any Trustee of either Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. Neither Trust holds annual meetings of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of a Fund have equal voting rights and liquidation rights.

JOINT PROSPECTUS. This prospectus contains information on five different
Funds. Each of the Funds is responsible and may be held liable for errors in or
omissions from this Prospectus, and the registration statement of which it is a
part, concerning any of the Funds.

44
<PAGE> 45

AVERAGE ANNUAL TOTAL RETURN. Each Fund may periodically advertise "average
annual total return." The "total return" of a Fund refers to the dividends and
capital gain distributions generated by an investment in the Fund plus the
change in the value of the investment from the beginning of the period to the
end of the period. The "average annual total return" of a Fund refers to the
rate of total return for each year of the period which would be equivalent to
the cumulative total return for the period. All dividends and capital gain
distributions earned on the investment are assumed to be reinvested.

OTHER PERFORMANCE INFORMATION. Each Fund may also periodically advertise
its TOTAL RETURN and CUMULATIVE TOTAL RETURN over various periods in addition to
the value of a $10,000 investment (made on the date of the initial public
offering of the Fund's shares) as of the end of a specified period. The "total
return" and "cumulative total return" for each Fund are calculated as indicated
above for "total return."

YIELD. The Bartlett Cash Reserves Fund may periodically advertise its
"yield" and "effective yield." The "yield" of the Fund refers to the income
generated by an investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then "annualized." That is,
the amount of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.

The Bartlett Fixed Income Fund and the Bartlett Short Term Bond Fund may
also periodically advertise their yields for a thirty-day or one month period.
The "yield" of these Funds refers to the income generated by an investment in
that Fund over the period, calculated on a per share basis (using the net asset
value per share on the last day of the period and the average number of shares
outstanding during the period). Each Fund's yield quotation will always be
accompanied by that Fund's average annual total return information described
above.

THE ADVERTISED PERFORMANCE DATA OF EACH FUND IS BASED ON HISTORICAL
PERFORMANCE AND IS NOT INTENDED TO INDICATE FUTURE PERFORMANCE. YIELDS AND RATES
OF TOTAL RETURN QUOTED BY A FUND MAY BE HIGHER OR LOWER THAN PAST QUOTATIONS,
AND THERE CAN BE NO ASSURANCE THAT ANY YIELD RATE OF TOTAL RETURN WILL BE
MAINTAINED. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE BARTLETT VALUE
INTERNATIONAL FUND, THE BARTLETT BASIC VALUE FUND, THE BARTLETT FIXED INCOME
FUND AND THE BARTLETT SHORT TERM BOND FUND WILL FLUCTUATE SO THAT A
SHAREHOLDER'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE
SHAREHOLDER'S ORIGINAL INVESTMENT.

45
<PAGE> 46

INVESTMENT ADVISOR
Bartlett & Co.
36 East Fourth Street
Cincinnati, Ohio 45202-3896

ADMINISTRATOR
Legg Mason Fund Adviser, Inc.
7 East Redwood Street - 10th floor
Baltimore, Maryland 21202

CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105

TRANSFER AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171

AUDITORS
Arthur Andersen LLP
425 Walnut Street
Cincinnati, Ohio 45202

- -------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS BEING AUTHORIZED BY
EITHER TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY EITHER TRUST TO
SELL ITS SHARES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH STATE.
- -------------------------------------------------

46
<PAGE> 47

BARTLETT & CO.
- ---------------------------------------------
REGISTERED INVESTMENT ADVISORS

36 East Fourth Street, - Cincinnati, OH 45202-3896
513/345-6212 - 800/800-3609 - FAX 513/621-6462
[RECYCLED LOGO] PRINTED ON RECYCLED PAPER

-------------------------------------------------
-------------------------------------------
----------------------------------------
----------------------------------------
BARTLETT & CO.
------------------------------------
REGISTERED INVESTMENT ADVISORS
MUTUAL
FUNDS
PROSPECTUS
AUGUST 1, 1996

BARTLETT
VALUE INTERNATIONAL FUND

BARTLETT
BASIC VALUE FUND

BARTLETT
FIXED INCOME FUND

BARTLETT
SHORT TERM BOND FUND

BARTLETT
CASH RESERVES FUND

BARTLETT CAPITAL TRUST
BARTLETT MANAGEMENT TRUST
<PAGE> 48

BARTLETT CAPITAL TRUST

STATEMENT OF ADDITIONAL INFORMATION

August 1, 1996

*Bartlett Value International Fund
*Bartlett Basic Value Fund
*Bartlett Fixed Income Fund
*Bartlett Short Term Bond Fund

This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Prospectus of Bartlett Capital Trust and
Bartlett Management Trust dated August 1, 1996. A copy of the Prospectus can
be obtained by writing the Trust at 36 East Fourth Street, Cincinnati, Ohio
45202, or by calling the Trust nationwide toll free 800-800-3609 or in
Cincinnati at 513-345-6212.
<PAGE> 49
STATEMENT OF ADDITIONAL INFORMATION

Bartlett Capital Trust
36 East Fourth Street
Cincinnati, Ohio 45202

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . 3

ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS . . . . . . 5

INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . 17

STATE RESTRICTIONS . . . . . . . . . . . . . . . . . . . . 21

THE INVESTMENT ADVISOR . . . . . . . . . . . . . . . . . . 23

MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . 25

PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . 26

DETERMINATION OF SHARE PRICE . . . . . . . . . . . . . . . 29

INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . 30

CUSTODIANS . . . . . . . . . . . . . . . . . . . . . . . . 35

ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 35

TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . 35

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . 37
</TABLE>

- 2 -
<PAGE> 50
DESCRIPTION OF THE TRUST

The Trust is a diversified, open-end investment company established
under the laws of Massachusetts by an Agreement and Declaration of Trust dated
October 31, 1982 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. Shares of four series have been authorized,
which shares constitute the interests in the Bartlett Value International Fund,
the Bartlett Basic Value Fund, the Bartlett Fixed Income Fund, and the Bartlett
Short Term Bond Fund.

Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not
have cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares
of any series into a greater or lesser number of shares of that series so long
as the proportionate beneficial interest in the assets belonging to that series
and the rights of shares of any other series are in no way affected. In case
of any liquidation of a series, the holders of shares of the series being
liquidated will be entitled to receive as a class a distribution out of the
assets, net of the liabilities, belonging to that series. Expenses
attributable to any series are borne by that series. Any general expenses of
the Trust not readily identifiable as belonging to a particular series are
allocated by or under the direction of the Trustees in such manner as the
Trustees determine to be fair and equitable. No shareholder is liable to
further calls or to assessment by the Trust without his express consent.

Under Massachusetts law, under certain circumstances, shareholders of
a Massachusetts business trust could be deemed to have the same type of
personal liability for the obligations of the Trust as does a partner of a
partnership. However, numerous investment companies registered under the
Investment Company Act of 1940 have been formed as Massachusetts business
trusts and the Trust is not aware of an instance where such result has
occurred. In addition, the Trust Agreement disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. The Trust Agreement also provides for the
indemnification out of the Trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust. Moreover,
it provides that the Trust will, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Trust and satisfy
any judgment thereon. As

- 3 -
<PAGE> 51
a result, and particularly because the Trust assets are readily marketable and
ordinarily substantially exceed liabilities, the Board of Trustees believes
that the risk of shareholder liability is slight and limited to circumstances
in which the Trust itself would be unable to meet its obligations. The Board
of Trustees believes that, in view of the above, the risk of personal liability
is remote.

If at least ten shareholders (the "Petitioning Shareholders") wish to
obtain signatures to request a meeting for the purpose of voting upon removal
of any Trustee of the Trust, they may make a written application to the Trust
requesting to communicate with other shareholders. The Petitioning
Shareholders must hold in the aggregate at least 1% of the shares then
outstanding or shares then having a net asset value of $25,000, whichever is
less, and each Petitioning Shareholders must have been a shareholder for at
least six months prior to the date of the application. The application must be
accompanied by the form of communication which the shareholders wish to
transmit. Within five business days after receipt of the application, the
Trust will (a) provide the Petitioning Shareholders with access to a list of
the names and addresses of all shareholder of the Trust; or (b) inform the
Petitioning Shareholders of the approximate number of shareholders and the
estimated costs of mailing such communication, and undertake such mailing
promptly after tender by the Petitioning Shareholders to the Trust of the
material to be mailed and the reasonable expenses of such mailing.

For information concerning the purchase and redemption of shares of
the Funds, see "Purchase of Shares," "Redemption of Shares" and "Exchange
Privilege" in the Prospectus. For a description of the methods used to
determine the share price and value of each Fund's assets, see "Calculation of
Share Price" in the Prospectus.
As of May 28, 1996, the Trustees and officers as a group beneficially
owned approximately 0.4% of the outstanding shares of the Bartlett Value
International Fund, approximately 0.3% of the outstanding shares of the
Bartlett Basic Value Fund, approximately 0.2% of the outstanding shares of the
Bartlett Fixed Income Fund and approximately 1.27% of the outstanding shares of
the Bartlett Short Term Bond Fund.

As of May 23, 1996, FirstCinco PT owned 12.26% of the
outstanding shares of the Bartlett Value International Fund. As of the same
date, Miami 1993 Project Fund owned 14.84%, Orlando Hawaiian Motel Co. owned
6.41%, and Buckeye State Mutual Ins. Co. owned 5.68%, respectively, of the
outstanding shares of the Bartlett Short Term Bond Fund.

- 4 -
<PAGE> 52
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS

This section contains a more detailed discussion of some of the
investments a Fund may make and some of the techniques it may use, as described
in the Prospectus (see "Investment Objective and Strategy" and "Investment
Policies and Techniques").

A. Corporate Debt Securities. Corporate debt securities are
bonds or notes issued by corporations and other business organizations,
including business trusts, in order to finance their credit needs. Corporate
debt securities include commercial paper which consists of short-term (usually
from one to two hundred seventy days) unsecured promissory notes issued by
corporations in order to finance their current operations. Any Fund may invest
in foreign corporate debt securities denominated in U.S. dollars or foreign
currencies. Foreign debt securities include Yankee dollar obligations (U.S.
dollar denominated securities issued by foreign corporations and traded on U.S.
markets) and Eurodollar obligations (U.S. dollar denominated securities issued
by foreign corporations and traded on foreign markets).

B. Municipal Obligations. Municipal obligations are issued to
obtain funds to construct, repair or improve various public facilities such as
airports, bridges, highways, hospitals, housing, schools, streets and water and
sewer works, to pay general operating expenses or to refinance outstanding
debts. They also may be issued to finance various private activities,
including the lending of funds to public or private institutions for
construction of housing, educational or medical facilities or the financing of
privately owned or operated facilities. Municipal obligations consist of tax
exempt bonds, tax exempt notes and tax exempt commercial paper. Tax exempt
notes generally are used to provide short term capital needs and generally have
maturities of one year or less. Tax exempt commercial paper typically
represents short term, unsecured, negotiable promissory notes.

The two principal classifications of municipal obligations are
"general obligations" and "revenue" bonds. General obligation bonds are backed
by the issuer's full credit and taxing power. Revenue bonds are backed by the
revenues of a specific project, facility or tax. Industrial development
revenue bonds are a specific type of revenue bond backed by the credit of the
private issuer of the facility, and therefore investments in these bonds have
more potential risk that the issuer will not be able to meet scheduled payments
of principal and interest.

C. Zero Coupon and Pay in Kind Bonds. Corporate debt securities
and municipal obligations include so-called "zero

- 5 -
<PAGE> 53
coupon" bonds and "pay-in-kind" bonds. Zero coupon bonds are issued at a
significant discount from their principal amount in lieu of paying interest
periodically. Pay-in-kind bonds allow the issuer, at its option, to make
current interest payments on the bonds either in cash or in additional bonds.
The value of zero coupon bonds and pay-in-kind bonds is subject to greater
fluctuation in response to changes in market interest rates than bonds which
make regular payments of interest. Both of these types of bonds allow an
issuer to avoid the need to generate cash to meet current interest payments.
Accordingly, such bonds may involve greater credit risks than bonds which make
regular payment of interest. Even though zero coupon bonds and pay-in-kind
bonds do not pay current interest in cash, the applicable Fund is required to
accrue interest income on such investments and to distribute such amounts at
least annually to shareholders. Thus, the Fund could be required at times to
liquidate other investments in order to satisfy its dividend requirements.

D. Mortgage-Related Securities. Government-related organizations
which issue mortgage-related securities include the Government National
Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA")
and Federal Home Loan Mortgage Corporation ("FHLMC"). Securities issued by
GNMA and FNMA are fully modified pass through securities, i.e., the timely
payment of principal and interest is guaranteed by the issuer. FHLMC
securities are modified pass through securities, i.e., the timely payment of
interest is guaranteed by FHLMC, principal is passed through as collected but
payment thereof is guaranteed not later than one year after it becomes payable.

E. Direct Investment in Mortgages. Direct investments in
mortgages are normally available from lending institutions which group together
a number of mortgages for resale (usually from 10 to 50 mortgages) and which
act as servicing agent for the purchaser with respect to, among other things,
the receipt of principal and interest payments. (Such investments are also
referred to as "whole loans.") The vendor of such mortgages receives a fee
from the purchaser for acting as servicing agent. The vendor does not provide
any insurance or guarantees covering the repayment of principal or interest on
the mortgages. Each Fund will invest in such mortgages only if the Advisor has
determined through an examination of the mortgage loans and their originators
that the purchase of the mortgages should not present a significant risk of
loss to the Fund.

F. Financial Service Industry Obligations. Financial service
industry obligations include among others, the following:

(1) Certificates of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial bank or a
savings and loan association to repay funds

- 6 -
<PAGE> 54
deposited with it for a definite period of time (usually from fourteen days to
one year) at a stated or variable interest rate.

(2) Time Deposits. Time deposits are non-negotiable
deposits maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.

(3) Bankers' Acceptances. Bankers' acceptances are
credit instruments evidencing the obligation of a bank to pay a draft which has
been drawn on it by a customer, which instruments reflect the obligation both
of the bank and of the drawer to pay the face amount of the instrument upon
maturity.

G. Option Transactions.

Each of the Funds may engage in option transactions involving equity
securities, debt securities, futures contracts and stock indexes. An option
involves either (a) the right or the obligation to buy or sell a specific
instrument at a specific price until the expiration date of the option, or (b)
the right to receive payments or the obligation to make payments representing
the difference between the closing price of a market index and the exercise
price of the option expressed in dollars times a specified multiple until the
expiration date of the option. Options are sold (written) on equity
securities, debt securities, futures contracts and stock indexes. The
purchaser of an option on an equity security, debt security or futures contract
pays the seller (the writer) a premium for the right granted but is not
obligated to buy or sell the underlying security or futures contract. The
purchaser of an option on a stock index pays the seller a premium for the right
granted, and in return the seller of such an option is obligated to make the
payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the- counter
market. Options on equity securities, debt securities or options on futures
contracts which each Fund sells (writes) will be covered or secured, which
means that it will own the underlying security or futures contracts in the case
of a call option and that the Fund will segregate with the Trust's Custodian
high grade liquid debt securities sufficient to purchase the underlying
security or futures contracts in the case of a put option. Each Fund will also
segregate and maintain with the Custodian liquid assets equal to the market
value of each put option sold (written) by the Fund on a stock index. In
addition, when a Fund writes options, it may be required to maintain a margin
account, to pledge the underlying securities or U.S. government obligations or
to deposit high grade liquid debt securities in escrow with the Custodian.

- 7 -
<PAGE> 55
The purchase and writing of options involves certain risks. The
purchase of options limits a Fund's potential loss to the amount of the premium
paid and can afford the Fund the opportunity to profit from favorable movements
in the price of an underlying security to a greater extent than if transactions
were effected in the security directly. However, the purchase of an option
could result in a Fund losing a greater percentage of its investment than if
the transaction were effected directly. When a Fund writes a covered call
option, it will receive a premium, but it will give up the opportunity to
profit from a price increase in the underlying security above the exercise
price as long as its obligation as a writer continues, and it will retain the
risk of loss should the price of the security decline. When a Fund writes a
secured put option, it will assume the risk that the price of the underlying
security will fall below the exercise price, in which case the Fund may be
required to purchase the security at a higher price than the market price of
the security. In addition, there can be no assurance that a Fund can effect a
closing transaction on a particular option it has written.

Each of the Funds (particularly the Bartlett Value International Fund)
may engage in option transactions involving foreign currencies, foreign stock
indexes or futures contracts. A foreign currency option or an option on a
futures contract involves either the right or the obligation to buy or sell a
specific currency or futures contract at a specific price until the expiration
date of the option. A foreign stock index option involves either the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the
option until the expiration date of the option. The purchaser of an option on
a foreign currency or futures contract pays the seller (the writer) a premium
for the right granted but is not obligated to buy or sell the underlying
currency or futures contract. The purchaser of an option on a stock index pays
the seller a premium for the right granted, and in return the seller of such an
option is obligated to make the payment. A writer of an option may terminate
the obligation prior to expiration of the option by making an offsetting
purchase of an identical option. Options are traded on organized exchanges and
in the over-the-counter market.

Options on foreign currencies and futures contracts which a Fund sells
(writes) will be covered or secured, which means that it will own the
underlying currency or futures contract in the case of a call option and that
the Fund will segregate with the Custodian liquid assets sufficient to purchase
the underlying currency or futures contract in the case of a put option. The
Fund will also segregate and maintain with the Custodian high grade liquid
assets equal to the market value of each put option sold (written) by the Fund
on a stock index. In addition, when a Fund writes options, it may be required
to maintain a margin

- 8 -
<PAGE> 56
account, to pledge the underlying currency, futures contract or U.S. government
obligations, or to deposit high grade liquid assets in escrow with the
Custodian.

H. Hedging Transactions.

(1) U. S. Securities

Each of the Funds may hedge all or a portion of its portfolio
investments through the use of options, futures contracts and options on
futures contracts. The objective of a hedging program is to protect a profit
or offset a loss in a portfolio security from future price erosion or to assure
a definite price for a security by acquiring the right or option to purchase or
to sell a fixed amount of the security at a future date. For example, in order
to hedge against an anticipated rise in interest rates that might cause the
value of a Fund's portfolio securities to decline, the Fund might sell interest
rate futures contracts. When hedging of this character is successful, any
depreciation in the value of the hedged portfolio securities will be
substantially offset by an increase in the Fund's equity in the interest rate
futures position. Alternatively, an interest rate futures contract may be
purchased when a Fund anticipates the future purchase of a security but expects
the rate of return then available in the securities market to be less favorable
than rates currently available in the futures markets.

There is no assurance that the objective of the hedging program will
be achieved, since the success of the program will depend on the Advisor's
ability to predict the future direction of stock prices or interest rates and
incorrect predictions by the Advisor may have an adverse effect on the Funds.
In this regard, it should be noted that the skills and techniques necessary to
arrive at such predictions are different from those needed to predict price
changes in individual stocks. The Advisor is registered as a Commodity Trading
Advisor with the Commodity Futures Trading Commission, is a member of the
National Futures Association and has prior experience in the use of options,
futures contracts and options on futures contracts.

The hedging strategy involves the use of one or more techniques,
including buying and selling options (described above), futures contracts and
options on such futures contracts. A futures contract is a binding contractual
commitment which involves either (a) the delivery and payment for a specified
amount of securities or currency at a price agreed upon at the time the
contract is entered into but with actual delivery made during a specified
period in the future, or (b) the payment or receipt of payments representing,
respectively, the loss or gain of a specified group of stocks or market index.
The securities or currency underlying the contract may be government or

- 9 -
<PAGE> 57
corporate bonds (an interest rate futures contract), foreign currency (a
foreign currency futures contract), or a group of stocks such as a popular
market index (a stock index futures contract). Interest rate futures contracts
are currently available in standardized amounts on government obligations (such
as Treasury bills, notes and bonds), Government National Mortgage Association
certificates, corporate bonds, domestic certificates of deposit and Eurodollar
certificates of deposit. It is expected that other financial instruments will
at later dates be subject to other futures contracts. As new futures
contracts are developed and offered to investors, the Advisor will, consistent
with each Fund's investment objectives and policies, consider making
investments in such new futures contracts. Ordinarily a Fund would enter into
interest rate futures contracts to hedge its investments in fixed income
securities such as preferred stocks and money market obligations, stock index
futures contracts to hedge its investments in common stocks and foreign
currency futures contracts to hedge currency risks associated with investments
in foreign securities.

Futures contracts are traded on exchanges licensed and regulated by
the Commodity Futures Trading Commission. Interest rate futures contracts are
principally traded on the Chicago Board of Trade and International Monetary
Market. Stock index futures contracts are principally traded on the New York
Futures Exchange, Chicago Mercantile Exchange, Kansas City Board of Trade, New
York Stock Exchange and Chicago Board of Trade. Each Fund will be subject to
any limitations imposed by these Exchanges with respect to futures contracts
trading and positions. A clearing corporation associated with the particular
exchange assumes responsibility for all purchases and sales and guarantees
delivery and payment on the contracts. Although most futures contracts call
for actual delivery or acceptance of the underlying securities or currency, in
most cases the contracts are closed out before settlement date without the
making or taking of delivery. Closing out is accomplished by entering into an
offsetting transaction, which may result in a profit or a loss. There is no
assurance that a Fund will be able to close out a particular futures contract.

(2) International Securities

In general, the strategies and risks associated with hedging portfolio
investments in international securities are similar to those involved in
hedging U.S. securities, but have some differences.

Each Fund may hedge the international securities in its portfolio by
engaging in futures contracts transactions involving foreign currencies or
stock indexes. A foreign currency futures contract is a binding contractual
commitment which involves either the delivery and payment for a specified
period in the

- 10 -
<PAGE> 58
future. A foreign stock index futures contract involves either the payment or
receipt of payments representing, respectively, the loss or gain of a specified
group of stocks or market index. Ordinarily the Fund would enter into foreign
stock index futures contracts to hedge its investments in foreign common stocks
and foreign currency futures contracts to hedge currency risks associated with
investments in foreign securities.

There is no assurance that the objective of any hedging strategy used
by the Fund will be achieved, since the success of the strategy will depend on
the Advisor's ability to predict the future direction of the relevant currency,
stock index or futures contract and incorrect predictions by the Advisor may
have an adverse effect on the Fund. The forecasting of currency market
movement is extremely difficult and whether a hedging strategy involving
foreign currency transactions will be successful is highly uncertain. In
addition, it should be noted that the skills and techniques necessary to
predict movements in a stock index are different from those needed to predict
price changes in individual stocks. The Advisor is registered as a Commodity
Trading Advisor with the Commodity Futures Trading Commission, is a member of
the National Futures Association and has prior experience in foreign currency
transactions and the use of options, futures contracts and options on futures
contracts.

Futures contracts are traded on exchanges licensed and regulated by
the Commodity Futures Trading Commission and analogous foreign regulatory
agencies. The Fund will be subject to any limitations imposed by the exchanges
with respect to futures contracts trading and positions. A clearing
corporation associated with the particular exchange assumes responsibility for
all purchases and sales and guarantees delivery and payment on the contracts.
Although foreign currency futures contracts call for actual delivery or
acceptance of the currency, in most cases the contracts are closed out before
settlement date without the making or taking of delivery. Closing out is
accomplished by entering into an offsetting transaction, which may result in a
profit or a loss. There is no assurance that the Fund will be able to close
out a particular futures contract or that a liquid secondary market will exist
for any particular futures contract at any specific time.

Futures contracts transactions entail some risks. For example, it is
possible that the futures contracts selected by the Fund will not follow the
price movement of the underlying currency or stock index. If this occurs, the
hedging strategy may not be successful. Further, if the Fund sells a stock
index futures contract and is required to pay an amount measured by any
increase in the index, it will be exposed to an indeterminate liability. In
addition, a liquid secondary market may not exist for any particular futures
contract at any specific time.

- 11 -
<PAGE> 59
(3) Risks of Hedging Strategies

A hedging strategy involving options and futures contracts entails
some risks. For example, the total premium paid for an option on a futures
contract may be lost if a Fund does not exercise the option or the writer does
not perform his obligations. It is also possible that the futures contracts
selected by a Fund will not follow the price movement of the underlying
securities, currencies or stock index. If this occurs, the hedging strategy
may not be successful. Further, if a Fund sells a stock index futures contract
and is required to pay an amount measured by any increase in the market index,
it will be exposed to an indeterminate liability. In addition, a liquid
secondary market may not exist for any particular option or futures contract at
any specific time.

Each Fund will incur transactional costs in connection with the
hedging program. When a Fund purchases or sells a futures contract, an amount
of cash and liquid assets will be deposited in a segregated account with the
Trust's Custodian to guarantee performance of the futures contract. The amount
of such deposits will depend upon the requirements of each exchange and broker
and will vary with each futures contract. Because open futures contract
positions are marked to market and gains and losses are settled on a daily
basis, a Fund may be required to deposit additional funds in such a segregated
account if it has incurred a net loss on its open futures contract positions on
any day.

The Trust has filed a supplemental notice of eligibility with the
Commodity Futures Trading Commission ("CFTC") to claim relief from regulation
as a commodity "pool" within the meaning of the CFTC's regulations. In its
filing, the Trust has represented that each Fund's transactions in futures
contracts and options on futures contracts will constitute bona fide hedging
transactions within the meaning of such regulations and that each Fund will
enter into commitments which require as deposits for initial margin for futures
contracts or premiums for options on futures contracts no more than 5% of the
fair market value of its assets.

I. Forward Commitments and Reverse Repurchase Agreements. Each
Fund will direct its Custodian to place cash or U.S. government obligations in
a separate account of the Trust in an amount equal to the commitments of the
Fund to purchase or repurchase securities as a result of its forward commitment
or reverse repurchase agreement obligations. With respect to forward
commitments to sell securities, the Trust will direct its Custodian to place
the securities in a separate account. The Fund will direct its Custodian to
segregate such assets for when, as and if issued commitments only when it
determines that issuance of the security is probable. When a separate account
is maintained in connection with forward commitment transactions to

- 12 -
<PAGE> 60
purchase securities or reverse repurchase agreements, the securities deposited
in the separate account will be valued daily at market for the purpose of
determining the adequacy of the securities in the account. If the market value
of such securities declines, additional cash or securities will be placed in
the account on a daily basis so that the market value of the account will equal
the amount of the Fund's commitments to purchase or repurchase securities. To
the extent funds are in a separate account, they will not be available for new
investment or to meet redemptions.

Commitments to purchase securities on a when, as and if issued basis
will not be recognized in the portfolio of either Fund until the Advisor
determines that issuance of the security is probable. At such time, the Fund
will record the transaction and, in determining its net asset value, will
reflect the value of the security daily.

Securities purchased on a forward commitment basis, securities subject
to reverse repurchase agreements and the securities held in each Fund's
portfolio are subject to changes in market value based upon the public's
perception of the creditworthiness of the issuer and changes in the level of
interest rates (which will generally result in all of those securities changing
in value in the same way, i.e., all those securities experiencing appreciation
when interest rates decline and depreciation when interest rates rise).
Therefore, if in order to achieve a higher level of income, the Fund remains
substantially fully invested at the same time that it has purchased securities
on a forward commitment basis or entered into reverse repurchase transactions,
there will be a possibility that the market value of the Fund's assets will
have greater fluctuation.

With respect to 75% of the total assets of each Fund, the value of the
Fund's commitments to purchase or repurchase the securities of any one issuer,
together with the value of all securities of such issuer owned by the Fund, may
not exceed 5% of the value of the Fund's total assets at the time the
commitment to purchase or repurchase such securities is made; provided,
however, that this restriction does not apply to U.S. government obligations or
repurchase agreements with respect thereto. In addition, each Fund will
maintain an asset coverage of 300% for all of its borrowings and reverse
repurchase agreements. Subject to the foregoing restrictions, there is no
limit on the percentage of the Fund's total assets which may be committed to
such purchases or repurchases.

Although the Bartlett Value International Fund will engage from time
to time in forward commitment transactions, it does not intend to engage in
reverse repurchase transactions.

- 13 -
<PAGE> 61
J. Short Sales. When a Fund borrows a security in connection
with a short sale, the Fund is required to pay to the lender any dividends or
interest which accrue during the period of the loan. To borrow the security,
the Fund also may be required to pay a premium to the lender, which would
increase the cost of the security sold. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of any premium,
dividends or interest the Fund may be required to pay in connection with the
short sale. The proceeds of the short sale will be retained by the lender or
its broker, to the extent necessary to meet margin requirements, until the
short position is closed out by delivery of the underlying security.

K. Restricted Securities. Restricted securities are securities
the resale of which is subject to legal or contractual restrictions.
Restricted securities may be sold only in privately negotiated transactions, in
a public offering with respect to which a registration statement is in effect
under the Securities Act of 1933 or pursuant to Rule 144 or Rule 144A
promulgated under such Act. Where registration is required, the Fund may be
obligated to pay all or part of the registration expense, and a considerable
period may elapse between the time of the decision to sell and the time such
security may be sold under an effective registration statement. If during such
a period adverse market conditions were to develop, the Fund might obtain a
less favorable price than the price it could have obtained when it decided to
sell.

L. Bond Ratings.

Standard & Poor's Bond Ratings

AAA. Debt rated AAA has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is extremely
strong.

AA. Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the higher rated issues only in small
degree.

A. Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.

BBB. Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated categories.

- 14 -
<PAGE> 62
BB, B, CCC, CC, C. Debt rated BB, B, CCC, CC and C is
regarded, on balance, as predominately speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation. Such securities commonly are known as "junk bonds." BB indicates
the lowest level of speculation within this group, and C the highest degree of
speculation. While such debt likely will have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

BB. Debt rated BB generally has less near-term vulnerability
to default than lower-rated speculative issues and it faces major ongoing
uncertainties or exposure to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet timely interest and principal
payments. The BB rating category also is used for debt subordinated to senior
debt that is assigned an actual or implied BBB- rating.

B. Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions likely will impair capacity
or willingness to pay interest and repay principal. The B rating category also
is used for debt subordinated to senior debt that is assigned an actual or
implied BB or BB- rating.

CCC. Debt rated CCC has a currently identifiable
vulnerability to default, and is dependent upon favorable business, financial
and economic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial or economic conditions,
it is not likely to have the capacity to pay interest and repay principal. The
CCC rating category also is used for debt subordinated to senior debt that is
assigned an actual or implied B of B- rating.

CC. The rating CC typically is applied to debt subordinated
to senior debt that is assigned an actual or implied CCC rating.

C. The rating C typically is applied to debt subordinated to
senior debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.

CI. The rating CI is reserved for income bonds on which no
interest is being paid.

D. Debt rated D is in payment default. The D rating category
is used when interest payments or principal payments are not made on the date
due even if the applicable grace period has

- 15 -
<PAGE> 63
not expired, unless S&P believes that such payments will be made during such
grace period. The D rating also will be sued upon the filing of a bankruptcy
petition if debt service payments are jeopardized.

PLUS (+) OR MINUS (-). The ratings from AA to CCC may be
modified by the addition of a plus or minus sign to show relative standing
within the major categories.

Moody's Investors Service, Inc. Bond Ratings

AAA. Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.

AA. Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than in
Aaa securities.

A. Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

BAA. Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

BA. Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered well- assured. Often
the protection of interest and principal payments may be very moderate, and
thereby not well safeguarded during both good and bad economic times over the
future. Uncertainty of position characterizes bonds of this class.

- 16 -
<PAGE> 64
B. Bonds which are rated B generally lack
characteristics of the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the contract over any
long period of time may be small.

CAA. Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest.

CA. Bonds which are rated Ca represent obligations which
are speculative to a high degree. Such issues are often in default or have
other marked shortcomings.

C. Bonds which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.

INVESTMENT LIMITATIONS

Except as indicated, the investment limitations described below have
been adopted by the Trust with respect to each Fund and may not be changed
without the affirmative vote of a majority of the outstanding shares of the
applicable Fund. As used in the Prospectus and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Trust (or of
any series) means the lesser of (1) 67% or more of the outstanding shares of
the Trust (or the applicable series) present at a meeting, if the holders of
more than 50% of the outstanding shares of the Trust (or applicable series) are
present or represented at such meeting; or (2) more than 50% of the outstanding
shares of the Trust (or the applicable series). In addition to limitations
that may be changed only pursuant to shareholder vote, certain of the Funds
presently intend to limit voluntarily certain types of investments to comply
with current blue sky regulations. Such restrictions, which may be changed by
the Board of Trustees without shareholder approval, are described under the
caption "State Restrictions."

With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. It is the position of the Securities and Exchange Commission
that the provisions of this paragraph do not apply to the policies on borrowing
and illiquid investments.

Notwithstanding any of the following limitations, any investment
company, whether organized as a trust, association or corporation, or a
personal holding company, may be merged or consolidated with or acquired by the
Trust, provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the

- 17 -
<PAGE> 65
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer
so acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.

For purposes of the diversification requirements described below, a
Fund will treat both the corporate borrower and the financial intermediary as
issuers of a loan participation interest. Investments by a Fund in CMOs that
are deemed to be investment companies under the Investment Company Act of 1940
will be included in the limitation on investments in other investment
companies.

Limitations Applicable to All Funds

1. Borrowing Money. A Fund will not borrow money, except (a)
from a bank, provided that immediately after such borrowing there is an asset
coverage of 300% for all borrowings of the Fund (in the case of the Bartlett
Value International Fund, provided that such borrowings do not exceed one-third
of the Fund's total assets at the time when the borrowing is made); or (b) from
a bank or other persons for temporary purposes only, provided that such
temporary borrowings are in an amount not exceeding 5% of the Fund's total
assets at the time when the borrowing is made. This limitation does not
preclude the Bartlett Basic Value Fund, the Bartlett Fixed Income Fund and the
Bartlett Short Term Bond Fund from entering into reverse repurchase
transactions and dollar rolls, provided that the applicable Fund has an asset
coverage of 300% for all borrowings and repurchase commitments of the Fund
pursuant to reverse repurchase transactions and dollar rolls.

2. Pledging. A Fund will not mortgage, pledge, hypothecate or in
any manner transfer, as security for indebtedness, any assets of the Fund
except as may be necessary in connection with borrowings described in
limitation (1) above. (Margin deposits, security interests, liens and
collateral arrangements with respect to transactions involving options, futures
contracts, short sales and other permitted investments and techniques are not
deemed to be a mortgage, pledge or hypothecation of assets for purposes of this
limitation.)

3. Underwriting. A Fund will not act as underwriter of
securities issued by other persons. This limitation is not applicable to the
extent that, in connection with the disposition of portfolio securities
(including restricted securities), the Fund may be deemed an underwriter under
certain federal securities laws.

4. Real Estate. A Fund will not purchase, hold or deal in real
estate. This limitation is not applicable to investments in

- 18 -
<PAGE> 66
securities which are secured by or represent interests in real estate. This
limitation does not preclude the Fund from investing in mortgage-related
securities or (except for the Bartlett Value International Fund) investing
directly in mortgages.

5. Commodities. A Fund will not purchase, hold or deal in
commodities or commodities futures contracts except as described in the
Prospectus and Statement of Additional Information. This does not preclude the
Bartlett Value International Fund from investing in futures contracts or
forward currency exchange contracts.

6. Loans. A Fund will not make loans to other persons, except
(a) by loaning portfolio securities, (b) by engaging in repurchase agreements,
(c) by purchasing nonpublicly offered debt securities, or (except for the
Bartlett Value International Fund)(d) through direct investments in mortgages.
For purposes of this limitation, the term "loans" shall not include the
purchase of a portion of an issue of publicly distributed bonds, debentures or
other securities.

7. Margin Purchases. A Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable
to short term credit obtained by a Fund for the clearance of purchases and
sales or redemption of securities, or to arrangements with respect to
transactions involving options, futures contracts, short sales and other
permitted investments and techniques (including, for the Bartlett Value
International Fund, foreign currency exchange contracts).

8. Concentration. A Fund will not invest 25% or more of its
total assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.

9. Diversification. As a diversified series of the Trust, the
Fund will not purchase the securities of any issuer if such purchase at the
time thereof would cause less than 75% of the value of the total assets of the
Fund to be invested in cash and cash items (including receivables), securities
issued by the U.S. government, its agencies or instrumentalities and repurchase
agreements with respect thereto, securities of other investment companies,
other securities for the purposes of this calculation limited in respect of any
one issuer to an amount not greater in value than 5% of the value of the total
assets of the Fund and to not more than 10% of the outstanding voting
securities of such issuer.

- 19 -
<PAGE> 67
Additional Limitations Applicable to the Bartlett Basic Value Fund,
the Bartlett Fixed Income Fund and the Bartlett Short Term Bond Fund

1. Short Sales. These Funds will not effect short sales of
securities except as described in the Prospectus and Statement of Additional
Information.

2. Options. These Funds will not purchase or sell puts, calls,
options or straddles except as described in the Prospectus and Statement of
Additional Information.

3. Other Investment Companies. Each of these Funds will not
invest more than 10% of its total assets in securities of other investment
companies or invest more than 5% of its total assets in securities of any
investment company and will not purchase more than 3% of the outstanding voting
stock of any investment company.

4. Oil and Gas Programs. These Funds will not purchase, hold or
deal in oil, gas or other mineral explorative or development programs.

Additional Limitation on the Bartlett Basic Value Fund and the
Bartlett Fixed Income Fund

Illiquid Investments. Neither Fund will invest more than 10% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.

Additional Limitation on the Bartlett Value International Fund and the
Bartlett Short Term Bond Fund (which the Bartlett Basic Value Fund and
the Barlett Fixed Income Fund each interprets as a fundamental policy
applicable to it)

Senior Securities. None of these Funds may issue senior securities.
This limitation is not applicable to activities that may be deemed to involve
the issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, the rules and regulations promulgated thereunder or
interpretations of the Securities and Exchange Commission or its staff.

Statement of Intention by the Bartlett Value International Fund.

It is the intention of the Bartlett Value International Fund (which
may be changed by the Board of Trustees without shareholder approval) that it
will not invest in mortgage related securities and will limit its borrowings to
an amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made.

- 20 -
<PAGE> 68

STATE RESTRICTIONS

To comply with current blue sky regulations, each Fund presently
intends to observe the following restrictions, which may be changed by the
Board of Trustees without shareholder approval.

Ohio Restrictions

No Fund will purchase or retain securities of any issuer if the
Trustees and officers of the Trust or of the Advisor, who individually own
beneficially more than 0.5% of the outstanding securities of such issuer,
together own beneficially more than 5% of such securities. Each Fund will not
purchase securities issued by other investment companies except by purchase in
the open market where no commission or profit to a sponsor or dealer results
from such purchase other than customary broker's commission or except when such
purchase is part of a plan of merger, consolidation, reorganization or
acquisition. Each Fund will not borrow (other than by entering into reverse
repurchase agreements), pledge, mortgage or hypothecate more than one-third of
its total assets. In addition, each Fund will engage in borrowing (other than
reverse repurchase agreements) only for emergency or extraordinary purposes and
not for leverage. Each Fund will not invest more than 15% of its total assets
in securities of issuers which, together with any predecessors, have a record
of less than three years continuous operation or securities of issuers which
are restricted as to disposition. Each Fund will not purchase the securities
of any issuer if such purchase at the time thereof would cause more than 10% of
the voting securities of any issuer to be held by the Fund.

California Restrictions

As long as the rules promulgated under the California Corporate
Securities Law prohibit each Fund from acquiring or retaining securities of any
open-end investment company, neither Fund will acquire or retain such
securities, unless the acquisition is part of a merger or acquisition of assets
or other reorganization. In addition, as long as such rules include
restrictions on options transactions by an investment company, each Fund will
adhere to such restrictions as interpreted by the staff of the California
Department of Corporations.

In addition, California has imposed the following limitations on
investments by the Bartlett Short Term Bond Fund: (i) the Fund will limit
writing of puts such that the aggregate value of the obligations underlying
such puts will not exceed 50% of the Fund's net assets, (ii) the Fund will
limit the purchase of puts and calls such that the premiums paid therefor shall
not exceed 20% of the net assets of the Fund, (iii) futures

- 21 -
<PAGE> 69
transactions by the Fund shall comply with CAL. ADMIN. CODE tit. 10, section
260.140.85(b)(2)(b), (iv) with respect to short sales, the amount deposited in
the segregated account, plus any amount deposited with the broker, will equal
the current value of the security, but not be less than the proceeds resulting
from the sale; and (v) if the Fund engages in OTC option transactions, (a) such
transactions shall be entered into only when options are unavailable on
exchanges;(b) there shall be an active OTC market for such options that will
establish their pricing and liquidity; and (c) broker-dealers with whom the
Fund shall enter into such transactions shall have a minimum net worth of $20
million.

Texas Restrictions

The Bartlett Value International Fund may not invest more than 15% of
its average net assets in investments which are not readily marketable,
including restricted securities, illiquid assets, securities of foreign issuers
which are not listed on a recognized domestic or foreign securities exchange,
and any other assets for which a bona fide market does not exist at the time of
purchase or subsequent valuation. The Fund's investments in warrants, valued
at the lower of cost or market, may not exceed 5% of its net assets. Of such
5%, no more than 2% of the Fund's net assets may be invested in warrants which
are not listed on either the New York Stock Exchange or the American Stock
Exchange. The Fund may not invest in oil, gas or mineral leases. The Fund may
not purchase or sell real property including limited partnership interests, but
excluding readily marketable interests in real estate investment trusts or
readily marketable securities of companies which invest in real estate. The
Fund will observe the limitations described in the Prospectus as to loans of
portfolio securities and will limit its short sales to those transactions
referred to as short sales against the box as long as the regulations
promulgated under the Texas Securities Act require it to observe such
limitations. In addition, shares of the Fund will be issued for securities or
assets other than cash only if such issuance is consistent with the provisions
of Section 123.2(4) of the Texas Administrative Code, as amended.

Arkansas Restrictions

As a condition of sales in Arkansas, each of the Funds have agreed
that (i) it will not purchase securities of unseasoned issuers, including their
predecessors, which have been in operation for less than three years, and
equity securities of issuers which are not readily marketable if by reason
thereof the value of its aggregate investment in such classes of securities
will exceed 5% of its total assets and (ii) it will not purchase puts, calls,
straddles, spreads and any combination thereof if by reason thereof the value
of its aggregate investment in such classes of securities will exceed 5% of its
total assets.

- 22 -
<PAGE> 70
In addition, the Bartlett Value International Fund has agreed that it
(i) shall not purchase securities of issuers which it is restricted from
selling to the public without registration under the Securities Act of 1933 if
by reason thereof the value of its aggregate investment in such classes of
securities will exceed 10% of its total assets and (ii) will not invest in
interests in oil, gas or other mineral exploration or development programs.

Wisconsin Restrictions

As a condition of making sales in Wisconsin, the Bartlett Value
International Fund has agreed that it (i) will not invest in restricted
securities, excluding restricted securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 that have been determined to be
liquid by the Trust's Board of Trustees based upon the trading markets for the
securities, if by reason thereof the value of its aggregate investment in such
securities would exceed 5% of its total assets, (ii) will not invest in
securities of unseasoned issuers, including their predecessors, which have been
in operation for less than three years, and equity securities of issuers which
are not readily marketable, if by reason thereof the value of the Fund's
aggregate investment in such securities would exceed 5% of its total assets and
(iii) it will not invest in the securities of one or more investment companies,
if by reason thereof the value of its aggregate investment in such securities
would exceed 10% of its total assets.

THE INVESTMENT ADVISOR

The Trust's investment advisor is Bartlett & Co., 36 East
Fourth Street, Cincinnati, Ohio 45202. Bartlett & Co. became a wholly owned
subsidiary of Legg Mason, Inc. ("Legg Mason") effective January 2, 1996. The
Advisor has provided investment advice to individuals, corporations, pension
and profit sharing plans and trust accounts since 1898.

The directors and officers of Bartlett & Co. are James A. Miller,
William A. Friedlander, Raymond A. Mason, Edward A. Taber, III, Robert G.
Sabelhaus and Thomas A. Steele.

Under the terms of the management agreements between the Trust and the
Advisor (each an Agreement, collectively, the "Agreements"), the Advisor
manages the Funds' investments subject to approval of the Board of Trustees and
pays all of the expenses

- 23 -
<PAGE> 71
of the Funds except brokerage, taxes, interest and extraordinary expenses.

As compensation for its advisory services and agreement to pay the
expenses of the Bartlett Basic Value Fund and the Bartlett Fixed Income Fund,
the Trust pays the Advisor a fee for each Fund computed and accrued daily and
paid monthly at an annual rate of 2% of the average daily net assets of the two
Funds up to and including $10,000,000, 1-1/2% of such assets from $10,000,000
to and including $30,000,000 and 1% of such assets in excess of $30,000,000.
Under the terms of the Agreement for the Bartlett Basic Value Fund and the
Bartlett Fixed Income Fund, the Trustees, in the exercise of their discretion,
have determined that the fee should be allocated between the Bartlett Basic
Value Fund and the Bartlett Fixed Income Fund as follows: the fee for the
Bartlett Basic Value Fund is determined by applying the above rates to its
assets, and the remainder of the fee is allocated to the Bartlett Fixed Income
Fund.

As compensation for its advisory services and agreement to pay the
expenses of the Bartlett Value International Fund, that Fund pays the Advisor a
fee computed and accrued daily and paid monthly at an annual rate of 2% of the
average daily net assets of the Fund up to and including $20,000,000, 1.75% of
the average daily net assets of the Trust from $20,000,000 up to and including
$200,000,000 and 1.25% of such assets in excess of $200,000,000.

As compensation for its advisory services and agreement to pay the
expenses of the Bartlett Short Term Bond Fund, the Trust pays the Advisor a fee
computed and accrued daily and paid monthly at an annual rate of .85% of the
average daily net assets of the Fund.

Most investment companies make smaller payments to their investment
advisers because such companies directly pay their own operating expenses,
while all of the Trust's expenses except those specified above are paid by the
Advisor. Also, the expense of the Bartlett Value International Fund, like
those of other international funds, generally can be expected to be higher than
expenses of investment companies investing in domestic securities due to the
greater costs of custody, communications and investment advisory services for
foreign securities.

The Advisor has agreed to reimburse the Trust to the extent that the
expenses of the Trust or a Fund for the same fiscal year exceed the expense
limitations applicable to the Trust imposed by state securities administrators,
as such limitations may be lowered or raised from time to time. The most
restrictive applicable limitation is presently 2-1/2% of the first $30 million
of average net assets, 2% of the next $70 million and 1-1/2% of the remaining
average net assets. If any such

- 24 -
<PAGE> 72
reimbursement is required, the payment of the advisory fee at the end of any
month will be reduced or postponed or, if necessary, a refund will be made to
the Trust. Certain expenses such as brokerage commissions, if any, taxes,
interest, extraordinary items and other expenses subject to approval of state
securities administrators are excluded from such limitations. If the expenses
of the Trust or a Fund approach the applicable limitation in any state, the
Trust will consider the various actions that are available to it, including
suspension of sales to residents of that state.

The following table depicts the advisory fees paid by the Funds to the
Advisor for the fiscal years ended March 31, 1996, 1995 and 1994.

<TABLE>
<CAPTION>
Fiscal Year Bartlett Value Bartlett Bartlett Bartlett
Ended International Basic Value Fixed Income Short Term
March 31, Fund Fund Fund Bond Fund(a)
- ---------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
1996 $1,215,664 $1,366,123 $ 900,170 $197,641
1995 $1,025,125 $1,173,808 $ 998,750 $190,629
1994 $730,527(b) $1,201,666 $1,264,288 $ 21,102

<FN>
(a) The Bartlett Short Term Bond Fund began operations on February 4, 1994.

(b) Does not include a voluntary reduction in fees by the Advisor of $23,850.
</TABLE>

The Advisor retains the right to use the name "Bartlett" in connection
with another investment company or business enterprise with which the Advisor is
or may become associated. The Trust's right to use the name "Bartlett"
automatically ceases thirty days after termination of the Agreement and may be
withdrawn by the Advisor on thirty days written notice.

The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Trust believes
that the Glass-Steagall Act should not preclude a bank from providing such
services. However, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or part of such services,
management of the Trust believes that there would be no material impact on the
Trust or its shareholders. Banks and other financial institutions may charge
their customers fees for offering these services to the extent permitted by
applicable regulatory authorities, and the overall return to those shareholders
availing themselves of the financial institution services will be lower than to
those shareholders who do not. The Trust may from time to time purchase
securities issued by financial institutions which provide such services;
however, in selecting investments for the Trust, no preference will be shown
for such securities.

MANAGEMENT OF THE TRUST

For the fiscal year ended March 31, 1996, the Trustees of the Trust
received the following compensation:

<TABLE>
<CAPTION>
Aggregate Total Compensation
Name of Person, Compensation From Registraint and Trust
Age From Trust Complex Paid to Trustees

<S> <C> <C>
Dale H. Rabiner* (44) $0 $0

Lorrence T. Kellar (58) $7200 $9000

Philip J. Ringo (54) $4800 $6000

Alan R. Schriber (50) $5600 $7000

William P. Sheehan (69) $5600 $7000

*Interested Person of the Trust

</TABLE>

- 25 -
<PAGE> 73
The Trust and Bartlett Management Trust are the two investment
companies in the Bartlett Mutual Funds complex. Board and committee meetings
of both Trusts are held at the same time. Although the fees paid to Trustees
are expenses of the Trusts, the Advisor makes the actual payment pursuant to
its management agreements with the Trusts, which obligate the Advisor to pay
all of the operating expenses of the Trusts (with limited exceptions).
Mr. Rabiner, who is an employee of the Advisor, receives no remuneration for his
services as Trustee and officer of the Trust. Similarly, the other officers of
the Trust, all of whom are employees of the Advisor or one of its affiliates,
receive no remuneration for their services.

The names of the officers and their ages are as follows: Marie K.
Karpinski, CPA (47); Kathi D. Bair (32); Brian M. Eakes (26); Blanche P. Roche
(48); Thomas A. Steele, CPA (37); R. Stuart Crickmer, CFA, CPA (37); Madelynn
M. Matlock, CFA (46); James M. Miller, CFA (47); Donna M. Prieshoff (46); Troy
R. Snider, CFA (36); and Woodrow H. Uible, CFA (43).

PORTFOLIO TRANSACTIONS AND BROKERAGE

Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Trust's portfolio decisions and the placing
of the Trust's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Trust, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. The Trust has
no obligation to deal with any broker or dealer in the execution of its
transactions.

The Advisor is specifically authorized to select brokers or dealers
who also provide brokerage and research services to the Trust and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the
commission is reasonable in relation to the value of the brokerage and research
services provided. The determination may be viewed in terms of a particular
transaction or the Advisor's overall responsibilities with respect to the Trust
and to other accounts over which it exercises investment discretion.

Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Trust effects securities
transactions may also be used by the Advisor in servicing all of its accounts
and all such services may not be used by the Advisor in connection with the
Trust. Similarly, research and information provided by brokers or dealers
serving

- 26 -
<PAGE> 74
other clients may be useful to the Advisor in connection with its services to
the Trust. Although research services and other information are useful to the
Trust and the Advisor, it is not possible to place a dollar value on the
research and other information received. It is the opinion of the Board of
Trustees and the Advisor that the review and study of the research and other
information will not reduce the overall cost to the Advisor of performing its
duties to the Trust under the Agreement. Due to research services provided by
brokers, the Trust directed to the brokers $87,716,431 of brokerage
transactions (on which the commissions were $300,025) during the fiscal year
ended March 31, 1996.

Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to market makers may include the spread between the bid and
asked prices. The Advisor will not receive reciprocal brokerage business as a
result of the brokerage business placed by the Trust with others.

- 27 -
<PAGE> 75
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the
same security on a given date, the purchases and sales will normally be made by
random client selection.

The following table depicts, for the fiscal years ended March 31,
1996, 1995, and 1994, the total brokerage commissions paid by the Trust, the
amount of those commissions paid to the Advisor prior to its acquisition by
Legg Mason, the percentage of all commissions paid that were received by the
Advisor and the percentage of all portfolio transactions represented by the
commissions received by the Advisor.

<TABLE>
<CAPTION>
Advisor
Fiscal Year Total Commissions Commissions Percentage
Ended Commissions Paid To As % Of All Of Portfolio
March 31, Paid Advisor Commissions Transactions
- ---------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
1996 $300,025 $ 327 0.11% 0.10%
1995 $209,389 $ 900 0.43% 0.48%
1994 $189,656 $ 1,628 0.86% 1.78%

</TABLE>

- 28 -
<PAGE> 76

As of March 31, 1996, Bartlett Basic Value Fund owned securities of
its regular brokers or dealers or their parents (as defined in Rule 10b-1
promulgated under the Investment Company Act of 1940) as follows: ITT
Financial Services, Inc. -- $564,187, Salomon, Inc -- $1,500,000, and Norwest
Financial Inc. -- $2,996,407.

DETERMINATION OF SHARE PRICE

The prices (net asset values) of the shares of each Fund is determined
as of the close of trading of the New York Stock Exchange (generally, 4:00
P.M., New York time) on each day the Trust is open for business. The price of
the shares of a Fund will also be calculated on other days if there is
sufficient trading in the Fund's portfolio securities that its net asset value
might be materially affected. The Trust is open for business on every day
except Saturdays, Sundays and the following holidays: New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas, or any national holiday which results in the
closing of the New York Stock Exchange. For a description of the methods used
to determine the net asset value (share price), see "Calculation of Share
Price" in the Prospectus.

- 29 -
<PAGE> 77
INVESTMENT PERFORMANCE

"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return (over the one and five year periods and the period from initial
public offering through the end of a Fund's most recent fiscal year) that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:

P(1+T)n=ERV

Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end
of the applicable period of the hypothetical $1,000
investment made at the beginning of the applicable period.

The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.

The Fund's "yield" is determined in accordance with the method defined
by the Securities and Exchange Commission. A yield quotation is based on a
30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:

Yield = 2[(a-b/cd+1)6-1]
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

Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day
prior to the start of the 30-day (or one month) period for which yield is being
calculated, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest). With respect to the

- 30 -
<PAGE> 78
treatment of discount and premium on mortgage or other receivable-backed
obligations which are expected to be subject to monthly paydowns of principal
and interest, gain or loss attributable to actual monthly paydowns is accounted
for as an increase or decrease to interest income during the period and
discount or premium on the remaining security is not amortized.

A Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time
periods used in calculating non-standardized investment performance should be
considered when comparing the Fund's performance to those of other investment
companies or investment vehicles. The risks associated with the Fund's
investment objective, policies and techniques should also be considered. At
any time in the future, investment performance may be higher or lower than past
performance, and there can be no assurance that any performance will continue.

From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Funds
may be compared to indices of broad groups of unmanaged securities considered
to be representative of or similar to the portfolio holdings of the appropriate
Fund or considered to be representative of the stock market in general or the
fixed income securities market in general.

The Bartlett Value International Fund will use the Standard & Poor's
500 Stock Index, the Morgan Stanley Capital International EAFE Index, the
Morgan Stanley Capital International World Index and the Consumer Price Index.
The Morgan Stanley Capital International EAFE Index (EAFE Index), compiled from
a composite of securities markets of Europe, Australia and the Far East, is
widely recognized by investors in foreign markets as the measurement index for
portfolios of non-North American securities. The Morgan Stanley Capital
International World Index, compiled from a composite of securities of the U.S.,
Europe, Canada, Mexico, Australia and the Far East, is widely recognized by
investors as the measurement index for portfolios of international securities.
Both indexes are prepared by Morgan Stanley Capital International, an
investment management and research company located in Geneva, Switzerland. The
Consumer Price Index, prepared by the U.S. Bureau of Labor Statistics, is a
commonly used measure of inflation. The index shows changes in the cost of
selected consumer goods and does not represent an investment return. The
investment performance figures for the Fund and the indices (other than the
Consumer Price Index) will include reinvestment of dividends and capital gains
distributions.

The Bartlett Basic Value Fund will use the Standard & Poor's 500 Stock
Index, the Dow Jones Industrial Average, the Value Line

- 31 -
<PAGE> 79
Composite Index and the BARRA Value Index. The Value Line Composite Index is
an index composed of approximately 1700 issues. As it is a broad index
containing the issues of many smaller capitalization companies, it may be more
representative of the Bartlett Basic Value Fund portfolio than narrower, large
capitalization indices such as the Dow Jones Industrial Average. The BARRA
Value Index is prepared by ranking the stocks in the Standard and Poor's 500
Index primarily on the basis of price to book value. That ranking is split
into two groups with equal aggregate market capitalization, and the group with
the lower price-to-book value ratio comprises the stocks in the BARRA Value
Index. The BARRA Value Index, which is weighted by market capitalization, is
designed as a long-term measure of investment performance based upon some of
the value investing criteria used by the Advisor.

The Bartlett Fixed Income Fund will use the Lehman Brothers
Intermediate Government/Corporate Bond Index. The Lehman Brothers
Intermediate Government/Corporate Bond Index measures the price, income and
total return of a group of fixed income securities maturing in one to ten
years. It contains all public obligations of the U.S. Treasury (excluding
flower bonds and foreign-targeted issues), all publicly traded debt of agencies
of the U.S. Government, quasi-federal corporations and corporate debt
guaranteed by the U.S. Government, and all public, fixed rate, non-convertible,
investment grade, domestic corporate debt. The Index does not include
mortgage-backed securities or collateralized mortgage obligations. The
investment performance figures for the Funds and the indices will include
reinvestment of dividends and capital gains distributions.

The Bartlett Short Term Bond Fund will use the Merrill Lynch 1-3 Year
Government Index. The Merrill Lynch 1-3 Year Government Index, developed by
Merrill Lynch Pierce, Fenner & Smith Incorporated, measures total return of a
broad index of United States government securities, presently including issues
with more than $50 million outstanding and coupon rates greater than 4- 1/4%.
The Index does not include United States Treasury Bills or United States
Treasury strips.

The performance of a Fund may also be presented along with performance
information of other Bartlett Mutual Funds in materials distributed to the
public such as annual, semi-annual and quarterly reports, advertising and sales
literature. In addition, the performance of either Fund may be compared to
other groups of mutual funds tracked by any widely used independent research
firm which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc., Value Line or Morningstar,
Inc. The objectives, policies, limitations and expenses of other mutual funds
in a group may not be the same as those of the applicable Fund. Performance
rankings and ratings reported periodically in

- 32 -
<PAGE> 80
national financial publications such as Barron's and Fortune also may be used.
Bartlett Basic Value Fund. The average annual total returns of the
Bartlett Basic Value Fund for the one, five and ten year periods ended March
31, 1996 were 24.1%, 12.7% and 10.1%, respectively.

The following table shows the one year and cumulative rates of total
return for the indicated period as well as the value of a $10,000 investment
made on May 5, 1983, as of the end of the specified period.

<TABLE>
<CAPTION>
Year End Value of
Year Net Asset Dividends $10,000 Total Return
Ended Value Paid Investment(a) One Year Cumulative(b)
----- --------- --------- ------------- -----------------------
<S> <C> <C> <C> <C> <C>
3/31/84 (b)$10.20 $0.46 $10,668 6.68%(b) 6.68%
3/31/85 10.88 0.75 12,202 14.38% 22.02%
3/31/86 13.13 1.23 16,194 32.72% 61.94%
3/31/87 12.96 1.56 18,037 11.38% 80.37%
3/31/88 12.44 0.36 17,813 -1.24% 78.13%
3/31/89 12.56 1.71 20,593 15.61% 105.93%
3/31/90 12.34 1.05 21,930 6.49% 119.30%
3/31/91 12.60 0.46 23,310 6.29% 133.10%
3/31/92 13.47 0.36 25,624 9.91% 156.24%
3/31/93 14.76 0.58 29,268 14.22% 192.69%
3/31/94 14.89 0.37 30,268 3.42% 202.68%
3/31/95 15.39 1.30 34,103 12.67% 241.03%
3/31/96 17.94 1.07 42,306 24.05% 323.06%

<FN>
(a) Value at end of fiscal year of $10,000 investment made on May 5, 1983.

(b) Not annualized and from the date of the initial public offering of
shares (May 5, 1983).
</TABLE>

Bartlett Fixed Income Fund. The average annual total returns of the
Bartlett Fixed Income Fund for the one and five year, and for the period
beginning April 22, 1986, ended March 31, 1996 were 8.0%, 6.8% and 7.4%,
respectively.

The following table shows the one year and cumulative rates of total
return for the indicated period as well as the value of a $10,000 investment
made on April 22, 1986, as of the end of the specified period.

- 33 -

<PAGE> 81
<TABLE>
<CAPTION>
Year End Value of
Year Net Asset Dividends $10,000 Total Return
Ended Value Paid Investment(a) One Year Cumulative(b)
----- --------- --------- ------------- -----------------------
<S> <C> <C> <C> <C> <C>
3/31/87(b) $10.18 $0.84 $11,059 10.59%(b) 10.59%
3/31/88 9.76 0.83 11,546 4.41% 15.46%
3/31/89 9.36 0.86 12,104 4.83% 21.04%
3/31/90 9.46 0.83 13,323 10.07% 33.23%
3/31/91 9.63 0.73 14,636 9.86% 46.36%
3/31/92 9.93 0.68 16,168 10.46% 61.68%
3/31/93 10.48 0.59 18,078 11.81% 80.78%
3/31/94 10.02 0.64 18,385 1.70% 83.85%
3/31/95 9.70 0.55 18,828 2.41% 88.28%
3/31/96 9.90 0.57 20,341 8.04% 103.41%
</TABLE>

(a) Value at end of fiscal year of $10,000 investment made on April 22,
1986.

(b) Not annualized and from the date of the initial public offering of
shares (April 22, 1986).

The yield of the Bartlett Fixed Income Fund for the 30-day period
ended March 31, 1996 was 5.53%.

Bartlett Value International Fund. The average annual total returns
of the Fund for the one year period ended March 31, 1996, the five year period
ended March 31, 1996 and for the period from October 6, 1989 through March 31,
1996 were 12.8%, 9.8% and 6.8%, respectively.

The following table shows the one year and cumulative rates of total
return for the indicated period as well as the value of a $10,000 investment
made on October 6, 1989, as of the end of the specified period.

(a) Value at end of fiscal year of $1,000 investment made on October 6,
1989.

(b) Not annualized and from the date of the initial public offering of
shares (October 6, 1989).

Bartlett Short Term Bond Fund. The average annual total returns of the Fund
for the one year period ended March 31, 1996 and for the period from February
4, 1994 through March 31, 1996 were 6.9% and 4.4%, respectively.

The following table shows the one year and cumulative rates

- 34 -
<PAGE> 82
of total return for the indicated period as well as the value of a $10,000
investment made on February 4, 1994, as of the end of the specified period.

(a) Value at end of fiscal year of $1,000 investment made on February 4,
1994.

(b) Not annualized and from the date of the initial public offering of
shares (February 4, 1994).

The yield of the Bartlett Short Term Bond Fund for the 30-day period
ended March 31, 1996 was 5.33%.

CUSTODIAN

The Custodian acts as the Trust's depository, safekeeps its portfolio
securities, collects all income and other payments with respect thereto,
disburses funds at the Trust's request and maintains records in connection with
its duties.

State Street Bank and Trust Company, P.O. Box 1713, Boston,
Massachusetts is the Custodian of Bartlett Capital Trust.

ACCOUNTANTS

The firm of Arthur Andersen LLP has been selected as independent
public accountants for the Trust for the fiscal year ending March 31, 1996.
Arthur Andersen LLP, 425 Walnut Street, Cincinnati, Ohio, performs an annual
audit of the Trust's financial statements, reviews the Trust's federal tax
return and provides financial and accounting consulting services as requested.

TRANSFER AGENT

Boston Financial Data Services, Inc., 2 Heritage Drive, North Quincy,
Massachusetts acts as the Trust's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their

- 35 -
<PAGE> 83
accounts, processes purchases and redemptions of the Trust's shares, acts as
dividend and distribution disbursing agent and performs other accounting and
shareholder service functions.

- 36 -
<PAGE> 84

FINANCIAL STATEMENTS

The Portfolios of Investments as of March 31, 1996; the Statements of
Assets and Liabilities as of March 31, 1996; the Statements of Operations for
the year ended March 31, 1996; the Statements of Changes in Net Assets for the
years ended March 31, 1996 and 1995; the Financial Highlights for all periods;
the Notes to Financial Statements and the Report of Independent Public
Accountants for the Bartlett Capital Trust and the Bartlett Management Trust,
all of which are included in the Annual Report for the year ended March 31,
1996, are hereby incorporated by reference in this Statement of Additional
Information.

- 37 -