<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No.
----
Post-Effective Amendment No. 21
----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 22
----
(Check appropriate box or boxes.)
BARTLETT CAPITAL TRUST (formerly Midwest Group Capital Trust)
- -------------------------------------------------------------------------------
(Exact name of Registrant as Specified in Charter)
FILE NOS. 2-80648; 811-3613
36 EAST FOURTH STREET, CINCINNATI, OHIO 45202
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code (513) 621-4612
Marie K. Karpinski, 7 East Redwood Street, Baltimore, MD 21202
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Release Date: ___________
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
------
/ / 60 days after filing pursuant to paragraph (a) of Rule 485
/x/ on August 1, 1996 pursuant to paragraph (a) of Rule 485
Registrant continues its election, made by the filing of its Initial
Registration Statement, effective May 4, 1983, to register an indefinite number
and amount of securities under Rule 24f-2. Pursuant to paragraph (b)(1) of
Rule 24f-2, Registrant filed a Rule 24f-2 Notice for the fiscal year ended
March 31, 1996, on May 30, 1996.
TOTAL NUMBER OF PAGES: ____.
EXHIBIT INDEX: PAGE ____.
<PAGE> 2
BARTLETT CAPITAL TRUST
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. SECTION IN PROSPECTUS
- ------------- ---------------------
<S> <C>
1 ..................... Cover Page
2 ..................... Fund Expenses
3 ..................... Investment Performance, Financial Highlights
4 ..................... Operation of the Trusts, Investment Objectives and Strategies, General Information, Investment
Policies and Techniques, Investment Limitations
5 ..................... Operation of the Trusts, Financial Highlights
5a .................... In Registrant's Annual Report
6 ..................... General Information, Cover Page, Dividends and Distributions, Taxes
7 ..................... Purchase of Shares, Calculation of Share Price, Exchange Privilege
8 ..................... Redemption of Shares
9 ..................... None
14 .................... Trustees and Officers
15 .................... General Information
16 .................... Trustees and Officers
20 .................... Taxes
SECTION IN STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------------
10 .................... Cover Page
11 .................... Table of Contents
12 .................... Description of the Trust
13 .................... Investment Limitations, State Restrictions, Additional Information about Fund Investments,
Portfolio Transaction and Brokerage
14 .................... The Investment Advisor, Management of the Trust
15 .................... Description of the Trust
16 .................... The Investment Advisor, Custodian, Accountants, Transfer and Accounting Services Agent
17 .................... Portfolio Transactions and Brokerage
18 .................... Description of the Trust
19 .................... Calculation of Share Price
20 .................... None
21 .................... None
22 .................... Investment Performance
23 .................... Financial Statements
</TABLE>
<PAGE> 3
PROSPECTUS
BARTLETT VALUE INTERNATIONAL FUND
BARTLETT BASIC VALUE FUND
BARTLETT FIXED INCOME FUND
BARTLETT SHORT TERM BOND FUND
BARTLETT CASH RESERVES FUND
AUGUST 1, 1996
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:
Nationwide (Toll Free).............................(800)800-3609
Cincinnati.........................................(513)345-6212
- ------------------------------------------------------------
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
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Fund Expenses. . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . 3
Investment Objectives and Strategies . . . 10
General. . . . . . . . . . . . . . . . . . 15
Trustees and Officer . . . . . . . . . . . 16
Purchase of Shares . . . . . . . . . . . . 18
Redemption of Shares . . . . . . . . . . . 20
Exchange Privilege . . . . . . . . . . . . 21
Operation of the Trusts . . . . . . . . . 22
Calculation of Share Price. . . . . . . . . . . 24
Dividends and Distributions . . . . . . . . . . 25
Taxes . . . . . . . . . . . . . . . . . . . . . 26
Investment Policies, Techniques and Risk
Considerations . . . . . . . . . . . . 27
Portfolio Management Policies for Bartlett
Cash Reserves Fund . . . . . . . . . . 40
Investment Limitations . . . . . . . . . . . . 40
General Information . . . . . . . . . . . . . . 41
Investment Performance . . . . . . . . . . . . 42
</TABLE>
<PAGE> 4
FUND EXPENSES
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.
<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>
SHAREHOLDER TRANSACTION
EXPENSES
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
ANNUAL FUND OPERATING
EXPENSES
Management Fees* 1.83% 1.17% 1.00% .85% .78%
12b-1 Fees None None None None None
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> 5
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>
FINANCIAL HIGHLIGHTS
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> 6
BARTLETT VALUE INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
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 waiver. 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> 7
BARTLETT BASIC VALUE FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
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%
<CAPTION>
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>
- 5 -
<PAGE> 8
BARTLETT FIXED INCOME FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92 3/31/91
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.70 $ 10.02 $ 10.48 $ 9.93 $ 9.63 $ 9.46
Income From Investment Operations:
Net Investment Income .57 .54 .48 .59 .67 .73
Net Realized and Unrealized Gains
(Losses) on Securities .20 (.32) (.30) .55 .31 .17
Total From Investment Operations .77 .22 .18 1.14 .98 .90
Less Distributions:
Dividends From Net Investment Income (.57) (.54) (.48) (.59) (.68) (.73)
Distributions From Realized Gains -- -- (.16) -- -- --
Total Distributions (.57) (.54) (.64) (.59) (.68) (.73)
Net Asset Value, End of Period $ 9.90 $ 9.70 $ 10.02 $ 10.48 $ 9.93 $ 9.63
Total Return 8.04% 2.41% 1.70% 11.81% 10.46% 9.86%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $79,377 $91,349 $111,414 $135,487 $147,992 $159,218
Ratio of Expenses to Average
Net Assets(b) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income
to Average Net Assets 5.74% 5.60% 4.58% 5.81% 6.85% 7.68%
Portfolio Turnover Rate 131% 118% 163% 175% 126% 165%
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 $ --
<CAPTION>
Year Year Year Period
Ended Ended Ended Ended
3/31/90 3/31/89 3/31/88 3/31/87(a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.36 $ 9.76 $ 10.18 $ 10.00
Income From Investment Operations:
Net Investment Income .82 .86 .83 .87
Net Realized and Unrealized Gains
(Losses) on Securities .10 (.40) (.42) .18
Total From Investment Operations .92 .46 .41 1.05
Less Distributions:
Dividends From Net Investment Income (.82) (.86) (.83) (.87)
Distributions From Realized Gains -- -- -- --
Total Distributions (.82) (.86) (.83) (.87)
Net Asset Value, End of Period $ 9.46 $ 9.36 $ 9.76 $ 10.18
Total Return 10.07% 4.83% 4.41% 11.27%(e)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $156,587 $158,536 $157,116 $145,138
Ratio of Expenses to Average
Net Assets(b) 1.00% 1.00% 1.00% .93%(e)
Ratio of Net Investment Income
to Average Net Assets 8.56% 8.95% 8.56% 8.57%(e)
Portfolio Turnover Rate 95% 104% 205% 192%(e)
Amount of Debt Outstanding
at End of Period $ -- $ -- $ -- $ --
Average Amount of Debt
Outstanding During the
Period (c) (000's) $ -- $ -- $ -- $ --
Average Number of Shares
Outstanding During the
Period (d) (000's) -- -- -- --
Average Amount of Debt Per
Share During the Period $ -- $ -- $ -- $ --
</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.
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<PAGE> 9
BARTLETT CASH RESERVES FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
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 Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment Operations:
Net Investment Income .05 .04 .03 .03 .05
Total From Investment Operations .05 .04 .03 .03 .05
Less Distributions:
Dividends From Net Investment Income (.05) (.04) (.03) (.03) (.05)
Total Distributions (.05) (.04) (.03) (.03) (.05)
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return 5.13% 4.22% 2.69% 3.26% 5.07%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $48,464 $90,172 $77,558 $65,962 $75,867
Ratios Net of Fees Waived by Advisor (b):
Ratio of Net Expenses to Average
Net Assets .78% .78% .77% .72% .67%
Ratio of Net Investment Income
to Average Net Assets 5.13% 4.16% 2.71% 3.26% 5.05%
<CAPTION>
Year Nine Year Period
Ended Months Ended Ended
3/31/91 Ended 6/30/89 6/30/88
3/31/90 (a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment Operations:
Net Investment Income .07 .06 .08 .02
Total From Investment Operations .07 .06 .08 .02
Less Distributions:
Dividends From Net Investment Income (.07) (.06) (.08) (.02)
Total Distributions (.07) (.06) (.08) (.02)
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return 7.32% 8.13%(c) 8.42% 6.95%(c)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $130,250 $105,503 $100,531 $71,780
Ratios Net of Fees Waived by Advisor (b):
Ratio of Net Expenses to Average
Net Assets .73% .75%(c) .86% .35%(c)
Ratio of Net Investment Income
to Average Net Assets 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.
- 7 -
<PAGE> 10
BARTLETT SHORT TERM BOND FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<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.
- 8 -
<PAGE> 11
INVESTMENT OBJECTIVES AND STRATEGIES
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
- 9 -
<PAGE> 12
BARTLETT VALUE INTERNATIONAL FUND
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 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.
For temporary defensive or temporary liquidity purposes, the Bartlett
Value International Fund may hold all or a portion of its assets in domestic or
foreign money market instruments, cash equivalents, securities of other no-load
registered investment companies or repurchase agreements.
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
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<PAGE> 13
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 to be 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 15 and "Investment Policies, Techniques and Risk
Considerations" beginning at page 27 for a more detailed discussion of risks
associated with the securities and investment techniques discussed above.
BARTLETT BASIC VALUE FUND
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 15 and "Investment Policies, Techniques
and Risk Considerations," beginning on page 27.
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<PAGE> 14
BARTLETT FIXED INCOME FUND
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
Corporation ("S&P"), Moody's Investor Services ("Moody's"), Duff &
Phelps ("D&P") or Fitch Investors Services ("Fitch") (or if
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 Standard & Poor's Corporation ("S&P"), Moody's
Investor Services ("Moody's"), Duff & Phelps ("D&P") or Fitch Investors
Services ("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
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<PAGE> 15
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 15 and "Investment Policies, Techniques
and Risk Considerations" beginning on page 27.
BARTLETT SHORT TERM BOND FUND
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.
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
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<PAGE> 16
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 Standard & Poor's
Corporation ("S&P"), Moody's Investor Services ("Moody's"), Duff &
Phelps ("D&P") or Fitch Investors Services ("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
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<PAGE> 17
* 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 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 15 and
- 15 -
<PAGE> 18
"Investment Policies, Techniques and Risk Considerations" beginning on page 27.
BARTLETT CASH RESERVES FUND
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-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.
GENERAL
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
- 16 -
<PAGE> 19
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
27.
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 27.
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.
TRUSTEES AND OFFICERS
The names of the Trustees and executive 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 Vice President
of the 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 Secretary Assistant 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>
- 17 -
<PAGE> 20
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 K Mart 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 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.
Thomas A. Steele, CPA, 36 East Fourth Street, Cincinnati, Ohio is the Secretary
and Treasurer for Bartlett & Co.
- 18 -
<PAGE> 21
R. Stuart Crickmer, CPA, CFA, 36 East Fourth Street, Cincinnati, Ohio is a
Portfolio Manager and Fixed Income Analyst for Bartlett & Co.
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.
PURCHASE OF SHARES
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
loss incurred. You may be prohibited or restricted from making future
purchases in any of the Funds.
- 19 -
<PAGE> 22
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.
- 20 -
<PAGE> 23
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 on the previous page.
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
- 21 -
<PAGE> 24
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.
REDEMPTION OF SHARES
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, 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
- 22 -
<PAGE> 25
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, the
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 or facsimile.
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, 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
- 23 -
<PAGE> 26
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.
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<PAGE> 27
EXCHANGE PRIVILEGE
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.
OPERATION OF THE TRUSTS
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.
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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.
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 servies 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.
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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 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.
CALCULATION OF SHARE PRICE
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
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calculated once daily, as of the close of trading on the New York Stock
Exchange (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 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,
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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.
DIVIDENDS AND DISTRIBUTIONS
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.
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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.
TAXES
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 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
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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
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 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 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.
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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 total 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
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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 Standard & Poor's (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 portfolio 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
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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
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
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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, 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
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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 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
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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.
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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
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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 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
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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.
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
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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 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
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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
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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.
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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 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
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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 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.
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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.
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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
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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 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
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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
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).
INVESTMENT LIMITATIONS
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.
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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 (including 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.
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 and reverse repurchase agreements (including 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 known as leverage. To reduce the risks
of borrowing and reverse repurchase agreements, each Fund has adopted the
limitations described above.
GENERAL INFORMATION
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
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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.
INVESTMENT PERFORMANCE
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
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<PAGE> 54
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.
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<PAGE> 55
INVESTMENT ADVISOR
Bartlett & Co.
36 East Fourth Street
Cincinnati, Ohio 45202-3896
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.
- --------------------------------------------------------------------------------
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<PAGE> 56
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> 57
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>
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<PAGE> 58
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
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<PAGE> 59
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.
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<PAGE> 60
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
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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
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<PAGE> 62
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.
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<PAGE> 63
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
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<PAGE> 64
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
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<PAGE> 65
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
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<PAGE> 66
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.
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<PAGE> 67
(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
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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.
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<PAGE> 69
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.
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<PAGE> 70
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
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<PAGE> 71
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.
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<PAGE> 72
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.
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
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<PAGE> 73
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
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<PAGE> 74
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 more than 25% 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.
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<PAGE> 75
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
Senior Securities. Neither 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.
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<PAGE> 76
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
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<PAGE> 77
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.
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<PAGE> 78
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
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<PAGE> 79
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
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<PAGE> 80
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
Position From Trust Complex Paid to Trustees
<S> <C> <C>
Dale H. Rabiner* $0 $0
Lorrence T. Kellar $7200 $9000
Philip J. Ringo $4800 $6000
Alan R. Schriber $5600 $7000
William P. Sheehan $5600 $7000
George J. Wile $5600 $7000
*Interested Person
</TABLE>
- 25 -
<PAGE> 81
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.
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> 82
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> 83
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> 84
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 and the custodian of the applicable
Fund 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 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> 85
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> 86
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> 87
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> 88
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> 89
<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.
<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>
3/31/90 $ 9.79 $.24 $10,029 0.29%(b) 0.29%
3/31/91 $ 9.09 $.30 $ 9,644 (3.84)% (3.56)%
3/31/92 $ 9.93 $.22 $10,790 .88% 7.90%
3/31/93 $10.08 $.12 $11,082 2.71% 10.82%
3/31/94 $12.46 $.07 $13,787 24.42% 37.87%
3/31/95 $11.64 $.70 $13,625 (1.18)% 36.25%
3/31/96 $12.59 $.51 $15,363 12.76% 53.63%
</TABLE>
(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> 90
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.
<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>
3/31/94 $ 9.94 $.06 $10,004 0.04%(b) 0.04%
3/31/95 $ 9.66 $.53 $10,263 2.58% 2.62%
3/31/96 $ 9.77 $.54 $10,967 6.87% 9.67%
</TABLE>
(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> 91
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> 92
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 -
<PAGE> 93
BARTLETT CAPITAL TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part A:
Financial Highlights for Bartlett Basic Value
Fund, Bartlett Fixed Income Fund, Bartlett
Value International Fund, Bartlett Short Term
Bond Fund and Bartlett Cash Reserves Fund.
(b) Financial Statements included in Part B:
The financial statements of Bartlett Basic
Value Fund, Bartlett Fixed Income Fund,
Bartlett Value International Fund, Bartlett
Short Term Bond Fund and Bartlett Cash
Reserves Fund for the year ended March 31,
1996 and the report of the Independent Public
Accountants thereon are incorporated into the
applicable Statement of Additional
Information by reference to the Annual Report
for the same period.
The Financial Data Schedules with respect to the above
series are included as Exhibits 27.1 to 27.5.
- C-1 -
<PAGE> 94
(b) Exhibits:
(1) (i) Copy of Registrant's Declaration of
Trust, which was filed as an Exhibit
to its Registration Statement, is
hereby incorporated by reference.
(ii) Copy of Amendment No. 1 to
Registrant's Declaration of Trust,
which was filed as an Exhibit to
Registrant's Pre-Effective Amendment
No. 1, is hereby incorporated by
reference.
(iii) Copy of Amendment No. 2 to
Registrant's Declaration of Trust,
dated July 13, 1984, which was filed
as an exhibit to Registrant's
Post-Effective Amendment No. 4, is
hereby incorporated by reference.
(iv) Copy of Amendment No. 3 to
Registrant's Declaration of Trust,
dated June 28, 1985, which was filed
as an exhibit to Registrant's
Post-Effective Amendment No. 4, is
hereby incorporated by reference.
(v) Copy of Amendment No. 4 to
Registrant's Declaration of Trust,
dated February 9, 1986, which was
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6, is
hereby incorporated by reference.
(vi) Copy of Amendment No. 5 to
Registrant's Declaration of Trust,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 13, is hereby
incorporated by reference.
(vii) Copy of Amendment No. 6 to
Registrant's Declaration of Trust,
dated November 22, 1993, which was
filed as an exhibit to Registrant's
Post-Effective Amendment No. 18, is
hereby incorporated by reference.
(2) (i) Copy of Registrant's By-Laws, which
was filed as an Exhibit to
Registrant's Pre-Effective Amendment
No. 1, is hereby incorporated by
reference.
- C-2 -
<PAGE> 95
(ii) Copy of Amendments to Registrant's
By-Laws, which was filed as an
Exhibit to Registrant's
Post-Effective Amendment No. 3, is
hereby incorporated by reference.
(3) Voting Trust Agreements - None.
(4) Specimen of each Security issued by the
Registrant and of each Security being
registered - None.
(5) (i) Copy of Registrant's Management
Agreement with its Adviser, Bartlett
& Co., with respect to the Bartlett
Basic Value Fund and Bartlett Fixed
Income Fund is filed herewith.
(ii) Copy of Bartlett Value International
Fund's Management Agreement with its
Adviser, Bartlett & Co. is filed
herewith.
(iii) Copy of Bartlett Short Term Bond
Fund's Management Agreement with its
Adviser, Bartlett & Co. is filed
herewith.
(6) Underwriting or Distribution Contracts and
Agreements with Principal Underwriters and
Dealers - None.
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.
(8) Copy of Registrant's Agreement with
the Custodian, State Street Bank and
Trust Company, Boston,
Massachusetts, is filed herewith.
- C-3 -
<PAGE> 96
(9) Other Material Contracts - None.
(10) (i) Opinion and Consent of Brown,
Cummins & Brown Co., L.P.A., which
was filed with Registrant's Rule
24f-2 Notice for the fiscal year
ended March 31, 1996, is hereby
incorporated by reference.
(ii) Opinion and Consent of Brown,
Rudnick, Freed & Gesmer, which was
filed with Registrant's Rule 24f-2
Notice for the fiscal year ended
March 31, 1996, is hereby
incorporated by reference.
(11) Consent of Arthur Andersen LLP is filed
herewith.
(12) Financial Statements Omitted from Item 23 -
None.
(13) Copies of Letters of Initial Shareholders,
which were filed as Exhibits to Registrant's
Pre-Effective Amendment No. 1, are hereby
incorporated by reference.
(14) (i) Copy of the Midwest IRA Plan, which
was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 7, is hereby
incorporated by reference.
(ii) Copy of the Midwest 403(b)(7) Plan,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 2, is hereby
incorporated by reference.
- C-4 -
<PAGE> 97
(iii) Form of 401(k) Plan Used by Bartlett
Mutual Funds, which was filed as an
Exhibit to Registrant's
Post-Effective Amendment No. 20, is
hereby incorporated by reference.
(15) 12b-1 Plan and Indemnification Agreements -
None.
(16) Schedule of Computations for each performance
quotation, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 9,
is hereby incorporated by reference.
Schedule of Computations for each performance
quotation of the Bartlett Value International
Fund, Bartlett Basic Value Fund, Bartlett
Fixed Income Fund and Bartlett Short Term
Bond Fund is filed herewith.
(17) (i) Power of Attorney for Registrant and
Certificate with respect thereto are
filed herewith.
(ii) Powers of Attorney for Trustees and
Officers of Registrant are filed
herewith.
(27) Financial Data Schedules are filed herewith.
Item 25. Persons Controlled by or Under Common Control with the
Registrant
None.
Item 26. Number of Holders of Securities (as of April 30, 1996)
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Bartlett Basic Value Fund 2,580
Bartlett Fixed Income Fund 1,313
Bartlett Value International Fund 1,553
Bartlett Short Term Bond Fund 224
</TABLE>
Item 27. Indemnification
(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and Trustees
as follows:
Section 6.4 Indemnification of Trustees, Officers, etc. The
Trust shall indemnify each of its Trustees and officers
(including persons who serve at the Trust's request as
directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or
otherwise (hereinafter referred to as a "Covered Person")
against all liabilities, including but not limited to amounts
- C-5 -
<PAGE> 98
paid in satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable accountants'
and counsel fees, incurred by any Covered Person in connection
with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or
otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being
or having been such a Trustee or officer, director or
trustee, and except that no Covered Person shall be
indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office ("disabling conduct").
Anything herein contained to the contrary notwithstanding, no
Covered Person shall be indemnified for any liability to the
Trust or its Shareholders to which such Covered Person would
otherwise be subject unless (1) a final decision on the merits
is made by a court or other body before whom the proceeding
was brought that the Covered Person to be indemnified was not
liable by reason of disabling conduct or, (2) in the absence
of such a decision, a reasonable determination is made, based
upon a review of the facts, that the Covered Person was not
liable by reason of disabling conduct, by (a) the vote of a
majority of a quorum of Trustees who are neither "interested
persons" of the Company as defined in the Investment Company
Act of 1940 nor parties to the proceeding ("disinterested,
non-party Trustees"), or (b) an independent legal counsel in a
written opinion.
Section 6.5 Advances of Expenses. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered Person
in defending a proceeding, upon the undertaking by or on
behalf of the Covered Person to repay the advance unless it is
ultimately determined that such Covered Person is entitled to
indemnification, so long as one of the following conditions is
met: (i) the Covered Person shall provide security for his
undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority
of a quorum of the disinterested non-party Trustees of the
Trust, or an independent legal counsel in a written opinion,
shall determine, based on a review of readily available facts
(as opposed to a full trial-type inquiry), that there is
reason to believe that the Covered Person ultimately
- C-6 -
<PAGE> 99
will be found entitled to indemnification.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article VI,
"Covered Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" is one
against whom the action, suit or other proceeding in question
or another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened, and
a "disinterested" person is a person against whom none of such
actions, suits or other proceedings or another action, suit or
other proceeding on the same or similar grounds is then or
has been pending or threatened. Nothing contained in this
article shall affect any rights to indemnification to which
personnel of the Trust, other than Trustees and officers, and
other persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
The Registrant may not pay for insurance which protects the
Trustees and officers against liabilities rising from action
involving willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
their offices.
(b) The Registrant maintains a standard mutual fund and
investment advisory professional and directors and
officers liability policy. The policy provides
coverage to the Registrant, its trustees and officers
and its Adviser, among others. Coverage under the
policy includes losses by reason of any act, error,
omission, misstatement, misleading statement, neglect
or breach of duty.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant pursuant to the provisions of
Massachusetts law and the Agreement and Declaration
of Trust of the Registrant or the By-Laws of the
Registrant, or otherwise, the Registrant has been
advised that in the opinion of the Securities and
Exchange Commission such indemnification is against
public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim
for
- C-7 -
<PAGE> 100
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by a trustee, officer or controlling person of
the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Item 28. Business and Other Connections of the Investment Adviser
Bartlett & Co. is a registered broker-dealer and a registered
investment adviser. It has provided investment advice to
individuals, corporations, pension and profit sharing plans
and trust accounts since 1898.
The following list sets forth the business and other
connections of the directors and officers of Bartlett & Co.
(1) James A. Miller -
(a) President and Director of Bartlett &
Co., 36 East Fourth Street, Cincinnati, Ohio
45202.
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<PAGE> 101
(b) Chairman of the Board and Director of
Bartlett Real Estate, Inc., 36 East Fourth
Street, Cincinnati, Ohio 45202.
(c) Chairman of the Board of BRE Group, Inc., 36
East Fourth Street, Cincinnati, Ohio 45202.
(d) Vice President of Bartlett Capital Trust, 36
East Fourth Street, Cincinnati, Ohio 45202.
(2) Willaim A. Friedlander -
(a) Portfolio Manager and Director of Bartlett &
Co., 36 East Fourth Street, Cincinnati, Ohio
45202.
(3) Raymond A. Mason -
(a) Director of Bartlett & Co., 36 East Fourth
Street, Cincinnati, Ohio 45202.
(b) Chairman of the Board, Legg Mason, Inc., 111
South Calvert St., Baltimore, MD 21202.
(c) Chairman of the Board, Legg Mason Wood
Walker, Incorporated, 111 South Calvert
Street, Baltimore, MD 21202.
(4) Edward A. Taber III -
(a) Director of Bartlett & Co., 36 East Fourth
Street, Cincinnati, Ohio 45202.
(b) Vice Chairman and Director, Legg Mason Fund
Adviser, Inc., 111 South Calvert Street,
Baltimore, MD 21202.
(c) Director and Executive Vice President, Legg
Mason Wood Walker, Incorporated, 111 South
Calvert Street, Baltimore, MD 21202.
- C-9 -
<PAGE> 102
(5) Robert G. Sabelhaus -
(a) Director of Bartlett & Co., 36 East Fourth
Street, Cincinnati, Ohio 45202.
(b) Executive Vice President and Director,
Legg Mason Wood Walker, Incorporated, 111
South Calvert Street, Baltimore, MD 21202.
(6) James B. Reynolds -
(a) President, Trustee and Chairman of the Board
of Bartlett Management Trust, 36 East Fourth
Street, Cincinnati, Ohio 45202.
(b) Vice President of Bartlett Capital Trust, 36
East Fourth Street, Cincinnati, Ohio 45202.
(7) Dale H. Rabiner -
(a) Vice President of Bartlett Management Trust,
36 East Fourth Street, Cincinnati, Ohio 45202.
(b) Chairman of the Board, Trustee and President
of Bartlett Capital Trust, 36 East Fourth
Street, Cincinnati, Ohio 45202.
(8) Thomas A. Steele -
(a) Secretary/Treasurer of Bartlett & Co., 36
East Fourth Street, Cincinnati, Ohio 45202.
- C-10 -
<PAGE> 103
45202.
Item 29. Principal Underwriters
None.
Item 30. Location of Accounts and Records
State Street Bank and Trust Company
P.O. Box 1713
Boston, MA 02105-1713
Item 31. Management Services Not Discussed in Parts A or B
None.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders, upon request and without charge.
(d) Within five business days after receipt of a written
application by shareholders holding 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, each of whom shall have been a shareholder
for at least six months prior to the date of
application (hereinafter the "Petitioning
Shareholders"), requesting to communicate with other
shareholders with a view to obtaining signatures to a
request for a meeting for the purpose of voting upon
removal of any Trustee of the Registrant, which
application shall be accompanied by a form of
communication and request which such Petitioning
Shareholders wish to transmit, Registrant will:
(i) provide such Petitioning
Shareholders with access to a list of the names and
addresses of all shareholders of the Registrant; or
(ii) inform such Petitioning Shareholders
of the approximate number of shareholders and the
estimated costs of mailing such communication, and
- C-11 -
<PAGE> 104
to undertake such mailing promptly after tender by
such Petitioning Shareholders to the Registrant of
the material to be mailed and the reasonable expenses
of such mailing.
- C-12 -
<PAGE> 105
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 21 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Baltimore, State of Maryland, on the 29th day of May, 1996.
-- ---
BARTLETT CAPITAL TRUST
By: /s/ Marie K. Karpinski
--------------------------------
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 21 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<S> <C> <C>
DALE H. RABINER Chairman of the
Board, President
& Trustee
MARIE K. KARPINSKI Vice President
and Treasurer
By: /s/ Marie K. Karpinski
----------------------
Attorney-in-Fact
WILLIAM P. SHEEHAN Trustee
May 29, 1996
------
PHILIP J. RINGO Trustee
ALAN R. SCHRIBER Trustee
LORRENCE T. KELLAR Trustee
</TABLE>
- C-13 -
<PAGE> 1
Exhibit 5(i)
AMENDED AND RESTATED
--------------------
MANAGEMENT AGREEMENT
--------------------
TO: Bartlett & Co.
36 East Fourth Street
Cincinnati, Ohio 45202
Dear Sirs:
Bartlett Capital Trust (hereinafter referred to as the "Trust") herewith
confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently consists of four series: Bartlett Basic Value
Fund, Bartlett Fixed Income Fund, Bartlett Short Term Bond Fund and Bartlett
Value International Fund. The Trust's Board of Trustees (the "Board") is
authorized from time to time, as it deems necessary or desirable, to establish
and designate additional series of shares. The Trust has previously entered
into a management agreement dated January 4, 1988 (the "Original Agreement")
with you on behalf of the Bartlett Basic Value Fund and the Bartlett Fixed
Income Fund. The Trust hereby amends and restates the Original Agreement, in
its entirety, as set forth herein.
You have been selected to act as the sole investment adviser of the Trust
and to provide certain other services, as more fully set forth below, and you
are willing to act as such investment adviser and to perform such services under
the terms and conditions hereinafter set forth. Accordingly, the Trust agrees
with you as follows upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
-----------------
You will regularly provide the Trust with such investment advice as you in
your discretion deem advisable and will furnish a continuous investment program
for each of the Trust's series consistent with the respective series'
investment objectives and policies. You will determine the securities to be
purchased for each series of the Trust, the portfolio securities to be held or
sold by each series of the Trust, and the portion of each series' assets to be
held uninvested, subject always to the series' investment objectives, policies
and restrictions, as each of the same shall be from time to time in effect, and
subject further, to such policies and instructions as the Board may from time
to time establish and supply to you copies thereof. You will advise and assist
the officers of the Trust in taking such steps as are necessary or appropriate
to carry out the decisions of the Board and the appropriate committees of the
Board regarding the conduct of the business of the Trust.
2. ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
You will pay all operating expenses of the Trust, including the
compensation and expenses of any trustees, officers and employees of the Trust
and of any other persons rendering any services to the Trust; clerical and
shareholder service staff salaries; office space and other office expenses;
fees and expenses incurred by the Trust in connection with membership in
investment company organizations; legal, auditing and accounting expenses;
expenses of registering shares
<PAGE> 2
under federal and state securities laws; insurance expenses; fees and expenses
of the custodian, transfer agent, dividend disbursing agent and shareholder
service agent of the Trust; expenses including clerical expenses of issue,
sale, redemption or repurchase of shares of the Trust; the cost of preparing
and distributing reports and notices to shareholders, the cost of printing or
preparing prospectuses and statements of additional information for delivery to
the Trust's current and prospective shareholders; the cost of printing or
preparing stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
pursuant to the Trust's Distribution Expense Plan, advertising and promotion
expenses incurred in connection with the sale or distribution of the Trust's
shares; and all other operating expenses of the Trust not specifically assumed
by the Trust.
The Trust will pay all brokerage fees and commissions, taxes, interest,
expenses incurred by the Trust in connection with the organization and
registration of shares of any series of the Trust established after the date of
this agreement, and such extraordinary or non-recurring expenses as may arise,
including litigation to which the Trust may be a party and indemnification of
the Trust's trustees and officers with respect thereto. You may obtain
reimbursement from the Trust, at such time or times as you may determine in
your sole discretion, for any of the expenses advanced by you, which the Trust
is obligated to pay, and such reimbursement shall not be considered to be part
of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
---------------------------
For all of the services to be rendered and payments to be made as provided
in this Agreement with respect to the Basic Value Fund and Fixed Income Fund
(the "Funds"), the Basic Value Fund and the Fixed Income Fund will pay you as
of the last day of each month, a fee equal to the annual rate of 2% of the
average aggregate daily net assets of the Funds up to and including $10
million, 1-1/2% of such assets from $10 million to and including $30 million
and 1% of such assets in excess of $30 million.
It is understood that for purposes of determining your compensation with
respect to an additional series of the Trust, the average daily net assets of
the series may be included in the average daily net assets of the Funds for the
fee calculation described above or may be excluded from such calculation, in
which case your compensation for the series would be determined pursuant to a
different fee arrangement. Your compensation with respect to each additional
series of the Trust established after the date of the Original Agreement shall
be determined by the Board of Trustees, including a majority of the Trustees
who are not interested persons as defined in the Investment Company Act of 1940
(the "Act") of you or the Trust and approved pursuant to the provisions of
Section 15 of the Act.
The average value of the daily net assets of a series shall be determined
pursuant to the applicable provisions of the Declaration of Trust of the Trust
or a resolution of the Board, if required. If, pursuant to such provisions,
the determination of net asset value of a series is suspended for any
particular business day, then for the purposes of this paragraph, the value of
the net assets of the series as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the net assets of the series may lawfully be determined, on
that day. If the determination of the net asset value of a series has been
suspended for a period including such month, your compensation payable at the
end of such month
- 2 -
<PAGE> 3
shall be computed on the basis of the value of the net assets of the series as
last determined (whether during or prior to such month).
You agree that your compensation during any fiscal year shall be reduced by
an amount, if any, by which the expenses of the Trust or a series for such
fiscal year exceed the lowest applicable expense limitation applicable to the
Trust or a series imposed by state securities administrators in states where
the series' shares are qualified for sale, as such limitations may be lowered
or raised from time to time. The payment of your compensation at the end of
any month will be reduced or postponed or, if necessary, a refund will be made
to the Trust or the series as soon as practicable so that at no time will there
be any accrued but unpaid liability in excess of the above expense limitation.
You shall refund to the Trust and the series within sixty days after the close
of each year, the amount of any additional reduction of your compensation
pursuant to this paragraph, provided, however, that you will not be required to
refund to the Trust or the series of the Trust an amount greater than the fee
paid to you by the Trust or the series in respect of such year pursuant to this
Agreement. As used in this paragraph "expenses" shall mean those expenses
included in the applicable expense limitation, and "expense limitation" means a
limit on the maximum annual expenses which may be incurred by an investment
company or a series of an investment company determined by multiplying a fixed
percentage by the average or multiplying more than one such percentage by
different specified amounts of the average of the values of the net assets of
the investment company or the series for a fiscal year. The words "lowest
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Trust.
4. EXECUTION OF PURCHASE AND SALE ORDERS
-------------------------------------
In connection with purchases or sales of portfolio securities for the
account of each series of the Trust, it is understood that you will arrange for
the placing of all orders for the purchase and sale of portfolio securities for
the account with brokers or dealers selected by you subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage.
In the selection of such brokers or dealers and the placing of such orders, you
are directed at all times to seek for the series the best qualitative
execution, 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.
You should generally seek favorable prices and commission rates that are
reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Trust and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a Trust portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Trust and to accounts over which you
- 3 -
<PAGE> 4
exercise investment discretion. The Trust and you understand and acknowledge
that, although the information may be useful to the Trust and you, it is not
possible to place a dollar value on such information. It is the Trust's
opinion, as well as your opinion, that the review and study of this information
will not reduce the overall cost to you in performing your duties to the Trust
under this Agreement. The Board shall periodically review the commissions paid
by the Trust to determine if the commissions paid over representative periods
of time were reasonable in relation to the benefits to the Trust.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution as
described above, you may give consideration to sales of shares of the Trust as
a factor in the selection of brokers and dealers to execute Trust portfolio
transactions.
You and your affiliates may retain compensation in connection with
effecting Trust portfolio transactions, provided that such compensation does
not exceed the maximum amount permitted by the Investment Company Act of 1940.
If any occasion should arise in which you give any investment advice to
your clients concerning the shares of the Trust, you will act solely as
investment counsel for such client and not in any way on behalf of the Trust.
Your services to the Trust pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice,
management and other services to others, including other registered investment
companies.
5. LIMITATION OF LIABILITY OF ADVISER
----------------------------------
You may rely on information reasonably believed by you to be accurate and
reliable. Except as may otherwise be required by the Act or the rules
thereunder, neither you nor your shareholders, officers, directors, employees,
agents, control persons or affiliates of any thereof shall be subject to any
liability for, or any damages, expenses or losses incurred by the Trust in
connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under or payments made
pursuant to this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of your duties under this Agreement
or by reason of reckless disregard by any of such persons or your obligations
and duties under this Agreement.
Any person, even though also a director, officer, employee, shareholder or
agent of you, who may be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of you, or one under your control or direction, even
though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall take effect on the date of its execution and shall
remain in force for a period of two (2) years with respect to each of the
Trust's series established on such date and,
- 4 -
<PAGE> 5
with respect to any additional series registered after such date, until the
next anniversary date of the Agreement following the date on which such series
become effectively registered for sale in a public offering, and from year to
year thereafter as to each series of the Trust's shares, subject to annual
approval by (i) the Board or (ii) a vote of a majority (as defined in the
Investment Company Act of 1940) of the outstanding voting securities of such
series, provided that in either event continuance is also approved by a
majority of the trustees who are not "interested persons" as defined in the
Investment Company Act of 1940 of you or the Trust, by a vote cast in person at
a meeting called for the purpose of voting such approval.
If the shareholders of any series of the Trust's shares fail to approve the
Agreement in the manner set forth above, upon request of the Board, you will
continue to serve or act in such capacity for that series for the period of
time pending required approval of the Agreement, of a new agreement with you or
a different adviser or other definitive action; provided that the compensation
to be paid by the Trust to you for your services to and payments on behalf of
the series will be equal to the lesser of your actual costs incurred in
furnishing such services and payments or the amount you would have received
under this Agreement for furnishing such services and payments.
This Agreement may, on sixty days' written notice, be terminated with
respect to a series at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the
series or by you. This Agreement shall automatically terminate in the event of
its assignment.
7. USE OF NAME
-----------
The Trust and you acknowledge that all rights to the name "Bartlett" belong
to you and that the Trust is being granted a limited license to use such word
in its name or in any series name. In the event you cease to be the adviser to
the Trust, the Trust's right to the use of the name "Bartlett" shall
automatically cease on the thirtieth day following the termination of this
Agreement. The right to the name may also be withdrawn by you during the term
of this Agreement upon thirty (30) days' written notice by you to the Trust.
Nothing contained herein shall impair or diminish in any respect, your right to
use the name "Bartlett" in the name of or in connection with any other business
enterprises with which you are or may become associated. There is no charge to
the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the series to which the amendment relates and by the Board,
including a majority of the trustees who are not interested persons of you or
of the Trust, cast in person at a meeting called for the purpose of voting on
such approval.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
-----------------------------------------
The term "Bartlett Capital Trust" means and refers to the trustees from
time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder
- 5 -
<PAGE> 6
shall not be binding upon any of the trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust, as provided in the Declaration of Trust of the Trust.
The execution and delivery of this Agreement have been authorized by the
trustees and shareholders of the Trust and signed by the officers of the Trust,
acting as such, and neither such authorization by such trustees and
shareholders nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the trust property of the Trust as
provided in its Declaration of Trust.
10. SEVERABILITY
------------
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
---------------------------
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Act.
In addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
12. NOTICES
-------
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust and your address
for this purpose shall be 36 East Fourth Street, Cincinnati, Ohio 45202.
13. COUNTERPARTS
------------
This Agreement may be in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
14. BINDING EFFECT
--------------
Each of the undersigned expressly warrants and represents that he has the
full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
- 6 -
<PAGE> 7
15. MISCELLANEOUS
-------------
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
Agreement.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of January 2, 1996.
Yours very truly,
ATTEST: BARTLETT CAPITAL TRUST
/s/ Tom A. Steele By /s/ Dale H. Rabiner
- -------------------------------- --------------------------------------
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: BARTLETT & CO.
/s/ James F. Lummanick By /s/ Gerald L. Oaks
- -------------------------------- --------------------------------------
- 7 -
<PAGE> 1
Exhibit 5(ii)
SECOND AMENDED AND RESTATED
MANAGEMENT AGREEMENT
--------------------
TO: BARTLETT & CO.
36 East Fourth Street
Cincinnati, Ohio 45202
Dear Sirs:
Bartlett Capital Trust (the "Trust") herewith confirms our agreement
with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently consists of four series: Bartlett Basic Value
Fund, Bartlett Fixed Income Fund, Bartlett Short Term Bond Fund and Bartlett
Value International Fund. The Trust has previously entered into a management
agreement (the "Original Agreement") dated January 4, 1988, with you on
behalf of Bartlett Basic Value Fund and Bartlett Fixed Income Fund, and has
entered into an amended and restated management agreement dated January 1, 1994
(the "International Agreement") with you on behalf of Bartlett Value
International Fund (the "Fund"). The Trust hereby further amends and
restates the International Agreement, in its entirety, as set forth herein.
You have been selected to act as the sole investment adviser to the
Fund and to provide certain other services to the Fund, as more fully set forth
below, and you are willing to act as such investment adviser and to perform
such services under the terms and conditions hereinafter set forth. The
Original Agreement provides that, for purposes of determining your
compensation with respect to series established after January 4, 1988, the
average daily net assets of the series may be excluded from the fee
calculation described in the Original Agreement, in which case your
compensation for the series is to be determined pursuant to a different fee
arrangement. The Board has determined, in the exercise of its fiduciary duty,
that it is in the best interests of the shareholders of the Trust to exclude
the average daily net assets of the Fund from the fee calculation described in
the Original Agreement and enter into a separate management agreement,
including a different fee arrangement, with you on behalf of the Fund.
Accordingly, the Trust agrees with you as follows upon the date of the
execution of this Agreement.
1. ADVISORY SERVICES
-----------------
You will regularly provide the Fund with such investment advice
as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with its investment objectives and
policies. You will determine the securities to be purchased for the Fund, the
portfolio securities to be held or sold by the Fund, and the portion of the
Funds' assets to be held uninvested, subject always to the Funds' investment
objectives, policies and restrictions, as each of the same shall be from time
to time in effect, and subject further, to such policies and instructions as
the Board may from time to time establish and supply to you copies thereof.
You will advise and assist the officers of the Trust in taking such steps as
are necessary or appropriate to carry out the decisions of the Board and the
appropriate committees of the Board regarding the conduct of the business of
the Fund.
<PAGE> 2
2. ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
You will pay all operating expenses of the Fund, including the
compensation and expenses of any trustees, officers and employees of the Trust
and of any other persons rendering any services to the Fund; clerical and
shareholder service staff salaries; office space and other office expenses;
fees and expenses incurred by the Fund in connection with membership in
investment company organizations; legal, auditing and accounting expenses;
expenses of registering shares under federal and state securities laws;
insurance expenses; fees and expenses of the custodian, transfer agent,
dividend disbursing agent and shareholder service agent of the Fund; expenses
including clerical expenses of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholders of the Fund, the cost of printing or preparing prospectuses and
statements of additional information for delivery to the current and
prospective shareholders of the Fund; the cost of printing or preparing stock
certificates or any other documents, statements or reports to shareholders;
its proportional share of expenses of shareholders' meetings and proxy
solicitations; advertising and promotion expenses incurred in connection with
the sale or distribution of the Fund's shares; and all other operating
expenses of the Fund not specifically assumed by the Fund or the Trust.
The Fund will pay all brokerage fees and commissions, taxes,
interest, and its share of extraordinary or non-recurring expenses as may
arise, including litigation to which the Trust may be a party and
indemnification of the Trust's trustees and officers with respect thereto.
You may obtain reimbursement from the Fund, at such time or times as you may
determine in your sole discretion, for any of the expenses advanced by you,
which the Fund is obligated to pay, and such reimbursement shall not be
considered to be part of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
---------------------------
For all of the services to be rendered and payments to be made
as provided in this Agreement with respect to the Fund, the Fund will pay you,
as of the last day of each month, a fee equal to the annual rate of 2% of the
average daily net assets of the Fund up to and including $20 million, 1.75% of
such assets from $20 million to and including $200 million and 1.25% of such
assets in excess of $200 million; provided, however, that the total fees paid
during the first and second halves of each fiscal year of the Fund shall not
exceed the semiannual total of the daily fee accruals requested by you during
the applicable six month period.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the
value of the net assets of the Fund as last determined shall be deemed to be
the value of the net assets as of 9:00 a.m., New York time, or as of such
other time as the value of the net assets of the Fund may lawfully be
determined, on that day. If the determination of the net asset value of the
Fund has been suspended for a period including such month, your compensation
payable at the end of such month shall be computed on the basis of the value
of the net assets of the Fund as last determined (whether during or prior to
such month).
-2-
<PAGE> 3
You agree that your compensation during any fiscal year shall be
reduced by an amount, if any, by which the expenses of the Fund for such fiscal
year exceed the lowest applicable expense limitation applicable to the Fund
imposed by state securities administrators in states where the series' shares
are qualified for sale, as such limitations may be lowered or raised from time
to time. The payment of your compensation at the end of any month will be
reduced or postponed or, if necessary, a refund will be made to the Fund as
soon as practicable so that at no time will there be any accrued but unpaid
liability in excess of the above expense limitation. You shall refund to the
Fund within sixty days after the close of each year, the amount of any
additional reduction of your compensation pursuant to this paragraph;
provided, however, that you will not be required to refund to the Fund an
amount greater than the fee paid to you by the Fund in respect of such year
pursuant to this Agreement. As used in this paragraph "expenses" shall mean
those expenses included in the applicable expense limitation, and "expense
limitation" means a limit on the maximum annual expenses which may be incurred
by a series of an investment company determined by multiplying a fixed
percentage by the average or multiplying more than one such percentage by
different specified amounts of the average of the values of the net assets of
the series for a fiscal year. The words "lowest expense limitation" shall be
construed to result in the largest reduction of your compensation for any
fiscal year of the Fund.
4. EXECUTION OF PURCHASE AND SALE ORDERS
-------------------------------------
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for
the account with brokers or dealers selected by you subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage.
In the selection of such brokers or dealers and the placing of such orders,
you are directed at all times to seek for the Fund the best qualitative
execution, 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.
You should generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received. ln seeking best
qualitative execution, you are authorized to select brokers or dealers who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Trust and/or the
other accounts over which you exercise investment discretion. You are
authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if you determine in good faith that the
amount of the commission is reasonable in relation to the value of the
brokerage and research services provided by the executing broker or dealer.
The determination may be viewed in terms of either a particular transaction or
your overall responsibilities with respect to the Trust and to accounts over
which you exercise investment discretion. The Trust and you understand and
acknowledge that, although the information may be useful to the Fund and you,
it is not possibie to place a dollar value on such information. It is the
Trust's opinion, as well as your opinion, that the review and study of this
information will not reduce the overall cost to you in performing your duties
to the Fund under this Agreement. The Board shall periodically review the
commissions paid by the
-3-
<PAGE> 4
Fund to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best
qualitative execution as described above, you may give consideration to sales
of shares of the Trust as a factor in the selection of brokers and dealers to
execute Fund portfolio transactions.
You and your affiliates may retain compensation in connection
with effecting the Fund portfolio transactions, provided that such compensation
does not exceed the maximum amount permitted by the Investment Company Act of
1940 (the "Act").
If any occasion should arise in which you give any investment
advice to your clients concerning the shares of the Fund, you will act solely
as investment counsel for such client and not in any way on behalf of the
Fund. Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and other services to others, including other registered
investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
----------------------------------
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the Act or the
rules thereunder, neither you nor your shareholders, officers, directors,
employees, agents, control persons or affiliates of any thereof shall be
subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee,
shareholder or agent of you, who may be or become an officer, director,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with your duties hereunder), to be
rendering such services to or acting solely for the Trust and not as a
director, officer, employee, shareholder or agent of you, or one under your
control or direction, even though paid by you.
6. DURATION AND TERMINATION OF AGREEMENT
-------------------------------------
This Agreement shall take effect on the date of its execution
and shall remain in force for a period of two (2) years and from year to year
thereafter, subject to annual approval by (i) the Board or (ii) a vote of a
majority (as defined in the Act) of the outstanding voting securities of the
Fund, provided that in either event continuance is also approved by a majority
of the trustees who are not "interested persons" as defined in the Act of you
or the Trust, by a vote cast in person at a meeting called for the purpose of
voting such approval.
-4-
<PAGE> 5
If the shareholders of the fund fail to approve the Agreement in
the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid
by the Fund to you for your services to and payments on behalf of the Fund will
be equal to the lesser of your actual costs incurred in furnishing such
services and payments or the amount you would have received under this
Agreement for furnishing such services and payments.
This Agreement may, on sixty days' written notice, be terminated
at any time without the payment of any penalty, by the Board, by a vote of a
majority of the outstanding voting securities of the Fund or by you. This
Agreement shall automatically terminate in the event of its assignment.
7. USE OF NAME.
-----------
The Trust and you acknowledge that all rights to the name
"Bartlett" belong to you and that the Fund is being granted a limited license
to use such word in the name of the Fund. In the event you cease to be the
adviser to the Fund, the Fund's right to the use of the name "Bartlett"
shall automatically cease on the thirtieth day following the termination of
this Agreement. The right to the name may also be withdrawn by you during the
term of this Agreement upon thirty (30) days' written notice by you to the
Fund. Nothing contained herein shall impair or diminish in any respect, your
right to use the name "Bartlett" in the name of or in connection with any
other business enterprises with which you are or may become associated. There
is no charge to the Fund for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the vote of the holders of a majority of the
outstanding voting securities of the fund and by the Board, including a
majority of the trustees who are not interested persons of you or of the
Trust, cast in person at a meeting called for the purpose of voting on such
approval.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
-----------------------------------------
The term "Bartlett Capital Trust" means and refers to the
trustees from time to time serving under the Trust's Declaration of Trust as
the same may subsequently thereto have been, or subsequentiy hereto be,
amended. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust, as provided in the Declaration of Trust of the Trust.
The execution and delivery of this Agreement have been authorized by the
trustees of the Trust and the shareholders of the Fund, and signed by the
officers of the Trust, acting as such, and neither such authorization by such
trustees and shareholders nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in its Declaration of Trust.
-5-
<PAGE> 6
10. SEVERABILITY
------------
In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
---------------------------
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) Any question of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act shall be resolved by reference to such term or provision
of the Act and to interpretation thereof, if any, by the United States courts
or in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued
pursuant to said Act. In addition, where the effect of a requirement of the
Act, reflected in any provision of this Agreement is revised by rule,
regulation or order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
12. NOTICES
-------
Any notices under this Agreement shall be in writing, addressed
and delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further
notice to the other party, it is agreed that the address of the Trust and your
address for this purpose shall be 36 East Fourth Street, Cincinnati, Ohio
45202.
13. COUNTERPARTS
------------
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. BINDING EFFECT
--------------
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party
indicated to the foregoing terms.
15. CAPTIONS
--------
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
-6-
<PAGE> 7
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding
contract effective as of January 2, 1996.
Yours very truly,
ATTEST: BARTLETT CAPITAL TRUST
/s/ Tom A. Steele By:/s/ Dale H. Rabiner
- ----------------------------------- ---------------------------------
Title:
------------------------------
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
ATTEST: BARTLETT & CO.
/s/ James F. Lummanick By:/s/ Gerald L. Oaks
- ----------------------------------- ---------------------------------
Title: CFO
------------------------------
-7-
<PAGE> 1
Exhibit 5(iii)
AMENDED AND RESTATED
--------------------
MANAGEMENT AGREEMENT
--------------------
TO: BARTLETT & CO.
36 East Fourth Street
Cincinnati, Ohio 45202
Dear Sirs:
Bartlett Capital Trust (the "Trust") herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently consists of four series: Bartlett Basic Value
Fund, Bartlett Fixed Income Fund, Bartlett Short Term Bond Fund and Bartlett
Value International Fund. The Trust has previously entered into a management
agreement (the "Original Agreement") dated January 4, 1988, with you on behalf
of Bartlett Basic Value Fund and Bartlett Fixed Income Fund, and has entered
into a management agreement dated November 22, 1993 (the "Bond Fund Agreement")
with you on behalf of the Bartlett Short Term Bond Fund (the "Fund"). The
Trust hereby amends and restates the Bond Fund Agreement, in its entirety, as
set forth herein.
You have been selected to act as the sole investment adviser to the Fund and
to provide certain other services to the Fund, as more fully set forth below,
and you are willing to act as such investment adviser and to perform such
services under the terms and conditions hereinafter set forth. The Original
Agreement provides that, for purposes of determining your compensation with
respect to series established after January 4, 1988, the average daily net
assets of the series may be excluded from the fee calculation described in the
Original Agreement, in which case your compensation for the series is to be
determined pursuant to a different fee arrangement. The Board has determined,
in the exercise of its fiduciary duty, that it is in the best interests of the
shareholders of the Trust to exclude the average daily net assets of the Fund
from the fee calculation described in the Original Agreement and enter into a
separate management agreement, including a different fee arrangement, with you
on behalf of the Fund. Accordingly, the Trust agrees with you as follows upon
the date of the execution of this Agreement.
1. ADVISORY SERVICES
-----------------
You will regularly provide the Fund with such investment advice as you in
your discretion deem advisable and will furnish a continuous investment program
for the Fund consistent with its investment objectives and policies. You will
determine the securities to be purchased for the Fund, the portfolio securities
to be held or sold by the Fund, and the portion of the Funds' assets to be held
uninvested, subject always to the Funds' investment objectives, policies and
restrictions, as each of the same shall be from time to time in effect, and
subject further, to such policies and instructions as the Board may from time
to time establish and supply to you copies thereof. You will advise and assist
the officers of the Trust in taking such steps as are necessary or appropriate
to carry out the decisions of the Board and the appropriate committees of the
Board regarding the conduct of the business of the Fund.
<PAGE> 2
2. ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
You will pay all operating expenses of the Fund, including the compensation
and expenses of any trustees, officers and employees of the Trust and of any
other persons rendering any services to the Fund; clerical and shareholder
service staff salaries; office space and other office expenses; fees and
expenses incurred by the Fund in connection with membership in investment
company organizations; legal, auditing and accounting expenses; expenses of
registering shares under federal and state securities laws; insurance expenses;
fees and expenses of the custodian, transfer agent, dividend disbursing agent
and shareholder service agent of the Fund; expenses including clerical expenses
of issue, sale, redemption or repurchase of shares of the Fund; the cost of
preparing and distributing reports and notices to shareholders of the Fund, the
cost of printing or preparing prospectuses and statements of additional
information for delivery to the current and prospective shareholders of the
Fund; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; its proportional share of
expenses of shareholders' meetings and proxy solicitations; advertising and
promotion expenses incurred in connection with the sale or distribution of the
Fund's shares; and all other operating expenses of the Fund not specifically
assumed by the Fund or the Trust.
The Fund will pay all brokerage fees and commissions, taxes, interest, and
its share of extraordinary or non-recurring expenses as may arise, including
litigation to which the Trust may be a party and indemnification of the Trust's
trustees and officers with respect thereto. You may obtain reimbursement from
the Fund, at such time or times as you may determine in your sole discretion,
for any of the expenses advanced by you, which the Fund is obligated to pay,
and such reimbursement shall not be considered to be part of your compensation
pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
---------------------------
For all of the services to be rendered and payments to be made as provided
in this Agreement with respect to the Fund, the Fund will pay you, as of the
last day of each month, a fee equal to the annual rate of .85% of the average
daily net assets of the Fund; provided, however, that the total fees paid
during the first and second halves of each fiscal year of the Fund shall not
exceed the semiannual total of the daily fee accruals requested by you during
the applicable six month period.
The average value of the daily net assets of the Fund shall be determined
pursuant to the applicable provisions of the Declaration of Trust of the Trust
or a resolution of the Board, if required. If, pursuant to such provisions,
the determination of net asset value of the Fund is suspended for any
particular business day, then for the purposes of this paragraph, the value of
the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of 4:00 p.m., New York time, or as of such other time as
the value of the net assets of the Fund may lawfully be determined, on that
day. If the determination of the net asset value of the Fund has been
suspended for a period including such month, your compensation payable at the
end of such month shall be computed on the basis of the value of the net assets
of the Fund as last determined (whether during or prior to such month).
- 2 -
<PAGE> 3
You agree that your compensation during any fiscal year shall be reduced by
an amount, if any, by which the expenses of the Fund for such fiscal year
exceed the lowest applicable expense limitation applicable to the Fund imposed
by state securities administrators in states where the series' shares are
qualified for sale, as such limitations may be lowered or raised from time to
time. The payment of your compensation at the end of any month will be reduced
or postponed or, if necessary, a refund will be made to the Fund as soon as
practicable so that at no time will there be any accrued but unpaid liability
in excess of the above expense limitation. You shall refund to the Fund within
sixty days after the close of each year, the amount of any additional reduction
of your compensation pursuant to this paragraph; provided, however, that you
will not be required to refund to the Fund an amount greater than the fee paid
to you by the Fund in respect of such year pursuant to this Agreement. As used
in this paragraph "expenses" shall mean those expenses included in the
applicable expense limitation, and "expense limitation" means a limit on the
maximum annual expenses which may be incurred by a series of an investment
company determined by multiplying a fixed percentage by the average or
multiplying more than one such percentage by different specified amounts of the
average of the values of the net assets of the series for a fiscal year. The
words "lowest expense limitation" shall be construed to result in the largest
reduction of your compensation for any fiscal year of the Fund.
4. EXECUTION OF PURCHASE AND SALE ORDERS
-------------------------------------
In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the account
with brokers or dealers selected by you subject to review of this selection by
the Board from time to time. You will be responsible for the negotiation and
the allocation of principal business and portfolio brokerage. In the selection
of such brokers or dealers and the placing of such orders, you are directed at
all times to seek for the Fund the best qualitative execution, 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.
You should generally seek favorable prices and commission rates that are
reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Trust and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if you determine in good faith that the amount of the
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or your overall
responsibilities with respect to the Trust and to accounts over which you
exercise investment discretion. The Trust and you understand and acknowledge
that, although the information may be useful to the Fund and you, it is not
possible to place a dollar value on such information. It is the Trust's
opinion, as well as your opinion, that the review and study of this information
will not reduce the overall cost to you in performing your duties to the Fund
under this Agreement. The Board shall periodically review the commissions paid
by the
- 3 -
<PAGE> 4
Fund to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution as
described above, you may give consideration to sales of shares of the Trust as
a factor in the selection of brokers and dealers to execute Fund portfolio
transactions.
You and your affiliates may retain compensation in connection with
effecting the Fund portfolio transactions, provided that such compensation does
not exceed the maximum amount permitted by the Investment Company Act of 1940
(the "Act").
If any occasion should arise in which you give any investment advice to
your clients concerning the shares of the Fund, you will act solely as
investment counsel for such client and not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice,
management and other services to others, including other registered investment
companies.
5. LIMITATION OF LIABILITY OF ADVISER
----------------------------------
You may rely on information reasonably believed by you to be accurate and
reliable. Except as may otherwise be required by the Act or the rules
thereunder, neither you nor your shareholders, officers, directors, employees,
agents, control persons or affiliates of any thereof shall be subject to any
liability for, or any damages, expenses or losses incurred by the Trust in
connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under or payments made
pursuant to this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of your duties under this Agreement
or by reason of reckless disregard by any of such persons of your obligations
and duties under this Agreement.
Any person, even though also a director, officer, employee, shareholder or
agent of you, who may be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of you, or one under your control or direction, even
though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall take effect on the date of its execution and shall
remain in force for a period of two (2) years and from year to year thereafter,
subject to annual approval by (i) the Board or (ii) a vote of a majority (as
defined in the Act) of the outstanding voting securities of the Fund, provided
that in either event continuance is also approved by a majority of the trustees
who are not "interested persons" as defined in the Act of you or the Trust, by
a vote cast in person at a meeting called for the purpose of voting such
approval.
- 4 -
<PAGE> 5
If the shareholders of the Fund fail to approve the Agreement in the manner
set forth above, upon request of the Board, you will continue to serve or act
in such capacity for the Fund for the period of time pending required approval
of the Agreement, of a new agreement with you or a different adviser or other
definitive action; provided that the compensation to be paid by the Fund to you
for your services to and payments on behalf of the Fund will be equal to the
lesser of your actual costs incurred in furnishing such services and payments
or the amount you would have received under this Agreement for furnishing such
services and payments.
This Agreement may, on sixty days' written notice, be terminated at any
time without the payment of any penalty, by the Board, by a vote of a majority
of the outstanding voting securities of the Fund or by you. This Agreement
shall automatically terminate in the event of its assignment.
7. USE OF NAME
-----------
The Trust and you acknowledge that all rights to the name "Bartlett" belong
to you and that the Fund is being granted a limited license to use such words
in the name of the Fund. In the event you cease to be the adviser to the Fund,
the Fund's right to the use of the name "Bartlett" shall automatically cease on
the thirtieth day following the termination of this Agreement. The right to
the name may also be withdrawn by you during the term of this Agreement upon
thirty (30) days' written notice by you to the Fund. Nothing contained herein
shall impair or diminish in any respect, your right to use the name "Bartlett"
in the name of or in connection with any other business enterprises with which
you are or may become associated. There is no charge to the Fund for the right
to use this name.
8. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by the Board, including a majority of the trustees who are not
interested persons of you or of the Trust, cast in person at a meeting called
for the purpose of voting on such approval, and (if required under current
interpretations of the Act by the Securities and Exchange Commission) by vote
of the holders of a majority of the outstanding voting securities of the Fund.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
-----------------------------------------
The term "Bartlett Capital Trust" means and refers to the trustees from
time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees of the Trust
and the shareholders of the Fund, and signed by the officers of the Trust,
acting as such, and neither such authorization by such trustees and
shareholders nor such execution and delivery by such officers shall be deemed
to have been made by any of them
- 5 -
<PAGE> 6
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust.
10. SEVERABILITY
------------
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
---------------------------
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Act.
In addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
12. NOTICES
-------
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust and your address
for this purpose shall be 36 East Fourth Street, Cincinnati, Ohio 45202.
13. COUNTERPARTS
------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
14. BINDING EFFECT
--------------
Each of the undersigned expressly warrants and represents that he has the
full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
15. CAPTIONS
--------
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
- 6 -
<PAGE> 7
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of January 2, 1996.
Yours very truly,
ATTEST: BARTLETT CAPITAL TRUST
/s/ Tom A. Steele By:/s/ Dale H. Rabiner
______________________________ __________________________________________
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
ATTEST: BARTLETT & CO.
/s/ James F. Lummanick By:/s/ Gerald L. Oaks
_______________________________ __________________________________________
- 7 -
<PAGE> 1
CUSTODIAN CONTRACT
Between
BARTLETT CAPITAL TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By
It...................................................................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States...............................................2
2.1 Holding Securities..........................................................................2
2.2 Delivery of Securities......................................................................2
2.3 Registration of Securities..................................................................4
2.4 Bank Accounts...............................................................................4
2.5 Availability of Federal Funds...............................................................4
2.6 Collection of Income........................................................................5
2.7 Payment of Fund Monies......................................................................5
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased.............................................................6
2.9 Appointment of Agents.......................................................................6
2.10 Deposit of Fund Assets in Securities System.................................................7
2.10A Fund Assets Held in the Custodian's Direct
Paper System................................................................................8
2.11 Segregated Account..........................................................................8
2.12 Ownership Certificates for Tax Purposes.....................................................9
2.13 Proxies.....................................................................................9
2.14 Communications Relating to Portfolio Securities.............................................9
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States..........................................................10
3.1 Appointment of Foreign Sub-Custodians......................................................10
3.2 Assets to be Held..........................................................................10
3.3 Foreign Securities Depositories............................................................10
3.4 Holding Securities.........................................................................10
3.5 Agreements with Foreign Banking Institutions...............................................10
3.6 Access of Independent Accountants of the Fund..............................................11
3.7 Reports by Custodian.......................................................................11
3.8 Transactions in Foreign Custody Account....................................................11
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C> <C>
3.9 Liability of Foreign Sub-Custodians........................................................11
3.10 Liability of Custodian.....................................................................12
3.11 Monitoring Responsibilities................................................................12
3.12 Branches of U.S. Banks.....................................................................12
3.13 Tax Law....................................................................................13
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund...............................................................................13
5. Proper Instructions.................................................................................13
6. Actions Permitted Without Express Authority.........................................................14
7. Evidence of Authority...............................................................................14
8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.......................................................14
9. Records.............................................................................................15
10. Opinion of Fund's Independent Accountants...........................................................15
11. Reports to Fund by Independent Public Accountants...................................................15
12. Compensation of Custodian...........................................................................16
13. Responsibility of Custodian.........................................................................16
14. Effective Period, Termination and Amendment.........................................................17
15. Successor Custodian.................................................................................18
16. Interpretive and Additional Provisions..............................................................19
17. Additional Portfolios...............................................................................19
18. Massachusetts Law to Apply..........................................................................19
19. Prior Contracts.....................................................................................19
20. Shareholder Communications..........................................................................19
21. Miscellaneous.......................................................................................20
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
21.1 Expenses of the Fund.......................................................................20
21.2 Assignment.................................................................................20
21.3 Insurance..................................................................................20
21.4 Confidentiality............................................................................20
21.5 Separate Portfolios........................................................................20
21.6 Limitations on Liability of the Trustees and Shareholders..................................20
</TABLE>
4
<PAGE> 5
CUSTODIAN CONTRACT
------------------
This Contract between Bartlett Capital Trust, an Ohio business trust
having its principal place of business at 36 East Fourth Street, Cincinnati,
Ohio 45202, hereinafter called the "Fund", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in four series,
Bartlett Value International Fund, Bartlett Basic Value Fund, Bartlett Fixed
Income Fund, and Bartlett Short Term Bond Fund (such series together with all
other series subsequently established by the Fund and made subject to this
Contract in accordance with paragraph 17, being herein referred to as the
"Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio, desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of this Contract. The
Fund on behalf of the Portfolio(s) agrees to deliver to the Custodian all
securities, similar investments and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian; provided, however, that (a) the Custodian
will be liable to the Fund for the Custodian's own negligence in transmitting
any instructions received by it from the Fund and for the Custodian's own
negligence in connection with the delivery of any securities, cash or other
assets held by it to any sub-custodian and (b) in the event of any loss, damage
or expense suffered or incurred by the Fund caused by or resulting from actions
or omissions for which the Custodian would be liable pursuant to this section,
the Custodian shall promptly reimburse the Fund
<PAGE> 6
in the amount of any such loss, damage or expense. The Custodian may employ as
sub-custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3. The Fund may instruct the Custodian, through Proper
Instructions, to cease the employment of any one or more sub-custodians for
maintaining custody of the Portfolio's assets, and to cause the prompt delivery
of such assets to another sub-custodian acceptable to the Fund and the
Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By
--------------------------------------------------------------------
the Custodian in the United States
----------------------------------
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities System" and
(b) commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian
pursuant to Section 2.10A.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only
upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
2
<PAGE> 7
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or into the name
or nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; PROVIDED that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misfeasance or misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, BUT ONLY against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, BUT ONLY
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and a
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
<PAGE> 8
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, UNLESS the Fund has authorized
in writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as
the Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in
"street name," the Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securities and to notify the
Fund on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under
4
<PAGE> 9
the Investment Company Act of 1940. Funds held by the Custodian for a
Portfolio may be deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
PROVIDED, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of the Board of
Trustees of the Fund. Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the Custodian
only in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund
on behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf
of a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of
such Portfolio which are deposited into the Portfolio's account.
2.6 COLLECTIONS. Subject to the provisions of Section 2.3, the Custodian
shall, and shall require any sub-custodian to, collect on a timely
basis all income, payments of principal and other payments with respect
to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income,
payments of principal and other payments with respect to bearer
domestic securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall
promptly credit such income, as collected, to such Portfolio's
custodian account. Without limiting the generality of the foregoing,
the Custodian shall detach, endorse where necessary and present for
payment all coupons and other income items requiring presentation as
and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection with income due on securities loaned,
other than to provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery to
the Custodian of the income to which the Portfolio is properly
entitled. The Custodian shall promptly notify the Fund by facsimile
transmission or in such other manner as the Fund and the Custodian may
agree in writing if any amount payable with respect to Shares of the
Portfolios or other assets of the Portfolios is not received by the
Custodian when due.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
<PAGE> 10
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; (d) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee of the Fund signed by
an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for
6
<PAGE> 11
the account of a Portfolio is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by
the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; PROVIDED, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder. In the event of any loss, damage or expense suffered or
incurred by the Fund, on behalf of a Portfolio, caused by or resulting
from the actions or omissions of any agent for which the Custodian
would otherwise be liable, the Custodian shall promptly reimburse the
Fund in the amount of any such loss, damage or expense.
2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may deposit
and/or maintain securities owned by a Portfolio in a clearing agency
registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may deposit and/or maintain securities of the
Portfolio in a Securities System provided that such securities
are represented in an account ("Account") of the Custodian in
the Securities System which shall not include any assets of
the Custodian other than assets held as a fiduciary, custodian
or otherwise for customers;
2) The books and records of the Custodian with respect to
securities of the Portfolio which are maintained in a
Securities System shall identify by book-entry those
securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon (i)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the Securities System of
transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Portfolio copies of
daily
<PAGE> 12
transaction sheets reflecting each day's transactions in the
Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial certificate required by Article 14
hereof;
6) At the written request of the Fund, the Custodian will
terminate the use of any such Securities System on behalf of
the Portfolios as promptly as practicable; and
7) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of
the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against
the Securities System or any other person which the Custodian
may have as a consequence of any such loss or damage if and to
the extent that the Portfolio has not been made whole for any
such loss or damage. In the event of any such subrogation, the
Custodian shall cooperate with the Fund in asserting such
rights and shall take all actions reasonably necessary to
enable the Fund to assert such rights.
2.10A FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may deposit and/or maintain securities of the
Portfolio in the Direct Paper System only if such securities
are represented in an account ("Account") of the Custodian in
the Direct Paper System which shall not include any assets of
the Custodian other than assets held as a fiduciary, custodian
or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
8
<PAGE> 13
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Securities System for the account of
the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control as the Fund may reasonably request from time to time.
2.11 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash, securities and/or similar investments, including
securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and
a broker-dealer registered under the Exchange Act and a member of the
NASD (or any futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange
(or the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or securities in
connection with options purchased, sold or written by the Portfolio or
commodity futures contracts or options thereon purchased or sold by the
Portfolio, (iii) for the purposes of compliance by the Portfolio with
the procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper purposes, BUT
ONLY, in the case of clause (iv), upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of Trustees or
of the Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper purposes.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall, and shall
require any sub-custodian to, promptly execute ownership and other
certificates and affidavits for all federal, state and foreign tax
purposes in connection with receipt of income or other payments with
respect to securities or similar investments of each Portfolio held by
it and in connection with transfers of securities or similar
investments.
<PAGE> 14
2.13 PROXIES; NOTICES. The Custodian shall cause to be promptly executed by
the registered holder of such securities, if the securities are
registered otherwise than in the name of the Portfolio or a nominee of
the Portfolio, all forms of proxies that are received by the Custodian
or any agent for the Custodian or any nominee of either of them,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.14 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund on behalf of the Portfolio
and the maturity of futures contracts purchased or sold by the
Portfolio) received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer
or any other similar transaction, the Portfolio shall notify the
Custodian at least three business days prior to the date on which the
Custodian is to take such action.
10
<PAGE> 15
3. Duties of the Custodian with Respect to Property of the Fund Held
-----------------------------------------------------------------
Outside of the United States
----------------------------
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 5 of this
Contract, together with a certified resolution of the Fund's Board of
Trustees, the Custodian and the Fund may agree to amend Schedule A
hereto from time to time to designate additional foreign banking
institutions and foreign securities depositories to act as
sub-custodian. The Fund may instruct the Custodian through Proper
Instructions to cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio's assets and to
cause the delivery of such assets to another sub-custodian acceptable
to the Custodian and the Fund.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may determine
to be reasonably necessary to effect the Portfolio's foreign securities
transactions. The Custodian shall identify on its books as belonging to
the Fund, the foreign securities of the Fund held by each foreign
sub-custodian.
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed upon
in writing by the Custodian and the Fund, assets of the Portfolios
shall be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.4 hereof.
3.4 HOLDING SECURITIES. The Custodian may hold securities and other
non-cash property for all of its customers, including the Fund, with a
Foreign Sub-custodian in a single account that is identified as
belonging to the Custodian for the benefit of its customers, PROVIDED
HOWEVER, that (i) the records of the Custodian with respect to
securities and other non-cash property of the Fund which are maintained
in such account shall identify by book-entry those securities and other
non-cash property belonging to the Fund and (ii) the Custodian shall
require that securities and other non-cash property so held by the
Foreign Sub-custodian be held separately from any assets of the Foreign
Sub-custodian or of others.
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe
custody or administration; (b) beneficial ownership for the assets of
each Portfolio will be freely transferable without the payment of money
or value other than for safe custody or administration; (c) adequate
records will be maintained identifying the assets as belonging to each
applicable Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted
under applicable law the independent public accountants for the Fund,
will be given access to the books and records of the foreign banking
institution relating to its actions under
<PAGE> 16
its agreement with the Custodian; and (e) assets of the Portfolios held
by the foreign sub-custodian will be subject only to the instructions
of the Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the Fund,
its independent accountants and/or its attorneys to be afforded access
to the books and records of any foreign banking institution employed as
a foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.7 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity of
the entity having physical possession of such securities. The Custodian
shall also provide to the Fund such other information as may be
reasonably requested by the Fund on behalf of the Portfolios to
evidence compliance with Rule 17f-5 under the Investment Company Act.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2, 2.7 and 2.8 of this Contract shall apply, MUTATIS
MUTANDIS to the foreign securities of the Fund held outside the United
States by foreign sub-custodians. (b) Notwithstanding any provision of
this Contract to the contrary, settlement and payment for securities
received for the account of each applicable Portfolio and delivery of
securities maintained for the account of each applicable Portfolio may
be effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer) against
a receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer. (c) Securities maintained in
the custody of a foreign sub-custodian may be maintained in the name of
such entity's nominee to the same extent as set forth in Section 2.3 of
this Contract, and the Fund agrees to hold any such nominee harmless
from any liability as a holder of record of such securities (except
liability for failing to act in accordance with instructions).
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
and diligence in the performance of its duties and to indemnify, and
hold harmless, the Custodian and each Fund from and against any loss,
damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At
the election of the Fund, it shall be entitled to
12
<PAGE> 17
be subrogated to the rights of the Custodian with respect to any claims
against a foreign banking institution as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim. In the event of any such subrogation, the
Custodian shall cooperate with the Fund in asserting such rights and
shall take all actions reasonably necessary to enable the Fund to
assert such rights.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.12 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care and diligence. Notwithstanding the
foregoing provisions of this paragraph 3.9, in delegating custody
duties to State Street London Ltd., the Custodian shall not be relieved
of any responsibility to the Fund for any loss, damage or expense due
to such delegation, except such loss as may result from (a) political
risk (including, but not limited to, exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil
strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses
under circumstances where the Custodian and State Street London Ltd.
have exercised reasonable care and diligence.
In the event that any sub-custodian appointed pursuant to the provisions
of this Section 3 fails to perform any of its obligations under the
terms and conditions of the applicable sub-custodian agreement, the
Custodian shall use its best efforts to cause such sub-custodian to
fully perform its obligations. In the event that the Custodian is
unable to cause such sub-custodian to perform fully its obligations
thereunder, the Custodian shall forthwith notify the Fund of the same
and, upon the Fund's request, terminate such sub-custodian as a
sub-custodian for the Fund in accordance with the termination
provisions of the applicable sub-custodian agreement and, if requested
by the Fund, appoint another sub-custodian acceptable to the Custodian
and the Fund.
The Custodian will not amend any sub-custodian agreement or agree to change
or permit any changes thereunder in respect of the Fund except upon the
prior written approval of the Fund.
3.11 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to
the Fund, during the month of June, and as reasonably requested by the
Fund from time to time, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
shall monitor the performance and financial condition of the foreign
sub-custodians and foreign securities depositories to the extent
practicable and shall promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the performance or
financial condition of a foreign sub-custodian or any material loss of
the assets of the Fund or in the case of any foreign sub-custodian not
the subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there appears
to be a substantial likelihood that its shareholders' equity will
decline
<PAGE> 18
below $200 million (U.S. dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting
principles).
3.12 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract. (b)
Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with
the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.13 TAX LAW. Except as provided in Section 2.12, the Custodian shall have
no responsibility or liability for any obligations now or hereafter
imposed on the Fund or the Custodian as custodian of the Fund by the
tax law of the United States of America or any state or political
subdivision thereof. It shall be the responsibility of the Fund to
notify the Custodian of the obligations imposed on the Fund, or the
Custodian with respect to assets of the Fund, by the tax law of
jurisdictions other than those mentioned in the above sentence,
including responsibility for withholding and other taxes, assessments
or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard to such
tax law shall be to use reasonable efforts to assist the Fund with
respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
----------------------------------------------------------------------
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and promptly deposit into the account of the
appropriate Portfolio such payments as are received for Shares of that Portfolio
issued or sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust of the Fund and any applicable votes of
the Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn
14
<PAGE> 19
on the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a tested
telex from the Fund, or a written request, direction, instruction or
certification signed or initialed on behalf of the Fund by one or more person or
persons as the Board of Trustees shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund shall
cause all oral instructions to be confirmed by tested telex or in writing in the
manner set forth above. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices in addition to tested telex,
provided that the Fund and the Custodian are satisfied that such procedures
afford adequate safeguards for the Portfolios' assets. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which requires a segregated
asset account in accordance with Section 2.11. Proper Instructions may be in the
form of standing instructions.
6. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, PROVIDED that all such payments
shall be accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Trustees of the Fund.
7. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on
<PAGE> 20
behalf of the Fund. The Custodian may receive and accept a certified copy of a
vote of the Board of Trustees of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Trustees pursuant to the
Declaration of Trust of the Fund as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of written
notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and
------------------------------------------------------------
Calculation of Net Asset Value and Net Income
---------------------------------------------
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus related to such Portfolio
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Portfolio shall be made at the time or times
described from time to time in the Fund's currently effective prospectus related
to such Portfolio. On each day that the Custodian computes the net asset value
per share of each Portfolio, the Custodian will provide information sufficient
to permit the Fund to verify that portfolio transactions have been recorded in
accordance with the prospectus and are reconciled with the Portfolio's trading
records.
9. Books and Records
-----------------
The Custodian shall with respect to each Portfolio create and maintain
all books and records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to Section 31 thereof
and Rules 31a-1 and 31a-2 thereunder and under applicable state and federal tax
laws. All such books and records shall be the property of the Fund and shall at
all times during the regular business hours of the Custodian be open for
inspection and audit by duly authorized officers, employees, agents and auditors
of and attorneys for, the Fund and employees and agents of the Securities and
Exchange Commission. The Custodian shall, at the Fund's request, supply the Fund
with a tabulation of securities owned by each Portfolio and held by the
Custodian and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
----------------------------------------
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants
16
<PAGE> 21
with respect to the Custodian's activities hereunder in connection with the
preparation of the Fund's Form N-1A, and Form N-SAR or other periodic reports to
Fund shareholders or to the Securities and Exchange Commission and with respect
to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
-------------------------------------------------
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding cash, securities, futures contracts and
options on futures contracts, including cash, securities and other assets
deposited and/or maintained in a Securities System or with a sub-custodian,
relating to the services provided by the Custodian, directly or through any
agent, under this Contract; such reports shall be of sufficient scope and in
sufficient detail as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so state.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon in writing from time to time
between the Fund on behalf of each applicable Portfolio and the Custodian. The
Custodian shall provide the Fund a written invoice for each such payment.
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice of counsel that such actions
or omissions comply with the terms of this Contract and with all applicable
laws, provided the Custodian acts in good faith and without negligence.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including, but not
limited to, securities settlements, foreign exchange contracts and assumed
<PAGE> 22
settlement) for the benefit of a Portfolio including the purchase or sale of
foreign exchange or of contracts for foreign exchange (any such amount is
referred to herein as an "Advance") or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's or agent's own negligent
action, negligent failure to act or willful misfeasance or misconduct (any such
liability is referred to herein as a "Liability"), then in such event cash held
for the account of the appropriate Portfolio and securities issued by United
States issuers or other securities selected by the Custodian equal in value to
not more than 125% of such Advance and accrued interest on the Advance or the
reasonably anticipated amount of such Liability, held at any time for the
account of the appropriate Portfolio by the Custodian or sub-custodian, shall be
held as security for such Liability or for such Advance and the accrued interest
on the Advance. Each Portfolio hereby grants to the Custodian a security
interest and lien on cash held by the Custodian for the account of such
Portfolio and any assets of such Portfolio as may be designated from time to
time by the Custodian as provided in this Section 13. The Custodian shall
designate the security or securities constituting security for an Advance or
Liability (the "Designated Securities") by notice in writing to the Fund (which
may be sent by tested telefax). In the event the value of the Designated
Securities shall decline to less than 110% of the amount of such Advance and
accrued interest on the Advance or the reasonably anticipated amount of such
Liability, then the Custodian may designate in the same manner additional
securities to be held as security for such obligation ("Additional Securities")
but the aggregate value of the Designated Securities and the Additional
Securities shall not be in excess of 125% of the amount of such Advance and the
accrued interest on the Advance or the reasonably anticipated amount of such
Liability. At the request of the Fund, the Custodian shall agree to substitution
of a security or securities which have a value equal to the value of the
Designated or Additional Securities which the Fund desires to be released from
their status as security, and such release from status as security shall be
effective upon the Custodian and the Fund agreeing in writing as to the identity
of the substituted security or securities, which shall thereupon become
Designated Securities.
Notwithstanding the above, the Custodian shall, at the request of the
Fund, immediately release from their status as security any or all of the
Designated Securities or Additional Securities upon the Custodian's receipt from
such Fund of cash or cash equivalents in an amount equal to 100% of the value of
the Designated Securities or Additional Securities that the Fund desires to be
released from their status as security pursuant to this Section. The Fund shall
reimburse the Custodian in respect of a Liability and shall pay any Advances
upon demand; provided, however, that the Custodian first notifies the Fund of
such demand for repayment or reimbursement. If, upon notification, the Fund
shall fail to pay such advance or interest when due or shall fail to reimburse
the Custodian promptly in respect of a Liability, the Fund, on behalf of the
Portfolios, acknowledges and agrees that the Custodian shall be entitled to
apply cash held for the applicable Portfolio and/or dispose of the Designated
Securities and Additional Securities to the extent necessary to obtain repayment
or reimbursement. Interest, dividends and other distributions paid or received
on the Designated Securities or Additional Securities, other than payments of
principal or payments upon retirement, redemption or repurchase, shall remain
the property of the Fund, and shall not be subject to this Section. To the
extent that the disposition of the Fund's property, designated as security for
such Advance or Liability, results in an amount less than necessary to obtain
repayment or
18
<PAGE> 23
reimbursement, the Fund shall continue to be liable to the Custodian for the
difference between the proceeds of the disposition of the Fund's property,
designated as security for such Advance or Liability, and the amount of the
repayment or reimbursement due to the Custodian and the Custodian shall be
entitled to designate Additional Securities to secure the amount of the
shortfall and shall have the same rights with respect to such Additional
Securities as are provided herein with respect to Designated Securities
generally.
14. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; PROVIDED,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of the Fund has
approved the initial use of a particular Securities System by such Portfolio, as
required by Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not with respect to a Portfolio act under Section 2.10A
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Trustees has approved the initial use
of the Direct Paper System by such Portfolio; PROVIDED FURTHER, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of its Board of Trustees (i) substitute
another bank or trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this Contract in the event
of the appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
reasonable costs, expenses and disbursements. Termination of this Contract with
respect to one Portfolio (but less than all of the Portfolios) will not
constitute termination of the Contract, and the terms of the Contract continue
to apply to the other Portfolios.
15. Successor Custodian
-------------------
If a successor custodian for the Fund, or one or more of the Portfolios
, shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, promptly deliver to such successor custodian at the office of
the Custodian, duly endorsed and in the form for transfer, all cash, securities,
similar investments and other property, as well as all books and records, of
each applicable Portfolio then held by it hereunder and shall transfer to an
account of the successor custodian all of the securities of each such Portfolio
held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Fund, deliver at the office of the Custodian and promptly
<PAGE> 24
transfer such securities, similar investments, cash, books, records and other
properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, similar
investments, cash, books, records and other properties held by the Custodian on
behalf of each applicable Portfolio and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract on behalf
of each applicable Portfolio and to transfer to an account of such successor
custodian all of the securities of each such Portfolio held in any Securities
System. Thereafter, such bank or trust company shall be the successor of the
Custodian under this Contract. The Custodian agrees to cooperate with the
successor custodian and the Fund in execution of documents and performance of
other actions necessary or desirable in order to substitute the successor
custodian for the Custodian.
In the event that securities, similar investments, cash and other
properties remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the certified copy of
the vote referred to or of the Board of Trustees to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities,
similar investments, cash and other properties and the provisions of this
Contract relating to the duties and obligations of the Custodian shall remain in
full force and effect.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, PROVIDED that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Articles of Incorporation
of the Fund. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
17. Additional Portfolios
---------------------
In the event that the Fund establishes one or more series of Shares in
addition to Bartlett Value International Fund, Bartlett Basic Value Fund,
Bartlett Fixed Income Fund, and Bartlett Short Term Bond Fund with respect to
which it desires to have the Custodian render services as custodian under the
terms hereof, it shall
20
<PAGE> 25
so notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
18. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
20. Shareholder Communications
--------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If the Fund tells the Custodian "yes" or do not check either "yes" or "no"
below, the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any funds
or accounts established by the Fund. For the Fund's protection, the Rule
prohibits the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below whether the
Fund consent or object by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's
name, address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's
name, address, and share positions.
21. Miscellaneous
-------------
21.1 EXPENSES OF THE FUND. In addition to any liability to the Fund for
which the Custodian is determined to be liable under this Contract, the
Custodian shall be liable to the Fund for all reasonable costs and
expenses incurred by the Fund in connection with a claim by the Fund
against the Custodian, an Agent or sub-custodian for which the
Custodian is determined to be liable under this Contract, including,
reasonable attorneys' fees and expenses and other reasonable fees
incurred in any investigation, lawsuit or other proceeding related to
such claim. Nothing in this paragraph shall preclude the parties from
agreeing to payment of such expenses by Custodian in connection with a
claim settled by arbitration, mediation or negotiation.
<PAGE> 26
21.2 ASSIGNMENT. This Contract may not be assigned by either party without
the written consent of the other.
21.3 INSURANCE. The Custodian agrees to maintain insurance adequate to the
protection of all assets of the Fund that may come into the Custodian's
care under this Contract.
21.4 CONFIDENTIALITY. The Custodian agrees that all books, records,
information and data pertaining to the business of the Fund which are
exchanged or received pursuant to the negotiation or carrying out of
this Contract shall remain confidential, shall not be voluntarily
disclosed to any other person, except as may be required by law, and
shall not be used by the Custodian for any purpose not directly related
to the business of the Fund, except with the Fund's written consent.
21.5 SEPARATE PORTFOLIOS. Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of each
series of the Fund are separate and distinct from the assets and
liabilities of each other series and that no series shall be liable or
shall be charged for any debt, obligation or liability of any other
series, whether arising under this Contract or otherwise.
21.6 LIMITATIONS ON LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. Notice is
hereby given that this Contract is executed on behalf of the Trustees
of the Trust as Trustees and not individually and that the obligations
of this Contract are not binding upon any of the Trustees or
Shareholders individually but are binding only upon the assets and
property of the Fund.
22
<PAGE> 27
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of February, 1996.
ATTEST BARTLETT CAPITAL TRUST
/s/ Tom A. Steele By: /s/ Dale H. Rabiner
- ----------------------------- --------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Francine S. Hayes by: /s/ Ronald E. Logue
- ----------------------------- ---------------------------------
Executive Vice President
<PAGE> 28
SCHEDULE A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Bartlett Capital
Trust for use as sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
________________________________
Fund's Authorized Officer
Date: _________________________
24
<PAGE> 1
EX 24.11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Post-Effective Amendment No. 21 of our report dated
May 3, 1996 and to all references to our Firm included in or made a part of
this Post-Effective Amendment.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
May 28, 1996
<PAGE> 1
EX 24.16
SCHEDULE OF COMPUTATIONS
Formula is: P(1+T)(n) = ERV
\ /----
Solving for T: T = \ n / ERV - 1
\ / ---
\ / P
<TABLE>
<CAPTION>
Since Year Ended
Inception March 31, 1996
<S> <C>
Bartlett Value International Fund
\ /-------- \ /------
T = \6.485/ 1536.31 -1 = \ 1 / 1127.6 -1
\ / ------- \ / ------
\ / 1000 \ / 1000
= 1.0684 -1 = 1.1276 -1
= 6.84% = 12.76%
Bartlett Basic Value Fund
\ /------- \ /--------
T = \12.902/ 4230.6 -1 = \ 1 / 1240.5 -1
\ / ------ \ / ------
\ / 1000 \ / 1000
= 1.1181 -1 = 1.2405 -1
= 11.81% = 24.05%
Bartlett Fixed Income Fund
\ /-------- \ /-------
T = \9.938/ 2034.1 -1 = \ 1 / 1080.4 -1
\ / ------ \ / ------
\ / 1000 \ / 1000
= 1.0740 -1 = 1.0804 -1
= 7.40% = 8.04%
Bartlett Short Term Bond Fund
\ /-------- \ /-------
T = \8.118/ 1096.7 -1 = \ 1 / 1057.4 -1
\ / ------ \ / ------
\ / 1000 \ / 1000
T = 1.0414 -1 = 1.0574 -1
= 4.14% = 5.74%
</TABLE>
<PAGE> 1
EX 24.17
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BARTLETT CAPITAL TRUST a business trust organized under the
laws of the Commonwealth of Massachusetts (hereinafter referred to as the
"Trust"), proposes to file with the Securities and Exchange Commission under
the provisions of the Securities Act of 1933 and the Investment Company Act of
1940, as amended, Post-Effective Amendment No. 21 to its Registration
Statement;
NOW, THEREFORE, the Trust hereby constitutes and appoints JOHN F.
CURLEY, JR., MARIE K. KARPINSKI and DONALD S. MENDELSOHN and each of them, its
attorneys for it and in its name, place and stead, to execute and file such
Post-Effective Amendment No. 21, hereby giving and granting to said attorneys
full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as fully
to all intents and purposes as it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused its name to be subscribed
hereto by the President this 6th day of May, 1996.
ATTEST: BARTLETT CAPITAL TRUST
/s/ Thomas A. Steele By /s/ Dale H. Rabiner
- ------------------------------------- ---------------------------
Thomas A. Steele, Assistant Secretary Dale H. Rabiner, President
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
Before me, a Notary Public, in and for said county and state,
personally appeared DALE H. RABINER, President and THOMAS A. STEELE, Assistant
Secretary, who represented that they are duly authorized in the premises, and
who are known to me to be the persons described in and who executed the
foregoing instrument, and they duly acknowledged to me that they executed and
delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 6th day of May, 1996.
/s/ JoAnn M. Strasser
------------------------------
Notary Public
State of Ohio
My Commission has no expiration date
<PAGE> 2
CERTIFICATE
The undersigned, Assistant Secretary of BARTLETT CAPITAL TRUST, hereby
certifies that the following resolution was duly adopted by the Board of
Trustees at the meeting held on May 6, 1996 and is in full force and effect:
WHEREAS, BARTLETT CAPITAL TRUST a business trust organized under
the laws of the Commonwealth of Massachusetts (hereinafter referred
to as the "Trust"), proposes to file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the
Investment Company Act of 1940, Post-Effective Amendment No. 21 to
its Registration Statement;
NOW, THEREFORE, the Trust hereby constitutes and appoints JOHN F.
CURLEY, JR., MARIE K. KARPINSKI and DONALD S. MENDELSOHN and each of
them, its attorneys for it and in its name, place and stead, to
execute and file such Post-Effective Amendment No. 21, hereby giving
and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all
intents and purposes as it might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said
attorneys may or shall lawfully do or cause to be done by virtue
hereof."
Dated: May 6, 1996 /s/ Thomas A. Steele
-------------------------------------
THOMAS A. STEELE, Assistant Secretary
Bartlett Capital Trust
<PAGE> 1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BARTLETT CAPITAL TRUST, a business trust organized under the
laws of the Commonwealth of Massachusetts (hereinafter referred to as the
"Trust"), proposes to file with the Securities and Exchange Commission under
the provisions of the Securities Act of 1933 and the Investment Company Act of
1940, as amended, Post-Effective Amendment No. 21 to its Registration
Statement; and
WHEREAS, the undersigned are Trustees and/or officers of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN
F. CURLEY, JR., MARIE K. KARPINSKI and DONALD S. MENDELSOHN and each of them,
their attorneys for them and in their name, place and stead, and in their
offices and capacities in the Trust, to execute and file such Post-Effective
Amendment No. 21, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents and
purposes as it might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
6th day of May, 1996.
/s/ Dale H. Rabiner /s/ Lorrence T. Kellar
- --------------------------- ---------------------------
DALE H. RABINER, Trustee, LORRENCE T. KELLAR, Trustee
Chairman of the Board
and President
/s/ Alan R. Schriber
---------------------------
ALAN R. SCHRIBER,
/s/ William P. Sheehan /s/ George J. Wile
- --------------------------- ---------------------------
WILLIAM P. SHEEHAN, Trustee GEORGE J. WILE, Trustee
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
Before me, a Notary Public, in and for said county and state, personally
appeared DALE H. RABINER, LORRENCE T. KELLAR, ALAN R. SCHRIBER, WILLIAM P.
SHEEHAN and GEORGE J. WILE, known to me to be the persons described in and who
executed the foregoing instrument, and who acknowledged to me that they executed
and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 6th day of May, 1996.
/s/ JoAnn M. Strasser
------------------------------------
Notary Public
State of Ohio
My Commission has no expiration date
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BARTLETT CAPITAL TRUST, a business trust organized under the
laws of the Commonwealth of Massachusetts (hereinafter referred to as the
"Trust"), proposes to file with the Securities and Exchange Commission under
the provisions of the Securities Act of 1933 and the Investment Company Act of
1940, as amended, Post-Effective Amendment No. 21 to its Registration
Statement; and
WHEREAS, the undersigned is an officer of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN
F. CURLEY, JR. and DONALD S. MENDELSOHN, and each of them, her attorneys for
her and in her name, place and stead, and in her office and capacity in the
Trust, to execute and file such Post-Effective Amendment No. 21, hereby giving
and granting to said attorneys full power and authority to do and perform all
and every act and thing whatsoever requisite and necessary to be done in and
about the premises as fully to all intents and purposes as it might or could do
if personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 6th day
of May, 1996.
/s/ Marie K. Karpinski
--------------------------------
MARIE K. KARPINSKI, Principal
Accounting Officer and Treasurer
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
Before me, a Notary Public, in and for said county and state, personally
appeared MARIE K. KARPINSKI, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that she executed
and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 6th day of May, 1996.
/s/ JoAnn M. Strasser
------------------------------------
Notary Public
State of Ohio
My Commission has no expiration date
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BARTLETT CAPITAL TRUST a business trust organized under the
laws of the Commonwealth of Massachusetts (hereinafter referred to as the
"Trust"), proposes to file with the Securities and Exchange Commission under
the provisions of the Securities Act of 1933 and the Investment Company Act of
1940, as amended, Post-Effective Amendment No. 21 to its Registration
Statement; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN
F. CURLEY, JR., MARIE K. KARPINSKI and DONALD S. MENDELSOHN and each of them,
his attorneys for him and in his name, place and stead, and in his office and
capacity in the Trust, to execute and file such Post-Effective Amendment No.
21, hereby giving and granting to said attorneys full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to
be done in and about the premises as fully to all intents and purposes as it
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 13th
day of May, 1996.
/s/ Phillip J. Ringo
---------------------------
PHILLIP J. RINGO, Trustee
STATE OF PA )
) ss:
COUNTY OF CHESTER )
Before me, a Notary Public, in and for said county and state, personally
appeared PHILLIP J. RINGO, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that he executed
and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 13th day of May, 1996.
/s/ Donna D. Riess
------------------------------------
Notary Public
State of PA
My Commission Expires Sept. 22, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000710434
<NAME> BARTLETT CAPITAL TRUST
<SERIES>
<NUMBER> 1
<NAME> BARTLETT BASIC VALUE FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 90,711,135
<INVESTMENTS-AT-VALUE> 123,865,689
<RECEIVABLES> 210,933
<ASSETS-OTHER> 821
<OTHER-ITEMS-ASSETS> 1,709,765
<TOTAL-ASSETS> 125,787,208
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 150,823
<TOTAL-LIABILITIES> 150,823
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88,302,489
<SHARES-COMMON-STOCK> 7,003,457
<SHARES-COMMON-PRIOR> 6,673,071
<ACCUMULATED-NII-CURRENT> 489,399
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,689,948
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 33,154,549
<NET-ASSETS> 125,636,385
<DIVIDEND-INCOME> 2,589,704
<INTEREST-INCOME> 861,425
<OTHER-INCOME> 0
<EXPENSES-NET> 1,366,123
<NET-INVESTMENT-INCOME> 2,085,006
<REALIZED-GAINS-CURRENT> 7,904,641
<APPREC-INCREASE-CURRENT> 14,980,193
<NET-CHANGE-FROM-OPS> 24,969,840
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,617,770
<DISTRIBUTIONS-OF-GAINS> 5,714,691
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,663,901
<NUMBER-OF-SHARES-REDEEMED> 6,758,445
<SHARES-REINVESTED> 424,930
<NET-CHANGE-IN-ASSETS> 22,915,467
<ACCUMULATED-NII-PRIOR> 22,163
<ACCUMULATED-GAINS-PRIOR> 1,499,998
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,366,123
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,366,123
<AVERAGE-NET-ASSETS> 116,488,000
<PER-SHARE-NAV-BEGIN> 15.39
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> 3.32
<PER-SHARE-DIVIDEND> .24
<PER-SHARE-DISTRIBUTIONS> .83
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.94
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000710434
<NAME> BARTLETT CAPITAL TRUST
<SERIES>
<NUMBER> 2
<NAME> BARTLETT FIXED INCOME FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 77,070,421
<INVESTMENTS-AT-VALUE> 76,732,041
<RECEIVABLES> 4,015,280
<ASSETS-OTHER> 607
<OTHER-ITEMS-ASSETS> 4,658
<TOTAL-ASSETS> 80,752,586
<PAYABLE-FOR-SECURITIES> 1,091,668
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 283,587
<TOTAL-LIABILITIES> 1,375,255
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 81,785,857
<SHARES-COMMON-STOCK> 8,014,911
<SHARES-COMMON-PRIOR> 9,418,434
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,070,146)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (338,380)
<NET-ASSETS> 79,377,331
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,032,746
<OTHER-INCOME> 0
<EXPENSES-NET> 900,170
<NET-INVESTMENT-INCOME> 5,132,576
<REALIZED-GAINS-CURRENT> 1,977,601
<APPREC-INCREASE-CURRENT> 205,780
<NET-CHANGE-FROM-OPS> 7,315,957
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,132,576
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,078,188
<NUMBER-OF-SHARES-REDEEMED> 3,903,266
<SHARES-REINVESTED> 421,555
<NET-CHANGE-IN-ASSETS> (11,972,127)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,047,747)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 900,170
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 900,170
<AVERAGE-NET-ASSETS> 89,397,000
<PER-SHARE-NAV-BEGIN> 9.70
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> .20
<PER-SHARE-DIVIDEND> .57
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.90
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
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<NAME> BARTLETT VALUE INTERNATIONAL FUND
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<NAME> BARTLETT SHORT TERM BOND FUND
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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