<PAGE> 1
As filed with the Securities and Exchange Commission on July 18, 1997.
1933 Act File No. 2-80648
1940 Act File No. 811-03613
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
<TABLE>
<S> <C> <C>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
------
Post-Effective Amendment No. 24 [X]
------
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 25 [X]
------
</TABLE>
BARTLETT CAPITAL TRUST
(formerly Midwest Group Capital Trust)
(Exact Name of Registrant as Specified in Charter)
36 East Fourth Street, Cincinnati, Ohio 45202
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (513) 621-4612
Copies to:
<TABLE>
<S> <C>
MARIE K. KARPINSKI ARTHUR J. BROWN, ESQ.
7 East Redwood Street Kirkpatrick & Lockhart LLP
Baltimore, Maryland 21202 1800 Massachusetts Ave., N.W.
(Name and Address of Second Floor
Agent for Service) Washington, D.C. 20036
</TABLE>
It is proposed that this filing will become effective:
[ X ] immediately upon filing pursuant to Rule 485(b)
[ ] on ___________________, 1997 pursuant to Rule 485(b)
[ ] 60 days after filing pursuant to Rule 485(a)(i)
[ ] on ___________________, 1997 pursuant to Rule 485(a)(i)
[ ] 75 days after filing pursuant to Rule 485(a)(ii)
[ ] on____________________, 1997 pursuant to Rule 485(a)(ii)
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed a declaration pursuant to Rule 24f-2 under the Investment
Company Act of 1940 and filed the notice required by such Rule for its most
recent fiscal year on May 30, 1997.
<PAGE> 2
Bartlett Capital Trust
Contents of Registration Statement
This registration statement consists of the following papers and documents.
Cover Sheet
Table of Contents
Cross Reference Sheets
Bartlett Basic Value Fund
Bartlett Value International Fund
Bartlett Europe Fund
Class A and Class C Shares
Part A - Prospectus
Bartlett Basic Value Fund
Bartlett Value International Fund
Bartlett Europe Fund
Class Y Shares
Part A - Prospectus
Bartlett Basic Value Fund
Bartlett Value International Fund
Bartlett Europe Fund
Class A, Class C and Class Y Shares
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
<PAGE> 3
Bartlett Capital Trust
Class A and Class C Shares Prospectus
Form N-1A Cross Reference Sheet
<TABLE>
<CAPTION>
Part A. Item No. Prospectus Caption
- ---------------- ------------------
<S> <C>
1 Cover Page
2 Prospectus Highlights; Fund Expenses
3 Investment Performance; Financial Highlights
4 Description of the Trust; Investment Objectives and Policies;
Investment Techniques and Risk Considerations
5 Description of the Trust; Financial Highlights; Fund Expenses
5a (In Registrant's Annual Report)
6 Prospectus Highlights; Cover Page;
Dividends and Distributions;
Taxes
7 Purchase of Shares; Calculation of Share Price
8 Redemption of Shares
9 None
</TABLE>
<PAGE> 4
Bartlett Capital Trust
Class Y Shares Prospectus
Form N-1A Cross Reference Sheet
<TABLE>
<CAPTION>
Part A. Item No. Prospectus Caption
- ---------------- ------------------
<S> <C>
1 Cover Page
2 Prospectus Highlights; Fund Expenses
3 Investment Performance; Financial Highlights
4 Description of the Trust; Investment Objectives and Policies;
Investment Techniques and Risk Considerations
5 Description of the Trust; Financial Highlights; Fund Expenses
5a (In Registrant's Annual Report)
6 Prospectus Highlights; Cover Page;
Dividends and Distributions;
Taxes
7 Purchase of Shares; Calculation of Share Price
8 Redemption of Shares
9 None
</TABLE>
<PAGE> 5
Bartlett Capital Trust
Class A, Class C and Class Y Shares
Form N-1A Cross Reference Sheet
<TABLE>
<CAPTION>
Statement of Additional
Part B. Item No. Information Caption
- ---------------- -----------------------
<S> <C>
10 Cover Page
11 Table of Contents
12 Description of the Trust
13 Investment Limitations; Additional Information about Fund Investments; Portfolio
Transaction and Brokerage
14 The Funds' Investment Adviser and Sub-Adviser;
Trustees and Officers
15 Description of the Trust
16 The Funds' Investment Adviser and Sub-Adviser; Custodian; Accountants; Transfer Agent;
The Trust's Distributor
17 Portfolio Transactions and Brokerage
18 Description of the Trust
19 Calculation of Share Price; Additional Purchase and Redemption
Information
20 Additional Tax Information; Tax-Deferred Retirement Plans
21 Portfolio Transactions and Brokerage; The Trust's Distributor
22 Investment Performance
23 Financial Statements
</TABLE>
<PAGE> 6
PROSPECTUS
July 18, 1997
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Highlights................................. 2
Fund Expenses......................................... 4
Financial Highlights.................................. 6
Investment Performance................................ 10
Investment Objectives and Policies.................... 11
Investment Policies, Techniques and Risk
Considerations....................................... 13
Purchase of Shares.................................... 18
Redemption of Shares.................................. 22
Calculation of Share Price............................ 24
Dividends and Other Distributions..................... 25
Taxes................................................. 26
Management of the Trust............................... 28
Description of the Trust.............................. 29
</TABLE>
- --------------------------------------------------------------------------------
Bartlett Capital Trust ("Trust") is an open-end management investment company
which currently offers three series: Bartlett Value International Fund, Bartlett
Basic Value Fund and Bartlett Europe Fund (each separately referred to as a
"Fund" and collectively referred to as the "Funds").
BARTLETT VALUE INTERNATIONAL FUND ("Value International") seeks capital
appreciation by investing primarily in foreign equity securities believed by its
adviser, Bartlett & Co. ("Bartlett" or "Adviser"), to be attractively priced
relative to their intrinsic value. Income is a secondary consideration.
BARTLETT BASIC VALUE FUND ("Basic Value") seeks capital appreciation by
investing primarily in common stocks or securities convertible into common
stocks that are believed by the Adviser to be attractively priced relative to
their intrinsic value. Income is a secondary consideration.
BARTLETT EUROPE FUND ("Europe Fund") seeks long-term growth of capital by
investing primarily in equity securities of European issuers which Lombard Odier
International Portfolio Management Limited ("Lombard Odier"), investment
sub-adviser to Europe Fund, believes are undervalued and thus may offer
above-average potential for capital appreciation.
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. A Statement of Additional Information for the Funds dated July
18, 1997 has been filed with the Securities and Exchange Commission ("SEC") and,
as amended or supplemented from time to time, is incorporated herein by
reference. The Statement of Additional Information is available without charge
upon request by calling BFP Financial Partners, Inc. ("BFP"), the Funds'
distributor, at (800) 800-3609.
INVESTORS SHOULD BE COGNIZANT OF THE UNIQUE RISKS OF INTERNATIONAL
INVESTING, INCLUDING EXPOSURE TO CURRENCY FLUCTUATIONS AND TO FOREIGN ECONOMIC
AND POLITICAL CHANGES.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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.
For further information, call (800) 800-3609 or contact your broker/dealer.
BARTLETT CAPITAL TRUST
<PAGE> 7
=======================================================================
PROSPECTUS HIGHLIGHTS
Bartlett Value International Fund
Bartlett Basic Value Fund
Bartlett Europe Fund
=====================================================================
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus and in the Statement of
Additional Information.
Investment Objectives and
Policies: VALUE INTERNATIONAL is a diversified,
professionally managed portfolio seeking to
provide capital appreciation. In attempting
to achieve the Fund's objective, the Fund
normally invests at least 65% of its total
assets in equity securities of non-U.S.
issuers. At least three different foreign
countries will normally be represented in the
Fund's portfolio.
BASIC VALUE is a diversified, professionally
managed portfolio seeking to provide capital
appreciation. In attempting to achieve the
Fund's objective, the Fund invests primarily
in common stocks or securities convertible
into common stocks. The Fund seeks to
diversify its investments across industry
sectors.
EUROPE FUND is a diversified, professionally
managed portfolio seeking to provide
long-term growth of capital. In attempting to
achieve the Fund's objective, the Fund
normally invests at least 65% of its total
assets in equity securities of European
issuers.
Investment Adviser: Bartlett & Co. has provided investment advice
to individuals, pension and profit-sharing
plans and trust accounts since 1898.
Investment Sub-Adviser to
Europe Fund: Lombard Odier International Portfolio
Management Limited ("Lombard Odier"), a
subsidiary of one of the oldest and largest
private banks in Switzerland, specializes in
advising and managing investment portfolios
for institutional clients.
Purchase Plans: Investors may select Class A or Class C
shares, each subject to different expenses
and a different sales charge structure.
Class A Shares: Offered at net asset value plus any
applicable sales charge (maximum is 4.75% of
public offering price) and subject to service
fees at an annualized rate of 0.25% of the
average daily net assets of each Fund's Class
A shares. A contingent deferred sales charge
("CDSC") may be imposed under limited
circumstances.
Class C Shares: Offered at net asset value and subject to
service and distribution fees at an
annualized rate of 1.00% of the average daily
net assets of each Fund's Class C shares. A
CDSC of 1% of net asset value at the time of
purchase or sale, whichever is less, may be
charged on redemptions of Class C shares made
within one year of the purchase date.
2
<PAGE> 8
Shares Available Through: Many brokerage firms nationwide, or directly
through the Funds' distributor. See "Purchase
of Shares," page [ ].
Initial Purchase: $1,000 minimum, generally.
Subsequent Purchases: $100 minimum, generally.
Exchange Privilege: Exchanges may be made for shares of the
corresponding class of shares of any other
Fund and for shares of Legg Mason Cash
Reserve Trust, a money market mutual fund.
See "Exchange Privilege," page [ ].
Redemption Fee: The Europe Fund will deduct a 2% redemption
fee from the proceeds of all redemptions made
by shareholders who own shares of the Fund
through the merger of Worldwide Value Fund
into Europe Fund. The redemption fee will be
charged on all redemptions until January 20,
1998 and is intended to offset the additional
trading costs the Fund may experience as a
result of such redemptions. See "Redemption
of Shares," page [ ].
Dividends and Other
Distributions: Dividends from net investment income are
declared and paid quarterly by Value
International and Basic Value and annually by
Europe Fund. Distributions of capital gains
are declared and paid annually for each Fund.
See "Dividends and Other Distributions," page
[ ]. All dividends and other distributions
are automatically reinvested in Fund shares
unless cash payments are requested.
Risk Factors: There can be no assurance that any Fund will
achieve its investment objective. Each Fund's
net asset value will fluctuate, reflecting
fluctuations in the value of its securities.
The value of the equity and other instruments
held by the Funds are subject to market risk.
The market risk of equity securities is
generally perceived to be higher than that of
any other securities of an issuer. The value
of debt instruments generally fluctuates
inversely with movements in market interest
rates. The values of longer-term debt
securities generally fluctuate more than
those of shorter-term securities.
Changes in economic conditions in, or
governmental policies of, foreign nations may
have a significant impact on the performance
of Value International and Europe Fund.
Foreign investment involves a possibility of
expropriation, nationalization, confiscatory
taxation, limitations on the use or removal
of funds or other assets of a Fund, the
withholding of tax on interest or dividends,
and restrictions on the ownership of
securities by foreign entities such as the
Funds. Fluctuations in the value of foreign
currencies relative to the U.S. dollar also
will affect the value of Fund holdings
denominated in such currencies.
Each Fund's participation in hedging and
option strategies also involves certain
investment risks and transaction costs. None
of the Funds should be considered a complete
investment program. See "Investment
Objectives and Policies" and "Investment
Policies, Techniques and Risk
Considerations."
3
<PAGE> 9
===========================================================================
=======================================================================
=====================================================================
FUND EXPENSES
The purpose of the following tables is to assist an investor in
understanding the various costs and expenses that an investor in Class A or
Class C shares of a Fund will bear directly or indirectly. For Value
International and Basic Value Class A shares, the expenses set forth in the
table below are based on average net assets and annual Fund operating expenses
relating to Value International and Basic Value shares, respectively, for the
year ended March 31, 1997, but have been restated to reflect current management
fees and estimated other expenses. Those shares were redesignated as Class A
shares on July 18, 1997. For Value International and Basic Value Class C shares,
the expenses set forth in the table below have been similarly restated, except
that Fund expenses reflect different 12b-1 fees. For Class A and Class C shares
of Europe Fund, other expenses are based on estimates for the current fiscal
period. Fees are adjusted for current expense limits and fee waiver levels for
all three Funds.
Long-term Class A and Class C shareholders may pay more in direct and
indirect sales charges (including 12b-1 distribution fees) than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. For further information concerning Fund
expenses, see "Management of the Trust."
CLASS A SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE BASIC EUROPE
SHAREHOLDER TRANSACTION EXPENSES INTERNATIONAL VALUE FUND
- ----------------------------------------- -----------------------------------------
<S> <C> <C> <C>
Maximum sales charge on purchases (as a % of offering price)(a) 4.75% 4.75% 4.75%
Deferred sales charges(b) None None None
Redemption or exchange fees None None 2.00%(c)
</TABLE>
ANNUAL FUND OPERATING EXPENSES(d)(e)
(as a % of average net assets)
- -----------------------------------------------
<TABLE>
<S> <C> <C> <C>
Management fees (after fee waivers) 1.20% 0.72% 0.69%
12b-1 fees 0.25% 0.25% 0.25%
Other expenses 0.35% 0.18% 0.81%
<CAPTION>
-----------------------------------------
<S> <C> <C> <C>
Total operating expenses (after fee waivers) 1.80% 1.15% 1.75%
</TABLE>
(a) Sales charge waivers and reduced sales charge purchase plans are available
for Class A Shares. See "Purchase of Shares."
(b) A CDSC of 1% of the net asset value of Class A shares may be imposed on
redemptions of shares purchased pursuant to the front-end sales charge
waiver on purchases of $1 million or more of Class A shares made within one
year of the purchase date. See "Purchase of Shares."
(c) The Europe Fund will deduct a 2% redemption fee from the redemption proceeds
of all redemptions by shareholders who own shares of the Fund through the
merger of Worldwide Value Fund into Europe Fund. The redemption fee will be
charged on all redemptions until January 20, 1998. See "Redemption of
Shares," page [ ].
(d) Pursuant to voluntary expense limitations, the Adviser has agreed to waive
fees to the extent that Value International's Class A expenses exceed 1.80%,
Basic Value's Class A expenses exceed 1.15%, and Europe Fund's Class A
expenses exceed 1.75% of their respective average daily net assets through
July 31, 1998. In the absence of such waivers, the expected management fee,
12b-1 fee, other expenses and total operating expenses of Value
International would be 1.25%, 0.25%, 0.35% and 1.85%; of Basic Value would
be 0.75%, 0.25%, 0.18% and 1.18%; and of Europe Fund would be 1.00%, 0.25%,
0.81% and 2.06% of average daily net assets, respectively.
(e) The expense information has been restated to reflect current fees and
expenses and a changed management fee.
4
<PAGE> 10
EXAMPLE
The following example illustrates the expenses that you would pay on a
$1,000 investment in Class A Shares over various time periods assuming (1) a 5%
annual rate of return and (2) full redemption at the end of each time period.
With the limited exceptions noted above, the Funds charge no redemption fees of
any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------
<S> <C> <C> <C> <C>
VALUE INTERNATIONAL.................................... $65 $ 101 $ 140 $249
BASIC VALUE............................................ $59 $ 82 $ 108 $181
EUROPE FUND............................................ $64 $ 100 $ 138 $244
</TABLE>
This example assumes that the maximum initial sales charge is deducted at
the time of purchase and that there is no deduction of the 1% CDSC imposed on
redemptions of shares purchased pursuant to the front-end sales charge waiver of
purchases of $1 million or more made within one year of the purchase date. THE
ASSUMED 5% ANNUAL RETURN IS NOT A PREDICTION OF, AND DOES NOT REPRESENT, THE
PROJECTED OR ACTUAL PERFORMANCE OF CLASS A SHARES OF THE FUNDS. THE ABOVE TABLES
AND EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The actual
expenses attributable to Class A shares will depend upon, among other things,
the level of average net assets, the levels of sales and redemptions of shares,
the extent to which Bartlett waives its fees and the extent to which Class A
shares incur variable expenses, such as transfer agency costs.
CLASS C SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE BASIC EUROPE
SHAREHOLDER TRANSACTION EXPENSES INTERNATIONAL VALUE FUND
- -------------------------------- ------------------------------------------
<S> <C> <C> <C>
Maximum sales charge on purchases None None None
Deferred sales charges(a) 1.00% 1.00% 1.00%
Redemption or exchange fees None None None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES(b)(c)
(as a % of average net assets)
- ------------------------------------
<S> <C> <C> <C>
Management fees (after fee waivers) 1.20% 0.72% 0.69%
12b-1 fees 1.00% 1.00% 1.00%
Other expenses 0.35% 0.18% 0.81%
-----------------------------------------
Total operating expenses (after fee waivers) 2.55% 1.90% 2.50%
</TABLE>
(a) A CDSC of 1% of net asset value at the time of purchase or sale, whichever
is less, may be charged on redemptions of Class C shares made within one
year of the purchase date. See "Purchase of Shares."
(b) Pursuant to voluntary expense limitations, the Adviser has agreed to waive
fees to the extent that Value International's Class C expenses exceed 2.55%,
Basic Value's Class C expenses exceed 1.90%, and Europe Fund's Class C
expenses exceed 2.50%, of their respective average daily net assets through
July 31, 1998. In the absence of such waivers, the expected management fee,
12b-1 fee, other expenses and total operating expenses of Value
International would be 1.25 %, 1.00%, 0.35% and 2.60%; of Basic Value would
be 0.75%, 1.00%, 0.18% and 1.93%; and of Europe Fund would be 1.00%, 1.00%,
0.81% and 2.81% of average daily net assets, respectively.
(c) The expense information has been restated to reflect current fees and
expenses and a changed management fee.
5
<PAGE> 11
EXAMPLE
The following example illustrates the expenses that you would pay on a
$1,000 investment in Class C shares over various time periods assuming (1) a 5%
annual rate of return and (2) full redemption at the end of each time period.
The Funds charge no redemption fees of any kind with respect to Class C shares.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------
<S> <C> <C> <C> <C>
VALUE INTERNATIONAL
Assuming full redemption............................. $36 $79 $ 136 $289
Assuming no redemption............................... $26 $79 $ 136 $289
BASIC VALUE
Assuming full redemption............................. $29 $60 $ 103 $222
Assuming no redemption............................... $19 $60 $ 103 $222
EUROPE FUND
Assuming full redemption............................. $35 $78 $ 133 $284
Assuming no redemption............................... $25 $78 $ 133 $284
</TABLE>
THE ASSUMED 5% ANNUAL RETURN IS NOT A PREDICTION OF, AND DOES NOT
REPRESENT, THE PROJECTED OR ACTUAL PERFORMANCE OF CLASS C SHARES OF THE FUNDS.
THE ABOVE TABLES AND EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
actual expenses attributable to Class C Shares will depend upon, among other
things, the level of average net assets, the levels of sales and redemptions of
shares, the extent to which Bartlett waives its fees and the extent to which
Class C Shares incur variable expenses, such as transfer agency costs.
=======================================================================
FINANCIAL HIGHLIGHTS
=====================================================================
Each Fund offers three classes of shares. Prior to July 18, 1997, Value
International and Basic Value each offered only a single class of shares, which
have been redesignated as Class A Shares. The financial information in the
tables that follow with respect to Value International and Basic Value is for
their respective shares that have been redesignated as Class A shares and has
been audited by Arthur Andersen LLP, independent accountants. The financial
statements for Value International and Basic Value for the year ended March 31,
1997 and the report of Arthur Andersen LLP thereon are included in the combined
annual report to shareholders for the Bartlett Mutual Funds and are incorporated
by reference into the Statement of Additional Information. The annual report for
the Bartlett Mutual Funds is available to shareholders without charge by calling
BFP at (800) 822-5544. No information is presented for the Funds' Class C shares
because no such shares were outstanding prior to July 18, 1997.
The financial information in the table below with respect to Worldwide
Value Fund, Inc. (Europe Fund's predecessor) has been audited by Coopers &
Lybrand L.L.P., independent accountants. Prior to July 18, 1997, Worldwide Value
Fund, Inc. was a closed-end registered investment company whose single class of
shares traded on the New York Stock Exchange. On July 18, 1997, Europe Fund,
which had no previous operating history, acquired the assets and assumed the
liabilities of Worldwide Value Fund, Inc.
6
<PAGE> 12
=======================================================================
BARTLETT VALUE INTERNATIONAL FUND
=====================================================================
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31, 1997 1996 1995 1994 1993 1992 1991 1990(a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $12.59 $11.64 $12.46 $10.08 $9.93 $9.09 $9.79 $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income from Investment
Operations:
Net Investment Income .08 .13 .09 .07 .12 .18 .30 .08
Net Realized and Unrealized
Gains
(Losses) on Securities 1.81 1.33 (.21) 2.38 .15 .88 (.70) (.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Operations 1.89 1.46 (.12) 2.45 .27 1.06 (.40) .03
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from Net Investment
Income (.08) (.13) (.09) (.07) (.10) (.22) (.28) (.08)
In Excess of Net Investment
Income (.01) (.01) -- -- -- -- -- --
Distributions from Realized
Gains (.75) (.37) (.61) -- (.02) -- (.02) (.16)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.84) (.51) (.70) (.07) (.12) (.22) (.30) (.24)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.64 $12.59 $11.64 $12.46 $10.08 $9.93 $9.09 $9.79
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return 15.45% 12.76% (1.18%) 24.42% 2.71% 11.88% (3.84%) 0.59%(c)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period $83,973 $72,041 $57,664 $49,607 $29,572 $22,042 $23,661 $20,557
Ratio of Net Expenses to
Average
Net Expenses(b) 1.81% 1.83% 1.83% 1.88% 2.00% 2.00% 1.99% 1.41%(c)
Ratio of Net Investment Income
to Average Net Assets(b) .62% 1.06% .80% .55% 1.13% 1.79% 3.31% 1.80%(c)
Portfolio Turnover Rate 31% 38% 24% 19% 19% 27% 39% 155%(c)
Average Commission Rate
Paid(d) $.0296 -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) From the date of the public offering of Value International (October 6,
1989) through March 31, 1990.
(b) The Adviser has periodically absorbed expenses of the Fund through
management fee waivers. If the Adviser 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 years ended March 31, 1994 and 1990, respectively.
(c) Annualized
(d) Pursuant to SEC regulations effective for fiscal years beginning after
September 1, 1995, this is the average commission rate paid on securities
purchased and sold by the fund.
7
<PAGE> 13
=======================================================================
BARTLETT BASIC VALUE FUND
=====================================================================
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31, 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $17.94 $15.39 $14.89 $14.76 $13.47 $12.60 $12.34 $12.56 $12.44 $12.96
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment
Operations:
Net Investment Income .22 .30 .27 .22 .30 .36 .46 .62 .57 .35
Net Realized and
Unrealized Gains
(Losses) on
Securities 1.82 3.32 1.53 .28 1.57 .87 .26 .21 1.20 (.51)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Operations 2.04 3.62 1.80 .50 1.87 1.23 .72 .83 1.77 (.16)
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from Net
Investment Income (.26) (.24) (.27) (.23) (.30) (.36) (.46) (.62) (.56) (.36)
Distributions from
Realized Gains (1.39) (.83) (1.03) (.14) (.28) -- -- (.43) (1.09) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.65) (1.07) (1.30) (.37) (.58) (.36) (.46) (1.05) (1.65) (.36)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Period $18.33 $17.94 $15.39 $14.89 $14.76 $13.47 $12.60 $12.34 $12.56 $12.44
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 11.30% 24.05% 12.67% 3.42% 14.22% 9.91% 6.29% 6.49% 15.61% (1.24%)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, End of Year $119,208 $125,636 $102,721 $94,289 $103,507 $88,536 $96,165 $105,842 $100,333 $80,583
Ratio of Expenses to
Average Net Expenses 1.16% 1.17% 1.20% 1.20% 1.21% 1.22% 1.21% 1.19% 1.23% 1.57%
Ratio of Net Investment
Income to Average Net
Assets 1.18% 1.79% 1.81% 1.48% 2.14% 2.77% 3.87% 4.81% 4.57% 2.75%
Portfolio Turnover Rate 23% 25% 26% 33% 43% 49% 92% 77% 99% 97%
Average Commission Rate
Paid(a) $.0655 -- -- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Pursuant to SEC regulations effective for fiscal years beginning after
September 1, 1995, this is the average commission rate paid on securities
purchased and sold by the fund.
8
<PAGE> 14
=======================================================================
BARTLETT EUROPE FUND
(SUCCESSOR TO WORLDWIDE VALUE FUND, INC.)
=====================================================================
(For the entire period shown, the Fund operated as a closed-end investment
company with its shares traded on the New York Stock Exchange.)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED
DECEMBER 31, 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987(c) 1987(b)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $21.13 $17.68 $18.46 $14.29 $15.44 $14.65 $20.14 $19.53 $16.46 $21.98 $20.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment
Income (Loss) .02 .01 (.03) .14 .08 .08 .19 .03 .03 -- .16
Net Realized and
Unrealized Gain
(Loss) on
Investments,
Options and
Currency
Transactions 6.34 3.50 (.75) 4.13 (1.19) .92 (4.30) 2.19 4.04 (4.41) 3.39
- ------------------------------------------------------------------------------------------------------------------------------------
Total From
Investment
Operations 6.36 3.51 (.78) 4.27 (1.11) 1.00 (4.11) 2.22 4.07 (4.41) 3.55
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and
Other
Distributions
Paid:
Net Investment
Income -- (.06) -- (.05) (.04) (.21) (.08) (.19) -- (.09) --
Net Realized
Gains (3.25) -- -- -- -- -- (.85) (1.42) (1.00) (1.02) --
In Excess of
Net Investment
Income -- -- -- (.05) -- -- (.45) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Dividends
and Other
Distributions (3.25) (.06) -- (.10) (.04) (.21) (1.38) (1.61) (1.00) (1.11) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $24.24 $21.13 $17.68 $18.46 $14.29 $15.44 $14.65 $20.14 $19.53 $16.46 $21.98
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value Per
Share, End of
Period $22.00 $16.88 $14.25 $16.63 $12.00 $12.50 $12.125 $19.00 $16.125 $12.00 $17.875
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment
Return:
Based on Market
Value Per
Share 49.5% 18.8% (14.3%) 39.3% (3.7%) 4.7% (30.4%) 28.5% 42.2% n/a n/a
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Ratios to
Average Net
Assets:
Expenses 2.0% 2.1% 2.1% 2.1% 2.2% 2.3% 2.4% 2.2% 2.2% 2.1%(d) 2.2%(d)
Net Investment
Income 0.1% 0.1% -- 0.9% 0.5% 0.5% 1.1% 0.1% 0.2% -- 0.9%(d)
Portfolio
Turnover Rate 109.0% 147.7% 75.0% 66.8% 148.4% 91.9% 84.3% 121.5% 95.6% 110.5%(d) 117.0%(d)
Average
Commission Rate
Paid(a) $.0313 -- -- -- -- -- -- -- -- -- --
Net Assets at
End of Period
(in Thousands) $70,991 $62,249 $53,135 $55,486 $42,930 $46,405 $44,026 $60,522 $58,684 $49,463 $66,040
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Pursuant to SEC regulations adopted for fiscal years beginning after
September 1, 1995, this is the average commission rate paid on securities
purchased and sold by the Fund.
(b) For the period August 19, 1986 (commencement of operations) to June 30,
1987.
(c) For the six months ended December 31, 1987.
(d) Annualized
9
<PAGE> 15
=======================================================================
INVESTMENT PERFORMANCE
=====================================================================
From time to time each Fund may quote the TOTAL RETURN of each class of
shares in advertisements or in reports or other communications to shareholders.
A mutual fund's total return is a measurement of the overall change in value,
including changes in share price and assuming reinvestment of dividends and
capital gain distributions, of an investment in the fund. CUMULATIVE TOTAL
RETURN shows the fund's performance over a specific period of time. AVERAGE
ANNUAL TOTAL RETURN is the average annual compounded return that would have
produced the same cumulative total return if the fund's performance had been
constant over the entire period. Average annual returns, which differ from
actual year-by-year results, tend to smooth out variations in a fund's return.
No adjustment will be made for any income taxes payable by shareholders.
Total returns of Basic Value and Value International shares (redesignated
as Class A shares) as of March 31, 1997 are shown below. The returns shown below
for Europe Fund as of December 31, 1996 are those of Worldwide Value Fund, Inc.
and are based on net asset value. Sales charges have not been deducted from
total returns. None of the Funds imposed such charges through the periods shown.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BASIC VALUE EUROPE
CUMULATIVE TOTAL RETURN VALUE INTERNATIONAL FUND
- ----------------------- ----------------------------------
<S> <C> <C> <C>
One Year 11.36% 15.45% 31.53%
Three Years 55.64% 28.65% 51.05%
Five Years 83.85% 64.39% 82.15%
Ten Years 161.19% n/a 124.09%
Life of Class 371.10%(a) 77.37%(b) 95.07%(c)
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------
<S> <C> <C> <C>
One Year 11.36% 15.45% 31.53%
Three Years 15.89% 8.76% 14.74%
Five Years 12.95% 10.45% 12.74%
Ten Years 10.08% n/a 8.40%
Life of Class 11.79%(a) 7.95%(b) 6.65%(c)
</TABLE>
(a) Inception of Basic Value -- May 5, 1983
(b) Inception of Value International -- October 6, 1989
(c) Inception of Worldwide Value Fund, Inc. (which was reorganized into Europe
Fund on July 18, 1997) -- August 19, 1986
Total return information reflects past performance and is not a prediction
or guarantee of future results. Investment return and share price will
fluctuate, and the value of an investors shares, when redeemed, may be worth
more or less than their original cost. Further information about each Fund's
performance is contained in the Funds' combined annual report to shareholders,
which may be obtained without charge by calling BFP at (800) 800-3609.
10
<PAGE> 16
=======================================================================
INVESTMENT OBJECTIVES AND POLICIES
=====================================================================
The investment objective of Basic Value and Value International may be
changed without shareholder approval; however, shareholders of these two Funds
will be given a minimum of 30 days' prior written notice before any change in
investment objective becomes effective. Europe Fund's investment objective may
not be changed without shareholder approval. Except as otherwise noted, the
investment policies of each Fund described below may be changed by the Trust's
Board of Trustees without a shareholder vote. There can be no assurance that any
Fund will achieve its investment objective. Each Fund's net asset value
fluctuates based upon changes in the value of its portfolio securities.
BARTLETT VALUE INTERNATIONAL FUND
The investment objective of Value International is to seek capital
appreciation. The Fund seeks its objective by investing primarily in foreign
equity securities believed by Bartlett 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 ("ADRs"), European Depositary Receipts
("EDRs") or other similar securities and by purchasing shares of closed-end
investment companies that hold foreign equity securities in their portfolios.
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
fixed income obligations of foreign companies, foreign governments, foreign
governmental agencies and international organizations. In addition, the Fund may
invest a portion of its assets in U.S. government obligations, debt and equity
obligations of U.S. issuers, and repurchase agreements, and may hold a portion
of its assets in cash and U.S. dollar-denominated time deposits.
In seeking its objective, the Fund intends to diversify its investments
among issuers representing various countries. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in equity securities of
non-U.S. 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 total assets invested in any
major industrial or developed country which in the view of Bartlett 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 Fund may employ several investment techniques, including the use of
options, hedging programs, currency transactions, repurchase agreements, lending
of portfolio securities, short sales "against the box" and forward commitment
transactions. For temporary defensive purposes, the Fund may hold all or a
portion of its assets in money market instruments, cash equivalents, short-term
government and corporate obligations or repurchase agreements.
Bartlett selects portfolio securities on the basis of what it considers to
be the intrinsic value of each security. In analyzing the intrinsic value of a
specific security, particular emphasis is given to such characteristics as
relative price/earnings ratio, dividend yield, and price/book value ratio. In
making investment decisions, Bartlett 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
11
<PAGE> 17
a portion of their assets outside the U.S., it should not be considered a
complete investment program. In addition, investments in foreign securities may
be subject to risks not typically associated with investments in domestic
securities. See "Foreign Securities" for a more complete discussion of certain
risks associated with investments in foreign securities.
See "Investment Policies, Techniques and Risk Considerations" beginning at
page [ ] for a more detailed discussion of risks associated with the securities
and investment techniques discussed above.
BARTLETT BASIC VALUE FUND
The investment objective of Basic Value is to seek capital appreciation.
The Fund seeks its objective by investing primarily in common stocks or
securities convertible into common stocks that Bartlett 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 ratio. The Fund
seeks to diversify its investments across industry sectors. The Fund's
investments may include foreign securities.
In seeking its objective, Basic Value invests only in securities of
companies with at least three years of operating history. Due to the Fund's
disciplined investment methodology, and the cyclical nature of the economy and
investment markets, there will be times when Bartlett 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.
The Fund may employ several investment techniques, including the use of
options, hedging programs, currency transactions, repurchase agreements, reverse
repurchase agreements and dollar rolls, lending of portfolio securities, short
sales, short sales "against the box", structured securities and forward
commitment transactions. For temporary defensive purposes, the Fund may hold all
or a portion of its assets in money market instruments, cash equivalents,
short-term government and corporate obligations or repurchase agreements.
For a further discussion of the risks associated with these securities and
techniques, see "Investment Policies, Techniques and Risk Considerations,"
beginning on page [ ].
BARTLETT EUROPE FUND
The investment objective of Europe Fund is to seek long-term growth of
capital. The Fund seeks to achieve its investment objective by investing, under
normal market conditions, at least 65% of its total assets in equity securities
of European issuers that Lombard Odier believes are undervalued and thus may
offer above-average potential for capital appreciation.
The Fund invests primarily in equity securities, including common stock,
preferred stock, convertible securities, rights and warrants, but may also
invest in bonds, notes and other fixed income securities. The Fund will normally
invest at least 65% of its total assets in equity securities and may invest up
to 35% of its total assets in fixed income securities. When conditions warrant,
for temporary defensive purposes, the Fund may invest over 35% and as much as
100% of its total assets in fixed income securities. The fixed income securities
in which the Fund may invest generally include obligations of foreign or
domestic governments, government agencies or municipalities, and obligations of
foreign or domestic companies. The Fund may invest in fixed income securities
without regard to rating, although Lombard Odier does not anticipate that more
than 5% of the Fund's total assets will be invested in fixed income securities
rated lower than "investment grade"
12
<PAGE> 18
(that is, Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard
& Poor's ("S&P")), or, if unrated, deemed by Lombard Odier to be of comparable
quality. Most fixed income securities of foreign issuers are not rated by
Moody's or S&P. Generally, the fixed income securities in which the Fund will
invest will be those which Lombard Odier believes offer potential for capital
appreciation, either because of anticipated changes in the general level of
interest rates, or because of anticipated improvement in the issuer's credit
rating.
For temporary defensive purposes, the Fund may hold all or a portion of its
assets in money market instruments, cash equivalents, short-term government and
corporate obligations. The Fund may also enter into repurchase agreements.
The Fund may purchase securities both on recognized stock exchanges and in
over-the-counter markets. Most of the Fund's portfolio transactions will be
effected in the primary trading market for the given security.
The Fund may also invest in depositary receipts and securities of other
investment companies, and may enter into when-issued and delayed-delivery
transactions. The Fund is authorized to invest in options, futures and options
on futures contracts and may enter into foreign currency transactions and
forward foreign currency exchange contracts ("forward contracts"). The Fund may
invest up to 15% of its net assets in illiquid or restricted securities.
================================================================================
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
Equity securities include common stock, preferred stock and other similar
securities 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.
FOREIGN SECURITIES
Each Fund may invest, without limitation, in foreign equity securities.
Value International and Europe Fund are expected normally to invest at least 65%
of their respective assets in foreign securities.
ADRs, 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 an 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.
Each Fund may invest in ADRs and EDRs.
Foreign fixed income securities include corporate debt obligations issued
by foreign companies and debt obligations of foreign governments or
international organizations.
13
<PAGE> 19
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).
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, which include entities designated or supported by
governmental entities to promote economic reconstruction or development as well
as international banking institutions and related governmental 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 in its portfolio.
Value International and Europe Fund under normal conditions will invest at
least 65% of their assets in foreign securities and European securities,
respectively. For purposes of this 65% test, foreign and European securities
respectively include securities of issuers: (i) which are organized under the
laws of a foreign country or Europe; (ii) for which the principal trading market
is in a foreign country or Europe; or (iii) which derive at least 50% of their
revenues or profits from goods produced or sold, investments made, or services
performed in foreign countries or Europe or which have at least 50% of their
assets situated in foreign countries or Europe.
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. 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 exchange, changes in the administrations or
economic and monetary policies of foreign governments, the imposition of
exchange control regulations, the possibility of expropriation decrees and other
adverse foreign governmental action, the imposition of confiscatory 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.
EMERGING MARKETS
Value International and Europe Fund may invest in securities of issuers
based in emerging markets. Europe Fund may (but is not limited to) invest in
issuers based in Greece, Portugal, Hungary, Poland, Czech Republic, Slovakia or
Turkey. International Fund may (but is not limited to) invest in issuers based
in the countries in Latin America, Southeast Asia, the Far East and South
America. Subject to the above restrictions, emerging markets will include any
country: (i) having an "emerging stock market" as defined by the International
Finance Corporation; (ii) with low- to middle-income economies according to the
International Bank for Reconstruction and Development ("World Bank"); (iii)
listed in World Bank publications as developing; or (iv) determined by Bartlett
& Co. or Lombard
14
<PAGE> 20
Odier to be an emerging market in accordance with the criteria of those
organizations. The following are considered emerging market securities: (1)
securities publicly traded on emerging market stock exchanges, or whose
principal trading market is over-the-counter (i.e., off-exchange) is an emerging
market; (2) securities (i) denominated in any emerging market currency or (ii)
denominated in a major currency if issued by companies to finance operations in
an emerging market; (3) securities of companies that derive a substantial
portion of their total revenues from goods or services produced in, or sales
made in, emerging markets; (4) securities of
companies organized under the laws of an emerging market country or region,
which are publicly traded in securities markets elsewhere; and (5) ADRs (or
similar instruments) with respect to the foregoing.
The risks of foreign investment, described above, are greater for
investments in emerging markets. Investors are strongly advised to consider
carefully the special risks involved in emerging markets, which are in addition
to the usual risks of investing in developed markets around the world. Many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, very
negative effects on the economies and securities markets of certain emerging
markets. Economies in emerging markets generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be affected
adversely by economic conditions, trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. In addition, many of the
currencies of emerging market countries have experienced steady devaluations
relative to the U.S. dollar, and major devaluations have occurred in certain
countries.
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 convertible debt securities may also be
considered to be fixed income securities.
Corporate Debt Securities. 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% (15% for Europe Fund) of
the value of its net assets in illiquid investments.
OPTIONS, FUTURES AND FORWARD CURRENCY EXCHANGE CONTRACTS
Each Fund may engage in option transactions involving equity securities,
debt securities, futures contracts and stock indexes. Each Fund may also engage
in option transactions involving foreign currencies and foreign stock indexes.
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 its custodian
15
<PAGE> 21
(i) appropriate liquid assets sufficient to purchase the underlying equity
security, debt security, futures contract or foreign currency or (ii)
appropriate liquid assets equal to the market value of the stock index. A Fund
will engage in options on futures contracts only for hedging purposes (see
below). Option transactions involve the following principal risks: (i) the loss
of a greater percentage of the Fund's investment than a direct investment in the
underlying instrument, (ii) the loss of opportunity to profit from price
movements in the underlying instrument, and (iii) 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). However, the SEC considers over-the-counter options to be
illiquid. As long as the SEC 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% (15% for Europe Fund) of its net assets. The
policy of Basic Value and Value International 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 which a Fund writes, are
not deemed fundamental and may be changed by the Board of Trustees without
shareholder vote.
Each Fund may hedge all or a portion of its portfolio investments through
the use of options, futures contracts and options on futures contracts. Each
Fund may hedge currency risks associated with investments in foreign securities
and in particular may hedge its portfolio through the use of forward contracts
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: (i) possible
imperfect correlation between the prices of the options and futures contracts
and the market value of a Fund's portfolio securities, (ii) possible lack of a
liquid secondary market for closing out an option or futures contract
transaction, (iii) the need for additional skills and techniques beyond normal
portfolio management, and (iv) losses resulting from market movements not
anticipated by Bartlett and/or Lombard Odier.
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 requirement for federal
income tax purposes that a Fund derive less than 30% of its gross income from
the sale or other disposition of stock, securities or certain options, futures,
forward contracts or foreign currencies held for less than three months.
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, a 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, a Fund may enter into a forward
contract. A forward contract involves an obli-
16
<PAGE> 22
gation 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, a 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 a Fund from a possible
loss, but will limit potential gains which might result from a positive change
in the currency relationships.
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, a
Fund may enter into a forward contract to sell, for a fixed amount of U.S.
dollars, the amount of foreign currency approximating the value of some or all
of that Fund's portfolio securities denominated in such foreign currency. This
technique is known as portfolio hedging. Hedging against a decline in the value
of currency does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of such securities declines. The
Funds may also employ forward contracts to hedge against an increase in the
value of the currency in which the securities a 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.
A more complete description of the characteristics, risks and possible
benefits of option and hedging transactions is included in the Funds' Statement
of Additional Information.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements. A repurchase agreement is a
transaction 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,
a Fund could experience both delays in liquidating the underlying security and
losses. Europe Fund may enter into repurchase agreements with respect to
securities issued by the U.S. government, its agencies or instrumentalities.
Under normal circumstances, no more than 25% of Europe Fund's total assets will
be invested in repurchase agreements at any time.
ILLIQUID SECURITIES
The portfolio of each Fund may contain illiquid securities. A Fund will not
invest more than 10% (15% with respect to Europe Fund) 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 generally to be illiquid (although if they are liquid they will
be treated as such): repurchase agreements and time deposits maturing in more
than seven days, options traded in the over-the-counter market, nonpublicly
offered securities, stripped collateralized mortgage obligations ("CMOs"), CMOs
for which there is no established market, direct investments in mortgages and
restricted securities.
RESTRICTED SECURITIES
Each Fund may invest in restricted securities, although Basic Value and
Value International do not intend to invest more than 5% of their respective net
assets in 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,
17
<PAGE> 23
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, a 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.
LOANS OF PORTFOLIO SECURITIES
Each Fund may make short- and long-term loans of their portfolio
securities. Under the lending policy authorized by the Board of Trustees and
implemented by Bartlett or Lombard Odier, in response to requests of broker/
dealers or institutional investors which Bartlett or Lombard Odier 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
Funds 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. 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 a Fund's total assets.
OTHER INVESTMENT COMPANIES
Each Fund is permitted to invest in other investment companies at any time.
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 a Fund acquires securities of another
investment company, the shareholders of the Fund may be subject to duplicative
management fees.
Value International and Europe Fund each may invest in any closed-end
investment company that holds foreign equity securities in its portfolio. For
Value International, investments in the shares of closed-end investment
companies that invest primarily in the equity securities of non-U.S. issuers
will be included in the 65% of total assets that Value International normally
would expect to invest in such issuers. Likewise, investments by Europe Fund in
the shares of closed-end investment companies that invest primarily in equity
securities of European issuers will be included in the 65% of total assets that
Europe Fund normally would expect to invest in European issuers.
=======================================================================
PURCHASE OF SHARES
=====================================================================
GENERAL
Each Fund is authorized to issue three classes of shares. Class A Shares of
the Funds are subject to an initial sales charge or a CDSC under limited
circumstances. Class C Shares are sold without an initial sales charge but are
subject to a CDSC on certain redemptions and are subject to higher ongoing
expenses. The third class of shares of the Funds, Class Y Shares, is offered
through a separate prospectus only to certain investors. See "Class Y Shares."
Orders received before the close of regular trading on the New York Stock
Exchange ("Exchange") (normally 4:00 p.m. Eastern time) ("close of the
Exchange") on any day the Exchange is open will be executed at the net asset
value for the applicable class of
18
<PAGE> 24
shares, plus any applicable sales charge, determined as of the close of the
Exchange on that day. Orders received after the close of the Exchange or on days
the Exchange is closed will be executed at the net asset value for the
applicable class of shares, plus any applicable sales charge, determined as of
the close of the Exchange on the next day the Exchange is open. When placing
purchase orders, investors should specify whether the order is for Class A or
Class C shares of a Fund. All purchase orders that fail to specify a class will
automatically be invested in Class A Shares. The Funds and BFP reserve the right
to reject any purchase order and to suspend the offering of shares for a period
of time. The Funds do not issue share certificates.
The minimum initial investment for each class of shares is $1,000,
including investments made by exchange from another Fund or Legg Mason Cash
Reserve Trust, and investments through an individual retirement account ("IRA")
self-employed individual retirement plan ("Keogh Plan"), simplified employee
pension plan ("SEP"), savings incentive match plan for employees ("SIMPLE") or
other qualified retirement plan. The minimum investment for each purchase of
additional shares is $100. Each Fund may reduce or 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 investments made by advisory clients of Bartlett and
employees of Bartlett and their families, or under other circumstances. The
minimum amount for subsequent investments will be waived if an investment in an
IRA or similar plan will bring the investment for the year to the maximum amount
permitted under the Internal Revenue Code of 1986, as amended ("Code").
Once an account has been established, investors may also purchase shares of
the Funds through BFP by bank wire. Bank wire purchases will be effected at the
next determined net asset value, plus any applicable sales charge, after the
bank wire is received. An investor's bank may charge a service fee for wiring
money to the Funds.
Reports will be sent to each Fund's shareholders at least semiannually
showing its portfolio and other information; an annual report for the Funds will
contain financial statements audited by the Trust's independent accountants.
Shareholder inquiries should be addressed to:
[insert complete Fund name]
BFP Funds Processing
P.O. Box 1476
Baltimore, Maryland 21203-1476
Telephone inquiries:
call BFP at (800) 800-3609
PURCHASES THROUGH BROKER/DEALERS:
Shares of the Funds may be purchased through broker/dealers with which BFP
has entered into dealer agreements. Orders received by such broker/dealers
before the close of the Exchange will be effected that day, provided that such
order is transmitted to Boston Financial Data Services, Inc. ("BFDS"), the
Trust's transfer agent, prior to its close of business on such day. The
broker/dealer will be responsible for forwarding the investor's order to BFDS so
that it will be received prior to such time. After an initial investment is made
and a shareholder account is established through a broker/dealer, at the
investor's option, subsequent purchases may be made directly through BFP.
Broker/dealers that do not have dealer agreements with BFP also may offer
to place orders for the purchase of shares. Purchases made through such
broker/dealers will be effected at the net asset value per share plus any
applicable sales charge next determined after the order is received by BFDS.
Such a broker/dealer may charge the investor a transaction fee as determined by
the broker/dealer. That fee will be in addition to the sales charge payable by
the investor with respect to Class A Shares, and may be avoided if shares are
purchased through a broker/dealer that has a dealer agreement with BFP or
directly through BFP.
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<PAGE> 25
PURCHASING CLASS A SHARES:
Each Fund's public offering price for Class A Shares is equal to the net
asset value per share plus a sales charge determined in accordance with the
following schedule, which may be amended from time to time:
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS A % OF REALLOWANCE AS
---------------------- A PERCENTAGE
OFFERING NET OF THE
AMOUNT OF PURCHASE PRICE INVESTMENT OFFERING PRICE
- ---------------------------------------------------------- -------- ---------- --------------
<S> <C> <C> <C>
Less than $25,000......................................... 4.75% 4.99% 4.00%
$25,000 to $49,999........................................ 4.50% 4.71% 3.75%
$50,000 to $99,000........................................ 4.00% 4.17% 3.25%
$100,000 to $249,000...................................... 3.50% 3.63% 2.75%
$250,000 to $499,000...................................... 2.50% 2.56% 2.00%
$500,000 to $999,999...................................... 2.00% 2.04% 1.60%
$1 million or more*....................................... 0.00% 0.00% 1.00%
</TABLE>
*A CDSC of 1% of the shares' net asset value at the time of purchase or sale,
whichever is less, may be charged on redemptions of shares purchased pursuant to
the front-end sales charge waiver for purchases of $1 million or more made
within one year of the purchase date. See below.
BFP will pay the following commission to brokers that initiate and are
responsible for purchases of Class A shares by any single purchaser of $2
million or more in the aggregate: 0.80% up to $2,999,999, plus 0.50% of the
excess over $3 million up to $20 million, plus 0.25% of the excess over $20
million.
From time to time, BFP may reallow to broker/dealers the full amount of the
sales charge on Class A shares or may pay out, in addition to a sales
commission, special additional compensation and promotional incentives to
broker/dealers who sell Class A shares. To the extent that BFP reallows the full
amount of the sales charge to broker/dealers, such broker/dealers may be deemed
to be underwriters under the Securities Act of 1933, as amended.
SALES CHARGE WAIVERS
Class A shares of each Fund are sold at net asset value without imposition
of sales charges when investments are made by the following classes of
investors: advisory clients (and related accounts) of Bartlett & Co., certain
employee benefit or retirement accounts (subject to the discretion of Bartlett &
Co.), officers and trustees of the Trust, employees of Legg Mason, Inc. and its
affiliates, registered representatives or full-time employees of broker/dealers
that have entered into dealer agreements with BFP, and the children, siblings
and parents of such persons. In addition, all existing shareholders of Basic
Value and Value International as of July 18, 1997 will be eligible for the
waiver going forward.
REDUCED SALES CHARGE PURCHASE PLANS -- CLASS A SHARES
Class A shares may be purchased at reduced sales charges either through the
Right of Accumulation or under a Letter of Intent. For more details on these
plans, investors should contact their broker/dealers or BFP.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, shareholders
are permitted to purchase shares of the Funds at the sales charge applicable to
the total of (a) the dollar amount then being purchased plus (b) the dollar
amount of the shareholder's concurrent purchases of the corresponding class of
other Funds plus (c) the price of all shares of the corresponding class of Funds
already held by the shareholder. To receive the Right of Accumulation, at the
time of purchase shareholders must give their broker/dealers or BFP sufficient
information to permit confirmation of qualification.
20
<PAGE> 26
LETTER OF INTENT. In executing a Letter of Intent ("LOI"), a shareholder
indicates an aggregate investment amount he or she intends to invest in Class A
shares of a Fund and the Class A shares of other Funds in the following thirteen
months. The sales charge applicable to that aggregate amount then becomes the
applicable sales charge on all purchases made concurrently with the execution of
the LOI and in the thirteen months following that execution. If a shareholder
executes an LOI within 90 days of a prior purchase of Class A shares, the prior
purchase may be included under the LOI and an appropriate adjustment, if any,
with respect to the sales charges paid by the shareholder in connection with the
prior purchase will be made, based on the then-current net asset value(s) of the
pertinent Fund(s).
If at the end of the thirteenth month period covered by the LOI, the total
amount of purchases does not equal the amount indicated, the shareholder will be
required to pay the difference between the sales charges paid at the reduced
rate and the sales charges applicable to the purchases actually made. Shares
having a value equal to 5% of the amount specified in the LOI will be held in
escrow during the thirteen month period (while remaining registered in the
shareholder's name) and are subject to redemption to assure any necessary
payment to BFP of a higher applicable sales charge.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES
Purchases of Class A shares of $1,000,000 or more may be made without an
initial sales charge. Purchases of Class A shares of two or more Funds may be
combined for this purpose, and the Right of Accumulation and LOI also apply to
such purchases. If a shareholder redeems any Class A shares that were purchased
without a sales charge by reason of a purchase of $1,000,000 or more within one
year after the date of purchase, a CDSC of 1% of the lower of the original
purchase price or the net asset value of such shares at the time of redemption
will be charged. Class A shares that are redeemed will not be subject to the
CDSC to the extent that the value of such shares represents: (1) reinvestment of
dividends or other distributions or (2) Class A shares redeemed more than one
year after their purchase. Such share purchases of at least $1,000,000 without a
sales charge may be exchanged for Class A shares of another Fund without the
imposition of a CDSC, although the CDSC described above will apply to the
redemption of the shares acquired through an exchange. For federal income tax
purposes, the amount of the CDSC will reduce the gain or increase the loss, as
the case may be, on the amount realized on redemption. The amount of any CDSC
will be paid to BFP.
PURCHASING CLASS C SHARES:
The public offering price of Class C shares of each Fund is the next
determined net asset value. No initial sales charge is imposed but Class C
shares are subject to higher ongoing expenses.
CONTINGENT DEFERRED SALES CHARGE -- CLASS C SHARES
A CDSC of 1% of net asset value at the time of purchase or sale, whichever
is less, may be charged on redemptions of Class C shares made within one year of
the purchase date. Class C shares that are redeemed will not be subject to the
CDSC to the extent that the value of such shares represents: (1) reinvestment of
dividends or other distributions or (2) Class C shares redeemed more than one
year after their purchase. For federal income tax purposes, the amount of the
CDSC will reduce the gain or increase the loss, as the case may be, on the
amount realized on redemption. The amount of any CDSC will be paid to BFP.
CLASS Y SHARES:
Class Y shares are offered through a separate Prospectus only to advisory
clients of Bartlett that are employee benefit or retirement plans, other than
IRAs and Keogh Plans, to retirement plans having net assets of at least $10
million, to purchasers of $5 million or more of the shares of any Fund, and to
participants in certain wrap fee investment advisory programs that are currently
or in the future sponsored by Bartlett and that may
21
<PAGE> 27
invest in Bartlett proprietary funds, provided
that shares are purchased through or in connection with those programs.
PROGRAMS APPLICABLE TO CLASS A AND CLASS C:
SYSTEMATIC INVESTMENT PLAN. Shares of each Fund may be purchased through
the Systematic Investment Plan. Under this plan, you may arrange for automatic
monthly investments in the Funds of $50 or more by authorizing BFDS to transfer
funds each month from your checking account. Please contact your broker/dealer
or BFP for further information.
AUTOMATIC INVESTMENTS. Arrangements may be made with some employers and
financial institutions, such as banks or credit unions, for regular automatic
monthly investments of $50 or more in shares. In addition, it may be possible
for dividends from certain unit investment trusts to be invested automatically
in shares. Persons interested in establishing such automatic investment programs
should contact the Funds through their broker/dealer or BFP.
=====================================================================
REDEMPTION OF SHARES
=====================================================================
As described below, shares of the Funds may be redeemed at their net asset
value (subject to any applicable CDSC or redemption fee). Redemption proceeds
normally will settle in your BFP brokerage account two business days after trade
date; however, each Fund reserves the right to take up to seven days to make
payment upon redemption if, in the judgment of Bartlett and/or Lombard Odier,
the respective Fund could be adversely affected by immediate payment. The
Statement of Additional Information describes several other circumstances in
which the date of payment may be postponed or the right of redemption suspended.
REDEMPTIONS THROUGH BROKER/DEALERS:
Shareholders may call their BFP or affiliated broker/dealer and give them
an order for redemption. Shareholders should have the following information
ready when they call: the name of the Fund, the number of shares (or dollar
amount) to be redeemed and their shareholder account number. Shareholders may
also send a written request for redemption to the address listed below.
Shareholders with accounts at broker/ dealers that sell shares of the Funds
may submit redemption requests to such broker/ dealers. Broker/dealers may honor
a redemption request either by repurchasing shares from a redeeming shareholder
at the shares' net asset value next determined after the broker/dealer receives
the request or by forwarding such requests to BFDS. See "Redemptions Through
BFDS," below.
Redemption proceeds (less any applicable CDSC or redemption fee) normally
will be paid by check or; if offered by the broker/ dealer, credited to the
shareholder's brokerage account at the election of the shareholder. If shares
are held in the broker/dealer's "street name," the redemption must be made
through the broker/dealer. Broker/dealers may impose a service charge for
handling redemption transactions placed through them and may have other
requirements concerning redemptions. Shareholders should contact their
broker/dealers for further information.
All redemptions will be effected at the net asset value next determined
after BFDS has received the request in good order and any required supporting
documentation (less any applicable CDSC or redemption fee). Redemption requests
received before the close of the Exchange will be effected at the net asset
value calculated on that day. ALL WRITTEN REDEMPTION REQUESTS MUST BE
ACCOMPANIED BY A SIGNATURE GUARANTEE UNLESS THE REDEMPTION PROCEEDS ARE TO BE
SENT TO THE REDEEMING SHAREHOLDER AT THE SHAREHOLDER'S ADDRESS OF RECORD AS
MAIN-
22
<PAGE> 28
TAINED BY BFDS. A signature guarantee may be obtained by a national bank, a
state bank, a member firm of a principal stock exchange or other entity
described in Rule 17Ad-15 under the Securities Exchange Act of 1934.
Written redemption requests will be considered to be received in "good
order" only if:
1. The shareholder has indicated in writing the number of shares [or the dollar
amount] of the specific class to be redeemed, the complete Fund name and
shareholder account number;
2. The written request is signed by the shareholder and by any co-owner of the
account with exactly the same name or names used in establishing the account;
3. The signatures on the written request have been guaranteed, if required, as
described above.
Other supporting legal documents may be required from corporations or other
organizations, fiduciaries or persons other than the shareholder of record
making the request for redemption or repurchase. Please contact BFP or your
broker/dealer for further information.
EUROPE FUND REDEMPTION FEE:
The Europe Fund will deduct a 2% redemption fee from the redemption
proceeds of all redemptions by shareholders who own shares of the Fund through
the merger of Worldwide Value Fund into Europe Fund. The redemption fee will be
charged on all redemptions until January 20, 1998 and is intended to offset the
additional trading costs the Fund may experience as a result of such
redemptions. The redemption fee will be retained by Europe Fund, and not
Bartlett, BFP or Lombard Odier, and will be calculated based upon 2% of the net
asset value of the shares redeemed.
SYSTEMATIC WITHDRAWAL PLAN:
Shareholders may elect to make systematic withdrawals from their Fund
account of a minimum of $50 on a monthly basis if they are purchasing or already
own shares with a net asset value of $5,000 or more. Shareholders should not
purchase shares of a Fund while they are participating in the Systematic
Withdrawal Plan with respect to that Fund. Please contact BFP or your
broker/dealer for further information.
REINSTATEMENT PRIVILEGE:
Shareholders who have redeemed their Class A Shares in a Fund may reinstate
their Fund account without a sales charge up to the dollar amount redeemed by
purchasing shares within 90 days of the redemption ("reinstatement privilege").
Shareholders may exercise their reinstatement privilege by notifying BFP or
their broker/dealer of such desire and placing an order for the amount to be
purchased within 90 days after the date of redemption. The reinstatement will be
made at the net asset value next determined after the Notice of Reinstatement
and order have been received by BFDS.
EXCHANGE PRIVILEGE:
As a Fund shareholder, you are entitled to exchange your shares of a Fund
for the corresponding class of shares of another Fund or the Legg Mason Cash
Reserve Trust (a money market mutual fund), provided that such shares are
eligible for sale in your state of residence.
Investments by exchange into a class of a Fund sold with an initial sales
charge are made at the per share net asset value (plus any applicable sales
charge) determined on the same business day as redemption of the Fund shares you
wish to exchange.
No initial sales charge will be imposed on an exchange where the investor
paid an initial sales charge upon the purchase of shares. Investments by
exchange into the Legg Mason Cash Reserve Trust, which is sold without an
initial sales charge, are made at the per share net asset value determined on
the same business day as redemption of the Fund shares
23
<PAGE> 29
you wish to exchange. A CDSC may apply to the redemption of Class A and/or Class
C shares acquired through an exchange.
There is no charge for the exchange privilege, but each Fund reserves the
right to terminate or limit the exchange privilege of any shareholder who makes
more than four exchanges from that Fund in one calendar year. To effect an
exchange by telephone, or to obtain further information concerning the exchange
privilege, please contact BFP or your broker/dealer.
OTHER IMPORTANT REDEMPTION INFORMATION:
The proceeds of your redemption may be more or less than your original
cost. If the shares to be redeemed were paid for by check (including certified
or cashier's checks) within 10 business days of the redemption request, the
proceeds may not be disbursed unless the Fund can be reasonably assured that the
check has been collected.
None of the Funds will be responsible for the authenticity of redemption
instructions received by telephone, provided it follows reasonable procedures to
identify the caller. Each Fund may request identifying information from callers
or employ identification numbers. Each Fund may be liable for losses due to
unauthorized or fraudulent instructions if it does not follow reasonable
procedures. Telephone redemption privileges are available automatically to all
shareholders. Shareholders who do not wish to have telephone redemption
privileges should call BFP or their broker/ dealer for further instructions.
Because of the relatively high cost of maintaining small accounts, each
Fund may elect to close any account with a current value of less than $500 by
redeeming all of the shares in the account and mailing the proceeds to you.
However, no Fund will redeem accounts that fall below $500 solely as a result of
a reduction in net asset value per share. If a Fund elects to redeem the shares
in your account, you will be notified that your account is below $500 and will
be allowed 60 days in which to make an additional investment in order to avoid
having your account closed.
The shares of each Fund are subject to redemption at any time if the Board
of Trustees of the 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.
Telephone Transactions:
Call BFP at (800) 800-3609
Mail Transactions:
[insert complete Fund name]
BFP Funds Processing
P.O. Box 1476
Baltimore, Maryland 21203-1476
=====================================================================
CALCULATION OF SHARE PRICE
=====================================================================
Net asset value per share of each Fund class is determined daily, as of the
close of the Exchange, on every day that the Exchange is open, by subtracting
the liabilities attributable to each class from the total assets of such class
and dividing the result by the number of shares of such class outstanding.
Securities owned by each Fund for which market quotations are readily available
are valued at current market value. In the absence of readily available market
quotations, securities are valued at fair value as determined by Bartlett and/or
Lombard Odier, under authority delegated by the Board of Trustees. The Funds may
use pricing services to determine the market value of its portfolio securities,
subject to Bartlett's and/or Lombard Odier'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.
Equity securities, options and commodities listed on exchanges are valued
at the last
24
<PAGE> 30
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 that use prices provided by market makers or
estimates of market values. However, if Bartlett and/or Lombard Odier believes
that 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 are valued at amortized cost.
For valuation purposes, quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents at the time of pricing. In
computing the net asset value of a Fund, the values of foreign portfolio
securities are generally based upon market quotations that, 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 Exchange is open. Trading of these
securities may not take place on every business day the Exchange is open. In
addition, trading may take place in various foreign markets on Saturdays or on
other days when the Exchange 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 Bartlett and/or Lombard
Odier determines, subject to review by the Trust's Board of Trustees, that the
particular event would materially affect net asset value, in which case an
adjustment will be made.
=====================================================================
DIVIDENDS AND OTHER DISTRIBUTIONS
=====================================================================
Each Fund distributes substantially all of its investment company taxable
income (which consists of net investment income, net short-term capital gain and
net gains from certain foreign currency transactions), if any, in the form of
dividends to its shareholders of each class. Value International and Basic Value
each declares and pays dividends from net investment income on a quarterly
basis, and dividends from any net short-term capital gains annually; Europe Fund
declares and pays all dividends on an annual basis. Each Fund also distributes
substantially all of its net capital gain (the excess of net long-term capital
gain over net short-term capital loss) and net gains from foreign currency
transactions, if any, after the end of the taxable year in which the gains are
realized. A second distribution of net capital gain may be necessary in some
years to avoid imposition of the excise tax described under the heading "Addi-
25
<PAGE> 31
tional Tax Information" in the Statement of Additional Information.
Dividends and other distributions, if any, on Class A or Class C shares of
a Fund held in an IRA, Keogh Plan, SEP, SIMPLE or other qualified retirement
plan and by shareholders maintaining a Systematic Withdrawal Plan, generally are
reinvested in the corresponding class of shares of the distributing Fund on the
payment date (including instances when no election is made). Other shareholders
may elect to:
1. Receive both dividends and other distributions in shares of the corresponding
class of the distributing Fund (automatic option -- no action needed);
2. Receive dividends in cash and other distributions in shares of the
corresponding class of the distributing Fund;
3. Receive dividends in shares of the corresponding class of the distributing
Fund and other distributions in cash; or
4. Receive both dividends and other distributions in cash.
In certain cases, shareholders may reinvest dividends and other
distributions in the corresponding class of shares of another Fund. Please
contact BFP or your financial advisor for additional information concerning this
option. If no election is made, both dividends and other distributions are
credited to your account in shares of the corresponding class of the
distributing Fund at the net asset value of the shares determined as of the
close of the Exchange on the reinvestment date. Shares received pursuant to any
of the first three (reinvestment) elections above are also credited to your
account at that net asset value. Shareholders electing to receive dividends
and/or other distributions in cash will be sent a check or will have their
brokerage account credited after the payment date. You may elect at any time to
change your option by notifying the applicable Fund in writing at: [insert
complete Fund name], c/o BFP Funds Processing, P.O. Box 1476, Baltimore,
Maryland 21203-1476. Your election must be received at least 10 days before the
record date in order to be effective for dividends and other distributions paid
to shareholders as of that date.
=====================================================================
TAXES
=====================================================================
Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of federal income
tax on that part of its investment company taxable income and net capital gain
that is distributed to its shareholders.
Dividends from a Fund's investment company taxable income (whether paid in
cash or reinvested in shares) are taxable to its shareholders (other than IRAs,
Keogh Plans, SEPs, SIMPLEs, other qualified retirement plans and other
tax-exempt investors) as ordinary income to the extent of the Fund's earnings
and profits. Distributions of a Fund's net capital gain (whether paid in cash or
reinvested in shares), when designated as such, are taxable to those
shareholders as long-term capital gain, regardless of how long they have held
their Fund shares.
Each Fund sends its shareholders a notice following the end of each
calendar year specifying, among other things, the amounts of all dividends and
other distributions paid (or deemed paid) during the year. Each Fund is required
to withhold 31% of all dividends, capital gain distributions and redemption
proceeds payable to any individuals and certain other non-corporate shareholders
who do not provide the Fund with a certified taxpayer identification number.
Each Fund also is required to withhold 31% of all dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding.
26
<PAGE> 32
A redemption of Fund shares may result in a taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are more or
less than the shareholder's adjusted basis for the redeemed shares (which
normally includes any initial sales charge paid on Class A shares). An exchange
of Fund shares for shares of any other Fund or the Legg Mason Cash Reserve Trust
generally will have similar tax consequences. See "Redemption of
Shares -- Exchange Privilege," above. Special rules apply when a shareholder
redeems or exchanges Class A shares of a Fund within 90 days after purchase
thereof and subsequently reacquires shares of the same Fund or acquires shares
of another Fund or the Legg Mason Cash Reserve Trust without paying a sales
charge due to the 90-day reinstatement privilege or the exchange privilege (see
"Redemption of Shares -- Reinvestment Privilege" and "-- Exchange Privilege").
In these cases, any gain on the redemption or exchange of the original Fund
shares would be increased, or any loss would be decreased, by the amount of the
sales charge paid when those shares were acquired, and that amount will increase
the basis of the shares subsequently acquired. If Fund shares are purchased
within 30 days before or after redeeming at a loss other shares of the same Fund
(regardless of class), all or part of that loss will not be deductible and
instead will increase the basis of the newly purchased shares.
A dividend or other distribution paid shortly after shares have been
purchased, although in effect a return of investment, is subject to federal
income tax. Accordingly, an investor should recognize that a purchase of shares
immediately before the record date for a dividend or other distribution could
cause the investor to incur tax liabilities and should not be made solely for
the purpose of receiving the dividend or other distribution.
Each Fund's dividend and interest income, and gains realized from
disposition of foreign securities, may be subject to income, withholding or
other taxes imposed by foreign countries and U.S. possessions that would reduce
the yield on that Fund's securities. Tax conventions between certain countries
and the United States may reduce or eliminate these foreign taxes, however, and
many foreign countries do not impose taxes on capital gains in respect of
investments by foreign investors. Shareholders may be entitled to claim tax
credits or deductions, subject to certain limitations, for foreign income taxes
paid by a Fund (see "Additional Tax Information" in the Statement of Additional
Information). Each Fund will notify its shareholders if such credit or deduction
is available.
The foregoing is only a summary of some of the important federal income tax
considerations generally affecting each Fund and its shareholders; see the
Statement of Additional Information for a further discussion. In addition to
federal income tax, you may also be subject to state, local or foreign taxes on
distributions from the Funds, depending on the laws of your home state and
locality or country of residence. Prospective shareholders are urged to consult
their tax advisers with respect to the effects of this investment on their own
tax situations.
27
<PAGE> 33
=====================================================================
MANAGEMENT OF THE TRUST
=====================================================================
BARTLETT & CO.
Bartlett & Co., 36 East Fourth Street, Cincinnati, Ohio, serves as
investment adviser and administrator to each Fund. Bartlett is an investment
advisory firm which has provided investment advice to individuals, corporations,
pension and profit sharing plans and trust accounts since 1898. As of June 30,
1997, Bartlett had aggregate assets under management of approximately $2.6
billion. Bartlett is a wholly owned subsidiary of Legg Mason, Inc., a financial
services holding company.
Pursuant to an Investment Management and Administration Agreement, which
was approved by the Board of Trustees, Bartlett acts as investment adviser for
each Fund and has responsibility for the actual investment management of the
Funds, including the responsibility for making decisions and placing orders to
buy, sell or hold a particular security, except with respect to Europe Fund,
where it has delegated that responsibility to Lombard Odier. Bartlett also
supervises all aspects of the operations of each Fund in its capacity as
administrator for each Fund.
Bartlett receives for its services a management fee from each Fund
attributable to the net assets of each class, calculated daily and payable
monthly. For its services to Basic Value, Bartlett receives and annual fee of
0.75% of its average daily net assets; for its services to Value International,
Bartlett receives an annual fee of 1.25% of its average daily net assets; and
for its services to Europe Fund, Bartlett receives an annual fee of 1.00% of its
average daily net assets.
LOMBARD ODIER
Lombard Odier, Norfolk House, 13 Southampton Place, London WC1A 2AJ,
England, serves as investment sub-adviser to Europe Fund pursuant to a
Sub-Advisory Agreement, which was approved by the Board of Trustees. For its
services under the Sub-Advisory Agreement, Lombard Odier will receive from
Bartlett (not Europe Fund) a monthly fee at the rate of 60% of the monthly fee
actually paid to Bartlett by the Trust under the Investment Management and
Administration Agreement, taking into account any fee waiver arrangements in
effect for Europe Fund (see below).
Lombard Odier specializes in advising and managing investment portfolios
for institutional clients and also serves as investment adviser for one other
investment company. As of June 30, Lombard Odier had approximately $3.0 billion
in aggregate assets under management. Lombard Odier is an indirect wholly owned
subsidiary of Lombard Odier & Cie, a Swiss private bank.
FEE WAIVERS:
Bartlett has agreed to waive fees to the extent that a Fund's expenses
exceed the following annual rates of average daily net assets until July 31,
1998:
<TABLE>
<CAPTION>
CLASS A CLASS C
------- -------
<S> <C> <C>
Value International 1.80% 2.55%
Basic Value 1.15% 1.90%
Europe Fund 1.75% 2.50%
</TABLE>
PORTFOLIO MANAGERS:
James A. Miller, CFA, Vice President of the Trust, and Woodrow H. Uible,
CFA, Vice President of the Trust, are responsible for co-managing Basic Value.
Mr. Miller is a Senior Portfolio Manager, President and a Director of Bartlett.
Mr. Miller joined Bartlett in 1977 and is a member of its Institutional
Investment Group. Mr. Uible is a Senior Portfolio Manager of Bartlett. Mr. Uible
has been employed by Bartlett since 1980. He chairs Bartlett's Equity Investment
Group, and is responsible for Bartlett's equity investment processes.
28
<PAGE> 34
Madelynn M. Matlock, CFA, Vice President of the Trust, is primarily
responsible for managing Value International. Ms. Matlock, Director of
International Investments for Bartlett, joined Bartlett in 1981. She also served
as Director of Research for Bartlett from 1983 to 1992.
Ronnie Armist, Chief Investment Officer, Equities, of Lombard Odier in
London, is primarily responsible for managing the Europe Fund. Mr. Armist joined
Lombard Odier in 1983 and has served as Chief Investment Officer, Equities,
since 1991.
BFP
BFP is the distributor, or principal underwriter, of each Fund's shares
pursuant to a Distribution Agreement with the Trust on behalf of each Fund. The
Distribution Agreement obligates BFP to pay certain expenses in connection with
the offering of shares of each Fund, including any compensation to
brokers/dealers, the printing and distribution of prospectuses, statements of
additional information and periodic reports used in connection with the offering
to prospective investors, after the prospectuses, statements of additional
information and periodic reports have been prepared, set in type and mailed to
existing shareholders at the Fund's expense, and for any supplementary sales
literature and advertising costs. BFP collects the sales charges imposed on
purchases of Class A shares and any CDSCs that may be imposed on certain
redemptions of Class A and Class C shares. BFP reallows a portion of the sales
charges on Class A shares to broker/dealers that have sold such shares in
accordance with the schedule set forth under "Purchase of Shares," and may from
time to time reallow the full amount of the sales charge. BFP may also pay
special additional compensation and promotional incentives to broker/dealers who
sell Class A shares of the Funds. BFP is a wholly owned subsidiary of Legg
Mason, Inc.
The Board of Trustees of the Trust has adopted a Plan of Distribution
pursuant to Rule 12b-1 under the 1940 Act, with respect to each Fund's Class A
shares ("Class A Plan"). The Class A Plan provides that as compensation for its
ongoing services to investors, each Fund may pay BFP a service fee at the
annualized rate of 0.25% of the average daily net assets of each Fund's Class A
shares. Pursuant to a separate Plan of Distribution adopted with respect to each
Fund's Class C shares ("Class C Plan"), each Fund may pay BFP distribution and
service fees at the annualized rate of 1.00% of the average daily net assets of
each Fund's Class C shares for its ongoing services to investors and its
activities and expenses related to the sale and distribution of Class C shares.
These fees are calculated daily and paid monthly. The fees received by BFP
during any year may be more or less than its costs of providing distribution and
shareholder services for Class A and Class C shares. NASD rules limit the amount
of annual distribution fees that may be paid by mutual funds and impose a
ceiling on the cumulative distribution fees received. Each Fund's distribution
plans comply with those rules.
===========================================================================
=======================================================================
=====================================================================
DESCRIPTION OF THE TRUST
Bartlett Capital Trust ("Trust") is a diversified, open-end management
investment company organized as a Massachusetts business trust on October 31,
1982. The business activities of the Trust are supervised by its Board of
Trustees. Like other mutual funds, the Trust retains various organizations to
perform specialized services.
The trustees of the Trust have authority to issue an unlimited number of
shares of beneficial interest of separate series, all without par value. Shares
of three series, consisting of the Funds, have been authorized.
The shares of beneficial interest of each Fund are divided into three
classes, designated
29
<PAGE> 35
Class A, Class C and Class Y shares. Each class represents interests in the same
assets of the Fund. The classes differ as follows: (1) each of Class A and Class
C has exclusive voting rights on matters pertaining to its plan of distribution,
(2) Class A shares generally are subject to an initial sales charge, and may,
under limited circumstances, be subject to a CDSC, and bear ongoing service
fees, (3) no initial sales charge is imposed on Class C shares, but Class C
shares are subject to a CDSC, and bear ongoing distribution and service fees,
and (4) each Class may bear differing amounts of certain class-specific
expenses.
The differing sales charges and other expenses applicable to the different
classes of each Fund's shares may affect the performance of those classes. More
information concerning the classes of shares of the Funds may be obtained by
calling BFP at (800) 822-5544.
Any Trustee of the Trust may be removed by vote of the shareholders holding
not less than two-thirds of the outstanding shares of the Trust. The Trust does
not hold annual meetings of shareholders. Shareholders of the Funds are entitled
to one vote per share and fractional votes for fractional shares held. Voting
rights are not cumulative. All shares of the Funds are fully paid and
nonassessable and have no preemptive or conversion rights. A separate vote is
taken by a class of shares of a Fund if a matter affects just that class of
shares. Each class of shares may bear certain differing class-specific expenses.
Financial advisors and others entitled to receive compensation for selling or
servicing Fund shares may receive more with respect to one class than another.
The Board of Trustees of the Trust does not anticipate that there will be
any conflicts among the interests of the holders of the different classes of
Fund shares. On an ongoing basis, the Board will consider whether any such
conflict exists and, if so, take appropriate actions.
Each Fund acknowledges that it is solely responsible for the information or
any lack of information about it in this joint Prospectus and in the joint
Statement of Additional Information, and no other Fund is responsible therefor.
There is a possibility that one Fund might be deemed liable for misstatements or
omissions regarding another Fund in this Prospectus or in the joint Statement of
Additional Information; however, the Funds deem this possibility slight.
30
<PAGE> 36
INVESTMENT ADVISOR
Bartlett & Co.
36 East Fourth Street
Cincinnati, Ohio 45202-3896
INVESTMENT SUB-ADVISER TO EUROPE FUND
Lombard Odier International Portfolio
Management Limited
Norfolk House
13 Southampton Place
London WC1A 2AJ, England
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105
SUB-CUSTODIAN FOR EUROPE FUND
The Chase Manhattan Bank, N.A.
1 Chaseside
Bournemouth, Dorset BH7 7DB
England
TRANSFER AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
217 East Redwood Street
Baltimore, Maryland 21202
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
- ---------------------------------------------------
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
THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE TRUST TO SELL ITS
SHARES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN
SUCH STATE.
- -------------------------------------------------
<PAGE> 37
PROSPECTUS
CLASS Y SHARES
July 18, 1997
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Highlights................................. 2
Fund Expenses......................................... 4
Investment Performance................................ 5
Investment Objectives and Policies.................... 6
Investment Policies, Techniques and Risk
Considerations....................................... 8
Purchase of Shares.................................... 13
Redemption of Shares.................................. 14
Calculation of Share Price............................ 16
Dividends and Other Distributions..................... 17
Taxes................................................. 18
Management of the Trust............................... 19
Description of the Trust.............................. 20
</TABLE>
- --------------------------------------------------------------------------------
Bartlett Capital Trust ("Trust") is an open-end management investment company
which currently offers three series: Bartlett Value International Fund, Bartlett
Basic Value Fund and Bartlett Europe Fund (each separately referred to as a
"Fund" and collectively referred to as the "Funds").
BARTLETT VALUE INTERNATIONAL FUND ("Value International") seeks capital
appreciation by investing primarily in foreign equity securities believed by its
adviser, Bartlett & Co. ("Bartlett" or "Adviser"), to be attractively priced
relative to their intrinsic value. Income is a secondary consideration.
BARTLETT BASIC VALUE FUND ("Basic Value") seeks capital appreciation by
investing primarily in common stocks or securities convertible into common
stocks that are believed by the Adviser to be attractively priced relative to
their intrinsic value. Income is a secondary consideration.
BARTLETT EUROPE FUND ("Europe Fund") seeks long-term growth of capital by
investing primarily in equity securities of European issuers which Lombard Odier
International Portfolio Management Limited ("Lombard Odier"), investment
sub-adviser to Europe Fund, believes are undervalued and thus may offer
above-average potential for capital appreciation.
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. A Statement of Additional Information for the Funds dated July
18, 1997 has been filed with the Securities and Exchange Commission ("SEC") and,
as amended or supplemented from time to time, is incorporated herein by
reference. The Statement of Additional Information is available without charge
upon request by calling BFP Financial Partners, Inc. ("BFP"), the Funds'
distributor, at (800) 800-3609.
The Class Y shares described in this Prospectus are currently offered for
sale only to advisory clients of Bartlett that are employee benefit or
retirement plans, other than individual retirement accounts ("IRAs") and
self-employed individual retirement plans ("Keogh Plans"), to retirement plans
having net assets of at least $10 million, to purchasers of $5 million or more
in shares of any Fund, and to participants in certain wrap fee investment
advisory programs that are currently or in the future sponsored by Bartlett and
that may invest in Bartlett proprietary funds, provided that shares are
purchased through or in connection with those programs.
INVESTORS SHOULD BE COGNIZANT OF THE UNIQUE RISKS OF INTERNATIONAL
INVESTING, INCLUDING EXPOSURE TO CURRENCY FLUCTUATIONS AND TO FOREIGN ECONOMIC
AND POLITICAL CHANGES.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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.
For further information, call (800) 800-3609 or contact your broker/dealer.
BARTLETT CAPITAL TRUST
<PAGE> 38
===========================================================================
=======================================================================
=====================================================================
PROSPECTUS HIGHLIGHTS
Bartlett Value International Fund
Bartlett Basic Value Fund
Bartlett Europe Fund
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus and in the Statement of
Additional Information.
Investment Objectives and
Policies: VALUE INTERNATIONAL is a diversified,
professionally managed portfolio seeking to
provide capital appreciation. In attempting
to achieve the Fund's objective, the Fund
normally invests at least 65% of its total
assets in equity securities of non-U.S.
issuers. At least three different foreign
countries will normally be represented in the
Fund's portfolio.
BASIC VALUE is a diversified, professionally
managed portfolio seeking to provide capital
appreciation. In attempting to achieve the
Fund's objective, the Fund invests primarily
in common stocks or securities convertible
into common stocks. The Fund seeks to
diversify its investments across industry
sectors.
EUROPE FUND is a diversified, professionally
managed portfolio seeking to provide
long-term growth of capital. In attempting to
achieve the Fund's objective, the Fund
normally invests at least 65% of its total
assets in equity securities of European
issuers.
Investment Adviser: Bartlett & Co. has provided investment advice
to individuals, pension and profitsharing
plans and trust accounts since 1898.
Investment Sub-Adviser to Europe
Fund: Lombard Odier International Portfolio
Management Limited ("Lombard Odier"), a
subsidiary of one of the oldest and largest
private banks in Switzerland, specializes in
advising and managing investment portfolios
for institutional clients.
Purchase Plan: Class Y shares are offered only to a limited
class of investors.
Class Y Shares: Offered for sale only to advisory clients of
Bartlett that are employee benefit or
retirement plans, other than IRAs and Keogh
Plans, to retirement plans having net assets
of at least $10 million, to purchasers of $5
million or more in shares of any Fund, and to
participants in certain wrap fee investment
advisory programs that are currently or in
the future sponsored by Bartlett and that may
invest in Bartlett proprietary funds,
provided that shares are purchased through or
in connection with those programs. See
"Purchase of Shares."
Initial Purchase: $1,000 minimum, generally, subject to the
above limitations.
Subsequent Purchases: $100 minimum, generally.
2
<PAGE> 39
Exchange Privilege: Exchanges may be made for shares of the
corresponding class of shares of any other
Fund and for shares of Legg Mason Cash
Reserve Trust, a money market mutual fund.
See "Exchange Privilege," page [ ].
Dividends and Other
Distributions: Dividends from net investment income are
declared and paid quarterly by Value
International and Basic Value and annually by
Europe Fund. Distributions of gains are
declared and paid annually by each Fund. See
"Dividends and Other Distributions," page
[ ]. All dividends and other
distributions are automatically reinvested in
Fund shares unless cash payments are
requested.
Risk Factors: There can be no assurance that any Fund will
achieve its investment objective. Each Fund's
net asset value will fluctuate, reflecting
fluctuations in the value of its securities.
The value of the equity and other instruments
held by the Funds are subject to market risk.
The market risk of equity securities is
generally perceived to be higher than that of
any other securities of an issuer. The value
of debt instruments generally fluctuates
inversely with movements in market interest
rates. The values of longer-term debt
securities generally fluctuate more than
those of shorter-term securities.
Changes in economic conditions in, or
governmental policies of, foreign nations may
have a significant impact on the performance
of Value International and Europe Fund.
Foreign investment involves a possibility of
expropriation, nationalization, confiscatory
taxation, limitations on the use or removal
of funds or other assets of a Fund, the
withholding of tax on interest or dividends,
and restrictions on the ownership of
securities by foreign entities such as the
Funds. Fluctuations in the value of foreign
currencies relative to the U.S. dollar also
will affect the value of Fund holdings
denominated in such currencies.
Each Fund's participation in hedging and
option strategies also involves certain
investment risks and transaction costs. None
of the Funds should be considered a complete
investment program. See "Investment
Objectives and Policies" and "Investment
Policies, Techniques and Risk
Considerations."
3
<PAGE> 40
===========================================================================
=======================================================================
=====================================================================
FUND EXPENSES
The purpose of the following tables is to assist an investor in
understanding the various costs and expenses that an investor in Class Y shares
of a Fund will bear directly or indirectly. For Value International and Basic
Value Class Y shares, the expenses set forth in the table below are based on
average net assets and annual Fund operating expenses relating to Value
International and Basic Value shares, respectively, for the year ended March 31,
1997, but have been restated to reflect current management fees and estimated
other expenses. Those shares were redesignated as Class A shares on July 18,
1997. For Class Y shares of Europe Fund, other expenses are based on estimates
for the current fiscal period. Fees are adjusted for current expense limits and
fee waiver levels for all three Funds.
CLASS Y SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE BASIC EUROPE
SHAREHOLDER TRANSACTION EXPENSES INTERNATIONAL VALUE FUND
- ----------------------------------------- -------------------------------
<S> <C> <C> <C>
Maximum sales charge on purchases None None None
Deferred sales charges None None None
Redemption or exchange fees None None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES(a)(b)
(as a % of average net assets)
- ----------------------------------------------
<TABLE>
<S> <C> <C> <C>
Management fees (after fee waivers) 1.20% 0.72% 0.69%
12b-1 fees None None None
Other expenses 0.35% 0.18% 0.81%
<CAPTION>
-------------------------------
<S> <C> <C> <C>
Total operating expenses (after fee waivers) 1.55% 0.90% 1.50%
</TABLE>
(a) Pursuant to voluntary expense limitations, the Adviser has agreed to waive
fees to the extent that Value International's Class Y expenses exceed 1.55%,
Basic Value's Class Y expenses exceed 0.90%, and Europe Fund's Class Y
expenses exceed 1.50% of their respective average daily net assets through
July 31, 1998. In the absence of such waivers, the expected management fee,
other expenses and total operating expenses of Value International would be
1.25%, 0.35% and 1.60%; of Basic Value would be 0.75%, 0.18% and 0.93%; and
of Europe Fund would be 1.00%, 0.81% and 1.81% of average daily net assets,
respectively.
(b) The expense information has been restated to reflect current fees and
expenses and a changed management fee.
4
<PAGE> 41
EXAMPLE
The following example illustrates the expenses that you would pay on a
$1,000 investment in Class Y shares over various time periods assuming (1) a 5%
annual rate of return and (2) full redemption at the end of each time period.
With the limited exceptions noted above, the Funds charge no redemption fees of
any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------
<S> <C> <C> <C> <C>
VALUE INTERNATIONAL.................................... $16 $49 $84 $185
BASIC VALUE............................................ $ 9 $29 $50 $111
EUROPE FUND............................................ $15 $47 $82 $179
</TABLE>
THE ASSUMED 5% ANNUAL RETURN IS NOT A PREDICTION OF, AND DOES NOT
REPRESENT, THE PROJECTED OR ACTUAL PERFORMANCE OF CLASS Y SHARES OF THE FUNDS.
THE ABOVE TABLES AND EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
actual expenses attributable to Class Y shares will depend upon, among other
things, the level of average net assets, the levels of sales and redemptions of
shares, the extent to which Bartlett or Lombard Odier waive their fees and the
extent to which Class Y shares incur variable expenses, such as transfer agency
costs.
===========================================================================
=======================================================================
=====================================================================
INVESTMENT PERFORMANCE
From time to time each Fund may quote the TOTAL RETURN of each class of
shares in advertisements or in reports or other communications to shareholders.
A mutual fund's total return is a measurement of the overall change in value,
including changes in share price and assuming reinvestment of dividends and
capital gain distributions, of an investment in the fund. CUMULATIVE TOTAL
RETURN shows the fund's performance over a specific period of time. AVERAGE
ANNUAL TOTAL RETURN is the average annual compounded return that would have
produced the same cumulative total return if the fund's performance had been
constant over the entire period. Average annual returns, which differ from
actual year-by-year results, tend to smooth out variations in a fund's return.
No adjustment will be made for any income taxes payable by shareholders.
Total return information reflects past performance and is not a prediction
or guarantee of future results. Investment return and share price will
fluctuate, and the value of an investors shares, when redeemed, may be worth
more or less than their original cost. Further information about each Fund's
performance is contained in the combined annual report to shareholders, which
may be obtained without charge by calling BFP at (800) 822-5544.
5
<PAGE> 42
===========================================================================
=======================================================================
=====================================================================
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of Basic Value and Value International may be
changed without shareholder approval; however, shareholders of these two Funds
will be given a minimum of 30 days' prior written notice before any change in
investment objective becomes effective. Europe Fund's investment objective may
not be changed without shareholder approval. Except as otherwise noted, the
investment policies of each Fund described below may be changed by the Trust's
Board of Trustees without a shareholder vote. There can be no assurance that any
Fund will achieve its investment objective. Each Fund's net asset value
fluctuates based upon changes in the value of its portfolio securities.
BARTLETT VALUE INTERNATIONAL FUND
The investment objective of Value International is to seek capital
appreciation. The Fund seeks its objective by investing primarily in foreign
equity securities believed by Bartlett 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 ("ADRs"), European Depositary Receipts
("EDRs") or other similar securities and by purchasing shares of closed-end
investment companies that hold foreign equity securities in their portfolios.
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
fixed income obligations of foreign companies, foreign governments, foreign
governmental agencies and international organizations. In addition, the Fund may
invest a portion of its assets in U.S. government obligations, debt and equity
obligations of U.S. issuers, and repurchase agreements, and may hold a portion
of its assets in cash and U.S. dollar-denominated time deposits.
In seeking its objective, the Fund intends to diversify its investments
among issuers representing various countries. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in equity securities of
non-U.S. 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 total assets invested in any
major industrial or developed country which in the view of Bartlett 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 Fund may employ several investment techniques, including the use of
options, hedging programs, currency transactions, repurchase agreements, lending
of portfolio securities, short sales "against the box" and forward commitment
transactions. For temporary defensive purposes, the Fund may hold all or a
portion of its assets in money market instruments, cash equivalents, short-term
government and corporate obligations or repurchase agreements.
Bartlett selects portfolio securities on the basis of what it considers to
be the intrinsic value of each security. In analyzing the intrinsic value of a
specific security, particular emphasis is given to such characteristics as
relative price/earnings ratio, dividend yield, and price/book value ratio. In
making investment decisions, Bartlett considers all other pertinent factors
affecting the intrinsic value of a security, including financial, tax, social,
political and national conditions.
6
<PAGE> 43
Although the Fund provides a means for individuals and institutional
investors to invest a portion of their assets outside the U.S., it should not be
considered a complete investment program. In addition, investments in foreign
securities may be subject to risks not typically associated with investments in
domestic securities. See "Foreign Securities" for a more complete discussion of
certain risks associated with investments in foreign securities.
See "Investment Policies, Techniques and Risk Considerations" beginning at
page [ ] for a more detailed discussion of risks associated with the
securities and investment techniques discussed above.
BARTLETT BASIC VALUE FUND
The investment objective of Basic Value is to seek capital appreciation.
The Fund seeks its objective by investing primarily in common stocks or
securities convertible into common stocks that Bartlett 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 ratio. The Fund
seeks to diversify its investments across industry sectors. The Fund's
investments may include foreign securities.
In seeking its objective, Basic Value invests only in securities of
companies with at least three years of operating history. Due to the Fund's
disciplined investment methodology, and the cyclical nature of the economy and
investment markets, there will be times when Bartlett 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.
The Fund may employ several investment techniques, including the use of
options, hedging programs, currency transactions, repurchase agreements, reverse
repurchase agreements and dollar rolls, lending of portfolio securities, short
sales, short sales "against the box", structured securities and forward
commitment transactions. For temporary defensive purposes, the Fund may hold all
or a portion of its assets in money market instruments, cash equivalents,
short-term government and corporate obligations or repurchase agreements.
For a further discussion of the risks associated with these securities and
techniques, see "Investment Policies, Techniques and Risk Considerations,"
beginning on page [ ].
BARTLETT EUROPE FUND
The investment objective of Europe Fund is to seek long-term growth of
capital. The Fund seeks to achieve its investment objective by investing, under
normal market conditions, at least 65% of its total assets in equity securities
of European issuers that Lombard Odier believes are undervalued and thus may
offer above-average potential for capital appreciation.
The Fund invests primarily in equity securities, including common stock,
preferred stock, convertible securities, rights and warrants, but may also
invest in bonds, notes and other fixed income securities. The Fund will normally
invest at least 65% of its total assets in equity securities and may invest up
to 35% of its total assets in fixed income securities. When conditions warrant,
for temporary defensive purposes, the Fund may invest over 35% and as much as
100% of its total assets in fixed income securities. The fixed income securities
in which the Fund may invest generally include obligations of foreign or
domestic governments, government agencies
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<PAGE> 44
or municipalities, and obligations of foreign or domestic companies. The Fund
may invest in fixed income securities without regard to rating, although Lombard
Odier does not anticipate that more than 5% of the Fund's total assets will be
invested in fixed income securities rated lower than "investment grade" (that
is, Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's ("S&P")), or, if unrated, deemed by Lombard Odier to be of comparable
quality. Most fixed income securities of foreign issuers are not rated by
Moody's or S&P. Generally, the fixed income securities in which the Fund will
invest will be those which Lombard Odier believes offer potential for capital
appreciation, either because of anticipated changes in the general level of
interest rates, or because of anticipated improvement in the issuer's credit
rating.
For temporary defensive purposes, the Fund may hold all or a portion of its
assets in money market instruments, cash equivalents, short-term government and
corporate obligations. The Fund may also enter into repurchase agreements.
The Fund may purchase securities both on recognized stock exchanges and in
over-the-counter markets. Most of the Fund's portfolio transactions will be
effected in the primary trading market for the given security.
The Fund may also invest in depositary receipts and securities of other
investment companies, and may enter into when-issued and delayed-delivery
transactions. The Fund is authorized to invest in options, futures and options
on futures contracts and may enter into foreign currency transactions and
forward foreign currency exchange contracts ("forward contracts"). The Fund may
invest up to 15% of its net assets in illiquid or restricted securities.
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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
Equity securities include common stock, preferred stock and other similar
securities 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.
FOREIGN SECURITIES
Each Fund may invest, without limitation, in foreign equity securities.
Value International and Europe Fund are expected normally to invest at least 65%
of their respective assets in foreign securities.
ADRs, 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 an 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
8
<PAGE> 45
company issuer. Each Fund may invest in ADRs and EDRs.
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).
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, which include entities designated or supported by
governmental entities to promote economic reconstruction or development as well
as international banking institutions and related governmental 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 in its portfolio.
Value International and Europe Fund under normal conditions will invest at
least 65% of their assets in foreign securities and European securities,
respectively. For purposes of this 65% test, foreign and European securities
respectively include securities of issuers: (i) which are organized under the
laws of a foreign country or Europe; (ii) for which the principal trading market
is in a foreign country or Europe; or (iii) which derive at least 50% of their
revenues or profits from goods produced or sold, investments made, or services
performed in foreign countries or Europe or which have at least 50% of their
assets situated in foreign countries or Europe.
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. 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 exchange, changes in the administrations or
economic and monetary policies of foreign governments, the imposition of
exchange control regulations, the possibility of expropriation decrees and other
adverse foreign governmental action, the imposition of confiscatory 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.
EMERGING MARKETS
Value International and Europe Fund may invest in securities of issuers
based in emerging markets. Europe Fund may (but is not limited to) invest in
issuers based in Greece, Portugal, Hungary, Poland, Czech Republic, Slovakia or
Turkey. International Fund may (but is not limited to) invest in issuers based
in the countries in Latin America, Southeast Asia, the Far East and South
America. Subject to the above restrictions, emerging markets will include any
country: (i) having an
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<PAGE> 46
"emerging stock market" as defined by the International Finance Corporation;
(ii) with low- to middle-income economies according to the International Bank
for Reconstruction and Development ("World Bank"); (iii) listed in World Bank
publications as developing; or (iv) determined by Bartlett & Co. or Lombard
Odier to be an emerging market in accordance with the criteria of those
organizations. The following are considered emerging market securities: (1)
securities publicly traded on emerging market stock exchanges, or whose
principal trading market is over-the-counter (i.e., off-exchange) in an emerging
market; (2) securities (i) denominated in any emerging market currency or (ii)
denominated in a major currency if issued by companies to finance operations in
an emerging market; (3) securities of companies that derive a substantial
portion of their total revenues from goods or services produced in, or sales
made in, emerging markets; (4) securities of companies organized under the laws
of an emerging market country or region, which are publicly traded in securities
markets elsewhere; and (5) ADRs (or similar instruments) with respect to the
foregoing.
The risks of foreign investment, described above, are greater for
investments in emerging markets. Investors are strongly advised to consider
carefully the special risks involved in emerging markets, which are in addition
to the usual risks of investing in developed markets around the world. Many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, very
negative effects on the economies and securities markets of certain emerging
markets. Economies in emerging markets generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be affected
adversely by economic conditions, trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. In addition, many of the
currencies of emerging market countries have experienced steady devaluations
relative to the U.S. dollar, and major devaluations have occurred in certain
countries.
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 convertible debt securities may also be
considered to be fixed income securities.
Corporate Debt Securities. 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% (15% for Europe Fund) of
the value of its net assets in illiquid investments.
OPTIONS, FUTURES AND FORWARD
CURRENCY EXCHANGE CONTRACTS
Each Fund may engage in option transactions involving equity securities,
debt securities, futures contracts and stock indexes. Each Fund may also engage
in option transactions
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<PAGE> 47
involving foreign currencies and foreign stock indexes.
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 its custodian (i) appropriate
liquid assets sufficient to purchase the underlying equity security, debt
security, futures contract or foreign currency or (ii) appropriate liquid assets
equal to the market value of the stock index. A Fund will engage in options on
futures contracts only for hedging purposes (see below). Option transactions
involve the following principal risks: (i) the loss of a greater percentage of
the Fund's investment than a direct investment in the underlying instrument,
(ii) the loss of opportunity to profit from price movements in the underlying
instrument, and (iii) 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). However, the SEC considers over-the-counter options to be
illiquid. As long as the SEC 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% (15% for Europe Fund) of its net assets. The
policy of Basic Value and Value International 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 which a Fund writes, are
not deemed fundamental and may be changed by the Board of Trustees without
shareholder vote.
Each Fund may hedge all or a portion of its portfolio investments through
the use of options, futures contracts and options on futures contracts. Each
Fund may hedge currency risks associated with investments in foreign securities
and in particular may hedge its portfolio through the use of forward contracts
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: (i) possible
imperfect correlation between the prices of the options and futures contracts
and the market value of a Fund's portfolio securities, (ii) possible lack of a
liquid secondary market for closing out an option or futures contract
transaction, (iii) the need for additional skills and techniques beyond normal
portfolio management, and (iv) losses resulting from market movements not
anticipated by Bartlett and/or
Lombard Odier.
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 requirement for federal
income tax purposes that a Fund derive less than 30% of its gross income from
the sale or other disposition of stock, securities or certain options, futures,
forward contracts or foreign currencies held for less than three months.
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.
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<PAGE> 48
In addition, a 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, a Fund may enter into a forward
contract. A forward 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, a 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 a Fund from a possible loss, but will limit potential gains
which might result from a positive change in the currency relationships.
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, a
Fund may enter into a forward contract to sell, for a fixed amount of U.S.
dollars, the amount of foreign currency approximating the value of some or all
of that Fund's portfolio securities denominated in such foreign currency. This
technique is known as portfolio hedging. Hedging against a decline in the value
of currency does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of such securities declines. The
Funds may also employ forward contracts to hedge against an increase in the
value of the currency in which the securities a 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.
A more complete description of the characteristics, risks and possible
benefits of option and hedging transactions is included in the Funds' Statement
of Additional Information.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements. A repurchase agreement is a
transaction 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,
a Fund could experience both delays in liquidating the underlying security and
losses. Europe Fund may enter into repurchase agreements with respect to
securities issued by the U.S. government, its agencies or instrumentalities.
Under normal circumstances, no more than 25% of Europe Fund's total assets will
be invested in repurchase agreements at any time.
ILLIQUID SECURITIES
The portfolio of each Fund may contain illiquid securities. A Fund will not
invest more than 10% (15% with respect to Europe Fund) 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 generally to be illiquid (although if they are liquid they will
be treated as such): repurchase agreements and time deposits maturing in more
than seven days, options traded in the over-the-counter market, nonpublicly
offered securities, stripped collateralized mortgage obligations ("CMOs"), CMOs
for which there is no established market, direct investments in mortgages and
restricted securities.
RESTRICTED SECURITIES
Each Fund may invest in restricted securities, although Basic Value and
Value Interna-
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<PAGE> 49
tional do not intent to invest more than 5% of their respective net assets in
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, a 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.
LOANS OF PORTFOLIO SECURITIES
Each Fund may make short- and long-term loans of their portfolio
securities. Under the lending policy authorized by the Board of Trustees and
implemented by Bartlett or Lombard Odier, in response to requests of
broker/dealers or institutional investors which Bartlett or Lombard Odier, 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
Funds 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. 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 a Fund's total assets.
OTHER INVESTMENT COMPANIES
Each Fund is permitted to invest in other investment companies at any time.
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 a Fund acquires securities of another
investment company, the shareholders of the Fund may be subject to duplicative
management fees.
Value International and Europe Fund each may invest in any closed-end
investment company that holds foreign equity securities in its portfolio. For
Value International, investments in the shares of closed-end investment
companies that invest primarily in the equity securities of non-U.S. issuers
will be included in the 65% of total assets that Value International normally
would expect to invest in such issuers. Likewise, investments by Europe Fund in
the shares of closed-end investment companies that invest primarily in equity
securities of European issuers will be included in the 65% of total assets that
Europe Fund normally would expect to invest in European issuers.
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PURCHASE OF SHARES
GENERAL
Each Fund is authorized to issue three classes of shares. Class A Shares
and Class C shares of the Funds are offered through a separate prospectus. Class
Y shares, as described in this Prospectus, are offered for sale only to advisory
clients of Bartlett that are employee benefit or retirement plans, other than
IRAs and Keogh Plans, to retirement plans having net assets of at least $10
million, to purchasers of $5 million or more in shares of any Fund, and to
participants in certain wrap fee investment advisory programs that
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<PAGE> 50
are currently or in the future sponsored by
Bartlett and that may invest in Bartlett proprietary funds, provided that shares
are purchased through or in connection with those programs.
Investors eligible to purchase Class Y shares may purchase them through a
brokerage account with Bartlett, BFP or their affiliates. Subject to the above
limitations, the minimum initial investment for Class Y shares is $1,000,
including investments made by exchange from other Funds or Legg Mason Cash
Reserve Trust. The minimum investment for each purchase of additional shares is
$100. Each Fund may reduce or 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 investments made by advisory clients of Bartlett and employees
of Bartlett and their families, or under other circumstances.
Share purchases will be processed at the net asset value next determined
after Bartlett or BFP has received the order. Orders received before the close
of regular trading on the New York Stock Exchange ("Exchange") (normally 4:00
p.m. Eastern time) ("close of the Exchange") on any day the Exchange is open
will be executed at the net asset value determined as of the close of the
Exchange on that day. Orders received after the close of the Exchange or on days
the Exchange is closed will be executed at the net asset value determined as of
the close of the Exchange on the next day the Exchange is open. The Funds,
Bartlett and BFP reserve the right to reject any purchase order and to suspend
the offering of shares for a period of time. The Funds do not issue share
certificates.
No sales charge is imposed by any Fund in connection with the purchase of
Class Y Shares.
Once an account has been established, investors may also purchase shares of
the Funds through BFP by bank wire. Bank wire purchases will be effected at the
next determined net asset value after the bank wire is received. An investor's
bank may charge a service fee for wiring money to the Funds.
Reports will be sent to each Fund's shareholders at least semiannually
showing its portfolio and other information; an annual report for the Funds will
contain financial statements audited by the Trust's independent accountants.
Shareholder inquiries should be addressed to:
[insert complete Fund name]
BFP Funds Processing
P.O. Box 1476
Baltimore, Maryland 21203-1476
Telephone Purchase Transactions:
Call BFP at (800) 800-3609
PROGRAMS APPLICABLE TO CLASS Y:
SYSTEMATIC INVESTMENT PLAN. Shares of each Fund may be purchased through
the Systematic Investment Plan. Under this plan, you may arrange for automatic
monthly investments in the Funds of $50 or more by authorizing BFDS to transfer
funds each month from your checking account. Please contact Bartlett or BFP for
further information.
AUTOMATIC INVESTMENTS. Arrangements may be made with some employers and
financial institutions, such as banks or credit unions, for regular automatic
monthly investments of $50 or more in shares. In addition, it may be possible
for dividends from certain unit investment trusts to be invested automatically
in shares. Persons interested in establishing such automatic investment programs
should contact the Funds through Bartlett or BFP.
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REDEMPTION OF SHARES
As described below, shares of the Funds may be redeemed at their net asset
value. Redemption proceeds normally will settle in your Bartlett or BFP
brokerage account two business days after trade date; however, each Fund
reserves the right to take up to seven days to make payment upon redemption if,
in the judgment of Bartlett and/or Lombard Odier, the respective Fund could be
adversely affected by immediate payment. The Statement of Additional Information
describes several other circumstances in which the date of payment may be
postponed or the right of redemption suspended.
Shareholders may call Bartlett or BFP and give them an order for
redemption. Shareholders should have the following information ready when they
call: the name of the Fund, the number of shares (or dollar amount) to be
redeemed and their shareholder account number. Shareholders may also send a
written request for redemption to the address listed below.
Orders for redemption received by Bartlett or BFP before the close of the
Exchange, on any day that the Exchange is open, will be transmitted to BFDS for
redemption at the net asset value per share determined as of the close of the
Exchange on that day. Requests for redemption received by Bartlett or BFP after
the close of the Exchange will be executed at the net asset value determined as
of the close of the Exchange on its next trading day. A redemption request
received by Bartlett or BFP may be treated as a request for repurchase and, if
it is accepted by Bartlett or BFP, the investors shares will be purchased at the
net asset value per share determined as of the next close of the Exchange.
SYSTEMATIC WITHDRAWAL PLAN:
Eligible shareholders may elect to make systematic withdrawals from their
Fund account of a minimum of $50 on a monthly basis if they are purchasing or
already own shares with a net asset value of $5,000 or more. Shareholders should
not purchase shares of a Fund while they are participating in the Systematic
Withdrawal Plan with respect to that Fund. Please contact BFP or your
broker/dealer for further information.
EXCHANGE PRIVILEGE:
As a Fund shareholder, investors are entitled to exchange their shares of a
Fund for the corresponding class of shares of any of the other Funds or the Legg
Mason Cash Reserve Trust (a money market mutual fund), provided that such shares
are eligible for sale in the investor's state of residence.
Investments by exchange into a Fund are made at the per share net asset
value determined on the same business day as redemption of the Fund shares you
wish to exchange.
There is no charge for the exchange privilege, but each Fund reserves the
right to terminate or limit the exchange privilege of any shareholder who makes
more than four exchanges from that Fund in one calendar year. To effect an
exchange by telephone, or to obtain further information concerning the exchange
privilege, please contact BFP or Bartlett.
OTHER IMPORTANT REDEMPTION INFORMATION:
The proceeds of your redemption may be more or less than your original
cost. If the shares to be redeemed were paid for by check (including certified
or cashier's checks) within 10 business days of the redemption request, the
proceeds may not be disbursed unless the Fund can be reasonably assured that the
check has been collected.
None of the Funds will be responsible for the authenticity of redemption
instructions received by telephone, provided it follows reasonable procedures to
identify the caller. Each Fund may request identifying information from callers
or employ identification numbers. Each Fund may be liable for losses due to
unauthorized or fraudulent instructions if it does not follow reasonable
procedures. Tele-
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<PAGE> 52
phone redemption privileges are available
automatically to all shareholders. Shareholders who do not wish to have
telephone redemption privileges should call BFP or Bartlett for further
instructions.
Because of the relatively high cost of maintaining small accounts, each
Fund may elect to close any account with a current value of less than $500 by
redeeming all of the shares in the account and mailing the proceeds to you.
However, no Fund will redeem accounts that fall below $500 solely as a result of
a reduction in net asset value per share. If a Fund elects to redeem the shares
in your account, you will be notified that your account is below $500 and will
be allowed 60 days in which to make an additional investment in order to avoid
having your account closed.
The shares of each Fund are subject to redemption at any time if the Board
of Trustees of the 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.
Telephone Transactions:
Call BFP at (800) 800-3609
Mail Transactions:
[insert complete Fund name]
BFP Funds Processing
P.O. Box 1476
Baltimore, Maryland 21203-1476
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CALCULATION OF SHARE PRICE
=====================================================================
Net asset value per share of each Fund class is determined daily, as of the
close of the Exchange, on every day that the Exchange is open, by subtracting
the liabilities attributable to each class from the total assets of such class
and dividing the result by the number of shares of such class outstanding.
Securities owned by each Fund for which market quotations are readily available
are valued at current market value. In the absence of readily available market
quotations, securities are valued at fair value as determined by Bartlett and/or
Lombard Odier, under authority delegated by the Board of Trustees. The Funds may
use pricing services to determine the market value of its portfolio securities,
subject to Bartlett's and/or Lombard Odier'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.
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 that use prices provided by market makers or
estimates of market values. However, if Bartlett and/or Lombard Odier believes
that 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 are valued at amortized cost.
For valuation purposes, quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents at the time of pricing. In
computing the net asset value of a Fund, the values of foreign portfolio
securities are generally based upon market quotations that, depending upon the
exchange or market, may be last sale price, last bid
16
<PAGE> 53
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 Exchange is open. Trading of these
securities may not take place on every business day the Exchange is open. In
addition, trading may take place in various foreign markets on Saturdays or on
other days when the Exchange 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 Bartlett and/or Lombard
Odier determines, subject to review by the Trust's Board of Trustees, that the
particular event would materially affect net asset value, in which case an
adjustment will be made.
===========================================================================
=======================================================================
=====================================================================
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes substantially all of its investment company taxable
income (which consists of net investment income, net short-term capital gain and
net gains from certain foreign currency transactions), if any, in the form of
dividends to its shareholders of each class. Value International and Basic Value
each declares and pays dividends from net investment income on a quarterly
basis, and dividends from any net short-term capital gains annually; Europe Fund
declares and pays all dividends on an annual basis. Each Fund also distributes
substantially all of its net capital gain (the excess of net long-term capital
gain over net short-term capital loss) and net gains from foreign currency
transactions, if any, after the end of the taxable year in which the gains are
realized. A second distribution of net capital gain may be necessary in some
years to avoid imposition of the excise tax described under the heading
"Additional Tax Information" in the Statement of Additional Information.
Dividends and other distributions, if any, on Class Y shares of a Fund held
in a Simplified Employee Pension Plan ("SEP"), Savings Incentive Match Plan for
Employees ("SIMPLE") or other qualified retirement plan and by shareholders
maintaining a Systematic Withdrawal Plan, generally are reinvested in Class Y
shares of that Fund on the payment date (including instances when no election is
made). Other shareholders may elect to:
1. Receive both dividends and other distributions in Class Y shares of the
distributing Fund (automatic option -- no action needed);
2. Receive dividends in cash and other distributions in Class Y shares of the
distributing Fund;
3. Receive dividends in Class Y shares of the distributing Fund and other
distributions in cash; or
4. Receive both dividends and other distributions in cash.
In certain cases, shareholders may reinvest dividends and other
distributions in Class Y shares of another Fund. Please contact BFP or your
financial advisor for additional information concerning this option. If no
election is made, both dividends and other distributions are credited to your
account in shares of the corresponding class of the distributing Fund at the net
asset value of the
17
<PAGE> 54
shares determined as of the close of the Exchange on the reinvestment date.
Class Y shares received pursuant to any of the first three (reinvestment)
elections above are also credited to your account at that net asset value.
Shareholders electing to receive dividends and/or other distributions in cash
will be sent a check or will have their brokerage account credited after the
payment date. You may elect at any time to change your option by notifying the
applicable Fund in writing at: [insert complete Fund name], c/o BFP Funds
Processing, P.O. Box 1476, Baltimore, Maryland 21203-1476. Your election must be
received at least 10 days before the record date in order to be effective for
dividends and other distributions paid to shareholders as of that date.
===========================================================================
=======================================================================
=====================================================================
TAXES
Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of federal income
tax on that part of its investment company taxable income and net capital gain
that is distributed to its shareholders.
Dividends from a Fund's investment company taxable income (whether paid in
cash or reinvested in shares) are taxable to its shareholders (other than
qualified retirement plans and other tax-exempt investors) as ordinary income to
the extent of the Fund's earnings and profits. Distributions of a Fund's net
capital gain (whether paid in cash or reinvested in shares), when designated as
such, are taxable to those shareholders as long-term capital gain, regardless of
how long they have held their Fund shares.
Each Fund sends its shareholders a notice following the end of each
calendar year specifying, among other things, the amounts of all dividends and
other distributions paid (or deemed paid) during the year. Each Fund is required
to withhold 31% of all dividends, capital gain distributions and redemption
proceeds payable to any individuals and certain other non-corporate shareholders
who do not provide the Fund with a certified taxpayer identification number.
Each Fund also is required to withhold 31% of all dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding.
A redemption of Fund shares may result in a taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are more or
less than the shareholder's adjusted basis for the redeemed shares. An exchange
of Fund shares for shares of any other Fund or the Legg Mason Cash Reserve Trust
generally will have similar tax consequences. See "Redemption of Shares --
Exchange Privilege," above. If Fund shares are purchased within 30 days before
or after redeeming at a loss other shares of the same Fund (regardless of
class), all or part of that loss will not be deductible and instead will
increase the basis of the newly purchased shares.
A dividend or other distribution paid shortly after shares have been
purchased, although in effect a return of investment, is subject to federal
income tax. Accordingly, an investor should recognize that a purchase of shares
immediately before the record date for a dividend or other distribution could
cause the investor to incur tax liabilities and should not be made solely for
the purpose of receiving the dividend or other distribution.
Each Fund's dividend and interest income, and gains realized from
disposition of foreign securities, may be subject to income, withholding or
other taxes imposed by foreign countries and U.S. possessions that would reduce
the yield on that Fund's securities. Tax conventions between certain countries
and the United States may reduce or eliminate these foreign taxes, however, and
many foreign countries do not impose taxes
18
<PAGE> 55
on capital gains in respect of investments by
foreign investors. Shareholders may be entitled to claim tax credits or
deductions, subject to certain limitations, for foreign income taxes paid by a
Fund (see "Additional Tax Information" in the Statement of Additional
Information). Each Fund will notify its shareholders if such credit or deduction
is available.
The foregoing is only a summary of some of the important federal income tax
considerations generally affecting each Fund and its shareholders; see the
Statement of Additional Information for a further discussion. In addition to
federal income tax, you may also be subject to state, local or foreign taxes on
distributions from the Funds, depending on the laws of your home state and
locality or country of residence. Prospective shareholders are urged to consult
their tax advisers with respect to the effects of this investment on their own
tax situations.
=======================================================================
MANAGEMENT OF THE TRUST
=====================================================================
BARTLETT & CO.
Bartlett & Co., 36 East Fourth Street, Cincinnati, Ohio, serves as
investment adviser and administrator to each Fund. Bartlett is an investment
advisory firm which has provided investment advice to individuals, corporations,
pension and profit sharing plans and trust accounts since 1898. As of June 30,
1997, Bartlett had aggregate assets under management of approximately $2.6
billion. Bartlett is a wholly owned subsidiary of Legg Mason, Inc., a financial
services holding company.
Pursuant to an Investment Management and Administration Agreement, which
was approved by the Board of Trustees, Bartlett acts as investment adviser for
each Fund and has responsibility for the actual investment management of the
Funds, including the responsibility for making decisions and placing orders to
buy, sell or hold a particular security, except with respect to Europe Fund,
where it has delegated that responsibility to Lombard Odier. Bartlett also
supervises all aspects of the operations of each Fund in its capacity as
administrator for each Fund.
Bartlett receives for its services a management fee from each Fund
attributable to the net assets of each class, calculated daily and payable
monthly. For its services to Basic Value, Bartlett receives an annual fee of
0.75% of its average daily net assets; for its services to Value International,
Bartlett receives an annual fee of 1.25% of its average daily net assets; and
for its services to Europe Fund, Bartlett receives an annual fee of 1.00% of its
average daily net assets.
LOMBARD ODIER
Lombard Odier, Norfolk House, 13 Southampton Place, London WC1A 2AJ,
England, serves as investment sub-adviser to Europe Fund pursuant to a
Sub-Advisory Agreement, which was approved by the Board of Trustees. For its
services under the Sub-Advisory Agreement, Lombard Odier will receive from
Bartlett (not Europe Fund) a monthly fee at the rate of 60% of the monthly fee
actually paid to Bartlett by the Trust under the Investment Management and
Administration Agreement, taking into account any fee waiver arrangements in
effect for Europe Fund (see below).
Lombard Odier specializes in advising and managing investment portfolios
for institutional clients and also serves as investment adviser for one other
investment company. As of June 30, 1997, Lombard Odier had approximately $3.0
billion in aggregate assets under management. Lombard Odier is an indirect
wholly owned subsidiary of Lombard Odier & Cie, a Swiss private bank.
FEE WAIVERS:
Bartlett has agreed to waive fees to the extent that a Fund's expenses
exceed the
19
<PAGE> 56
following annual rates of average daily net assets until July 31, 1998:
<TABLE>
<CAPTION>
CLASS Y
------
<S> <C>
Value International 1.55%
Basic Value 0.90%
Europe Fund 1.50%
</TABLE>
PORTFOLIO MANAGERS:
James A. Miller, CFA, Vice President of the Trust, and Woodrow H. Uible,
CFA, Vice President of the Trust, are responsible for co-managing Basic Value.
Mr. Miller is a Senior Portfolio Manager, President and a Director of Bartlett.
Mr. Miller joined Bartlett in 1977 and is a member of its Institutional
Investment Group. Mr. Uible is a Senior Portfolio Manager of Bartlett. Mr. Uible
has been employed by Bartlett since 1980. He chairs Bartlett's Equity Investment
Group, and is responsible for Bartlett's equity investment processes.
Madelynn M. Matlock, CFA, Vice President of the Trust, is primarily
responsible for managing Value International. Ms. Matlock, Director of
International Investments for Bartlett, joined Bartlett in 1981. She also served
as Director of Research for Bartlett from 1983 to 1992.
Ronnie Armist, Chief Investment Officer, Equities, of Lombard Odier in
London, is primarily responsible for managing the Europe Fund. Mr. Armist joined
Lombard Odier in 1983 and has served as Chief Investment Officer, Equities,
since 1991.
BFP
BFP is the distributor, or principal underwriter, of each Fund's shares
pursuant to a Distribution Agreement with the Trust on behalf of each Fund. The
Distribution Agreement obligates BFP to pay certain expenses in connection with
the offering of shares of each Fund, including any compensation to
brokers/dealers, the printing and distribution of prospectuses, statements of
additional information and periodic reports used in connection with the offering
to prospective investors, after the prospectuses, statements of additional
information and periodic reports have been prepared, set in type and mailed to
existing shareholders at the Fund's expense, and for any supplementary sales
literature and advertising costs. BFP is a wholly owned subsidiary of Legg
Mason, Inc.
===========================================================================
=======================================================================
=====================================================================
DESCRIPTION OF THE TRUST
Bartlett Capital Trust ("Trust") is a diversified, open-end management
investment company organized as a Massachusetts business trust on October 31,
1982. The business activities of the Trust are supervised by its Board of
Trustees. Like other mutual funds, the Trust retains various organizations to
perform specialized services.
The trustees of the Trust have authority to issue an unlimited number of
shares of beneficial interest of separate series, all without par value. Shares
of three series, consisting of the Funds, have been authorized.
The shares of beneficial interest of each Fund are divided into three
classes, designated Class A, Class C and Class Y shares. Each class represents
interests in the same assets of the Fund. The classes differ as follows: (1)
each of Class A and Class C has exclusive voting rights on matters pertaining to
its plan of distribution, (2) Class A shares generally are subject to an initial
sales charge, and may, under limited circumstances, be subject to a contingent
deferred sales charge, and bear ongoing service fees, (3) no initial sales
charge is imposed on Class C shares, but Class C shares are subject to a
contingent deferred sales charge, and bear ongoing distribution and service
fees, and (4) each Class may bear differing amounts of certain class-specific
expenses.
20
<PAGE> 57
The differing sales charges and other expenses applicable to the different
classes of each Fund's shares may affect the performance of those classes. More
information concerning the classes of shares of the Funds may be obtained by
calling BFP at (800) 800-3609.
Any Trustee of the Trust may be removed by vote of the shareholders holding
not less than two-thirds of the outstanding shares of the Trust. The Trust does
not hold annual meetings of shareholders. Shareholders of the Funds are entitled
to one vote per share and fractional votes for fractional shares held. Voting
rights are not cumulative. All shares of the Funds are fully paid and
nonassessable and have no preemptive or conversion rights. A separate vote is
taken by a class of shares of a Fund if a matter affects just that class of
shares. Each class of shares may bear certain differing class-specific expenses.
Financial advisors and others entitled to receive compensation for selling or
servicing Fund shares may receive more with respect to one class than another.
The Board of Trustees of the Trust does not anticipate that there will be
any conflicts among the interests of the holders of the different classes of
Fund shares. On an ongoing basis, the Board will consider whether any such
conflict exists and, if so, take appropriate actions.
Each Fund acknowledges that it is solely responsible for the information or
any lack of information about it in this joint Prospectus and in the joint
Statement of Additional Information, and no other Fund is responsible therefor.
There is a possibility that one Fund might be deemed liable for misstatements or
omissions regarding another Fund in this Prospectus or in the joint Statement of
Additional Information; however, the Funds deem this possibility slight.
21
<PAGE> 58
INVESTMENT ADVISER
Bartlett & Co.
36 East Fourth Street
Cincinnati, Ohio 45202-3896
INVESTMENT SUB-ADVISER TO EUROPE FUND
Lombard Odier International Portfolio
Management Limited
Norfolk House
13 Southampton Place
London WC1A 2AJ, England
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105
SUB-CUSTODIAN FOR EUROPE FUND
The Chase Manhattan Bank, N.A.
1 Chaseside
Bournemouth, Dorset BH7 7DB
England
TRANSFER AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
217 East Redwood Street
Baltimore, Maryland 21202
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
- ---------------------------------------------------
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
THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE TRUST TO SELL ITS
SHARES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN
SUCH STATE.
- ---------------------------------------------------
<PAGE> 59
BARTLETT & CO.
- ---------------------------------------------
REGISTERED INVESTMENT ADVISORS
36 East Fourth Street, - Cincinnati, OH 45202-3896
513/345-6212 - 800/800-3609 - FAX 513/621-6462
(LOGO)PRINTED ON RECYCLED PAPER
-------------------------------------------------
-------------------------------------------
========================================
BARTLETT & CO.
------------------------------------
REGISTERED INVESTMENT ADVISORS
MUTUAL
FUNDS
PROSPECTUS
JULY 18, 1997
BARTLETT
VALUE INTERNATIONAL FUND
BARTLETT
BASIC VALUE FUND
BARTLETT
EUROPE FUND
BARTLETT CAPITAL TRUST
<PAGE> 60
BARTLETT CAPITAL TRUST:
Bartlett Value International Fund
Bartlett Basic Value Fund
Bartlett Europe Fund
STATEMENT OF ADDITIONAL INFORMATION
July 18, 1997
The three funds named above (each a "Fund" and collectively, the
"Funds") are series of Bartlett Capital Trust (the "Trust"), a diversified
open-end investment company. Bartlett Value International Fund ("Value
International") seeks capital appreciation; it invests primarily in foreign
equity securities that its investment adviser, Bartlett & Co. ("Bartlett"),
believes are attractively priced relative to their intrinsic value. Income is
a secondary consideration. Bartlett Basic Value Fund ("Basic Value") seeks
capital appreciation; it invests primarily in common stocks or securities
convertible into common stocks that Bartlett believes are selling at attractive
prices relative to their intrinsic value. Income is a secondary consideration.
Bartlett Europe Fund ("Europe Fund") seeks long-term growth of capital; it
invests, under normal conditions, at least 65% of its total assets in equity
securities of European issuers that its investment sub-adviser, Lombard Odier
International Portfolio Management Limited ("Lombard Odier"), believes are
undervalued and thus may offer above-average potential for capital
appreciation.
This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Prospectuses for Bartlett Capital Trust
dated July 18, 1997, which have been filed with the Securities and Exchange
Commission ("SEC"). Class A and Class C shares of the Funds are offered
through one Prospectus; the Funds' Class Y shares are offered through a separate
Prospectus. A copy of each Prospectus can be obtained by calling BFP Financial
Partners, Inc. ("BFP"), the Trust's distributor, toll-free at 1-800-822-5544.
BFP FINANCIAL PARTNERS, INC.
111 South Calvert Street
Baltimore, Maryland 21202
(800) 822-5544
BARTLETT & CO.
36 East Fourth Street
Cincinnati, Ohio 45202
<PAGE> 61
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
INVESTMENT LIMITATIONS
THE FUNDS' INVESTMENT ADVISER AND SUB-ADVISER
THE TRUST'S DISTRIBUTOR
TRUSTEES AND OFFICERS
PORTFOLIO TRANSACTIONS AND BROKERAGE
DETERMINATION OF SHARE PRICE
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
ADDITIONAL TAX INFORMATION
TAX-DEFERRED RETIRMEMENT PLANS
INVESTMENT PERFORMANCE
DESCRIPTION OF THE TRUST
CUSTODIAN
ACCOUNTANTS
TRANSFER AGENT
FINANCIAL STATEMENTS
</TABLE>
2
<PAGE> 62
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
This section supplements the information in the Prospectuses
concerning the investments the Funds may make and the techniques they may use
(see "Investment Objectives and Policies" and "Investment Policies,
Techniques and Risk Considerations").
EMERGING MARKET SECURITIES
Because of the high levels of foreign-denominated debt owed by many
emerging market countries, fluctuating exchange rates can significantly affect
the debt service obligations of those countries. This could, in turn, affect
local interest rates, profit margins and exports which are a major source of
foreign exchange earnings. Although it might be theoretically possible to
hedge for anticipated income and gains, the ongoing and indeterminate nature of
the foregoing risk (and the costs associated with hedging transactions) makes
it virtually impossible to hedge effectively against such risks.
To the extent an emerging market country faces a liquidity crisis with
respect to its foreign exchange reserves, it may increase restrictions on the
outflow of any foreign exchange. Repatriation is ultimately dependent on the
ability of a Fund to liquidate its investments and convert the local currency
proceeds obtained from such liquidation into U.S. dollars. Where this
conversion must be done through official channels (usually the central bank or
certain authorized commercial banks), the ability to obtain U.S. dollars is
dependent on the availability of U.S. dollars through those channels and,
if available, upon the willingness of those channels to allocate those U.S.
dollars to a Fund. In such a case, a Fund's ability to obtain U.S. dollars
may be adversely affected by any increased restrictions imposed on the outflow
of foreign exchange. If a Fund is unable to repatriate any amounts due to
exchange controls, it may be required to accept an obligation payable at some
future date by the central bank or other government entity of the jurisdiction
involved. If such conversion can legally be done outside official channels,
either directly or indirectly, a Fund's ability to obtain U.S. dollars may
not be affected as much by any increased restrictions except to the extent of
the price which may be required to be paid for the U.S. dollars.
Many emerging market countries have little experience with the
corporate form of business organization, and may not have well developed
corporation and business laws or concepts of fiduciary duty in the business
context.
The securities markets of emerging markets are substantially smaller,
less developed, less liquid and more volatile than the securities markets of
the U.S. and other more developed countries. Disclosure and
3
<PAGE> 63
regulatory standards in many respects are less stringent than in the U.S. and
other major markets. There also may be a lower level of monitoring and
regulation of emerging markets and the activities of investors in such markets;
enforcement of existing regulations has been extremely limited.
Some emerging markets have different settlement and clearance
procedures. In certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. The inability of a Fund to make
intended securities purchases due to settlement problems could cause the Fund
to miss attractive investment opportunities. Inability to dispose of a
portfolio security caused by settlement problems could result either in losses
to a Fund due to subsequent declines in the value of the portfolio security
or, if the Fund has entered into a contract to sell the security, in possible
liability to the purchaser.
The risk also exists that an emergency situation may arise in one or
more emerging markets as a result of which trading of securities may cease or
may be substantially curtailed and prices for a Fund's portfolio securities
in such markets may not be readily availiable.
OPTION TRANSACTIONS
Each Fund 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 a 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, State Street Bank and Trust Company
("State Street" or "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 its 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 its Custodian.
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.
4
<PAGE> 64
Each Fund (particularly Value International and Europe 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 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 its Custodian liquid assets sufficient to purchase
the underlying currency or futures contract in the case of a put option. Each
Fund will also segregate and maintain with its 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 account, to pledge the underlying currency, futures
contract or U.S. government obligations, or to deposit high grade liquid assets
in escrow with its Custodian.
HEDGING TRANSACTIONS
(1) U. S. Securities
Each Fund 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 Bartlett's and/or
Lombard Odier's ability to predict the future direction of stock prices or
interest rates and incorrect predictions by Bartlett and/or Lombard Odier may
have an adverse effect on a Fund. 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. Bartlett
is registered as a commodity trading advisor with the Commodity Futures
Trading Commission ("CFTC"), 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
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be government or 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 U.S. Treasury bills, notes and bonds), Government National
Mortgage Association ("GNMA") 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, Bartlett and/or Lombard Odier 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
CFTC. 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 boards of trades and 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 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 a 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 a Fund will be achieved, since the success of the strategy will depend on
Bartlett's and/or Lombard Odier's ability to predict the future direction of
the relevant currency, stock index or futures contract and incorrect
predictions by Bartlett and/or Lombard Odier 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.
Futures contracts are traded on exchanges licensed and regulated by the
CFTC and analogous foreign regulatory agencies. Each 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
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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 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 a 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 a 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.
(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 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 total assets.
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 1 to 270 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).
U.S. GOVERNMENT OBLIGATIONS AND RELATED SECURITIES
U.S. government obligations include a variety of securities that are
issued or guaranteed by the U.S. Treasury, by various agencies of the
U.S. government or by various instrumentalities that
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have been established or sponsored by the U.S. government. U.S. Treasury
securities and securities issued by the GNMA and Small Business Administration
are backed by the "full faith and credit" of the U.S. government. Other U.S.
government obligations may or may not be backed by the "full faith and credit"
of the U.S.. In the case of securities not backed by the "full faith and
credit" of the U.S., 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, Fannie Mae (formerly the Federal National Mortgage
Association) ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC")) for ultimate repayment and may not be able to assert a claim
against the U.S. 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.
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 invest no more than 5% of its net assets in municipal
obligations (including participation interests). 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.
ZERO COUPON AND PAY-IN-KIND BONDS
Corporate debt securities and municipal obligations include so-called
"zero coupon" bonds and "pay-in-kind" bonds. A Fund may invest no more than 5%
of its net assets in zero coupon bonds or pay-in-kind bonds, respectively. 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 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
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payments of interest. Even though zero coupon and pay-in-kind bonds do not pay
current interest in cash, a Fund holding those bonds is required to accrue
interest income on such investments and may be required to distribute that
income at least annually to shareholders. Thus, such a Fund could be required
at times to liquidate other investments in order to satisfy its dividend
requirements.
MORTGAGE-RELATED SECURITIES
Each Fund may invest no more than 5% of its net assets in
mortgage-related securities. Mortgage-related securities provide capital for
mortgage loans made to residential homeowners, including securities which
represent interests in pools of mortgage loans made by lenders such as savings
and loan institutions, mortgage bankers, commercial banks and others. Pools of
mortgage loans are assembled for sale to investors (such as the Funds) by
various governmental, government-related and private organizations, such as
dealers. The market value of mortgage-related securities will fluctuate as a
result of changes in interest rates and mortgage rates.
Interests in pools of mortgage loans generally provide a monthly
payment which consists of both interest and principal payments. In effect,
these payments are a "pass-through" of the monthly payments made by the
individual borrowers on their residential mortgage loans, net of any fees paid
to the isser 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 GNMA) 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, Bartlett and/or Lombard Odier determines that the securities are
appropriate investments for the Fund.
Another type of security representing an interest in a pool of
mortgage loans is known as a collateralized mortgage obligation ("CMO"). CMOs
represent interests in a short-term, intermediate-term or long-term portion of
a mortgage pool. Each portion of the pool receives monthly interest payments,
but the principal repayments pass through to the short-term CMO first and the
long-term CMO last. A CMO permits an investor to more accurately predict the
rate of principal repayments. CMOs are issued by private issuers, such as
broker/dealers and government agencies, such as FNMA and FHLMC. 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 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.
Bartlett and/or Lombard Odier each 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
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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, Bartlett and/or Lombard Odier will, consistent with a
Fund's investment objective and policies, consider making investments in such
new types of securities. The Prospectuses will be amended with any necessary
additional disclosure prior to that 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 securities may not be
readily marketable. No Fund will purchase mortgage-realted securities for
which there is no established market (including CMOs and direct investments in
mortgages as described below) or any other investments which Bartlett and/or
Lombard Odier deems to be illiquid pursuant to criteria established by the
Board of Trustees if, as a result, more than 10% (15% for Europe Fund) of the
value of the Fund's net assets would be invested in such illiquid securities
and investments. Government-related organizations which issue mortgage-related
securities include GNMA, FNMA and 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.
DIRECT INVESTMENT IN MORTGAGES
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. 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
Bartlett and/or Lombard Odier 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.
LOAN PARTICIPATION INTERESTS
Basic Value and Value International may each invest no more than 5% of
its net assets in 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 creidt risks generally associated with the corporate borrower;
however, certain loan participation interests may be backed by irrevocable
letters of credit or a
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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 commerical 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.
ASSET-BACKED AND RECEIVABLE-BACKED SECURITIES
Basic Value and Value International are permitted to invest in
asset-backed and receivable-backed securities. Each of these Funds may invest
no more than 5% of its net assets in asset-backed securities and
receivable-backed securities, respectively. 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 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, Basic Value and Value
International also may invest in other types of asset-backed and
receivable-backed securities. The Prospectuses will be amended with any
necessary additional disclosure prior to either 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. Each Fund may invest no more than 5% of its net
assets in floating and variable rate obligations, respectively. Floating rate
obligations have an interest rate which is fixed to a specified interest rate,
such as 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.
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 obligtion 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. 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% (15% for Europe Fund) of the value of its net
assets in illiquid
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investments.
STRUCTURED SECURITIES
Basic Value may invest no more than 5% of its net assets in structured
securities which are derived from securities that 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 Fund uses these
securities only as a hedge or to protect its 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.
FORWARD COMMITMENTS, REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS
Basic Value and Value International 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. Each of these
Funds may invest no more than 5% of its net assets in forward commitments.
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 GNMA securities transactions.
The use of forward commitments enables a Fund to hedge against
anticipated changes in interest rates and prices. Forward commitment
securities may be sold prior to the settlement date, but a Fund will enter into
forward commitment transactions only with the intention of actually receiving
or delivering the securities, as the case may be. Any significant commitment
of a Fund's assets to the purchase of securities on a forward commitment basis
may increase the possibility that its net asset value will fluctuate. In
addition, if a Fund chooses to dispose of the right to receive or deliver a
forward commitment security prior to the settlement date, it may incur a gain
or loss. Purchases of forward commitment securities also involve a risk of
loss if the value of the securities declines prior to the settlement date or if
the seller fails to deliver after the value of the securities has risen.
A Fund will direct State Street 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, a Fund will direct
State Street to place the securities in a separate account. A Fund will direct
State Street to segregate such assets for "when, as and if issued" commitments
only when it determines that issuance of the security is probable.
Basic Value may enter into reverse repurchase agreements but may
invest no more than 5% of its net assets in such transactions. 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
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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, the Fund will
direct State Street 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.
Basic Value also may enter in dollar roll transactions with certain
broker/dealers and banks but may invest no more than 5% of its net assets in
such transactions. For all purposes (including borrowing restrictions)
the Fund treats 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.
When a separate account is maintained in connection with forward
commitment transactions to 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 a Fund until Bartlett 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.
SHORT SALES
Basic Value may sell a security short in anticipation of a decline in
the market value of the security. The Fund may invest no more than 5% of its
net assets in short sales. When the 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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<PAGE> 73
In connection with its short sales, the Fund will be required to
maintain a segregated account with State Street 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. The 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.
When Basic Value 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.
SHORT SALES AGAINST THE BOX
Basic Value and Value International may make short sales "against the
box." Short sales "against the box" are transactions, similar to those
described above, in which a security identical to one owned by a Fund is
borrowed and sold short. The transaction may serve to defer a gain or loss for
federal income tax purposes. Neither Fund may invest more than 5% of its net
assets in short sales "against the box."
BOND RATINGS
Each Fund may invest in debt obligations (such as corporate debt
securities and municipal obligations) in any rating category of the recognized
rating services, including issues that are in default, and may invest in
unrated debt obligations. Most foreign debt obligations are not rated.
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
Investor's Service, Inc. ("Moody's") or BBB by Standard & Poor's ("S&P")
(commonly known as "junk bonds"), are below investment grade and have
speculative characteristics, and those in the lowest rating categories are
extremely speculative and may be in default with respect to payment of
principal and interest. Each Fund does not intend to invest more than 5% of
its net assets in securities rated below investment grade.
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<PAGE> 74
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
perceptions 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, 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 face
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 invests in these lower-rated securities, the
achievement of its investment objective may be more dependent on Bartlett's
and/or Lombard Odier's own credit analysis than in the case of a Fund investing
in higher-rated securities.
Each Fund may invest in securities which are in lower rating
categories or are unrated if Bartlett and/or Lombard Odier determines that the
securities provide the opportunity of meeting the Fund's objective without
presenting excessive risk. Bartlett and/or Lombard Odier 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 Bartlett and/or Lombard Odier may refer to
ratings, they do not rely exclusively on ratings, but make their own
independent and ongoing review of credit quality.
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.
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.
BB. Debt rated BB generally has less near-term vulnerability to
default than other speculative issues. However, 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.
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
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<PAGE> 75
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- 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.
CC. Debt rated CC is typically applied to debt subordinated to senior
debt that is assigned an actual or implied CCC debt 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 not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
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 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 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 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 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 rated Ba are judged to have speculative elements. Their
future cannot be considered as 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
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<PAGE> 76
characterizes bonds in this class.
B. Bonds rated B generally lack characteristics of a 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 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 rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C. Bonds 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.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic
rating classification from As through B in its corporate bond system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
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 Prospectuses and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Trust (or of
any Fund) means the lesser of (1) 67% or more of the outstanding shares of the
Trust (or the applicable Fund) present at a meeting, if the holders of more
than 50% of the outstanding shares of the Trust (or the applicable Fund) are
present or represented at such meeting; or (2) more than 50% of the outstanding
shares of the Trust (or the applicable Fund).
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. this paragraph does not apply to the "Borrowing Money"
limitation. A Fund may borrow money consistent with this limitation and with
the applicable provisions of the Investment Company Act of 1940, as amended
("1940 Act").
Notwithstanding any of the following limitations, any investment
company (or series thereof), whether organized as a trust, association or
corporation, or a personal holding company, may be merged or consolidated with
or acquired by the Trust (or any Fund), provided that if such merger,
consolidation or acquisition results in an investment in the securities of any
issuer prohibited by said limitations, the Trust (or applicable Fund) 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 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 1940 Act will be included in
the limitation on investments in other investment companies. Europe Fund's
policy regarding loans does not prohibit the Fund from loaning portfolio
securities.
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<PAGE> 77
Fundamental Limitations Applicable to the 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; 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 Basic Value from
entering into reverse repurchase transactions and dollar rolls, provided that
it has an asset coverage of 300% for all borrowings and repurchase commitments
pursuant to reverse repurchase transactions and dollar rolls. Value
International will not borrow money in excess of one-third of the Fund's total
assets at the time when the borrowing is made. Europe Fund will not borrow
money in excess of 15% of the total value of its assets (including the amount
borrowed) less its liabilities (not including its borrowings), and will not
purchase securities at any time when borrowings exceed 5% of its total assets.
2. Pledging; Senior Securities. Basic Value and Value
International 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.) Europe Fund may not
issue senior securities except to evidence borrowings permitted by limitation
(1) above.
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 securities which
are secured by or represent interests in real estate or to securities issued by
companies, including real estate investment trusts, that invest in real estate
or interests in real estate. This limitation does not preclude a Fund from
investing in mortgage-related securities or (except for Value International)
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
Prospectuses and this Statement of Additional Information. This does not
preclude Value International or Europe Fund from investing in futures
contracts, put and call options on foreign currencies or forward currency
exchange contracts.
6. Loans. Basic Value and Value International 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 Value International) (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. Europe Fund may not lend money to other
persons except through the use of publicly distributed debt obligations and the
entering into of repurchase agreements consistent with its investment policies.
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 foreign currency exchange
contracts).
8. Concentration. A Fund will not invest 25% or more of its
total assets in a particular industry.
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<PAGE> 78
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. Basic Value and Value International will not
purchase the securities of any issuer if such purchase at the time thereof
would cause less than 75% of the value of its total assets 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. Europe Fund will not purchase any security (other than obligations of
the U.S. government, its agencies or instrumentalities), if as a
result (a) more than 25% of the value of the Fund's total assets would then be
invested in securities of any single issuer, or (b) as to 75% of the value of
the Fund's total assets (i) more than 5% of the value of the Fund's total
assets would then be invested in securities of any single issuer, or (ii) the
Fund would own more than 10% of the voting securities of any single issuer.
Additional Fundamental Limitations Applicable to Europe Fund
1. Short Sales. Europe Fund may not make short sales of
securities or maintain a short position in any security.
2. Restricted Securities. Europe Fund will not purchase
securities for which there are legal restrictions on resale and other
securities that are not readily marketable if as a result of such purchase more
than 15% of the value of the Fund's total assets would be invested in such
securities, provided that securities that are not subject to restrictions on
resale in the country in which they are principally traded are not considered
subject to this restriction.
3. Oil and Gas Programs. Europe Fund may not invest in oil, gas,
mineral exploration or development programs, except that the Fund may invest in
issuers which invest in such programs.
4. "Unseasoned" Companies. Europe Fund may not purchase any
security if as a result the Fund would have more than 5% of its net assets
invested in securities of companies which together with any predecessors have
been in continuous operation for less than three years.
5. Warrants. Europe Fund may not invest more than 5% of its net
assets in warrants issued by U.S. entities, provided that no more than 2% of
its net assets will be invested in warrants that are not listed on the New York
Stock Exchange or American Stock Exchange; except that these limitations are
not applicable to warrants issued by non-U.S. issuers.
Statement of Intention by Europe Fund
It is the intention of Europe Fund not to purchase securities for which
there are legal restrictions on resale and other securities that are not
readily marketable if, as a result of such purchase, more than 15% of the value
of the Fund's net assets would be invested in such securities, provided that
securities that are not subject to restrictions on resale in the country in
which they are principally traded are not considered to be subject to this
policy.
Additional Fundamental Limitations Applicable to Basic Value
1. Short Sales. Basic Value will not effect short sales of
securities except as described in the Prospectuses and this Statement of
Additional Information.
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<PAGE> 79
2. Options. Basic Value will not purchase or sell puts, calls,
options or straddles except as described in the Prospectuses and this Statement
of Additional Information.
3. Other Investment Companies. Basic Value 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. Basic Value will not purchase, hold or
deal in oil, gas or other mineral explorative or development programs.
5. Illiquid Investments. Basic Value will not invest more than
10% of its net assets in securities for which there are legal or contractual
restrictions on resale and other illiquid securities.
Non-Fundamental Limitation Applicable to Basic Value
1. Senior Securities. Basic Value may not 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
1940 Act, the rules and regulations promulgated thereunder or interpretations
of the SEC or its staff.
Additional Fundamental Limitation on Value International
Senior Securities. Value International may not 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
1940 Act, the rules and regulations promulgated thereunder or interpretations
of the SEC or its staff.
Statement of Intention by Value International
It is the intention of Value International (which may be changed by
the 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.
PORTFOLIO TURNOVER
For the year ended March 31, 1997, Basic Value's and Value
International's portfolio turnover rates for its shares (redesignated as Class
A shares) were 23% and 31%, respectively. For the year ended December 31,
1996, the portfolio turnover rate of Worldwide Value Fund, Inc. (a closed-end
investment company traded on the New York Stock Exchange) was 109%.
Valve International, Basic Value and Europe Fund each anticipates that
in the future its portfolio turnover rate will not exceed 100%, 100% and 115%,
respectively. The portfolio turnover rate is computed by dividing the lesser
of purchases or sales of securities for the period by the average value of
portfolio securities for that period. Short-term securities are excluded from
the calculation. High portfolio turnover rates (100% or more) will involve
correspondingly greater transaction costs which will be borne directly by a
Fund. It may also increase the amount of short-term capital gains realized by
a Fund and this may affect the tax treatment of distributions paid to
shareholders, because distributions of net short-term capital gains are taxable
as ordinary income. Each Fund will take these possibilities into account as
part of its investment strategies.
THE FUNDS' INVESTMENT ADVISER AND SUB-ADVISER
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<PAGE> 80
The Trust's investment adviser is Bartlett & Co., 36 East Fourth
Street, Cincinnati, Ohio 45202. Bartlett became a wholly owned subsidiary of
Legg Mason, Inc. ("Legg Mason") effective January 2, 1996. Bartlett has
provided investment advice to individuals, corporations, pension and profit
sharing plans and trust accounts since 1898.
The directors and officers of Bartlett are James A. Miller, William A.
Friedlander, Raymond A. Mason, Edward A. Taber, III, Robert G. Sabelhaus and
Thomas A. Steele.
An Investment Management and Administration Agreement dated July 18,
1997 between the Trust and Bartlett ("Management Agreement") was approved by
the Board of Trustees, including a majority of the trustees who are not
"interested persons" of the Trust, Bartlett or BFP, on February 24, 1997, by
the vote of the sole shareholder of Europe Fund on July 18, 1997 and by a
majority of Value International's and Basic Value's outstanding shares on July
15, 1997. Pursuant to the Management Agreement, and subject to overall
direction by the Board of Trustees, Bartlett manages the Funds' investments
consistent with each Fund's investment objective and policies as described in
the Prospectus and this Statement of Additional Information. As administrator,
Bartlett also is obligated to, among other things, (a) furnish the Funds with
office space and executive and other personnel necessary for the operations of
each Fund; (b) supervise all aspects of each Fund's operations; (c) bear the
expense of certain informational and purchase and redemption services to each
Fund's shareholders; (d) arrange, but not pay for, the periodic updating of
prospectuses, proxy materials, tax returns and reports to shareholders and
state and federal regulatory agencies; and (e) report regularly to the Trust's
officers and trustees. Bartlett and its affiliates pay all the compensation of
trustees and officers of the Trust who are employees of Bartlett.
Each Fund pays all its other expenses which are not expressly assumed
by Bartlett. These expenses include, among others, interest expense, taxes,
brokerage fees, commissions, expenses of preparing and printing prospectuses,
statements of additional information, proxy statements and reports and of
distributing them to existing shareholders, custodian charges, transfer agency
fees, organizational expenses, distribution fees paid to the Fund's
distributor, compensation of the independent trustees, legal and audit
expenses, insurance expenses, expenses of registering and qualifying shares of
the Funds for sale under federal and state law, governmental fees and expenses
incurred in connection with membership in investment company organizations.
As compensation for the services provided and the expenses assumed
pursuant to the Management Agreement, each Fund will pay to Bartlett a fee,
subject to any fee waiver arrangements in place, computed daily and paid
monthly, at the following annual rates: 0.75% of Basic Value's average daily
net assets; 1.25% of Value International's average daily net assets; and 1.00%
of Europe Fund's average daily net assets.
Bartlett has agreed to waive fees to the extent that a Fund's expenses
exceed the following annual rates of average daily net assets until July 31,
1998:
<TABLE>
<CAPTION>
Class A Class C Class Y
------- ------- -------
<S> <C> <C> <C>
Value International 1.80% 2.55% 1.55%
Basic Value 1.15% 1.90% 0.90%
Europe Fund 1.75% 2.50% 1.50%
</TABLE>
The following table depicts the advisory fees paid by Basic Value and
Value International to Bartlett for the fiscal years ended March 31, 1997, 1996
and 1995.
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<PAGE> 81
<TABLE>
<CAPTION>
Fiscal Year Value
Ended International Basic Value
March 31, Fund Fund
- ----------- ------------- ------------
<S> <C> <C>
1997 $1,430,591 $1,468,801
1996 $1,215,664 $1,366,123
1995 $1,025,125 $1,173,808
</TABLE>
The expenses of Value International and Europe 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.
Under the Management Agreement, Bartlett will not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of the Management Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations or duties thereunder.
The Management Agreement terminates automatically upon assignment. It
also is terminable at any time without penalty by vote of the Trust's Board of
Trustees, by vote of a majority of a Fund's outstanding voting securities, or
by Bartlett, on not less than 60 days' notice to the other party to the
Management Agreement and may be terminated immediately upon the mutual written
consent of both parties to the Management Agreement. Termination of the
Management Agreement with respect to any given Fund shall in no way affect the
continued validity of the Management Agreement or the performance thereunder
with respect to any other Fund.
Bartlett retains the right to use the name "Bartlett" in connection
with another investment company or business enterprise with which Bartlett is
or may become associated. The Trust's right to use the name "Bartlett"
automatically ceases thirty days after termination of the Management Agreement
and may be withdrawn by Bartlett on thirty days' written notice.
Lombard Odier International Portfolio Management Limited ("Lombard
Odier"), Norfolk House, 13 Southampton Place, London WC1A 2AJ, England, serves
as investment sub-adviser to Europe Fund under a Sub-Advisory Agreement dated
July 18, 1997, between Lombard Odier and Bartlett ("Sub-Advisory Agreement").
The Sub-Advisory Agreement was approved by the Board of Trustees, including a
majority of the trustees who are not "interested persons" of the Trust,
Bartlett, BFP or Lombard Odier, on February 24, 1997 and by the sole
shareholder of Europe Fund on July 18, 1997.
Lombard Odier is responsible for providing investment advice to Europe
Fund in accordance with its investment objective and policies, and for placing
orders to purchase and sell portfolio securities pursuant to directions from
the Fund's officers. For Lombard Odier's services to Europe Fund, Bartlett
(not the Fund) pays Lombard Odier a fee, computed daily and payable monthly, at
an annual rate equal to 60% of the monthly fee actually paid to Bartlett by the
Fund under the Management Agreement.
Under the Sub-Advisory Agreement, Lombard Odier will not be liable for
any error of judgment or mistake of law or for any loss suffered by Bartlett or
by the Fund in connection with the performance of the Sub-Advisory Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations or duties
thereunder.
The Sub-Advisory Agreement terminates automatically upon assignment
and is terminable at any time without penalty by vote of the Trust's Board of
Trustees, by vote of a majority of the Fund's outstanding voting securities, by
Bartlett or by Lombard Odier, on not less than 60 days' notice to the Fund
and/or the other
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<PAGE> 82
party(ies). The Sub-Advisory Agreement terminates immediately upon any
termination of the Management Agreement.
THE TRUST'S DISTRIBUTOR
BFP Financial Partners Inc. ("BFP") acts as distributor of the Funds'
shares pursuant to a Distribution Agreement dated July 18, 1997 between the
Trust and BFP ("Distribution Agreement"). The Distribution Agreement obligates
BFP to promote the sale of Fund shares and to pay certain expenses in
connection with its distribution efforts, including the printing and
distribution of prospectuses and periodic reports used in connection with the
offering to prospective investors (after the prospectuses and reports have been
prepared, set in type and mailed to existing shareholders at each Fund's
expense) and for supplementary sales literature and advertising costs.
The Trust has adopted separate Distribution Plans ("Plan") pertaining
to the Class A and Class C shares of each Fund which, among other things,
permit a Fund to pay BFP fees for its services related to sales and
distribution of Fund shares and the provision of ongoing services to
shareholders. Service and/or distribution activities for which such payments
may be made include, but are not limited to, compensation to persons who engage
in or support distribution and redemption of shares, printing of prospectuses
and reports for persons other than existing shareholders, advertising,
preparation and distribution of sales literature, overhead, travel, telephone
and other communication expenses.
Each Plan was adopted, as required by Rule 12b-1 under the 1940 Act,
by a vote of the Board of Trustees on February 24, 1997, including a majority
of the trustees who are not "interested persons" of the Trust as that term is
defined in the 1940 Act and who have no direct or indirect financial interest
in the operation of the Plan ("12b-1 Trustees"). In approving each Plan, in
accordance with the requirements of Rule 12b-1, the trustees determined that
there was a reasonable likelihood that each Plan would benefit each Fund and
its shareholders.
As compensation for its services and expenses as principal underwriter
of each Fund's Class A shares, BFP receives an annual service fee equivalent to
0.25% of the average daily net assets of each Fund's Class A shares. For BFP's
services and expenses as principal underwriter of each Fund's Class C shares,
BFP receives annual distribution and service fees equivalent to 1.00% of the
average daily net assets of each Fund's Class C shares. Such fees shall be
calculated daily and paid monthly.
Each Plan continues in effect only so long as it is approved at least
annually by the vote of a majority of the Board of Trustees, including a
majority of the 12b-1 Trustees, cast in person at a meeting called for the
purpose of voting on the Plans. Each Plan may be terminated with respect to
each Fund by a vote of a majority of 12b-1 Trustees or by vote of a majority of
the outstanding voting securities of that Fund. Any change in a Plan that
would materially increase the distribution costs to a Fund requires shareholder
approval; otherwise, each Plan may be amended by the trustees, including a
majority of the 12b-1 Trustees.
Rule 12b-1 requires that any person authorized to direct the
disposition of monies paid or payable by a Fund, pursuant to the Plan or any
related agreement shall provide to that Fund's Board of Trustees, and the
trustees shall review, at least quarterly, a written report of the amounts so
expensed and the purposes for which the expenditures were made. Rule 12b-1
also provides that a Fund may rely on that Rule only if, while the Plan is in
effect, the nomination and selection of that Fund's independent trustees is
committed to the discretion of such independent trustees.
TRUSTEES AND OFFICERS
The Trust's officers are responsible for the operation of the Trust
under the direction of the Board of Trustees. The officers and trustees and
their principal occupations during the past five years are set forth
23
<PAGE> 83
below. An asterisk (*) indicates those trustees who are "interested persons"
of the Trust as defined by the 1940 Act.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Name, Address and Date of Birth Position with the Trust Principal Occupation
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dale H. Rabiner, CFA* President Senior Portfolio Manager and a
[09/14/51] and Trustee managing Director of Bartlett
36 East Fourth Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------
Lorrence T. Kellar Chairman of the Board and Trustee Vice President - Real Estate for
[08/10/37] KMart Corporation, (a general
36 East Fourth Street merchandise retailer) since May
Cincinnati, Ohio 45202 1996; formerly: Group Vice President
of Finance and Real Estate at The
Kroger Co. (a food retailer);
Director of BT Office Products
International, Inc. and Director of
Multi-Color Corporation (a producer
of printed labels)
------------------------------------------------------------------------------------------------------------
Alan R. Schriber Trustee President of ARS Broadcasting
[08/20/45] Corp., a company which owns and
36 East Fourth Street operates radio stations
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------
William P. Sheehan Trustee Member of the State of Ohio
[02/16/27] Employment Relations Board
36 East Fourth Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------
Charles J. Swindells Trustee Vice Chairman, U.S. Trust Company
[ ] of the Pacific Northwest (a
36 East Fourth Street non-depository trust company);
Cincinnati, Ohio 45202 Founder of Capital Trust Company,
which was merged into U.S. Trust
Company of New York in July 1993;
Chairman, Oregon Public
Broadcasting
------------------------------------------------------------------------------------------------------------
Prinz Wolfgang E. Ysenburg Trustee Director of Holland Fund (Dutch
[ ] investment company); Director of
36 East Fourth Street Beteilingungsgesellschaft (German
Cincinnati, Ohio 45202 investment company); Director of
------------------------------------------------------------------------------------------------------------
A. John W. Campbell Trustee Profirent Investment Fund
[ ] Director of Campbell Lutyens & Co.
36 East Fourth Street Ltd (UK investment banking firm);
Cincinnati, Ohio 45202 Director of Beradin Holdings, PLC
(agricultural holding company)
------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 84
<TABLE>
------------------------------------------------------------------------------------------------------------
Name, Address and Date of Birth Position with the Trust Principal Occupation
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Henri Deegenaar Trustee Independent Consultant; Investment
[ ] Adviser to Saint Honore Marche
36 East Fourth Street Emergents (French investment
Cincinnati, Ohio 45202 company); Director of Guilbert SA
(office supplies distribution
company) and OFREX (office supplies
distribution company)
------------------------------------------------------------------------------------------------------------
Ian F. H. Grant Trustee Managing Director of Glenmoriston
[ ] Estates Ltd. (Scottish holding
36 East Fourth Street company); Chairman of Pacific
Cincinnati, Ohio 45202 Assets Trust PLC (UK investment
company); Director of Royal Bank of
Scotland PLC, Royal Bank of
Scotland Group PLC, Banco Santander
SA, and a number of publicly owned
companies in Europe and the Far
East
------------------------------------------------------------------------------------------------------------
Edmund J. Cashman, Jr.* Trustee Senior Executive Vice President and
[08/31/ ] Director of Legg Mason Wood Walker,
111 South Calvert Street Inc.; President/Vice
Baltimore, MD 21202 Chairman/Director/Trustee of
various Legg Mason funds; Director
of E. A. Engineering, Science and
Technology, Inc. (a
multidisciplinary environmental
services company)
------------------------------------------------------------------------------------------------------------
</TABLE>
The executive officers of the Trust, other than those who also serve
as trustee, are:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Name, Address and Date of Birth Position With Trust Principal Occupation
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James B. Reynolds, CFA Vice President Senior Portfolio Manager and a
[09/13/43] Managing Director of Bartlett
36 East Fourth Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------
Marie K. Karpinski, CPA Vice President and Treasurer Treasurer of Legg Mason Fund
[01/01/49] Adviser, Inc., Vice President and
7 East Redwood Street Treasurer of other registered
Baltimore, MD 21202 investment companies for which Legg
Mason Fund Adviser, Inc. is
investment adviser or manager and
Vice President of Legg Mason Wood
Walker, Inc.
------------------------------------------------------------------------------------------------------------
Madelynn M. Matlock, CFA Vice President Director of International Equities
[12/8/49] for Bartlett
36 East Fourth Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 85
<TABLE>
------------------------------------------------------------------------------------------------------------
Name, Address and Date of Birth Position With Trust Principal Occupation
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James A. Miller Vice President Senior Portfolio Manager, President
[03/13/49] and a Director of Bartlett
36 East Fourth Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------
Donna M. Prieshoff Vice President Director of Operations of Bartlett
[09/19/49]
36 East Fourth Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------
Woodrow H. Uible, CFA Vice President Senior Portfolio Manager of
[06/13/53] Bartlett
36 East Fourth Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------
Kathi D. Bair Secretary Secretary and/or Assistant
[12/15/64] Treasurer of other registered
7 East Redwood Street investment companies for which Legg
Baltimore, MD 21202 Mason Fund Adviser, Inc. is
investment adviser or manager
------------------------------------------------------------------------------------------------------------
Thomas A. Steele Assistant Treasurer Vice President, Secretary
[03/09/59] and Assistant Secretary and Treasurer of
36 East Fourth Street Bartlett
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------
</TABLE>
For the fiscal year ended March 31, 1997, the Trustees of the Trust
received the following compensation:
<TABLE>
<CAPTION>
Aggregate
Compensation Total Compensation From Registrant
Name of Person, Position From Trust and Trust Complex Paid to Trustees
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dale H. Rabiner*, $0 $0
Chairman of the Board, President and
Trustee
Lorrence T. Kellar, $6,400 $8,000
Trustee
Philip J. Ringo** $1,500 $1,500
Alan R. Schriber, $4,800 $6,000
Trustee
William P. Sheehan, $4,800 $6,000
Trustee
</TABLE>
*Interested Person
**Mr. Ringo resigned as trustess effective February 6, 1997.
Officers and trustees of the Trust who are "interested persons"
thereof, as defined in the 1940 Act, receive no salary or fees from the Trust.
Independent trustees of the Trust receive an annual fee of $2,000 and an
attendance fee of $1,000 per meeting of the Board plus travel and out-of-pocket
expenses incurred
26
<PAGE> 86
in connection with the Board of Trustees' meetings.
The Nominating Committee of the Board of Trustees is responsible for
the selection and nomination of disinterested trustees. The committee is
composed of Alan R. Schriber, William P. Sheehan, Lorrence T. Kellar, Charles
J. Swindells, Prinz Wolfgang E. Ysenburg, A. John W. Campbell, Henri Deegenaar
and Ian F. H. Grant. As of July 18, 1997, no trustee or officer
beneficially owned more than 1% of the shares outstanding of any Fund.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
Bartlett and/or Lombard Odier is responsible for the Trust's portfolio
decisions and the placing of the Trust's portfolio transactions. In placing
portfolio transactions, Bartlett and/or Lombard Odier seeks the best qualitive
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.
Bartlett and/or Lombard Odier 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.
Bartlett and/or Lombard Odier 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 Bartlett and/or Lombard Odier
exercises investment discretion and to pay such brokers or dealers a commission
in excess of the commission another broker or dealer would charge if Bartlett
and/or Lombard Odier 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 Bartlett's or Lombard Odier'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 Bartlett and/or Lombard Odier in servicing
all of its accounts and all such services may not be used by Bartlett and/or
Lombard Odier in connection with the Trust. Similarly, research and
information provided by brokers or dealers serving other clients may be useful
to Bartlett and/or Lombard Odier in connection with its services to the Trust.
Although research services and other information are useful to the Trust and
Bartlett and/or Lombard Odier, 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 Bartlett and/or Lombard Odier that the review and study of the
research and other information will not reduce the overall cost to Bartlett
and/or Lombard Odier of performing its duties to the Trust under the
Agreement. Due to research services provided by brokers, the Trust directed to
the brokers $100,950,172 of brokerage transactions (on which the commissions
were $284,114) during the fiscal year ended March 31, 1997.
Bartlett and its affiliates (including Legg Mason Wood Walker, Inc.),
and Lombard Odier and its affiliates, in their capacity as broker/dealers, may
receive brokerage commissions in connection with effecting portfolio
transactions for the Trust. The Trust will not effect any brokerage
transactions in the Funds' portfolio securities with Bartlett or its affiliates
or Lombard Odier or its affiliates if such transactions would be unfair or
unreasonable to the Trust's shareholders, and the commissions will be paid
solely for the execution of trades and not for any other services.
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. While the Trust contemplates no ongoing arrangements with
any other brokerage firms, brokerage business may be given from time to time to
other firms. Bartlett and its affiliates and Lombard Odier and its affiliates
do not receive reciprocal brokerage business as a result of the brokerage
27
<PAGE> 87
business placed by the Trust with others.
Under the 1940 Act, persons affiliated with the Trust are prohibited
from dealing with the Trust as a principal in the purchase and sale of
securities. Since transactions in the over-the-counter market usually involve
transactions with dealers acting as principal for their own account, affiliated
persons of the Trust, including Bartlett and its affiliates and Lombard Odier
and its affiliates, will not serve as the Trust's dealer in connection with
such transactions. However, affiliated persons of the Trust may serve as its
broker in over-the-counter transactions conducted on an agency basis.
In determining the commissions to be paid to Bartlett or its
affiliates or Lombard Odier or its affiliates, it is the policy of the Trust
that such commissions will, in the judgment of the Board of Trustees, be (a) at
least as favorable to the Trust as those which would be charged by other
qualified brokers having comparable execution capability and (b) at least as
favorable to the Trust as commissions contemporaneously charged by Bartlett and
its affiliates or Lombard Odier or its affiliates on comparable transactions
for its most favored unaffiliated customers, except for customers of Bartlett
or Lombard Odier considered by a majority of the Trust's independent trustees
not to be comparable to the Trust. The Board of Trustees, including a majority
of the independent trustees, will from time to time review, among other things,
information relating to the commissions charged by Bartlett and its affiliates
to the Trust and its other customers, and posted rates and other information
concerning the commissions charged by other qualified brokers.
To the extent that the Trust and another of Bartlett's or Lombard
Odier'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 on
behalf of Value International and Basic Value will normally be made by random
client selection; purchases and sales on behalf of Europe Fund would normally
be allocated, in terms of amount, according to the proportion that Europe
Fund's order bears to aggregate size of all orders simultaneously made, with
appropriate adjustments to avoid odd lots.
The following table depicts, for the fiscal years ended March 31,
1997, 1996 and 1995, the total brokerage commissions paid by the Trust, the
amount of those commissions paid to Bartlett, the percentage of all
commissions paid that were received by Bartlett and the percentage of all
portfolio transactions represented by the commissions received by Bartlett.
<TABLE>
<CAPTION>
Bartlett
Fiscal Year Total Commissions Commissions Percentage
Ended Commissions Paid To As % Of All Of Portfolio
March 31, Paid Bartlett Commissions Transactions
- ---------- -------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
1997 $284,114 $ 0 0.00% 0.00%
1996 $300,025 $ 327 0.11% 0.10%
1995 $209,389 $ 900 0.43% 0.48%
</TABLE>
As of March 31, 1997, Basic Value 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: 60,000 shares of Salomon, Inc.
with a market value of $2,992,500.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each class of a Fund is
determined as of the close of regular trading on the New York Stock Exchange
(generally, 4:00 P.M., Eastern time) on each day the Trust and the Custodian of
the applicable Fund are open for business. The price of the shares of each
class of a Fund will also be calculated on other days if there is sufficient
trading in the Fund's portfolio securities that its
28
<PAGE> 88
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 other 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 Prospectuses.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
SYSTEMATIC INVESTMENT PLAN
If you invest in shares of the Funds, the Prospectuses explain that
you may buy additional shares through the Systematic Investment Plan. Under
this plan, you may arrange for automatic monthly investments in the Funds of
$50 or more by authorizing Boston Financial Data Services ("BFDS"), the Funds'
transfer agent, to transfer funds to be used to buy Class A, Class C or Class Y
shares at the per share net asset value determined on the day the funds are
sent by your bank. You will receive a quarterly account statement. You may
terminate the Systematic Investment Plan at any time without charge or penalty.
Forms to enroll in the Systematic Investment Plan are available from your
broker/dealer or BFP.
SYSTEMATIC WITHDRAWAL PLAN
Investors in Class A and Class C shares, and certain eligible
investors in Class Y shares, with a net asset value of $5,000 or more, may also
elect to make systematic withdrawals from their Fund account of a minimum of
$50 on a monthly basis. The amounts paid to you each month are obtained by
redeeming sufficient shares from their account to provide the withdrawal amount
that was specified. The Systematic Withdrawal Plan is not currently available
for shares held in an Individual Retirement Account ("IRA"), Self-Employed
Individual Retirement Plan ("Keogh Plan"), Simplified Employee Pension Plan
("SEP"), Savings Incentive Match Plan for Employees ("SIMPLE") or other
qualified retirement plan. You may change the monthly amount to be paid to you
without charge not more than once a year by notifying BFP or the broker/dealer
with which you have an account. Redemptions will be made at the shares' net
asset value determined as of the close of regular trading on the Exchange on
the first day of each month. If the Exchange is not open for business on that
day, the shares will be redeemed at the net asset value determined as of the
close of regular trading on the Exchange on the preceding business day. The
check for the withdrawal payment will usually be mailed to you on the next
business day following redemption. If you elect to participate in the
Systematic Withdrawal Plan, dividends and other distributions on all shares in
your account must be automatically reinvested in the applicable class of
shares. You may terminate the Systematic Withdrawal Plan at any time without
charge or penalty. Each Fund, its transfer agent, and BFP also reserve the
right to modify or terminate the Systematic Withdrawal Plan at any time.
Withdrawal payments are treated as a sale of shares rather than as a
dividend or a capital gain distribution. These payments are taxable to the
extent that the total amount of the payments exceeds the tax basis of the
shares sold. If the periodic withdrawals exceed reinvested dividends and other
distributions, the amount of your original investment may be correspondingly
reduced.
Ordinarily, you should not purchase additional shares of the Fund in
which you have an account if you
29
<PAGE> 89
maintain a Systematic Withdrawal Plan because you may incur tax liabilities in
connection with such purchases and withdrawals. Each Fund will not knowingly
accept purchase orders from you for additional shares if you maintain a
Systematic Withdrawal Plan unless your purchase is equal to at least one year's
scheduled withdrawals. In addition, if you maintain a Systematic Withdrawal
Plan you may not make periodic investments under the Systematic Investment
Plan.
REDEMPTION SERVICES
Each Fund reserves the right to modify or terminate the wire or
telephone redemption services described in the Prospectuses at any time.
The date of payment may not be postponed for more than seven days, and
the right of redemption may not be suspended except (a) for any period during
which the Exchange is closed (other than for customary weekend and holiday
closings), (b) when trading in markets a Fund normally utilizes is restricted
or an emergency, as defined by rules and regulations of the SEC, exists, making
disposal of that Fund's investments or determination of its net asset value not
reasonably practicable, or (c) for such other periods as the SEC, by order, may
permit for protection of a Fund's shareholders. In the case of any such
suspension, you may either withdraw your request for redemption or receive
payment based upon the net asset value next determined after the suspension is
lifted.
Each Fund reserves the right, under certain conditions, to honor any
request or combination of requests for redemption from the same shareholder in
any 90-day period, totaling $250,000 or 1% of the net assets of the Fund,
whichever is less, by making payment in whole or in part by securities valued
in the same way as they would be valued for purposes of computing that Fund's
net asset value per share. If payment is made in securities, a shareholder
generally will incur brokerage expenses in converting those securities into
cash and will be subject to fluctuation in the market price of those securities
until they are sold. Each Fund does not redeem in kind under normal
circumstances but would do so where Bartlett determines that it would be in the
best interests of the Fund's shareholders as a whole.
Foreign securities exchanges may be open for trading on days when the
Funds are not open for business. The net asset value of Fund shares may be
significantly affected on days when investors do not have access to their Fund
to purchase and redeem shares.
ADDITIONAL TAX INFORMATION
The following is a general summary of certain federal tax
considerations affecting each Fund and its shareholders. Investors are urged
to consult their own tax advisers for more detailed information regarding any
federal, state or local taxes that may be applicable to them.
GENERAL
For federal tax purposes, each Fund is a separate corporation. In
order to continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), a Fund
must distribute annually to its shareholders at least 90% of its investment
company taxable income (generally, net investment income, net short-term
capital gain, and net gains from certain foreign currency transactions, if any)
("Distribution Requirement") and must meet several additional requirements. For
each Fund, these requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, futures or forward contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
(2) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities, or any of the following,
that were held for less than three months --
30
<PAGE> 90
options or futures (other than those on foreign currencies), or foreign
currencies (or options, futures or forward contracts thereon) that are not
directly related to the Fund's principal business of investing in securities
(or options and futures with respect to securities) ("Short-Short Limitation");
(3) at the close of each quarter of the Fund's taxable year, at least 50% of
the value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with
those other securities limited, in respect of any one issuer, to an amount that
does not exceed 5% of the value of the Fund's total assets and does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in the securities (other than
U.S. government securities or the securities of other RICs) of any one issuer.
If Fund shares are sold at a loss after being held for six months or
less, the loss will be treated as a long-term, instead of a short-term, capital
loss to the extent of any capital gain distributions received on those shares.
Investors also should be aware that if shares are purchased shortly before the
record date for any dividend or other distribution, the investor will pay full
price for the shares and receive some portion of the price back as a taxable
distribution.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts. For this and other purposes, dividends and other distributions
declared by a Fund in December of any year and payable to its shareholders of
record on a date in that month will be deemed to have been paid by the Fund and
received by the shareholders on December 31 if the distributions are paid by
the Fund during the following January. Accordingly, those distributions will
be taxed to shareholders for the year in which that December 31 falls.
FOREIGN SECURITIES
Foreign Taxes. Interest and dividends received by a Fund may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions that would reduce the yield on its securities. Tax conventions
between certain countries and the United States may reduce or eliminate these
foreign taxes, however, and many foreign countries do not impose taxes on
capital gains in respect of investments by foreign investors. If more than 50%
of the value of Value International's or Europe Fund's total assets at the
close of any taxable year consists of securities of foreign corporations, that
Fund will be eligible to, and may, file an election with the Internal Revenue
Service that will enable its shareholders, in effect, to receive the benefit of
the foreign tax credit with respect to any foreign and U.S. possessions income
taxes paid by it. Pursuant to any such election, a Fund would treat those
taxes as dividends paid to its shareholders and each shareholder would be
required to (1) include in gross income, and treat as paid by the shareholder,
the shareholder's proportionate share of those taxes, (2) treat the
shareholder's share of those taxes and of any dividend paid by the Fund that
represents income from foreign or U.S. possessions sources as the shareholder's
own income from those sources, and (3) either deduct the taxes deemed paid by
the shareholder in computing the shareholder's taxable income or,
alternatively, use the foregoing information in calculating the foreign tax
credit against the shareholder's federal income tax. Each Fund will report to
its shareholders shortly after each taxable year the shareholders' respective
shares of the Fund's income from sources within, and taxes paid to, foreign
countries and U.S. possessions if it makes this election.
Passive Foreign Investment Companies. Each Fund may invest in the
stock of "passive foreign investment companies" ("PFICs"). A PFIC is a
foreign corporation that, in general, meets either of the following tests: (1)
at least 75% of its gross income is passive or (2) an average of at least 50%
of its assets produce, or are held for the production of, passive income.
Under certain circumstances, a Fund will be subject to federal income tax on a
portion of any "excess distribution" received on the stock of a PFIC or of any
gain on disposition of the stock (collectively "PFIC income"), plus interest
thereon, even if the Fund
31
<PAGE> 91
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent that
income is distributed to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Fund would be required to include in income each year
its pro rata share of the QEF's annual ordinary earnings and net capital gain
(the excess of net long-term capital gain over net short-term capital loss) --
which probably would have to be distributed by the Fund to satisfy the
Distribution Requirement and avoid imposition of the Excise Tax -- even if
those earnings and gain were not received by the Fund from the QEF. In most
instances it will be very difficult, if not impossible, to make this election
because of certain requirements thereof.
Proposed regulations have been published pursuant to which open-end
RICs, such as the Funds, would be entitled to elect to "mark-to-market" their
stock in certain PFICs. "Marking-to-market," in this context, means
recognizing as gain for each taxable year the excess, as of the end of that
year, of the fair market value of each such PFIC's stock over the adjusted
basis in that stock (including mark-to-market gain for each prior year for
which an election was in effect).
Foreign Currencies. Gains or losses (1) from the disposition of
foreign currencies, (2) from the disposition of debt securities denominated
in foreign currencies that are attributable, in each case, to fluctuations in
the value of the foreign currency between the date of acquisition of the
security and the date of its disposition, and (3) that are attributable to
fluctuations in exchange rates that occur between the time a Fund accrues
dividends, interest or other receivables or expenses or other liabilities
denominated in a foreign currency and the time the Fund actually collects the
receivables or pays the liabilities, generally will be treated as ordinary
income or loss. These gains or losses, referred to under the Code as "section
988" gains or losses, may increase or decrease the amount of a Fund's
investment company taxable income to be distributed to its shareholders.
OPTIONS, FUTURES, FORWARD CONTRACTS AND FOREIGN CURRENCIES
The use of hedging strategies, such as writing (selling) and
purchasing options and futures contracts and entering into forward contracts,
involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses a Fund realizes in
connection therewith. Gains from the disposition of foreign currencies
(except certain gains that may be excluded by future regulations), and gains
from options, futures and forward contracts derived by a Fund with respect to
its business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition of options and futures contracts (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition of foreign currencies, and
options, futures and forward contracts on foreign currencies, that are not
directly related to a Fund's principal business of investing in securities (or
options and futures with respect to securities) also will be subject to the
Short-Short Limitation if they are held for less than three months.
If a Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain, if any, from the designated
hedge will be included in gross income for purposes of that limitation. Each
Fund will consider whether it should seek to qualify for this treatment for its
hedging transactions. To the extent a Fund does not so qualify, it may be
forced to defer the closing out of certain options, futures, forward contracts
and/or foreign currency positions beyond the time when it otherwise would be
advantageous to do so, in order for that Fund to continue to qualify as a RIC.
32
<PAGE> 92
Certain options and futures in which a Fund may invest will be
"section 1256 contracts." Section 1256 contracts held by a Fund at the end of
each taxable year, other than section 1256 contracts that are part of a "mixed
straddle" with respect to which the Fund has made an election not to have the
following rules apply, must be "marked-to-market" (that is, treated as sold for
their fair market value) for federal income tax purposes, with the result that
unrealized gains or losses will be treated as though they were realized. Sixty
percent of any net gain or loss recognized on these deemed sales, and 60% of
any net realized gain or loss from any actual sales of section 1256 contracts,
will be treated as long-term capital gain or loss, and the balance will be
treated as short-term capital gain or loss. Section 1256 contracts also may be
marked-to- market for purposes of the Excise Tax.
Code section 1092 (dealing with straddles) also may affect the
taxation of options and futures contracts in which a Fund may invest. Section
1092 defines a "straddle" as offsetting positions with respect to personal
property; for these purposes, options and futures contracts are personal
property. Section 1092 generally provides that any loss from the disposition
of a position in a straddle may be deducted only to the extent the loss exceeds
the unrealized gain on the offsetting position(s) of the straddle. Section
1092 also provides certain "wash sale" rules, which apply to transactions where
a position is sold at a loss and a new offsetting position is acquired within a
prescribed period, and "short sale" rules applicable to straddles. If a Fund
makes certain elections, the amount, character and timing of recognition of
gains and losses from the affected straddle positions would be determined under
rules that vary according to the elections made. Because only a few of the
regulations implementing the straddle rules have been promulgated, the tax
consequences to a Fund of straddle transactions are not entirely clear.
ORIGINAL ISSUE DISCOUNT AND "PAY-IN-KIND" SECURITIES
Each Fund may purchase zero coupon or other debt securities issued
with original issue discount ("OID"). As a holder of those securities, a Fund
must include in its income the OID that accrues thereon during the taxable
year, even if it receives no corresponding payment on the securities during the
year. Similarly, a Fund must include in its gross income securities it receives
as "interest" on pay-in-kind securities. Because each Fund annually must
distribute substantially all of its investment company taxable income,
including any OID and other non-cash income, to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax, it may be required in a
particular year to distribute as a dividend an amount that is greater than the
total amount of cash it actually receives. Those distributions will be made
from a Fund's cash assets or from the proceeds of sales of portfolio
securities, if necessary. A Fund may realize capital gains or losses from
those dispositions, which would increase or decrease its investment company
taxable income and/or net capital gain . In addition, any such gains may be
realized on the disposition of securities held for less than three months.
Because of the Short-Short Limitation, any such gains would reduce a Fund's
ability to sell other securities (and certain options, futures, forward
contracts and/or foreign currencies) held for less than three months that it
might wish to sell in the ordinary course of its portfolio management.
MISCELLANEOUS
If a Fund invests in shares of common stock or preferred stock, a
portion of the dividends from its investment company taxable income (whether
paid in cash or reinvested in additional Fund shares) may be eligible for the
dividends-received deduction allowed to corporations. The eligible portion may
not exceed the aggregate dividends received by the Fund from U.S. corporations.
However, dividends received by a corporate shareholder and deducted by it
pursuant to the dividends-received deduction are subject indirectly to the
federal alternative minimum tax.
TAX-DEFERRED RETIREMENT PLANS
Investors may invest in Class A or Class C shares of a Fund through
IRAs, Keogh Plans, SEPs, SIMPLEs and other qualified retirement plans. In
general, income earned through the investment of assets
33
<PAGE> 93
of qualified retirement plans is not taxed to the beneficiaries thereof unitl
the income is distributed to them. Investors who are considering establishing
such a plan should consult their attorneys or other tax advisors with respect
to individual tax questions. Please contact BFP or your broker/dealer for
further information with respect to these plans.
INDIVIDUAL RETIREMENT ACCOUNT - IRA
Certain investors in Class A or Class C shares may obtain tax
advantages by establishing an IRA. Specifically, if neither you nor your spouse
is an active participant in a qualified employer or government retirement plan,
or if either you or your spouse is an active participant in such a plan and
your adjusted gross income does not exceed a certain level, then each of you
may deduct cash contributions made to an IRA in an amount for each taxable year
not exceeding the lesser of 100% of your earned income or $2,000. In addition,
if your spouse is not employed and you file a joint return, you may establish a
separate IRA for your spouse and contribute up to a total of $4,000 to the two
IRAs, provided that the contribution to either does not exceed $2,000. If your
employer's plan qualifies as a SEP, permits voluntary contributions and meets
certain other requirements, you may make voluntary contributions to that plan
that are treated as deductible IRA contributions.
Even if you are not in one of the categories described in the
preceding paragraph, you may find it advantageous to invest in Class A or Class
C shares through non-deductible IRA contributions, up to certain limits,
because all dividends and capital gain distributions on your shares are then
not immediately taxable to you or the IRA; they become taxable only when
distributed to you. To avoid penalties, your interest in an IRA must be
distributed, or start to be distributed, to you not later than the end of the
taxable year in which you attain age 70 1/2. Distributions made before age 59
1/2, in addition to being taxable, generally are subject to a penalty equal to
10% of the distribution, except in the case of death or disability, where the
distribution is rolled over into another qualified plan, or certain other
situations.
SELF-EMPLOYED INDIVIDUAL RETIREMENT PLAN - KEOGH PLAN
BFP makes available to self-employed individuals a Plan and Trustee
Agreement for a Keogh Plan through which Class A or Class C shares may be
purchased. You have the right to use a bank of your own choice to provide
these services at your own cost. There are penalties for distributions from a
Keogh Plan prior to age 59 1/2, except in the case of death or disability.
SIMPLIFIED EMPLOYEE PENSION PLAN - SEP
BFP also makes available to corporate and other employers a SEP for
investment in Class A or Class C shares.
SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES - SIMPLE
Although a salary reduction SEP, or SARSEP, may no longer be
established after December 31, 1996, an employer with no more than 100
employees that does not maintain another retirement plan instead may establish
a SIMPLE either as separate IRAs or as part of a Code section 401(k) plan. A
SIMPLE, which is not subject to the complicated nondiscrimination rules that
generally apply to qualified retirement plans, will allow certain employees to
make elective contributions of up to $6,000 per year and will require the
employer to make matching contributions up to 3% of each such employee's
salary.
Withholding at the rate of 20% is required for federal income tax
purposes on distributions eligible for rollover from the foregoing retirement
plans (except IRAs and SEPs), unless the recipient transfers the distribution
directly to an "eligible retirement plan" (including IRAs and other qualified
plans) that accepts those distributions. Other distributions generally are
subject to regular wage withholding or to withholding at the rate
34
<PAGE> 94
of 10% (depending on the type and amount of the distribution), unless the
recipient elects not to have any withholding apply. Investors in Class A or
Class C shares should consult their plan administrator or tax advisor for
further information.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the SEC, 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:
n
P(1+T) =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 other 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.
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 a Fund's performance to those of other investment
companies or investment vehicles. The risks associated with a 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.
Value International and Europe Fund will use the Standard & Poor's 500
Composite Stock Price Index ("S+P 500 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 Funds and the
indices (other than the Consumer Price Index) will include reinvestment of
dividends and other distributions.
Basic Value will use the S+P 500 Index, the Dow Jones Industrial
Average, the Value Line Composite Index and the BARRA Value Index. The Value
Line Composite Index is an index composed of approximately 1700 issues. As a
broad index containing the issues of many
35
<PAGE> 95
smaller capitalization companies, it may be more representative of Basic Value
than narrower, large capitalization indices such as the Dow Jones Industrial
Average. The BARRA Value Index is prepared by ranking the stocks in the
S+P 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 Bartlett.
The performance of a Fund may also be presented along with performance
information of other Funds in materials distributed to the public such as
annual, semi-annual and quarterly reports, advertising and sales literature.
In addition, the performance of any 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 a Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
Basic Value. The average annual total returns of Basic Value shares
(redesignated as Class A shares) for the one, five and ten year periods ended
March 31, 1997 were 11.36%, 12.95% and 10.08%, 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 (the date of the initial public offering of shares), as of
the end of the specified period. Sales charges have not been deducted from
total returns; the Fund did not impose such charges for the periods shown.
<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%
3/31/97 18.33 1.65 47,110 11.36% 371.10%
</TABLE>
(a) Value at end of fiscal year of $10,000 investment made on May 5, 1983.
(b) Not annualized and from May 5, 1983.
Value International. The average annual total returns of Value
International's shares (redesignated as Class A shares) for the one and five
year periods ended March 31, 1997 and the period from October 6,
36
<PAGE> 96
1989 (the date of the initial public offering of shares) through March 31, 1997
were 15.45%, 10.45% and 7.95%, 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. Sales charges
have not been deducted from total returns; the Fund did not impose such charges
for the periods shown.
<TABLE>
<CAPTION>
Year End Value of Total
Year Net Asset Dividends $10,000 Return Total Return
Ended Value Paid Investments(a) One Year Cumulative(b)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3/31/90 $9.79 $0.24 $10,029 0.29%(b) 0.29%
3/31/91 9.09 0.30 9,644 (3.84)% (3.56)%
3/31/92 9.93 0.22 10,790 0.88% 7.90%
3/31/93 10.08 0.12 11,082 2.71% 10.82%
3/31/94 12.46 0.07 13,787 24.42% 37.87%
3/31/95 11.64 0.70 13,625 (1.18)% 36.25%
3/31/96 12.59 0.51 15,363 12.76% 53.63%
3/31/97 13.64 0.84 17,737 15.45% 77.37%
</TABLE>
(a) Value at end of fiscal year of $1,000 investment made on October 6,
1989.
(b) Not annualized and from October 6, 1989.
Europe Fund. The average annual total returns of Worldwide Value
Fund, Inc. (Europe Fund's predecessor) for the one, five and ten year periods
ended December 31, 1996 were 31.53%, 12.74% and 8.40%, respectively.
The following table shows the one year and cumulative rates of total
return (based on net asset value) for the indicated period as well as the value
of a $10,000 investment made on August 19, 1986 (the date of the initial public
offering of Worldwide Value Fund, Inc. shares), as of the end of the specified
period. Sales charges have not been deducted from total returns; that fund did
not impose such charges for the periods shown.
<TABLE>
<CAPTION>
Year End Value of Total
Year Net Asset Dividends $10,000 Return Total Return
Ended Value Paid Investments(a) One Year Cumulative(b)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/86 $17.41 0.00 $10,990 n/a (12.95)%
12/31/87 16.46 $1.11 8,925 2.52% (10.75)%
12/31/88 19.53 1.00 11,208 25.59% 12.09%
12/31/89 20.14 1.61 12,606 12.47% 26.06%
12/31/90 14.65 1.38 10,002 (20.66)% .02%
</TABLE>
37
<PAGE> 97
<TABLE>
<S> <C> <C> <C> <C> <C>
12/31/91 15.44 0.21 10,709 7.07% 15.78%
12/31/92 14.29 0.04 9,941 (7.17)% (0.59)%
12/31/93 18.46 0.10 12,915 29.91% 29.15%
12/31/94 17.68 0.00 12,369 (3.68)% 24.39%
12/31/95 21.13 0.06 14,831 19.94% 48.35%
12/31/96 24.24 3.25 19,555 31.53% 95.07%
</TABLE>
(a) Value at end of fiscal year of $1,000 investment made on August 19,
1986.
(b) Not annualized and from August 19, 1986.
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 three series have been
authorized, which shares constitute the interests in Value International, Basic
Value and Europe Fund. Each Fund's shares are divided into three classes,
designated as Class A, Class C and Class Y shares.
Each share of each class of a Fund represents an equal proportionate
interest in the assets and liabilities belonging to that Fund. The shares of
each class of each Fund 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 Fund into a greater or lesser number of
shares of that Fund so long as the proportionate beneficial interest in the
assets belonging to that Fund and the rights of shares of any other Fund are in
no way affected. In case of any liquidation of a Fund, the holders of shares
of the Fund being liquidated will be entitled to receive as a class a
distribution out of the assets, net of the liabilities, belonging to that Fund.
Expenses attributable to any Fund are borne by that Fund. Any general expenses
of the Trust not readily identifiable as belonging to a particular Fund are
allocated among the Funds 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 or her
express consent.
Each Fund might determine to allocate certain of its expenses (in
addition to 12b-1 fees) to the specific classes of the Fund's shares to which
those expenses are attributable. For example, a higher transfer agency fee per
shareholder account may be imposed on a class of shares subject to a contingent
deferred sales charge because, upon redemption, the duration of the
shareholder's investment must be determined.
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 1940
Act 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 a
result, and particularly because the Trust assets are readily marketable and
ordinarily substantially exceed liabilities,
38
<PAGE> 98
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 shareholders 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.
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 the Trust.
The Chase Manhattan Bank, N.A., 1 Chaseside, Bournemouth, Dorset BH7
7DB, England, is the sub- custodian for Europe Fund.
ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. has been selected as independent
public accountants for the Trust for the fiscal year ending March 31, 1998.
Coopers & Lybrand L.L.P., 217 East Redwood Street, Baltimore, Maryland,
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 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.
FINANCIAL STATEMENTS
The Portfolios of Investments as of March 31, 1997; the Statements of
Assets and Liabilities as of March 31, 1997; the Statements of Operations for
the year ended March 31, 1997; the Statements of Changes in Net Assets for the
years ended March 31, 1997 and 1996; the Financial Highlights for all periods;
the Notes to Financial Statements and the Report of Independent Public
Accountants, each with respect to Basic Value and Value International, are
included in the combined annual report for the year ended March 31, 1997, and
are hereby incorporated by reference in this Statement of Additional
Information.
39
<PAGE> 99
The Statement of Net Assets as of December 31, 1996; the Statement of
Operations for the year ended December 31, 1996; the Statement of Changes in
Net Assets for the years ended December 31, 1996 and 1995; the Financial
Highlights for all periods; the Notes to Financial Statements and the Report of
Independent Accountants are included in Worldwide Value Fund, Inc.'s annual
report for the year ended December 31, 1996, and are hereby incorporated by
reference in this Statement of Additional Information.
40
<PAGE> 100
Bartlett Capital Trust
Part C. Other Information
<TABLE>
<CAPTION>
Item 24. Financial Statements and Exhibits
---------------------------------
<S> <C>
(a) Financial Statements: The financial statements of Bartlett Basic Value Fund and Bartlett Value International Fund
for the year ended March 31, 1997 and the report of the independent accountants thereon are incorporated into the
Statement of Additional Information (Part B) by reference to the Annual Report to Shareholders for the same period.
The financial statements of Worldwide Value Fund, Inc. (Europe Fund's predecessor) for the year ended December 31,
1996 and the report of the independent accountants thereon are incorporated into the Statement of Additional
Information (Part B) by reference to that Fund's Annual Report for the same period.
The Financial Data Schedules with respect to each Fund are included as Exhibits 27.1 to 27.3.
(b) Exhibits
(1) (a) Amended and Restated Declaration of Trust -- filed herewith
(i) Amendment No. 1 to the Amended and Restated
Declaration of Trust -- filed herewith
(2) (a) By-Laws -- filed herewith
(i) Amendment to By-Laws -- filed herewith
(3) Voting trust agreement -- none
(4) Specimen security -- none
(5) (i) Management Agreement -- Bartlett Basic Value Fund1/
-
(ii) Management Agreement -- Bartlett Value International Fund1/
-
(iii) Investment Management and Administration Agreement --
Bartlett Basic Value Fund, Bartlett Value International Fund and
Bartlett Europe Fund -- filed herewith
(iv) Subadvisory Agreement -- Bartlett Europe Fund -- filed herewith
(6) (i) Distribution Agreement -- filed herewith
(7) Bonus, profit sharing or pension plans -- none
(8) Custodian agreement1/
-
(9) Transfer Agent Agreement1/
-
(10) Opinion and consent of counsel
(i) Opinion and consent of Brown, Cummins & Brown Co., L.P.A.2/
-
(ii) Opinion and consent of Brown, Rudnick, Freed & Gesmer2/
-
(iii) Opinion and consent of Brown, Cummins & Brown Co., L.P.A.
with respect to Bartlett Europe Fund -- filed herewith
(11) Other opinions, appraisals, rulings and consents--Accountants' consent
(a) Consent of Arthur Andersen LLP -- filed herewith
(b) Consent of Coopers & Lybrand L.L.P. -- filed herewith
(12) Financial statements omitted from Item 23 -- none
(13) Agreement for providing initial capital -- filed herewith
(14) (i) Prototype Retirement Plan*
</TABLE>
<PAGE> 101
<TABLE>
<S> <C>
(ii) Prototype corporate Simplified Employee Pension Plan*
(iii) Prototype Keogh Plan*
(15) (i) Plan pursuant to Rule 12b-1 with respect to Class A Shares --
filed herewith
(ii) Plan pursuant to Rule 12b-1 with respect to Class C Shares --
filed herewith
(16) Schedule for computation of performance quotations -- filed herewith
(17) (i) Power of Attorney for Registrant and Certificate with respect thereto1/
-
(18) Plan Pursuant to Rule 18f-3 -- filed herewith
(27) Financial Data Schedules -- filed herewith
</TABLE>
- -----------------
*Previously filed
1/ Incorporated by reference from Post-Effective Amendment No. 21 to the
Registrant's registration statement, SEC File No. 2-80648, filed May 31, 1996.
2/ Incorporated by reference from Registrant's Rule 24f-2 Notice for the fiscal
year ended March 31, 1996, filed May 30, 1996.
Item 25. Persons Controlled by or under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Recordholders
Title of Class (as of June 30, 1997)
-------------- ---------------------
Capital Stock
par value $.001
<S> <C>
Bartlett Basic Value Fund 2,307
Bartlett Value International Fund 1,613
Bartlett Europe Fund, Class A Shares 0
</TABLE>
Item 27. Indemnification
This item is incorporated by reference from Item 27 of Part C of
Post-Effective Amendment No. 21 to the registration statement, SEC File No.
2-80648, filed May 31, 1996.
Item 28. Business and other Connections of Investment Adviser and
Subadviser
I. Bartlett & Co. ("Bartlett"), adviser to Bartlett Basic Value
Fund, Bartlett Value International Fund and Bartlett Europe Fund, is a
registered investment adviser incorporated on January 4, 1988. Information as
to the officers and directors of Bartlett is included in its Form ADV filed
September 17, 1996 with the Securities and Exchange Commission (Registration
Number 801-21) and is incorporated herein by reference.
<PAGE> 102
II. Lombard Odier International Portfolio Management Limited
("Lombard Odier") serves as investment sub-adviser to Bartlett Europe Fund.
Lombard Odier, which was incorporated in England and Wales in 1978, is a
registered investment adviser and a wholly owned subsidiary of Lombard Odier
Holdings UK, Ltd. which in turn is wholly owned by Lombard, Odier & Cie.
Lombard Odier specializes in advising and managing investment portfolios for
institutional clients. Information as to the officers and managing directors
of Lombard Odier is included in its Form ADV, as filed with the Securities and
Exchange Commission (registration number 801-14606), and is incorporated herein
by reference.
Item 29. Principal Underwriters
(a) BFP Financial Partners, Inc.
(b) The following table sets forth information concerning
each director and officer of the Registrant's
principal underwriter, BFP Financial Partners, Inc.
("BFP").
<TABLE>
<CAPTION>
Position and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter - BFP Registrant
- ----------------- ----------------- -------------
<S> <C> <C>
Horace M. Lowman, Jr. Chairman of the None
111 South Calvert Street Board and Director
Baltimore, Maryland 21202
John W. Houston President and Director None
111 South Calvert Street
Baltimore, Maryland 21202
John R. Mould Vice President None
111 South Calvert Street
Baltimore, Maryland 21202
L. Kay Strohecker Treasurer None
111 South Calvert Street
Baltimore, Maryland 21202
C. Gregory Kallmyer Secretary None
111 South Calvert Street
Baltimore, Maryland 21202
Suzanne E. Peluso Assistant Secretary None
111 South Calvert Street
Baltimore, Maryland 21202
Charles A. Bacigalupo Director None
111 South Calvert Street
Baltimore, Maryland 21202
</TABLE>
<PAGE> 103
<TABLE>
<S> <C> <C>
James W. Brinkley Director None
111 South Calvert Street
Baltimore, Maryland 21202
W. Wiliiam Brab Director None
111 South Calvert Street
Baltimore, Maryland 21202
</TABLE>
Item 30. Location of Accounts and Records
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105-1713
Item 31. Management Services
None.
Item 32. Undertakings
Registrant hereby undertakes to provide each person to whom a
prospectus is delivered with a copy of its latest annual report to shareholders
upon request and without charge.
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 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.
<PAGE> 104
SIGNATURE PAGE
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant, Bartlett Capital Trust,
certifies that it meets all the requirements for effectiveness of this
Post-Effective Amendment No. 24 to its Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Baltimore and State of Maryland, on the 16th day of
July, 1997.
Bartlett Capital Trust
By:/s/ Marie K. Karpinski
----------------------
Marie K. Karpinski
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 24 to the Registrant's Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Chairman of the Board,
/s/Dale H. Rabiner* President and Trustee July 16, 1997
- -------------------
Dale H. Rabiner*
/s/ Marie K. Karpinski Vice President and July 16, 1997
- ---------------------- Treasurer
Marie K. Karpinski
/s/William P. Sheehan* Trustee July 16, 1997
- ----------------------
William P. Sheehan*
/s/Alan R. Schriber* Trustee July 16, 1997
- --------------------
Alan R. Schriber*
/s/ Lorrence T. Kellar* Trustee July 16, 1997
- -----------------------
Lorrence T. Kellar*
</TABLE>
*Signatures affixed by Marie K. Karpinski pursuant to a power of attorney dated
May 6, 1996, incorporated herein by reference to Post-Effective Amendment No.
21, filed May 31, 1996.
<PAGE> 1
-------------------------
BARTLETT CAPITAL TRUST
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
JULY 15, 1997
-------------------------
<PAGE> 2
BARTLETT CAPITAL TRUST
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - NAME AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) The "Trust" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) "Trustees". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(c) "Shares". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(d) "Series". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(e) "Class" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(f) "Shareholder" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) The "1940 Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(h) "Commission" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(i) "Declaration of Trust" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(j) "By-Laws" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - PURPOSE OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III - THE TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.1 Number, Designation, Election, Term, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Initial Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) Resignation and Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(e) Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(f) Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(g) Effect of Death, Resignation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(h) No Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.2 Powers of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Ownership Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) Subscription. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Form of Holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(f) Reorganization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
(g) Voting Trusts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(h) Compromise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(i) Partnerships, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(j) Borrowing and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(k) Guarantees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(l) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(m) Pensions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.3 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Advisory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Custodian and Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Transfer and Dividend Disbursing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Shareholder Servicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(g) Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 Payment of Trust Expenses and Compensation of Trustees . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 Ownership of Assets of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV - SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.1 Description of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.2 Establishment and Designation of Series . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Assets Belonging to Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Liabilities Belonging to Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Redemption by Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(g) Redemption by Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(h) Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(i) Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(j) Equality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(k) Fractions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(l) Conversion Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.3 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.4 Investments in the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.5 No Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.6 Status of Shares and Limitation of Personal Liability . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.1 Voting Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.2 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.3 Record Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.4 Quorum and Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.5 Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.6 Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.7 Additional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice . . . . . . . . . . . . . . . . . . 16
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety . . . . . . . . . . . . . . . . 17
Section 6.3 Indemnification of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.4 Indemnification of Trustees, Officers, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.5 Advances of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.6 Indemnification Not Exclusive, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.7 Liability of Third Persons Dealing with Trustees . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.1 Duration and Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.2 Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.3 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.4 Filing of Copies; References; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.5 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
- iii -
<PAGE> 5
BARTLETT CAPITAL TRUST
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
The undersigned officer of Bartlett Capital Trust (formerly MGF Equity
Trust and Midwest Group Capital Trust), which was organized pursuant to an
Agreement and Declaration of Trust made at Boston, Massachusetts on the 31st
day of October, 1982 by Dale H. Rabiner, hereby amends and restates the
Agreement and Declaration of Trust of Bartlett Capital Trust, upon due
authorization by the Trustees and by the Shareholders, as follows:
WITNESSETH:
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust in accordance with
the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same
upon the following terms and conditions for the benefit of the holders from
time to time of shares of beneficial interest in this Trust as hereinafter set
forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "Bartlett Capital
Trust" and the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust
established by this Agreement and Declaration of Trust, as
amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
appointed or elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust, shall be divided
from time to time, including the shares of any and all Series
or Classes which may be established by the Trustees, and
includes fractions of Shares as well as whole Shares;
- 1 -
<PAGE> 6
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article IV;
(e) "Class" refers to a class or sub-series of any Series of Shares
established and designated under and in accordance with the
provisions of Article IV;
(f) "Shareholder" means a record owner of Shares;
(g) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time
to time;
(h) "Commission" shall have the meaning given it in the 1940 Act;
(i) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to time;
and
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company, to
offer Shareholders one or more investment programs primarily in securities and
debt instruments and to engage in any and all lawful acts or activities for
which business trusts may be formed under Chapter 182 of the Massachusetts
General Laws.
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Current Trustees. The current Trustees of the Trust are:
Lorrence T. Kellar, Dale H. Rabiner, Alan R. Schriber and
William P. Sheehan.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming a Trustee, may increase or decrease the
number of Trustees to a number other than the number
theretofore determined. No decrease in the number of Trustees
shall have the effect of removing any Trustee from office prior
to the expiration of his term, but the number of Trustees may
be decreased in conjunction with the removal of a Trustee
pursuant to subsection (e) of this Section 3.1.
- 2 -
<PAGE> 7
(c) Term. Each Trustee shall serve as a Trustee during the
lifetime of the Trust and until its termination as hereinafter
provided or until such Trustee sooner dies, resigns, retires or
is removed. The Trustees may elect their own successors and
may, pursuant to Section 3.1(f) hereof, appoint Trustees to
fill vacancies; provided that, immediately after filling a
vacancy, at least two-thirds of the Trustees then holding
office shall have been elected to such office by the
Shareholders at an annual or special meeting. If at any time
less than a majority of the Trustees then holding office were
so elected, the Trustees shall forthwith cause to be held as
promptly as possible, and in any event within 60 days, a
meeting of Shareholders for the purpose of electing Trustees to
fill any existing vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust
or retire as a Trustee, by written instrument signed by him and
delivered to the other Trustees or to any officer of the Trust,
and such resignation or retirement shall take effect upon such
delivery or upon such later date as is specified in such
instrument.
(e) Removal. Any Trustee may be removed with or without cause at
any time: (i) by written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal,
specifying the date upon which such removal shall become
effective, (ii) by vote of the Shareholders holding not less
than two-thirds of the Shares then outstanding, cast in person
or by proxy at any meeting called for the purpose, or (iii) by
a declaration in writing signed by Shareholders holding not
less than two-thirds of the Shares then outstanding and filed
with the Trust's Custodian.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from
any reason, including without limitation the death,
resignation, retirement, removal or incapacity of any of the
Trustees, or resulting from an increase in the number of
Trustees by the Trustees may (but so long as there are at least
three remaining Trustees, need not unless required by the 1940
Act) be filled either by a majority of the remaining Trustees
through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine (unless
a shareholder election is required by the 1940 Act) or by the
election by the Shareholders, at a meeting called for the
purpose, of a person to fill such vacancy, and such appointment
or election shall be effective upon the written acceptance of
the person named therein to serve as a Trustee and agreement by
such person to be bound by the provisions of this Declaration
of Trust, except that any such appointment or election in
anticipation of a vacancy to occur by reason of retirement,
resignation, or increase in number of Trustees to be effective
at a later date shall become effective only at or after the
effective date of said retirement, resignation, or increase in
number of Trustees. As soon as any Trustee so appointed or
elected shall have accepted such appointment or election and
shall have agreed in writing to be bound by this Declaration of
Trust and the appointment or election is effective, the Trust
estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any one
of them, shall not operate to annul or terminate the
- 3 -
<PAGE> 8
Trust or to revoke or terminate any existing agency or contract
created or entered into pursuant to the terms of this
Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act
or under circumstances which would justify his removal for
cause, no person ceasing to be a Trustee as a result of his
death, resignation, retirement, removal or incapacity (nor the
estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such
cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business and affairs of
the Trust and may amend and repeal them to the extent that such By-Laws do not
reserve that right to the Shareholders; they may as they consider appropriate
elect and remove officers and appoint and terminate agents and consultants and
hire and terminate employees, any one or more of the foregoing of whom may be a
Trustee, and may provide for the compensation of all of the foregoing; they may
appoint from their own number, and terminate, any one or more committees
consisting of two or more Trustees, including without implied limitation an
executive committee, which may, when the Trustees are not in session and
subject to the 1940 Act, exercise some or all of the power and authority of the
Trustees as the Trustees may determine; in accordance with Section 3.3 they may
employ one or more Advisers, Administrators, Depositories and Custodians and
may authorize any Depository or Custodian to employ subcustodians or agents and
to deposit all or any part of such assets in a system or systems for the
central handling of securities and debt instruments, retain transfer, dividend,
accounting or Shareholder servicing agents or any of the foregoing, provide for
the distribution of Shares by the Trust through one or more distributors,
principal underwriters or otherwise, set record dates or times for the
determination of Shareholders or certain of them with respect to various
matters; they may compensate or provide for the compensation of the Trustees,
officers, advisers, administrators, custodians, other agents, consultants and
employees of the Trust or the Trustees on such terms as they deem appropriate;
and in general they may delegate to any officer of the Trust, to any committee
of the Trustees and to any employee, adviser, administrator, distributor,
principal underwriter, depository, custodian, transfer and dividend disbursing
agent, or any other agent or consultant of the Trust such authority, powers,
functions and duties as they consider desirable or appropriate for the conduct
of the business and affairs of the Trust, including without implied limitation
the power and authority to act in the name of the Trust and of the Trustees, to
sign documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority:
(a) Investments. To invest and reinvest cash and other property,
and to hold cash or other property uninvested without in any
event being bound or limited by any present or future law or
custom in regard to investments by trustees;
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(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of
the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other securities,
debt instruments or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons
such power and discretion with relation to securities, debt
instruments or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities or debt instruments;
(e) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in bearer,
unregistered or other negotiable form, or in the name of the
Trustees or of the Trust or in the name of a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
(f) Reorganization, etc. To consent to or participate in any plan
for the reorganization, consolidation or merger of any
corporation or issuer, any security or debt instrument of which
is or was held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or
issuer, and to pay calls or subscriptions with respect to any
security or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a committee,
depository, voting trustee or otherwise, and in that connection
to deposit any security or debt instrument with, or transfer
any security or debt instrument to, any such committee,
depository or trustee, and to delegate to them such power and
authority with relation to any security or debt instrument
(whether or not so deposited or transferred) as the Trustees
shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee,
depository or trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or
associations;
(j) Borrowing and Security. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any
notes or other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge the Trust property
or any part thereof to secure any of or all such obligations;
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(l) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or
appropriate for the conduct of the business, including, without
limitation, insurance policies insuring the assets of the Trust
and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants, investment
advisers, managers, administrators, distributors, principal
underwriters, or independent contractors, or any thereof (or
any person connected therewith), of the Trust individually
against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken
or omitted by any such person in any such capacity, including
any action taken or omitted that may be determined to
constitute negligence; provided, however, that 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 may not be purchased; and
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the
Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (a quorum, consisting of at least a majority of the Trustees then in
office, being present), within or without Massachusetts, including any meeting
held by means of a conference telephone or other communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time and participation by such means shall constitute presence in
person at a meeting, or by written consents of a majority of the Trustees then
in office (or such larger or different number as may be required by the 1940
Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other type of organizations, or individuals
("Contracting Party") to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or of the
Trust and/or the Trustees, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set forth
below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees
and in conformity with the stated policy of the Trustees with
respect to the investments of the Trust or of the assets
belonging to any Series of Shares of the Trust (as that phrase
is defined in subsection (a) of Section 4.2), to manage such
investments and assets, make investment decisions with
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respect thereto, and to place purchase and sale orders for
portfolio transactions relating to such investments and assets;
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees
with respect to the operations of the Trust, to supervise all
or any part of the operations of the Trust, and to provide all
or any part of the administrative and clerical personnel,
office space and office equipment and services appropriate for
the efficient administration and operations of the Trust;
(c) Distribution. To distribute the Shares of the Trust, to be
principal underwriter of such Shares, and/or to act as agent of
the Trust in the sale of Shares and the acceptance or rejection
of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to
maintain custody of the property of the Trust and accounting
records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records
of the ownership of outstanding Shares, the issuance and
redemption and the transfer thereof, and to disburse any
dividends declared by the Trustees and in accordance with the
policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with
respect to Shareholders and their Shares, and similar matters;
and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's
properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into subcontractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter or distributor or agent of or
for any Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust, or
that
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(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited partnerships
or other organizations, or has other business or interests,
shall not affect the validity of any contract for the performance and
assumption of services, duties and responsibilities to, for or of the Trust
and/or the Trustees or disqualify any Shareholder, Trustee or officer of the
Trust from voting upon or executing the same or create any liability or
accountability to the Trust or its Shareholders, provided that in the case of
any relationship or interest referred to in the preceding clause (i) on the
part of any Trustee or officer of the Trust either (l) the material facts as to
such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith reasonably justified by such facts by a majority of
such Trustees not having any such relationship or interest (even though such
unrelated or disinterested Trustees are less than a quorum of all of the
Trustees), (2) the material facts as to such relationship or interest and as to
the contract have been disclosed to or are known by the Shareholders not having
such relationship or interest and who are entitled to vote thereon and the
contract involved is specifically approved in good faith by majority vote of
such Shareholders, or (3) the specific contract involved is fair to the Trust
as of the time it is authorized, approved or ratified by the Trustees or by
such Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the principal
or income of the Trust, or partly out of principal and partly out of income,
and to charge or allocate the same to, between or among such one or more of the
Series and Classes that may be established and designated pursuant to Article
IV, as the Trustees deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, Shareholder servicing agent, and such other
agents, consultants, and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur. Without
limiting the generality of any other provision hereof, the Trustees shall be
entitled to reasonable compensation from the Trust for their services as
Trustees and may fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the
Trust shall be divided into Shares, all without par value. The Trustees shall
have the authority from time to time to issue or reissue Shares in one or more
Series of Shares (including without limitation the Series specifically
established and designated in Section 4.2), as they deem necessary or
desirable, to establish and designate such Series, and to fix and determine the
relative rights and preferences as between the different Series of Shares as to
right of redemption and the price, terms and manner of redemption, special and
relative
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rights as to dividends and other distributions and on liquidation, sinking or
purchase fund provisions, conversion rights, and conditions under which the
several Series shall have separate voting rights or no voting rights.
The Shares of each Series may be issued or reissued from time to time
in one or more Classes, as determined by the Board of Trustees pursuant to
resolution. Each Class shall be appropriately designated, prior to the
issuance of any shares thereof, by some distinguishing letter, number or title.
All Shares within a Class shall be alike in every particular. All Shares of
each Series shall be of equal rank and have the same powers, preferences and
rights, and shall be subject to the same qualifications, limitations and
restrictions without distinction between the shares of different Classes
thereof, except with respect to such differences among such Classes, as the
Board of Trustees shall from time to time determine to be necessary or
desirable, including without limitation differences in expenses, in voting
rights and in the rate or rates of dividends or distributions. The Board of
Trustees may from time to time increase the number of Shares allocated to any
Class already created by providing that any unissued Shares of the applicable
Series shall constitute part of such Class, or may decrease the number of
Shares allocated to any Class already created by providing that any unissued
Shares previously assigned to such Class shall no longer constitute part
thereof. The Board of Trustees is hereby empowered to classify or reclassify
from time to time any unissued Shares of each Series by fixing or altering the
terms thereof and by assigning such unissued shares to an existing or newly
created Class. Notwithstanding anything to the contrary in this paragraph the
Board of Trustees is hereby empowered (i) to redesignate any issued Shares of
any Series by assigning a distinguishing letter, number or title to such shares
and (ii) to reclassify all or any part of the issued Shares of any Series to
make them part of an existing or newly created Class.
The number of authorized Shares and the number of Shares of each Series
and Class that may be issued is unlimited, and the Trustees may issue Shares of
any Series or Class for such consideration and on such terms as they may
determine (or for no consideration if pursuant to a Share dividend or
split-up), all without action or approval of the Shareholders. All Shares when
so issued on the terms determined by the Trustees shall be fully paid and
non-assessable (but may be subject to mandatory contribution back to the Trust
as provided in subsection (h) of Section 4.2). The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired
of any Series or Class into one or more Series or Classes that may be
established and designated from time to time. The Trustees may hold as
treasury Shares (of the same or some other Series), reissue for such
consideration and on such terms as they may determine, or cancel, at their
discretion from time to time, any Shares of any Series or Class reacquired by
the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Series or Class of Shares in
addition to those established and designated in Section 4.2 shall be effective
upon the execution by a majority of the then Trustees of an instrument setting
forth such establishment and designation and the relative rights and
preferences of such Series or Class, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
Series or Class previously established and designated, the
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Trustees may by an instrument executed by a majority of their number abolish
that Series or Class and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an amendment
to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested, may acquire, own, hold and dispose of
Shares to the same extent as if such person were not a Trustee, officer or
other agent of the Trust; and the Trust may issue and sell or cause to be
issued and sold and may purchase Shares from any such person or any such
organization subject only to the general limitations, restrictions or other
provisions applicable to the sale or purchase of Shares generally.
Section 4.2 Establishment and Designation of Series or Classes.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Series or Classes, the Trustees hereby
acknowledge that they have established and designated the following series of
Shares: the "Bartlett Basic Value Fund," the "Bartlett Value International
Fund" and the "Bartlett Europe Fund." They also acknowledge that they have
designated one Class, "Class A," of the Bartlett Europe Fund. The Shares of
these Series and Classes and any Shares of any further Series or Class that may
from time to time be established and designated by the Trustees shall (unless
the Trustees otherwise determine with respect to some further Series or Class
at the time of establishing and designating the same) have the following
relative rights and preferences:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issuance or sale of Shares of a particular Series
or Class, together with all assets in which such consideration
is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to that
Series or Class for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any
General Items allocated to that Series or Class as provided in
the following sentence, are herein referred to as "assets
belonging to" that Series or Class. In the event that there
are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable
as belonging to any particular Series or Class (collectively
"General Items"), the Trustees shall allocate such General
Items to and among any one or more of the Series or Classes
established and designated from time to time in such manner and
on such basis as they, in their sole discretion, deem fair and
equitable; and any General Items so allocated to a particular
Series or Class shall belong to that Series or Class. Each
such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series and Classes for all
purposes.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall
be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding
upon the Shareholders.
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(b) Liabilities Belonging to Series. The assets belonging to each
particular Series and Class thereof shall be charged with the
liabilities of the Trust in respect of that Series or Class and
all expenses, costs, charges and reserves attributable to that
Series or Class, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series or Class
shall be allocated and charged by the Trustees to and among any
one or more of the Series and Classes established and
designated from time to time in such manner and on such basis
as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and
reserves allocated and so charged to a Series or Class are
herein referred to as "liabilities belonging to" that Series or
Class. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and
binding upon the Shareholders of all Series for all purposes.
(c) Dividends. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise
pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to
the holders of Shares of that Series, from such of the
estimated income and capital gains, accrued or realized, from
the assets belonging to that Series, as the Trustees may
determine, after providing for actual and accrued liabilities
belonging to that Series. All dividends and distributions on
Shares of a particular Series shall be distributed pro rata to
the holders of that Series in proportion to the number of
Shares of that Series held by such holders at the date and time
of record established for the payment of such dividends or
distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine
that no dividend or distribution shall be payable on Shares as
to which the Shareholder's purchase order and/or payment have
not been received by the time or times established by the
Trustees under such program or procedure, and except that if
Classes have been established for any Series, the rate of
dividends or distributions may vary among such Class pursuant
to resolution, which may be a standing resolution, of the Board
of Trustees. Such dividends and distributions may be made in
cash or Shares or a combination thereof as determined by the
Trustees or pursuant to any program that the Trustees may have
in effect at the time for the election by each Shareholder of
the mode of the making of such dividend or distribution to that
Shareholder. Any such dividend or distribution paid in Shares
will be paid at the net asset value thereof as determined in
accordance with subsection (h) of Section 4.2.
The Trust intends to qualify each Series as a "regulated
investment company" under the Internal Revenue Code of 1954, as
amended, or any successor or comparable statute thereto, and
regulations promulgated thereunder. Inasmuch as the
computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books of
the Trust, the Board of Trustees shall have the power, in its
sole discretion, to distribute in any fiscal year as dividends,
including dividends designated in whole or in part as capital
gains distributions, amounts sufficient, in the opinion of the
Board of Trustees, to enable each Series to qualify as a
regulated investment company and to avoid liability of the
Series for federal income tax in respect of that year.
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However, nothing in the foregoing shall limit the authority of
the Board of Trustees to make distributions greater than or
less than the amount necessary to qualify as a regulated
investment company and to avoid liability of each Series for
such tax.
(d) Liquidation. In event of the liquidation or dissolution of the
Trust, the Shareholders of each Series or Class that has been
established and designated shall be entitled to receive, as a
Series or Class, when and as declared by the Trustees, the
excess of the assets belonging to that Series or Class over the
liabilities belonging to that Series or Class. The assets so
distributable to the Shareholders of any particular Series or
Class shall be distributed among such Shareholders in
proportion to the number of Shares of that Series or Class held
by them and recorded on the books of the Trust. The
liquidation of any particular Series or Class may be authorized
by vote of a majority of the Trustees then in office subject to
the approval of a majority of the outstanding voting Shares of
that Series or Class, as defined in the 1940 Act.
(e) Voting. All Shares shall have "equal voting rights" as such
term is defined in the Investment Company Act of 1940 and
except as otherwise provided by that Act or rules, regulations
or orders promulgated thereunder. On each matter submitted to
a vote of the Shareholders, each Series shall vote as a
separate series except (i) as to any matter with respect to
which a vote of all Series voting as a single series is
required by the 1940 Act or rules and regulations promulgated
thereunder, or would be required under the Massachusetts
Business Corporation Law if the Trust were a Massachusetts
business corporation; and (ii) as to any matter which the
Trustees have determined affects only the interests of one or
more Series or Classes, only the holders of Shares of the one
or more affected Series or Classes shall be entitled to vote
thereon.
(f) Redemption by Shareholder. Each holder of Shares of a
particular Series or Class shall have the right at such times
as may be permitted by the Trust, but no less frequently than
once each week, to require the Trust to redeem all or any part
of his Shares of that Series or Class at a redemption price
equal to the net asset value per Share of that Series or Class
next determined in accordance with subsection (h) of this
Section 4.2 after the Shares are properly tendered for
redemption. Payment of the redemption price shall be in cash;
provided, however, that if the Trustees determine, which
determination shall be conclusive, that conditions exist which
make payment wholly in cash unwise or undesirable, the Trust
may make payment wholly or partly in securities or other assets
belonging to the Series or Class of which the Shares being
redeemed are part at the value of such securities or assets
used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the
holders of Shares of any Series to require the Trust to redeem
Shares of that Series during any period or at any time when and
to the extent permissible under the 1940 Act, and such
redemption is conditioned upon the Trust having funds or
property legally available therefor.
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(g) Redemption by Trust. Each Share of each Series or Class that
has been established and designated is subject to redemption by
the Trust at the redemption price which would be applicable if
such Share was then being redeemed by the Shareholder pursuant
to subsection (f) of this Section 4.2: (a) at any time, if the
Trustees determine in their sole discretion that failure to so
redeem may have materially adverse consequences to all or any
of the holders of the Shares, or any Series or Class thereof,
of the Trust, or (b) upon such other conditions as may from
time to time be determined by the Trustees and set forth in the
then current Prospectus of the Trust with respect to
maintenance of Shareholder accounts of a minimum amount. Upon
such redemption the holders of the Shares so redeemed shall
have no further right with respect thereto other than to
receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Series
or Class shall be the quotient obtained by dividing the value
of the net assets of that Series or Class (being the value of
the assets belonging to that Series or Class less the
liabilities belonging to that Series or Class) by the total
number of Shares of that Series or Class outstanding, all
determined in accordance with the methods and procedures,
including without limitation those with respect to rounding,
established by the Trustees from time to time. Net asset value
shall be determined separately for each Class of a Series.
The Trustees may determine to maintain the net asset value per
Share of any Series or Class at a designated constant dollar
amount and in connection therewith may adopt procedures not
inconsistent with the 1940 Act for the continuing declarations
of income attributable to that Series or Class as dividends
payable in additional Shares of that Series or Class at the
designated constant dollar amount and for the handling of any
losses attributable to that Series or Class. Such procedures
may provide that in the event of any loss each Shareholder
shall be deemed to have contributed to the capital of the Trust
attributable to that Series or Class his pro rata portion of
the total number of Shares required to be canceled in order to
permit the net asset value per Share of that Series or Class to
be maintained, after reflecting such loss, at the designated
constant dollar amount. Each Shareholder of the Trust shall be
deemed to have agreed, by his investment in any Series with
respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) Transfer. All Shares of each particular Series or Class shall
be transferable, but transfers of Shares of a particular Series
or Class will be recorded on the Share transfer records of the
Trust applicable to that Series or Class only at such times as
Shareholders shall have the right to require the Trust to
redeem Shares of that Series or Class and at such other times
as may be permitted by the Trustees.
(j) Equality. All Shares of each particular Series shall represent
an equal proportionate interest in the assets belonging to that
Series (subject to the liabilities belonging to that Series),
and each Share of any particular Series shall be equal to each
other Share of that Series; but the provisions of this sentence
shall not restrict any distinctions permissible
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under this Section 4.2 that may exist with respect to a Class
of the same Series. The Trustees may from time to time divide
or combine the Shares of any particular Series or Class into a
greater or lesser number of Shares of that Series or Class
without thereby changing the proportionate beneficial interest
in the assets belonging to that Series or Class or in any way
affecting the rights of Shares of any other Series or Class.
(k) Fractions. Any fractional Share of any Series or Class, if any
such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole Share
of that Series or Class, including with respect to voting,
receipt of dividends and distributions, redemption of Shares,
and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series or Class shall
have the right to convert said Shares into Shares of one or
more other Series or Classes in accordance with such
requirements and procedures as may be established by the
Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
and Class that has been established and designated. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of
the Trust as kept by the Trust or any transfer or similar agent, as the case
may be, shall be conclusive as to who are the Shareholders and as to the number
of Shares of each Series and Class held from time to time by each such
Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 No Preemptive Rights. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance
of the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not
entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an
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<PAGE> 19
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or
agent of the Trust shall have any power to bind personally any Shareholder, nor
except as specifically provided herein to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to
vote only (i) for the election or removal of Trustees as provided in Section
3.1, (ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Series to
the extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or the Shareholders, and (vi) with respect to such additional
matters relating to the Trust as may be required by the 1940 Act, this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. There shall be no cumulative voting in the
election of any Trustee or Trustees. Shares may be voted in person or by
proxy. A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger. Until
Shares are then issued and outstanding, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. Meetings (including meetings involving only
the holders of Shares of one or more but less than all Series or Classes) of
Shareholders may be called by the Trustees from time to time for the purpose of
taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matter deemed by the Trustees
to be necessary or desirable. Written notice of any meeting of Shareholders
shall be given or caused to be given by the Trustees by mailing such notice at
least seven days before such meeting, postage prepaid, stating the time, place
and purpose of the meeting, to each Shareholder at the Shareholder's address as
it appears on the records of the Trust. If the Trustees shall fail to call or
give notice of any meeting of Shareholders (including a meeting involving only
the holders of Shares of one or more but less than all Series or Classes) for a
period of 30 days after written application by Shareholders holding at least
25% of the Shares then outstanding requesting a meeting be called for any other
purpose requiring action by the Shareholders as provided herein or in the
By-Laws, then Shareholders holding at least 25% of the Shares then outstanding
may call and give notice of such meeting, and thereupon the meeting shall be
held in the manner provided for herein in case of call thereof by the Trustees.
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<PAGE> 20
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date and time not
more than 60 days prior to the date of any meeting of Shareholders or other
action as the date and time of record for the determination of Shareholders
entitled to vote at such meeting or any adjournment thereof or to be treated as
Shareholders of record for purposes of such other action, and any Shareholder
who was a Shareholder at the date and time so fixed shall be entitled to vote
at such meeting or any adjournment thereof or (subject to any provisions
permissible under subsection (c) of Section 4.2 with respect to dividends or
distributions on Shares that have not been ordered and/or paid for by the time
or times established by the Trustees under the applicable dividend or
distribution program or procedure then in effect) to be treated as a
Shareholder of record for purposes of such other action, even though he has
since that date and time disposed of his Shares, and no Shareholder becoming
such after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of record for
purposes of such other action.
Section 5.4 Quorum and Required Vote. A majority of Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of this Declaration of Trust
permits or requires that holders of any Series or Class thereof shall vote as a
Series or Class, then a majority of the aggregate number of Shares of that
Series or Class thereof entitled to vote shall be necessary to constitute a
quorum for the transaction of business by that Series or Class. Any lesser
number shall be sufficient for adjournments. Any adjourned session or sessions
may be held, within a reasonable time after the date set for the original
meeting, without the necessity of further notice. Except when a larger vote is
required by any provision of this Declaration of Trust or the By-Laws, a
majority of the Shares voted, at a meeting at which a quorum is present, shall
decide any questions and a plurality shall elect a Trustee, provided that where
any provision of law or of this Declaration of Trust permits or requires that
the holders of any Series or Class shall vote as a Series or Class, then a
majority of the Shares of that Series or Class voted on the matter shall decide
that matter insofar as that Series or Class is concerned.
Section 5.5 Action by Written Consent. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such other proportion thereof as shall be required by the 1940 Act
or by any express provision of this Declaration of Trust or the By-Laws)
consent to the action in writing and such written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall
be open to inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the Massachusetts
Business Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
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<PAGE> 21
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice. All persons extending credit to, contracting with or having any claim
against any Series of the Trust (or the Trust on behalf of any Series) shall
look only to the assets of that Series for payment under such credit, contract
or claim; and neither the Shareholders nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust or the Trustees or any of them in connection
with the Trust shall be conclusively deemed to have been executed or done only
by or for the Trust or the Trustees and not personally. Nothing in this
Declaration of Trust shall protect any Trustee or officer against any liability
to the Trust or the Shareholders to which such Trustee or officer would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers
or officer and not individually and that the obligations of such instrument are
not binding upon any of them or the Shareholders individually but are binding
only upon the assets and property of the Trust, but the omission thereof shall
not operate to bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his
own willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or
law. Subject to the foregoing, (a) the Trustees shall not be responsible or
liable in any event for any neglect or wrongdoing of any officer, agent,
employee, consultant, adviser, administrator, distributor or principal
underwriter, custodian or transfer, dividend disbursing, Shareholder servicing
or accounting agent of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee; (b) the Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust and their duties as Trustees, and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice; and (c) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of
the Trust and upon written reports made to the Trustees by any officer
appointed by them, any independent public accountant, and (with respect to the
subject matter of the contract involved) any officer, partner or responsible
employee of a Contracting Party appointed by the Trustees pursuant to Section
3.3. The Trustees as such shall not be required to give any bond or surety or
any other security for the performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any
Shareholder or former Shareholder shall be charged or held to be personally
liable for any obligation or liability of the Trust solely by
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<PAGE> 22
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, the Trust (upon
proper and timely request by the Shareholder) shall assume the defense against
such charge and satisfy any judgment thereon, and the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets of the Trust
estate to be held harmless from and indemnified against all loss and expense
arising from such liability; provided that, in the event the Trust shall
consist of more than one Series, Shareholders of a particular Series who are
faced with claims or liabilities solely by reason of their status as
Shareholders of that Series shall be limited to the assets of that Series for
recovery of such loss and related expenses. The rights accruing to a
Shareholder under this Section 6.3 shall not exclude any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
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 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
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<PAGE> 23
available facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the Covered Person ultimately 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.
Section 6.7 Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The
Trust may be terminated at any time by a majority of the Trustees then in
office subject to a favorable vote of a majority of the outstanding voting
Shares, as defined in the 1940 Act, of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may
be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with
the provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trustees may sell, convey and
transfer the assets of the Trust, or the assets belonging to any one or more
Series, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Series of the Trust, in exchange for cash, shares
or other securities (including, in the case of a transfer to another Series of
the Trust, Shares of such other Series) with such transfer being made subject
to, or with the assumption by the transferee of, the liabilities belonging to
each Series the assets of which are so transferred; provided, however, that if
shareholder approval is required by the 1940 Act, no assets belonging to any
particular Series shall be so transferred unless the terms of such transfer
shall have first been approved at a meeting called for the purpose by the
affirmative vote of the holders of a majority of the outstanding voting Shares,
as defined in the 1940 Act, of that Series. Following such transfer, the
Trustees shall distribute such cash, shares or other securities (giving due
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<PAGE> 24
effect to the assets and liabilities belonging to and any other differences
among the various Series the assets belonging to which have so been
transferred) among the Shareholders of the Series the assets belonging to which
have been so transferred; and if all of the assets of the Trust have been so
transferred, the Trust shall be terminated.
Section 7.3 Amendments. All rights granted to the Shareholders
under this Declaration of Trust are granted subject to the reservation of the
right to amend this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of any Shareholder
or Trustee or repeal the prohibition of assessment upon the Shareholders
without the express consent of each Shareholder or Trustee involved. Subject
to the foregoing, the provisions of this Declaration of Trust (whether or not
related to the rights of Shareholders) may be amended at any time by an
instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to the vote of a majority of such Trustees), when
authorized so to do by the vote in accordance with subsection (e) of Section
4.2 of Shareholders holding a majority of the Shares entitled to vote, except
that amendments either (a) establishing and designating any new Series of
Shares not established and designated in Section 4.2, or any Class or (b)
having the purpose of changing the name of the Trust or the name of any Shares
theretofore established and designated or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any provision hereof which is
internally inconsistent with any other provision hereof or which is defective
or inconsistent with the 1940 Act or with the requirements of the Internal
Revenue Code and applicable regulations for the Trust's obtaining the most
favorable treatment thereunder available to regulated investment companies,
shall not require authorization by Shareholder vote. If Shares have been
issued in Series or Classes and such amendment would not affect Shares of all
Series or Classes equally, no such amendment may be made except with the vote
or consent of the holders of a majority of the Shares of each Series or Class
affected by such amendment. Subject to the foregoing, any such amendment shall
be effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to effectiveness,
upon the execution of such instrument and of a certificate (which may be a part
of such instrument) executed by a Trustee or officer of the Trust to the effect
that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or
a copy of this instrument and of each amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy of
this instrument and of each amendment hereto shall be filed by the Trust with
the Secretary of the Commonwealth of Massachusetts and with the Boston City
clerk, as well as any other governmental office where such filing may from time
to time be required, but the failure to make any such filing shall not impair
the effectiveness of this instrument or any such amendment. Anyone dealing
with the Trust may rely on a certificate by an officer of the Trust as to
whether or not any such amendments have been made, as to the identities of the
Trustees and officers, and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such amendments. In this instrument and in any such amendment, references
to this instrument, and all expressions like "herein", "hereof" and "hereunder"
shall be deemed to refer to this instrument as a whole as the same may be
amended or affected by any such amendments. The masculine gender shall include
the feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not
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<PAGE> 25
be taken as a part hereof or control or affect the meaning, construction or
effect of this instrument. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 7.5 Applicable Law. This Declaration of Trust is to be
governed by and construed and administered according to the laws of the
Commonwealth of Massachusetts, including the Massachusetts Business Corporation
Law as the same may be amended from time to time, to which reference is made
with the intention that matters not specifically covered herein or as to which
an ambiguity may exist shall be resolved as if the Trust were a business
corporation organized in Massachusetts, but the reference to said Business
Corporation Law is not intended to give the Trust, the Trustees, the
Shareholders or any other person any right, power, authority or responsibility
available only to or in connection with an entity organized in corporate form.
The Trust shall be of the type referred to in Section 1 of Chapter 182 of the
Massachusetts General Laws and of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
IN WITNESS WHEREOF, the undersigned officer of the Trust, duly
authorized by the Trustees and the Shareholders, has hereunto set his hand in
Cincinnati, Ohio for himself and his assigns, on this 15th day of July, 1997.
/s/ 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 the above named Dale H. Rabiner, who acknowledged that he did sign the
foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 15th day of July, 1997.
/s/ Donald S. Mendelsohn
----------------------------------------
Notary Public
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<PAGE> 1
BARTLETT CAPITAL TRUST
AMENDMENT NO. 1 TO AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST ---
REDESIGNATION OF OUTSTANDING SHARES AND ESTABLISHMENT AND DESIGNATION OF
ADDITIONAL CLASSES
Pursuant to Section 4.1 of the Amended and Restated Agreement and
Declaration of Trust of Bartlett Capital Trust and effective upon the execution
of this document, the undersigned, being a majority of the Trustees of Bartlett
Capital Trust, hereby:
(a) establish three new classes of the "Bartlett Basic Value Fund" series
of shares of the Trust; designate such classes as "Class A," "Class C" and
"Class Y;" and redesignate the outstanding shares of such series as Class A
shares. The relative rights and preferences of the Class A, Class C and Class
Y shares of the Bartlett Basic Value Fund shall be those rights and preferences
set forth in Section 4.2 of the Amended and Restated Agreement and Declaration
of Trust of Bartlett Capital Trust; and
(b) establish three new classes of the "Bartlett Value
International Fund" series of shares of the Trust; designate such classes as
"Class A," "Class C" and "Class Y;" and redesignate the outstanding shares of
such series as Class A shares. The relative rights and preferences of the
Class A, Class C and Class Y shares of the Bartlett Value International Fund
shall be those rights and preferences set forth in Section 4.2 of the Amended
and Restated Agreement and Declaration of Trust of Bartlett Capital Trust; and
(c) establish two new classes of the "Bartlett Europe Fund" series
of shares of the Trust and designate such classes as "Class C" and "Class Y."
The relative rights and preferences of the Class C and Class Y shares of the
Bartlett Europe Fund shall be those rights and preferences set forth in Section
4.2 of the Amended and Restated Agreement and Declaration of Trust of Bartlett
Capital Trust.
This document shall have the status of an amendment to said Amended
and Restated Agreement and Declaration of Trust.
/s/ DALE H. RABINER /s/ ALAN R. SCHRIBER
- -------------------------------- ------------------------
Dale H. Rabiner Alan R. Schriber
/s/ WILLIAM P. SHEEHAN
- -------------------------------- ------------------------
Lorrence T. Kellar William P. Sheehan
Date: July 15, 1997
<PAGE> 1
BY-LAWS
OF
MIDWEST GROUP CAPITAL TRUST
ARTICLE 1
Agreement and Declaration of Trust and Offices
1.1 Agreement and Declaration of Trust. These By-Laws shall be
subject to the Agreement and Declaration of Trust, as from time to time in
effect (the "Declaration of Trust"), of Midwest Group Capital Trust, the
Massachusetts business trust established by the Declaration of Trust (the
"Trust").
1.2 Offices. The Trust shall maintain an office of record in
Boston, Massachusetts, which office may be the office of any resident agent
appointed by the Trust if located in that city. The Trust may maintain one or
more other offices, including its principal office, outside of Massachusetts,
in such cities as the Trustees may determine from time to time. Unless the
Trustees otherwise determine, the principal office of the Trust shall be
located in Cincinnati, Ohio.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be
held without call or notice at such places and at such time as the Trustees may
from time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after
and at the same place as the annual meeting of the shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be
held at any time and at any place designated in the call of the meeting when
called by the President or the Treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the Secretary or an Assistant
Secretary or by the officer of the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a
special meeting to send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting addressed
<PAGE> 2
to the Trustee at his or her usual or last known business or residence address
or to give notice to him or her in person or by telephone at least twenty-four
hours before the meeting. Notice of a meeting need not be given to any Trustee
if a written waiver of notice, executed by him or her before or after the
meeting, is filed with the records of the meeting, or to any Trustee who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to him or her. Neither notice of a meeting nor a waiver of a
notice need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the
Trustees then in office shall constitute a quorum. Any meeting may be
adjourned from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present, and the meeting may be held as adjourned
without further notice.
2.5 Participation by Telephone. One or more of the Trustees or of
any committee of the Trustees may participate in a meeting thereof by means of
a conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting
except as otherwise provided by the Investment Company Act of 1940.
2.6 Action by Consent. Any action required or permitted to be
taken at any meeting of the Trustees or any committee thereof may be taken
without a meeting, if a written consent of such action is signed by a majority
of the Trustees then in office or a majority of the members of such committee,
as the case may be, and such written consent is filed with the minutes of the
proceedings of the Trustees or such committee.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall
be a Chairman of the Board, a President, a Treasurer, a Secretary and such
other officers, including Vice Presidents, if any, as the Trustees from time to
time may in their discretion elect. The Trust may also have such agents as the
Trustees from time to time may in their discretion appoint. The Chairman of
the Board and the President of the Trust shall be Trustees and may but need not
be shareholders; and any other officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
3.2 Election. The Chairman of the Board, the President, the
Treasurer and the Secretary shall be elected annually by the Trustees at their
first meeting following the annual meeting of shareholders. Other officers, if
any, may be elected or appointed
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<PAGE> 3
by the Trustees at said meeting or at any other time. Vacancies in any office
may be filled at any time.
3.3 Tenure. The Chairman of the Board, the President, the
Treasurer and the Secretary shall hold office until the first meeting of the
Trustees following the next annual meeting of the shareholders and until their
respective successors are chosen and qualified, or in each case until he or she
sooner dies, resigns, is removed or becomes disqualified. Each other officer
shall hold office and each agent shall retain authority at the pleasure of the
Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws,
each officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him or her as if the Trust were organized as a
Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 Chairman of the Board and President. Unless the Trustees
otherwise provide, the Chairman of the Board of Trustees, or in the absence of
the Chairman of the Board, the President, or in the absence of the President,
any other Trustee chosen by the Trustees, shall preside at all meetings of the
shareholders and of the Trustees. The President shall be the chief executive
officer.
3.6 Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the President.
3.7 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the
absence of the Secretary from any meeting of the shareholders or Trustees, an
assistant secretary, or if there be none or if he or she is absent, a temporary
secretary chosen at such meeting shall record the proceedings thereof in the
aforesaid books.
3.8 Resignations and Removals. Any Trustee or officer may resign
at any time by written instrument signed by him or her and delivered to the
President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer elected by them with or without
cause. Except to the extent expressly provided in a written agreement with the
Trust,
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no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal, or
any right to damages on account of such removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the Trustees
then in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided
by the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or
duties shall keep records of its meetings and shall report its action to the
Trustees. The Trustees shall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at
the time and in the manner required by the Declaration of Trust or any
applicable law. Officers and Committees shall render such additional reports
as they may deem desirable or as may from time to time be required by the
Trustees.
ARTICLE 6
Fiscal Year
6.1 General. The fiscal year of the Trust shall be fixed, and
shall be subject to change by the Trustees.
ARTICLE 7
Seal
7.1 General. If required by applicable law, the seal of the Trust
shall consist of a flat-faced die with the word
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<PAGE> 5
"Massachusetts", together with the name of the Trust and the year of its
organization cut or engraved thereon, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence
shall not impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other manner, all
deeds, leases, contracts, notes and other obligations made by the Trustees
shall be signed by the Chairman of the Board, the President, any Vice
President, or by the Treasurer and need no bear the seal of the Trust, but
shall state the substance of or make reference to the provisions of Section 6.1
of the Declaration of Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for
shares, the Trustees or the transfer agent may either issue receipts therefor
or may keep accounts upon the books of the Trust for the record holders of such
shares, who shall in either case be deemed, for all purposes hereunder, to be
the holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a
certificate stating the number of shares owned by him, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the Chairman of the Board, the President or a Vice President and by the
Treasurer or Assistant Treasurer. Such signatures may be facsimiles if the
certificate is signed by a transfer agent, or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer who has signed
or whose facsimile signature has been placed on such certificate shall cease to
be such officer before such certificate is issued, it may be issued by the
Trust with the same effect as if he were such officer at the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees shall
prescribe.
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9.3 Issuance of New Certificate to Pledgee. In the event
certificates have been issued, a pledgee of shares transferred as collateral
security shall be entitled to a new certificate if the instrument of transfer
substantially describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it is held as
collateral security, and the name of the pledgor shall be stated thereon, who
alone shall be liable as a shareholder, and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may
at any time discontinue the issuance of share certificates and may, by written
notice to each shareholder, require the surrender of share certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect the
ownership of shares in the Trust.
ARTICLE 10
Custodian
10.1 General. The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at least Five
Hundred Thousand ($500,000) Dollars as Custodian of the capital assets of the
Trust. The Custodian shall be compensated for its services by the Trust and
upon such basis as shall be agreed upon from time to time between the Trust and
the Custodian.
ARTICLE 11
Dealings with Trustees and Officers
11.1 General. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he
were not a Trustee, officer or agent; and the Trustees may accept subscriptions
to shares or repurchase shares from any firm or company in which he is
interested.
ARTICLE 12
Shareholders
12.1 Annual Meeting. The annual meeting of the shareholders of the
Trust shall be held not more than 120 days after the end of each fiscal year,
or on such other day as the Trustees shall select, at such time as the
President or the Trustees may fix in the notice of the meeting.
12.2 Record Dates. For the purpose of determining the
shareholders who are entitled to vote or act at any meeting or any
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adjournment thereof, or who are entitled to receive payment of any dividend or
of any other distribution, the Trustees may from time to time fix a time, which
shall not be more that 60 days before the date of any meeting of shareholders
or the date for the payment of any dividend or of any other distribution, as
the record date for determining the shareholders having the right to notice of
and to vote at such meeting and any adjournment thereof or the right to receive
such dividend or distribution, and in such case only shareholders of record on
such record date shall have such right, notwithstanding any transfer of shares
on the books of the Trust after the record date; or without fixing such record
date the Trustees may for any such purposes close the register or transfer
books for all or any part of such period.
ARTICLE 13
Amendments to the By-Laws
13.1 General. These By-Laws may be amended or repealed, in whole
or in part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
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MIDWEST GROUP CAPITAL TRUST
RESOLUTIONS OF BOARD OF TRUSTEES
AMENDING THE BY-LAWS
"RESOLVED, that Section 2.1 of Article 2 of the By-Laws of Midwest Group
Capital Trust be amended to read as follows:
2.1 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may
from time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after
and at the same place as any meeting of the shareholders.
FURTHER RESOLVED, that Section 3.2 of Article 3 of the By-Laws of Midwest Group
Capital Trust be amended to read as follows:
3.2 Election. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at any time. Vacancies in any officer may be filled
at any time.
FURTHER RESOLVED, that Section 3.3 of Article 3 of the By-Laws of Midwest Group
Capital Trust be amended to read as follows:
3.3 Tenure. The President, the Treasurer and the Secretary shall hold
office for one year and until their respective successors are chosen and
qualified, or in each case until he or she sooner dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and each agent
shall retain authority at the pleasure of the Trustees.
FURTHER RESOLVED, that Section 12.1 of Article 12 of the By-Laws of Midwest
Group Capital Trust be amended to read as follows:
12.1 Meetings. A meeting of the shareholders of the Trust shall be held
whenever called by the Trustees, whenever election of a Trustee or Trustees by
shareholders is required by the provisions of Section 16(a) of the Investment
Company Act of 1940 for that purpose or whenever otherwise required pursuant to
the Declaration of Trust. Any meeting shall be held on such day and at such
time as the President or the Trustees may fix in the notice of the meeting.
<PAGE> 1
INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENT
Agreement made as of July 18, 1997, between BARTLETT CAPITAL TRUST, a
Massachusetts business trust ("Trust"), and BARTLETT & CO. ("Bartlett"), an
Ohio corporation registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Contract").
RECITALS
(1) The Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company and
offers for public sale distinct series of shares of beneficial interest, each
corresponding to a distinct portfolio; and
(2) The Trust desires to retain Bartlett as investment adviser and
administrator to furnish certain administrative, investment advisory and
portfolio management services to the Trust and its Bartlett Value International
Fund series, Bartlett Basic Value Fund series, Bartlett Europe Fund series, and
to such other series that the parties may hereafter designate ("Series"), and
Bartlett is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints Bartlett as investment
adviser and administrator of the Trust and each Series for the period and on
the terms set forth in this Contract. Bartlett accepts such appointment and
agrees to render the services set forth herein for the compensation herein
provided.
2. Duties as Investment Adviser.
(a) Subject to the supervision of and any guidelines
adopted by the Trust's Board of Trustees (the "Board"), Bartlett will provide
a continuous investment program for each Series, including investment research
and management with respect to all securities and investments and cash
equivalents in each Series.
<PAGE> 2
Bartlett will determine from time to time what securities investments will be
purchased, retained or sold by each Series, and will be responsible for placing
purchase and sell orders for the securities investments and for other related
transactions. Bartlett will provide services under this Contract in accordance
with each Series' investment objective, policies and restrictions as stated in
the Trust's currently effective registration statement under the Securities Act
of 1933, as amended, and the 1940 Act ("Registration Statement"), and any
amendments or supplements thereto.
(b) Bartlett agrees that, in placing orders with brokers
and dealers, it will attempt to obtain the best net result in terms of price
and execution; provided that, on behalf of any Series, Bartlett may, in its
discretion, purchase and sell portfolio securities through brokers who provide
the Series with research, analysis, advice and similar services, and Bartlett
may pay to those brokers, in return for brokerage and research services, a
higher commission than may be charged by other brokers, subject to Bartlett's
determining in good faith that such commission is reasonable in terms either of
the particular transaction or of the overall responsibility of Bartlett to such
Series and its other clients and that the total commissions paid by such Series
will be reasonable in relation to the benefits to the Series over the long
term. In no instance will portfolio securities be purchased from or sold to
Bartlett, or any affiliated person thereof, except in accordance with the
federal securities laws and the rules and regulations thereunder. Bartlett, or
any affiliated person thereof, may act as broker in connection with
transactions in portfolio securities on behalf of a Series, provided that such
actions are in compliance with the federal securities laws and the rules and
regulations thereunder, including Section 17(e) of the 1940 Act and Rule 17e-1
thereunder. Whenever Bartlett simultaneously places orders to purchase or sell
the same security on behalf of a Series and one or more other accounts advised
by Bartlett, the orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable to each account. The Trust
recognizes that in some cases this procedure may adversely affect the results
obtained for the Series.
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<PAGE> 3
(c) Bartlett will oversee the maintenance of all books and
records with respect to the securities transactions of each Series, and will
furnish the Board with such periodic and special reports as the Board
reasonably may request. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Bartlett hereby agrees that all records which it maintains
for the Trust are the property of the Trust, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Trust and which are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Trust any records which it
maintains for the Trust upon request by the Trust.
(d) Bartlett will oversee the computation of the net asset
value and the net income of each Series as described in the Registration
Statement or as more frequently requested by the Board.
(e) The Trust hereby authorizes Bartlett and any entity or
person associated with Bartlett which is a member of a national securities
exchange to effect any transaction on such exchange for the account of any
Series, which transaction is permitted by Section 11(a) of the Securities
Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and the Trust
hereby consents to the retention of compensation by Bartlett or any person or
entity associated with Bartlett for such transactions in accordance with Rule
11a2-2(T)(a)(2)(iv).
3. Duties as Administrator. Bartlett will administer the affairs
of the Trust and each Series subject to the supervision of the Board and the
following understandings:
(a) Bartlett will supervise all aspects of the operations
of the Trust and each Series, including the oversight of transfer agency,
custodial and accounting services, except as hereinafter set forth; provided,
however, that nothing herein contained shall be deemed to relieve or deprive
the Board of its responsibility for and control of the conduct of the affairs
of the Trust and each Series.
(b) Bartlett will provide the Trust and each Series
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<PAGE> 4
with such corporate, administrative and clerical personnel (including officers
of the Trust) and services as are reasonably deemed necessary or advisable by
the Board, including the maintenance of certain books and records of the Trust
and each Series.
(c) Bartlett will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the Trust's
Registration Statement, proxy material, tax returns and required reports to
each Series' shareholders and the Securities and Exchange Commission ("SEC")
and other appropriate federal or state regulatory authorities.
(d) Bartlett will provide the Trust and each Series with,
or obtain for it, adequate office space and all necessary office equipment and
services, including telephone service, heat, utilities and similar items.
(e) Bartlett will provide the Board on a regular basis
with economic and investment analyses and reports and make available to the
Board upon request any economic, statistical and investment services normally
available to institutional or other customers of Bartlett.
4. Further Duties. In all matters relating to the performance of
this Contract, Bartlett will act in conformity with the Declaration of Trust,
By-Laws and Registration Statement of the Trust and with the instructions and
directions of the Board and will comply with the requirements of the 1940 Act,
the rules thereunder and all other applicable federal and state laws and
regulations.
5. Delegation of Bartlett's Duties as Investment Adviser and
Administrator. With respect to any Series, Bartlett may enter into one or more
contracts ("Sub-Advisory or Sub-Administration Contract") with a sub-adviser or
sub-administrator in which Bartlett delegates to such sub-adviser or
sub-administrator any or all its duties specified in Paragraphs 2 and 3 of this
Contract, provided that each Sub-Advisory or Sub-Administration Contract
imposes on the sub-adviser or sub-administrator bound thereby all of the duties
and conditions to which Bartlett is subject by
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<PAGE> 5
Paragraphs 2, 3 and 4 of this Contract, and further provided that each
Sub-Advisory or Sub-Administration Contract meets all of the requirements of
the 1940 Act and rules thereunder.
6. Services Not Exclusive. The services furnished by Bartlett
hereunder are not to be deemed exclusive and Bartlett shall be free to furnish
similar services to others so long as its services under this Contract are not
impaired thereby. Nothing in this Contract shall limit or restrict the right of
any director, officer or employee of Bartlett, who may also be a trustee,
officer or employee of the Trust, to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.
7. Expenses.
(a) During the terms of this Contract, each Series will
bear all expenses not specifically assumed by Bartlett, incurred in its
operations and the offering of its shares.
(b) Expenses borne by each Series will include but not be
limited to the following (or each Series' proportionate share of the
following): (i) the cost (including brokerage commissions) of securities
purchased or sold by the Series and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of a Series by
Bartlett under this Contract; (iii) expenses of organizing the Trust and any
Series; (iv) filing fees and expenses relating to the registration and
qualification of a Series' shares under federal and/or state securities laws
and maintaining such registrations and qualifications; (v) fees and salaries
payable to the Trust's Trustees and officers who are not interested persons of
the Trust or Bartlett; (vi) all expenses incurred in connection with the
Trustees' services, including travel expenses; (vii) taxes (including any
income or franchise taxes) and governmental fees; (viii) costs of any
liability, uncollectible items of deposit and other insurance and fidelity
bonds; (ix) any costs, expenses or losses arising out of a liability of or
claim for damages or other relief asserted against the Trust or Series for
violation of any law; (x) legal, accounting and auditing expenses, including
legal
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<PAGE> 6
fees of special counsel for those Trustees of the Trust who are not interested
persons of the Trust; (xi) charges of custodians, transfer agents and other
agents; (xii) expenses of setting in type and printing prospectuses and
supplements thereto, statements of additional information and supplements
thereto, reports and proxy materials for existing shareholders; (xiii) costs of
mailing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials to existing
shareholders; (xiv) any extraordinary expenses (including fees and
disbursements of counsel, costs of actions, suits or proceedings to which the
Trust is a party and the expenses the Trust may incur as a result of its legal
obligation to provide indemnification to its officers, Trustees, agents and
shareholders) incurred by the Trust or a Series; (xv) fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; (xvi) costs of mailing and tabulating proxies
and costs of meetings of shareholders, the Board and any Committees thereof;
(xvii) the cost of investment company literature and other publications
provided by the Trust to its Trustees and officers; and (xviii) costs of
mailing, stationery and communications equipment.
(c) The Trust or a Series may pay directly any expense
incurred by it in its normal operations and, if any such payment is consented
to by Bartlett and acknowledged as otherwise payable by Bartlett pursuant to
this Contract, the Series may reduce the fee payable to Bartlett pursuant to
Paragraph 8 hereof by such amount. To the extent that such deductions exceed
the fee payable to Bartlett on any monthly payment date, such excess shall be
carried forward and deducted in the same manner from the fee payable on
succeeding monthly payment dates. Bartlett may also directly pay any expense
of the Trust or a Series if such payment is consented to by Bartlett and
acknowledged as otherwise payable by Bartlett pursuant to this Contract.
(d) Bartlett will assume the cost of any compensation for
services paid to the Trust and to those Trustees who are interested persons of
the Trust.
8. Compensation.
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<PAGE> 7
(a) For the services provided and the expenses assumed
pursuant to this Contract, with respect to a Series, the Trust will pay to
Bartlett a fee, computed daily and paid monthly, at the annual rate set forth
in Schedule A, together with a schedule showing the manner in which the fee was
computed.
(b) The fee shall be computed daily and paid monthly to
Bartlett on or before the last business day of the next succeeding calendar
month.
(c) If this Contract becomes effective or terminates before
the end of any month, the fee for the period from the effective date to the end
of the month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
9. Limitation of Liability of Bartlett. Bartlett shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
any Series or the Trust in connection with the matters to which this Contract
relates except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Contract. Any person,
even though also an officer, director, employee, or agent of Bartlett, who may
be or become an officer, Trustee, employee or agent of the Trust shall be
deemed, when rendering services to any Series or the Trust or acting with
respect to any business of such Series or the Trust, to be rendering such
service to or acting solely for the Series or the Trust and not as an officer,
director, employee or agent or one under the control or direction of Bartlett,
even though paid by Bartlett.
10. Limitation of Liability to Assets of Trust or Series. The
obligations of the Trust hereunder shall not be personally binding upon any of
the trustees, nominees, officers, agents or employees of the Trust, or the
shareholders of any Series to which this Contract relates, but shall bind only
the assets of the Trust or such Series as set forth in its Declaration of
Trust, as amended. Bartlett agrees that, in asserting any rights or claims
under this Contract, it shall look only to such assets in
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<PAGE> 8
settlement of any such right or claim. Notice is hereby provided that the
Trust's Declaration of Trust is on file with the Secretary of the Commonwealth
of Massachusetts. The execution and delivery of this Contract by an officer of
the Trust has been authorized by the trustees of the Trust and the shareholders
of each Series to which this Contract relates. Such authorization and
execution and delivery shall not be deemed to have been made by any trustee,
shareholder or officer individually or to impose any personal liability upon
them.
11. Duration and Termination.
(a) This Contract shall become effective upon the date
written above provided that, with respect to any Series to which this Contract
relates, this Contract shall not take effect unless it first has been approved
by a vote of a majority of those Trustees of the Trust who are not parties to
this Contract or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval and by a vote of the
holders of a majority of that Series' outstanding voting securities.
(b) Unless sooner terminated as provided herein, this
Contract shall continue in effect for two years from the above written date.
Thereafter, if not terminated, this Contract shall continue automatically for
successive periods of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of those
Trustees of the Trust who are not parties to this Contract or interested
persons of any such party, cast in person at a meeting called for the purpose
of voting on such approval and (ii) by the Board or with respect to any given
Series by vote of the holders of a majority of the outstanding voting
securities of such Series.
(c) Notwithstanding the foregoing, with respect to any
Series to which this Contract relates, this Contract may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of
the holders of a majority of the outstanding voting securities of such Series
on sixty days'
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<PAGE> 9
written notice to Bartlett or by Bartlett at any time, without the payment of
any penalty, on sixty days' written notice to the Trust. Termination of this
Contract with respect to any given Series shall in no way affect the continued
validity of this Contract or the performance thereunder with respect to any
other Series. This Contract will automatically terminate in the event of its
assignment.
12. Use of Name. The Trust and Bartlett acknowledge that all
rights to the name "Bartlett" belong to Bartlett 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 that Bartlett ceases to be the investment adviser to the Trust,
the Trust's right to use the name "Bartlett" shall automatically cease on the
thirtieth (30th) day following the termination of this Contract. The right to
use the name may also be withdrawn by Bartlett during the term of this Contract
upon thirty (30) days' written notice by Bartlett to the Trust. Nothing
contained herein shall impair or diminish in any respect Bartlett's right to
use the name "Bartlett" in the name of or in connection with any other business
enterprises with which Bartlett is or may become associated. There is no
charge to the Trust for the right to use this name.
13. Amendment of this Contract. No provision of this Contract may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Contract as to any
given Series shall be effective until approved by the Board, including a
majority of its independent trustees, cast in person at a meeting called for
the purpose of voting on such approval, and, if required by the 1940 Act, by
the vote of the holders of a majority of the outstanding voting securities of
the Series to which the amendment relates.
14. Governing Law. This Contract shall be construed in accordance
with the laws of the Commonwealth of Massachusetts and the 1940 Act. To the
extent that the applicable laws of the Commonwealth of Massachusetts conflict
with the applicable provisions of the 1940 Act, the latter shall control.
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<PAGE> 10
15. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be
affected thereby. This Contract shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Contract, the terms "majority of the outstanding voting securities,"
"interested person," "assignment," "broker," "dealer," "investment adviser,"
"national securities exchange," "net assets," "prospectus," "sale," "sell" and
"security" shall have the same meaning as such terms have in the 1940 Act,
subject to such exemption as may be granted by the Securities and Exchange
Commission by any rule, regulation or order. Where the effect of a requirement
of the 1940 Act reflected in any provision of this Contract is replaced by a
rule, regulation or order of the Securities and Exchange Commission, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: BARTLETT CAPITAL TRUST
/s/ THOMAS A. STEELE By: /s/ DALE H. RABINER
- ------------------------- -------------------------------------
Attest: BARTLETT & CO.
/s/ DALE H. RABINER By: /s/ THOMAS A. STEELE
- ------------------------- -------------------------------------
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<PAGE> 12
SCHEDULE A
Bartlett Europe Fund: The Trust shall pay Bartlett a fee, computed daily and
paid monthly, at the annual rate of 1.00% of Europe Fund's average daily net
assets, depending whether any fee waiver arrangements are in place for Europe
Fund.
For the period ending July 31, 1998, Bartlett agrees to waive a portion or all
of its fees to the extent that Europe Fund's total expenses for its Class A
shares exceeds 1.75% of the average daily net assets of such class.
Bartlett Basic Value Fund: The Trust shall pay Bartlett a fee, computed daily
and paid monthly, at the annual rate of 0.75% of Basic Value Fund's average
daily net assets, depending whether any fee waiver arrangements are in place
for Basic Value Fund.
For the period ending July 31, 1998, Bartlett agrees to waive a portion or all
of its fees to the extent that Basic Value Fund's total expenses for its Class
A shares exceeds 1.15% of the average daily net assets of such class.
Bartlett Value International Fund: The Trust shall pay Bartlett a fee,
computed daily and paid monthly, at the annual rate of 1.25% of Value
International Fund's average daily net assets, depending whether any fee waiver
arrangements are in place for Value International Fund.
For the period ending July 31, 1998, Bartlett agrees to waive a portion or all
of its fees to the extent that Value International Fund's total expenses for
its Class A shares exceeds 1.80% of the average daily net assets of such class.
- 12 -
<PAGE> 1
SUB-ADVISORY AGREEMENT
Agreement made as of July 18, 1997, between BARTLETT & CO.
("Bartlett"), an Ohio corporation, and LOMBARD ODIER INTERNATIONAL PORTFOLIO
MANAGEMENT LIMITED ("Sub-Adviser"), a corporation organized under the laws of
England and Wales (the "Agreement").
RECITALS
(1) Bartlett has entered into an Investment Management and
Administration Agreement dated July 18, 1997 ("Management Agreement"), with
Bartlett Capital Trust ("Trust"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
with respect to the Bartlett Europe Fund series of the Trust ("Fund"); and
(2) Bartlett wishes to retain the Sub-Adviser to furnish certain
investment advisory services to Bartlett and the Fund, and the Sub-Adviser is
willing to furnish those services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. Bartlett hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the Fund's assets for the period and on
the terms set forth in this Agreement. The Sub-Adviser accepts that appointment
and agrees to render the services herein set forth, for the compensation herein
provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision of and any guidelines adopted by
the Trust's Board of Trustees (the "Board") and by Bartlett, the Sub-Adviser
will provide a continuous investment program for the Fund's assets, including
investment research and management. The Sub-Adviser will determine from time to
time what investments will be purchased, retained or sold by the Fund. The
Sub-Adviser will be responsible for placing purchase and sell orders for the
securities investments and for other related transactions. The Sub-Adviser
will provide services under this Agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the
<PAGE> 2
Fund's currently effective registration statement under the Securities Act of
1933, as amended, and the 1940 Act ("Registration Statement"), and any
amendments or supplements thereto.
(b) The Sub-Adviser agrees that, in placing orders with brokers or
dealers, it will attempt to obtain the best net result in terms of price and
execution; provided that, on behalf of the Fund, the Sub-Adviser may, in its
discretion, purchase or sell portfolio securities through brokers who provide
the Fund with research, analysis, advice and similar services, and the
Sub-Adviser may pay to those brokers, in return for brokerage and research
services a higher commission than may be charged by other brokers, subject to
the Sub-Adviser's determining in good faith that such commission is reasonable
in terms either of the particular transaction or of the overall responsibility
of the Sub-Adviser to the Fund and its other clients and that the total
commissions paid by the Fund will be reasonable in relation to the benefits to
the Fund over the long term. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser or Bartlett, or any affiliated person
of either of them, except in accordance with the federal securities laws and
the rules and regulations thereunder. The Sub-Adviser, or any affiliated
person thereof or of Bartlett, may act as broker in connection with
transactions in portfolio securities on behalf of the Fund, provided that such
actions are in compliance with the federal securities laws and the rules and
regulations thereunder, including Section 17(e) of the 1940 Act and Rule 17e-1
thereunder. Whenever the Sub-Adviser simultaneously places orders to purchase
or sell the same security on behalf of the Fund and one or more other accounts
advised by the Sub-Adviser, the orders will be allocated as to price and amount
among all such accounts in a manner believed to be equitable by the Sub-Adviser
over time to each account. Bartlett recognizes that in some cases this
procedure may adversely affect the results obtained for the Fund.
(c) The Sub-Adviser will maintain all books and records related to
its activities hereunder required to be maintained by the Sub-Adviser pursuant
to the 1940 Act and the rules and regulations promulgated thereunder with
respect to transactions on behalf of the Fund, and will furnish the Trust and
Bartlett with such periodic and special reports as the Board or Bartlett
reasonably may request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act,
<PAGE> 3
the Sub-Adviser hereby agrees that all records which it maintains for the Fund
are the property of the Trust, agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records which it maintains for the Trust and
which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Trust any records which it
maintains for the Trust (or copies thereof) upon request by the Trust.
(d) At such times as shall be reasonably requested by the Board or
Bartlett, the Sub-Adviser will provide the Board and Bartlett with economic and
investment analyses and reports as well as quarterly reports setting forth the
Fund's performance and make available to the Board and Bartlett any economic,
statistical and investment services normally available to institutional or
other customers of the Sub-Adviser.
(e) In accordance with procedures adopted by the Board, as amended
from time to time, the Sub-Adviser is responsible for assisting in the fair
valuation of any illiquid Fund securities and will assist in providing
independent sources of market value for all other portfolio securities.
3. Further Duties. In all matters relating to the performance of
this Agreement, the Sub-Adviser will act in conformity with the Trust's
Declaration of Trust, By-Laws and currently effective Registration Statement
and any amendments or supplements thereto and with the written instructions and
directions of the Board and Bartlett and will comply with the requirements of
the 1940 Act, the Investment Advisers Act of 1940, as amended ("Advisers Act"),
the rules under each, and Subchapter M of the Internal Revenue Code as
applicable to regulated investment companies. In addition, the Sub-Adviser
will act in conformity with all other applicable federal and state laws and
regulations either as reflected in the Registration Statement or otherwise
provided in writing to the Sub-Adviser by Bartlett. Bartlett agrees to provide
to the Sub-Adviser copies of the Trust's Declaration of Trust, By-Laws,
Registration Statement, written instructions and directions of the Board and
Bartlett, and any amendments or supplements to any of these materials as soon
as practicable after such materials become available.
<PAGE> 4
4. Notice of Appointment. During the term of this Agreement,
the Sub-Adviser agrees to provide Bartlett and the Board with prior notice in
the event that the Sub-Adviser agrees to provide investment advice on a
discretionary basis for any other registered investment company investing
primarily in European equity securities.
5. Expenses. During the term of this Agreement, the Sub-Adviser
will bear all expenses incurred by it in connection with its investment
sub-advisory services under this Agreement.
6. Compensation.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, Bartlett, not the Fund, will pay to the
Sub-Adviser a fee, computed daily and payable monthly, as computed in the
manner set forth in Schedule A, together with a schedule showing the manner in
which the fee was computed.
(b) The fee shall be computed daily and payable monthly to the
Sub-Adviser on or before the fifteenth business day of the next succeeding
calendar month.
(c) If this Agreement becomes effective or terminates before the
end of any month, the fee for the period from the effective date to the end of
the month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
7. Limitation Of Liability. The Sub-Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund, the Trust or its shareholders or by Bartlett in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties under
this Agreement.
<PAGE> 5
8. Indemnification.
(a) The Sub-Adviser agrees to indemnify and hold Bartlett harmless
against any losses, expenses, claims, damages or liabilities (or actions or
proceedings in respect thereof, including attorneys' fees and costs of
settlement), to which Bartlett may become subject arising out of or based on
the breach by the Sub-Adviser of any provision of this Agreement other than a
breach caused in any way by Bartlett; provided, however, that the Sub-Adviser
shall not be liable under this paragraph in respect of any loss, expense,
claim, damage or liability to the extent that a court having jurisdiction shall
have determined by a final judgment, or independent counsel agreed upon by
Bartlett and the Sub-Adviser shall have concluded in a written opinion, that
such loss, expense, claim, damage or liability resulted primarily from
Bartlett's willful misfeasance, bad faith or gross negligence or by reason of
the reckless disregard by Bartlett of its duties. The foregoing
indemnification shall be in addition to any rights that Bartlett may have at
common law or otherwise. The Sub-Adviser's agreements in this paragraph shall,
upon the same terms and conditions, extend to and inure to the benefit of each
person who may be deemed to control Bartlett, be controlled by Bartlett or be
under common control with Bartlett and its affiliates, directors, officers,
employees and agents. The Sub-Adviser's agreements in this paragraph shall
also extend to any of Bartlett's successors or the successors of the
aforementioned affiliates, directors, officers, employees or agents.
(b) Bartlett agrees to indemnify and hold harmless the Sub-Adviser
against any losses, expenses, claims, damages or liabilities (or actions or
proceedings in respect thereof, including attorneys' fees and costs of
settlement), to which the Sub-Adviser may become subject arising out of or
based on the breach by Bartlett of any provision of this Agreement or the
Management Agreement other than a breach that was caused in any way by the
Sub-Adviser; provided, however, that Bartlett shall not be liable under this
paragraph in respect of any loss, expense, claim, damage or liability to the
extent that a court having jurisdiction shall have determined by a final
judgment or independent counsel agreed upon by Bartlett and the Sub-Adviser
<PAGE> 6
shall have concluded in a written opinion, that such loss, expense, claim,
damage or liability resulted primarily from the Sub-Adviser's willful
misfeasance, bad faith or gross negligence or by reason of the reckless
disregard by the Sub-Adviser of its duties. The foregoing indemnification
shall be in addition to any rights that the Sub-Adviser may have at common law
or otherwise. Bartlett's agreements in this paragraph shall, upon the same
terms and conditions, extend to and inure to the benefit of each person who may
be deemed to control the Sub-Adviser, be controlled by the Sub-Adviser or be
under common control with the Sub-Adviser and to each of the Sub-Adviser's and
each such person's respective affiliate, directors, officers, employees and
agents. Bartlett's agreements in this paragraph shall also extend to any of
the Sub-Adviser's successors or the successors of the aforementioned
affiliates, directors, officers, employees or agents.
(c) Promptly after receipt by a party indemnified under Paragraph 8(a)
or 8(b) above of notice of the commencement of any action, proceeding or
investigation for which indemnification will be sought, such indemnified party
shall promptly notify the indemnifying party in writing; but the omission to so
notify the indemnifying party shall not relieve it from any liability which it
may otherwise have to any indemnified party unless such omission results in
actual material prejudice to the indemnifying party. In case any action or
proceeding shall be brought against any indemnified party, and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, individually or jointly with any other
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of any
action or proceeding, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. If the indemnifying party does not elect to assume the
defense of any action or proceeding, the indemnifying party on a monthly basis
shall reimburse the indemnified party for the legal fees and expenses incurred
by the indemnified party for continuing its defense thereof. Regardless of
whether or not the indemnifying
<PAGE> 7
party shall have assumed the defense of any action or proceeding, the
indemnified party shall not settle or compromise the action or proceeding
without the prior written consent of the indemnifying party.
9. Representations of Sub-Adviser. The Sub-Adviser represents,
warrants and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long as
this Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will seek to continue to meet for so long as this Agreement
remains in effect, any other applicable federal or state requirements, or the
applicable requirements of any regulatory or industry self-regulatory agency,
necessary to be met in order to perform the services contemplated by this
Agreement; (iv) has the authority to enter into and perform the services
contemplated by this Agreement; and (v) will promptly notify Bartlett of the
occurrence of any event that would disqualify the Sub-Adviser from serving as
an investment adviser of an investment company pursuant to Section 9(a) of the
1940 Act or otherwise.
(b) The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and will provide
Bartlett and the Board with a copy of that code of ethics, together with
evidence of its adoption. Within fifteen days of the end of the last calendar
quarter of each year that this Agreement is in effect, a managing director of
the Sub-Adviser shall certify to Bartlett that the Sub-Adviser has complied
with the requirements of Rule 17j-1 during the previous year and that there has
been no violation of the Sub-Adviser's code of ethics or, if such a violation
has occurred, that appropriate action was taken in response to such violation.
Upon the written request of Bartlett, the Sub-Adviser shall permit Bartlett,
its employees or its agents to examine the reports required to be made to the
Sub-Adviser by Rule 17j-1(c)(1) and all other records relevant to the
Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided Bartlett and the Trust with a
copy of its Form ADV as most recently filed with the Securities and
<PAGE> 8
Exchange Commission ("SEC") and promptly will furnish a copy of all amendments
to Bartlett and the Trust at least annually.
(d) The Sub-Adviser will notify Bartlett of any change of control
of the Sub-Adviser, including any change of its general partners or 25%
shareholders, as applicable, and any changes in the key personnel of the
Sub-Adviser, in each case prior to or at the time of such change.
10. Representations and Warranties of Bartlett. Bartlett
represents, warrants and agrees as follows:
(a) Bartlett (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act from
performing the services contemplated by the Management Agreement; (iii) has
met, and will seek to continue to meet for so long as this Agreement remains in
effect, any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by the Management
Agreement; (iv) has the authority to enter into and perform the services
contemplated by the Management Agreement; and (v) will promptly notify the
Sub-Adviser of the occurrence of any event that would disqualify Bartlett from
serving as an investment adviser of an investment company pursuant to Section
9(a) of the 1940 Act or otherwise.
(b) Bartlett agrees that it will notify the Sub-Adviser, to the extent
possible, within a reasonable period of time prior to any termination of this
Agreement by Bartlett pursuant to Section 11(c) (including any termination by
assignment resulting from a foreseeable change in control of Bartlett that is a
matter of public information), and that it will notify the Sub-Adviser promptly
following any other termination of this Agreement pursuant to Section 11(c).
11. Duration and Termination.
(a) This Agreement shall become effective upon the date first
above written, provided that this Agreement shall not take effect
<PAGE> 9
unless it has first been approved (i) by a vote of a majority of those trustees
of the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by a vote of the holders of a majority of the
outstanding voting securities of the Fund.
(b) Unless sooner terminated as provided herein, this Agreement
shall continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement will continue automatically for
successive periods of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of those
trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) by the Board or by a vote of the holders
of a majority of the outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by vote of the
Board or by a vote of the holders of a majority of the outstanding voting
securities of the Fund on 60 days' written notice to the Sub-Adviser. This
Agreement may also be terminated, without the payment of any penalty, by
Bartlett: (i) upon 120 days' written notice to the Sub-Adviser; (ii) upon
material breach by the Sub-Adviser of any of the representations and warranties
set forth in Paragraph 9 of this Agreement; or (iii) if the Sub-Adviser becomes
unable to discharge its duties and obligations under this Agreement, including
circumstances such as financial insolvency of the Sub-Adviser or other
circumstances that could adversely affect the Fund. The Sub-Adviser may
terminate this Agreement at any time, without the payment of any penalty, on
120 days' written notice to Bartlett. This Agreement will terminate
automatically in the event of its assignment or upon termination of the
Management Agreement.
12. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of this
Agreement shall be effective until
<PAGE> 10
approved by the Board, including a majority of its independent trustees, cast
in person at a meeting called for the purpose of voting on such approval, and,
if required by the 1940 Act, by the vote of the holders of a majority of the
Fund's outstanding voting securities.
13. Governing Law. This Agreement shall be construed in
accordance with the 1940 Act and the laws of the Commonwealth of Massachusetts.
To the extent that the applicable laws of the Commonwealth of Massachusetts
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
14. Limitation of Liability of the Trustees and Shareholders of
the Fund. The Trustees of the Trust and the shareholders of the Fund shall not
be liable for any obligations of the Fund related to this Contract, and the
Sub-Adviser agrees that, in asserting any rights or claims under this Agreement
against the Fund, it shall look only to the assets and property of the Fund in
settlement of such right or claim, and not to such Trustees or shareholders.
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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "net assets," "sale," "sell" and "security" shall have the same
meaning as such terms have in the 1940 Act, subject to such exemption as may be
granted by the SEC by any rule, regulation or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order. This Agreement may
be signed in counterpart.
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
Attest: BARTLETT & CO.
By: /s/ DALE H. RABINER
-----------------------------
Name: Dale H. Rabiner
Title: Managing Director
Attest: LOMBARD ODIER INTERNATIONAL PORTFOLIO
MANAGEMENT LIMITED
By: /s/ RONNIE ARMIST
-----------------------------
Name: Ronnie Armist
Title: Director
<PAGE> 12
SCHEDULE A
<TABLE>
<CAPTION>
FUND ANNUAL FEE RATE
---- ---------------
<S> <C>
Bartlett Europe Fund 60% of the fees actually paid to Bartlett under the
Management Agreement with the Trust on behalf of
Bartlett Europe Fund ("Europe Fund").
(The Sub-Adviser acknowledges that, for the period
ending July 31, 1998, Bartlett & Co. has agreed to
waive some or all of its fees and/or to reimburse
other Europe Fund expenses under the Management
Agreement with the Trust to the extent that Europe
Fund's total expenses for its Class A shares exceed
1.75% of the average daily net assets of such
class.)
</TABLE>
<PAGE> 1
BARTLETT CAPITAL TRUST
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, made this 18th day of July, 1997, by and
between Bartlett Capital Trust, a Massachusetts business trust ("Trust"), and
BFP Financial Partners, Inc., a Maryland corporation ("Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as an open-end investment company under the Investment Company Act
of 1940, as amended (the "1940 Act"), and currently offers three distinct
series of shares of beneficial interest ("Series"), which correspond to
distinct portfolios designated as the Bartlett Basic Value Fund, Bartlett
Europe Fund and Bartlett Value International Fund, respectively;
WHEREAS, the Trust's Board of Trustees ("Board") has established three
classes of shares of beneficial interest of each of the above-referenced
Series, designated as Class A, Class C and Class Y shares;
WHEREAS, each Series has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the 1940 for its Class A and Class C shares (each a "Plan" and
collectively, the "Plans);
WHEREAS, the Trust wishes to retain the Distributor as the principal
distributor in connection with the offering and sale of the Class A, Class C
and Class Y shares of beneficial interest of each Series, and such other Series
as may hereafter be designated by the Board (the "Shares"), and to furnish
certain other services to the Trust as specified in this Agreement;
WHEREAS, this Agreement has been approved by separate votes of the
Board and of certain disinterested trustees in conformity with Section 15 of,
and paragraph (b)(2) of Rule 12b-1 under, the 1940 Act; and
- 1 -
<PAGE> 2
WHEREAS, the Distributor is willing and able to act as principal
distributor and to furnish such services on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. Appointment. The Trust hereby appoints the Distributor as
principal distributor in connection with the offering and sale of the Shares on
the terms and for the period set forth in this Agreement. The Distributor
hereby accepts such appointment and agrees to act hereunder. It is understood,
however, that this appointment does not preclude sales of the Shares directly
through the Trust's transfer agent in the manner set forth in the Registration
Statement. As used in this Agreement, the term "Registration Statement" shall
mean the registration statement most recently filed by the Trust with the
Securities and Exchange Commission and effective under the Securities Act of
1933 ("1933 Act") and the 1940 Act, as such Registration Statement is amended
by any amendments thereto at the time in effect, and the terms "Prospectus" and
"Statement of Additional Information" shall mean, respectively, the form of
prospectus and statement of additional information with respect to the Series
filed by the Trust as part of the Registration Statement, or as they may be
amended from time to time.
2. Services and Duties of the Distributor.
(a) The Distributor, subject to applicable federal and state
laws and the Declaration of Trust and By-Laws of the Trust, agrees to sell the
Shares on a best efforts basis from time to time during the term of this
Agreement as agent for the Trust and upon the terms described in the
Registration Statement.
- 2 -
<PAGE> 3
(b) Upon the later of the date of this Agreement or the
initial offering of the Shares to the public of a Series, the Distributor will
hold itself available to receive purchase orders, satisfactory to the
Distributor, for Shares of that Series and will accept such orders on behalf of
the Trust as of the time of receipt of such orders and promptly transmit such
orders as are accepted to the Trust's transfer agent. Purchase orders shall be
deemed effective at the time and in the manner set forth in the Registration
Statement.
(c) The Distributor in its discretion may enter into
agreements to sell Shares to such registered and qualified retail dealers,
including but not limited to Legg Mason Wood Walker, Inc. ("Legg Mason"), as it
may select. In making agreements with such dealers, the Distributor shall act
only as principal and not as agent for the Trust.
(d) The offering price of the Shares of each Series shall
be the net asset value per Share as next determined by the Trust following
receipt of an order at the Distributor's principal office plus the applicable
initial sales charge, if any, computed as set forth in the Registration
Statement. The Trust shall promptly furnish the Distributor with a statement
of each computation of net asset value.
(e) The Distributor shall not be obligated to sell any
certain number of Shares.
(f) To facilitate redemption of Shares by shareholders
directly or through dealers, the Distributor is authorized but not required on
behalf of the Trust to repurchase Shares presented to it by shareholders and
dealers at the price determined in accordance with, and in the manner set forth
in, the Registration Statement. Such price shall reflect the subtraction of
the contingent deferred sales charge, if any, computed in accordance with and
in the manner set forth in the Registration Statement. The Distributor will
receive no commission or other remuneration for repurchasing Shares. At the
end of each business day, the Distributor shall notify by electronic means or
in writing, the Trust and Boston Financial Data Services, Inc., the Trust's
transfer agent of the orders for repurchase of Shares received by the
Distributor since the last
- 3 -
<PAGE> 4
such report, the amount to be paid for such Shares, and the identity of the
shareholders or dealers offering Shares for repurchase. Upon such notice, the
Trust shall pay the Distributor such amounts as are required by the Distributor
for the repurchase of such Shares in cash or in the form of a credit against
monies due the Trust from the Distributor as proceeds from the sale of Shares.
The Trust reserves the right to suspend such repurchase right upon written
notice to the Distributor. The Distributor further agrees to act as agent for
the Trust to receive and transmit promptly to the Trust's transfer agent
shareholder and dealer requests for redemption of Shares.
(g) The Distributor shall provide ongoing shareholder services,
which include responding to shareholder inquiries, providing shareholders with
information on their investments in the Shares and any other services now or
hereafter deemed to be appropriate subjects for the payment of "service fees"
under Section 26(d) of the National Association of Securities Dealers, Inc.
("NASD") Rules of Fair Practice (collectively, "service activities"). "Service
activities" do not include transfer agency-related and other services for which
the Distributor may receive compensation from the Trust.
(h) The Distributor shall have the right to use any list of
shareholders of the Trust or any other list of investors which it obtains in
connection with its provision of services under this Agreement; provided,
however, that the Distributor shall not sell or knowingly provide such list or
lists to any unaffiliated person.
3. Authorization to Enter into Dealer Agreements and to Delegate
Duties as Distributor. With respect to the Shares of any or all Series, the
Distributor may enter into a dealer agreement with Legg Mason or any other
registered and qualified dealer with respect to sales of the Shares or the
provision of service activities. In a separate Agreement or as part of any
such dealer agreement, the Distributor also may delegate to Legg Mason or
another registered and qualified dealer ("sub-distributor") any or all of its
duties specified in this Agreement, provided that such separate Agreement or
dealer agreement imposes on the sub-distributor bound thereby all applicable
duties and conditions to which the Distributor is
- 4 -
<PAGE> 5
subject under this Agreement, and further provided that such separate
Agreements or dealer agreements meet all requirements of the 1940 Act and rules
thereunder.
4. Services Not Exclusive. The services furnished by the
Distributor hereunder are not to be deemed exclusive and the Distributor shall
be free to furnish similar services to others so long as its services under
this Agreement are not impaired thereby. Nothing in this Agreement shall limit
or restrict the right of any director, officer or employee of the Distributor,
who may also be a trustee, officer or employee of the Trust, to engage in any
other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar or a
dissimilar nature.
5. Compensation.
(a) As compensation for its service activities under this
Agreement with respect to the Class A and Class C Shares, the Distributor shall
receive from the Trust a service fee at the rate and under the terms and
conditions of the Plan or Plans adopted by the Trust with respect to the Class
A Shares and Class C Shares, respectively, of the Series, as such Plan or Plans
are amended from time to time, and subject to any further limitations on such
fee as the Board may impose.
(b) As compensation for its activities under this Agreement
with respect to the distribution of the Class A Shares, the Distributor shall
retain the initial sales charge, if any, on purchases of Class A Shares as set
forth in the Registration Statement. The Distributor is authorized to collect
the gross proceeds derived from the sale of the Class A Shares, remit the net
asset value thereof to the Trust upon receipt of the proceeds and retain the
initial sales charge, if any.
(c) As additional compensation for its activities under this
Agreement with respect to the distribution of the Class A and Class C Shares,
the Distributor shall receive all contingent deferred sales charges imposed on
redemptions of Class A or Class C Shares, respectively, of each Series, if any.
Whether and at what rate a contingent deferred sales charge will be imposed
with respect to a redemption shall be determined in
- 5 -
<PAGE> 6
accordance with, and in the manner set forth in, the Registration Statement.
(d) As compensation for its activities under this Agreement
with respect to the distribution of the Class C Shares, the Distributor shall
receive from the Trust a distribution fee at the rate and under the terms and
conditions of the Plan or Plans adopted by the Trust with respect to the Class
C Shares of the Series, as such Plan or Plans are amended from time to time,
and subject to any further limitations on such fee as the Board may impose.
(e) The Distributor may reallow any or all of the initial
sales charges, contingent deferred sales charges, service or distribution fees
which it is paid under this Agreement to such dealers as it may from time to
time determine; provided, however, that the Distributor may not reallow to any
dealer for service activities an amount in excess of .25% of the average
annual net asset value of the Shares with respect to which said dealer provides
service activities.
6. Duties of the Trust.
(a) The Trust reserves the right at any time to withdraw
offering Shares of any or all Series (and of any or all Classes thereof) by
written notice to the Distributor at its principal office.
(b) The Trust shall determine in its sole discretion whether
certificates shall be issued with respect to the Shares, and there is no
current intention that such certificates shall be issued. If the Trust
determines that certificates shall be issued, the Trust will not cause
certificates representing Shares to be issued unless so requested by
shareholders. If such request is transmitted by the Distributor, the Trust
will cause certificates evidencing Shares to be issued in such names and
denominations as the Distributor shall from time to time direct.
- 6 -
<PAGE> 7
(c) The Trust shall keep the Distributor fully informed
of its affairs and shall make available to the Distributor copies of all
information, financial statements, and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares,
including, without limitation, certified copies of any financial statements
prepared for the Trust by its independent public accountants and such
reasonable number of copies of the most current prospectus, statement of
additional information, and annual and interim reports of any Series as the
Distributor may request, and the Trust shall cooperate fully in the efforts of
the Distributor to sell and arrange for the sale of the Shares of the Series
and in the performance of the Distributor under this Agreement.
(d) The Trust shall take, from time to time, all
necessary action, including payment of the related filing fee, as may be
necessary to register the Shares under the 1933 Act to the end that there will
be available for sale such number of Shares as the Distributor may be expected
to sell. The Trust agrees to file, from time to time, such amendments,
reports, and other documents as may be necessary in order that there will be no
untrue statement of a material fact in the Registration Statement, nor any
omission of a material fact which omission would make the statements therein
misleading.
(e) The Trust shall use its best efforts to qualify and
maintain the qualification of an appropriate number of Shares of each Series
for sale under the securities laws of such states or other jurisdictions as the
Distributor and the Trust may approve, and, if necessary or appropriate in
connection therewith, to qualify and maintain the qualification of the Trust as
a broker or dealer in such jurisdictions; provided that the Trust shall not be
required to amend its Declaration of Trust or By-Laws to comply with the laws
of any jurisdiction, to maintain an office in any jurisdiction, to change the
terms of the offering of the Shares in any jurisdiction from the terms set
forth in its Registration Statement, to qualify as a foreign corporation in any
jurisdiction, or to consent to service of process in any jurisdiction other
than with respect to claims arising out of the offering of the Shares. The
Distributor shall furnish such information and other material relating to its
affairs and activ-
- 7 -
<PAGE> 8
ities as may be required by the Trust in connection with such qualifications.
7. Expenses of the Trust. The Trust shall bear all costs and
expenses of registering the Shares with the Securities and Exchange Commission
and state and other regulatory bodies, and shall assume expenses related to
communications with shareholders of each Series, including (i) fees and
disbursements of its counsel and independent public accountants; (ii) the
preparation, filing and printing of registration statements and/or prospectuses
or statements of additional information required under the federal securities
laws; (iii) the preparation and mailing of annual and interim reports,
prospectuses, statements of additional information and proxy materials to
shareholders; and (iv) the qualifications of Shares for sale and of the Trust
as a broker or dealer under the securities laws of such jurisdictions as shall
be selected by the Trust and the Distributor pursuant to Paragraph 6(e) hereof,
and the costs and expenses payable to each such jurisdiction for continuing
qualification therein.
8. Expenses of the Distributor. The Distributor shall bear all
costs and expenses of (i) preparing, printing and distributing any materials
not prepared by the Trust and other materials used by the Distributor in
connection with the sale of Shares under this Agreement, including the
additional cost of printing copies of prospectuses, statements of additional
information, and annual and interim shareholder reports other than copies
thereof required for distribution to existing shareholders or for filing with
any federal or state securities authorities; (ii) any expenses of advertising
incurred by the Distributor in connection with such offering; (iii) the
expenses of registration or qualification of the Distributor as a broker or
dealer under federal or state laws and the expenses of continuing such
registration or qualification; and (iv) all compensation paid to the
Distributor' employees and others for selling Shares, and all expenses of the
Distributor, its employees and others who engage in or support the sale of
Shares as may be incurred in connection with their sales efforts.
9. Indemnification.
- 8 -
<PAGE> 9
(a) The Trust agrees to indemnify, defend and hold the
Distributor, its officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its officers, directors or any such controlling person may incur
under the 1933 Act, or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in the
Registration Statement or arising out of or based upon any alleged omission to
state a material fact required to be stated in the Registration Statement or
necessary to make the statements therein not misleading, except insofar as such
claims, demands, liabilities or expenses arise out of or are based upon any
such untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with information furnished in writing by the
Distributor to the Trust for use in the Registration Statement; provided,
however, that this indemnity agreement shall not inure to the benefit of any
person who is also an officer or trustee of the Trust or who controls the Trust
within the meaning of Section 15 of the 1933 Act, unless a court of competent
jurisdiction shall determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy as expressed in
the 1933 Act; and further provided, that in no event shall anything contained
herein be so construed as to protect the Distributor against any liability to
the Trust or to the shareholders of any Series to which the Distributor would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations under this Agreement. The Trust shall not be
liable to the Distributor under this indemnity agreement with respect to any
claim made against the Distributor or any person indemnified unless the
Distributor or other such person shall have notified the Trust in writing of
the claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Distributor or such other person (or after the Distributor or
the person shall have received notice of service on any designated agent).
However, failure to notify the Trust of any claim shall not
- 9 -
<PAGE> 10
relieve the Trust from any liability which it may have to the Distributor or
any person against whom such action is brought otherwise than on account of
this indemnity agreement. The Trust shall be entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any claims subject to this indemnity agreement. If the
Trust elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the Trust and satisfactory to indemnified
defendants in the suit whose approval shall not be unreasonably withheld. In
the event that the Trust elects to assume the defense of any suit and retain
counsel, the indemnified defendants shall bear the fees and expenses of any
additional counsel retained by them. If the Trust does not elect to assume the
defense of a suit, it will reimburse the indemnified defendants for the
reasonable fees and expenses of any counsel retained by the indemnified
defendants. The Trust agrees to notify the Distributor promptly of the
commencement of any litigation or proceedings against it or any of its officers
or trustees in connection with the issuance or sale of any of its Shares.
(b) The Distributor agrees to indemnify, defend, and hold
the Trust, its officers and trustees and any person who controls the Trust
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending against such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which the Trust, its
trustees or officers, or any such controlling person may incur under the 1933
Act or under common law or otherwise arising out of or based upon any alleged
untrue statement of a material fact contained in information furnished in
writing by the Distributor to the Trust for use in the Registration Statement,
arising out of or based upon any alleged omission to state a material fact in
connection with such information required to be stated in the Registration
Statement necessary to make such information not misleading, or arising out of
any agreement between the Distributor and any retail dealer, or arising out of
any supplemental sales literature or advertising used by the Distributor in
connection with its duties under this Agreement. The Distributor shall be
entitled to participate, at its own expense, in the defense or, if it so
elects, to assume the
- 10 -
<PAGE> 11
defense of any suit brought to enforce the claim, but if the Distributor elects
to assume the defense, the defense shall be conducted by counsel chosen by the
Distributor and satisfactory to the indemnified defendants whose approval shall
not be unreasonably withheld. In the event that the Distributor elects to
assume the defense of any suit and retain counsel, the defendants in the suit
shall bear the fees and expenses of any additional counsel retained by them.
If the Distributor does not elect to assume the defense of any suit, it will
reimburse the indemnified defendants in the suit for the reasonable fees and
expenses of any counsel retained by them.
10. Limitation of Liability of the Trustees and Shareholders of
the Trust. The obligations of the Trust hereunder shall not be personally
binding upon any of the trustees, nominees, officers, agents or employees of
the Trust, or the shareholders of any Series, but shall bind only the assets of
the Trust or such Series as set forth in the Trust's Declaration of Trust, as
amended. The Distributor agrees that, in asserting any rights or claims under
this Agreement, it shall look only to such assets in settlement of any such
right or claim. Notice is hereby provided that the Trust's Declaration of
Trust is on file with the Secretary of the Commonwealth of Massachusetts. The
execution and delivery of this Agreement by an officer of the Trust has been
authorized by the trustees of the Trust. Such authorization and execution and
delivery shall not be deemed to have been made by any trustee, shareholder or
officer individually or to impose any personal liability upon them.
11. Services Provided to the Trust by Employees of the
Distributor. Any person, even though also an officer, director, employee or
agent of the Distributor, who may be or become an officer, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting in any business of the Trust, to be rendering such services to or acting
solely for the Trust and not as an officer, director, employee or agent or one
under the control or direction of the Distributor even though paid by the
Distributor.
12. Quarterly Reports to Board. The Distributor shall prepare
reports for the Board on a quarterly basis showing such
- 11 -
<PAGE> 12
information concerning expenditures related to this Agreement as from time to
time shall be reasonably requested by the Board.
13. Duration and Termination.
(a) This Agreement shall become effective upon the date
hereabove written, provided that, with respect to any Series, this Agreement
shall not take effect unless such action has first been approved by vote of a
majority of the Board and by vote of a majority of those trustees of the Trust
who are not interested persons of the Trust, and have no direct or indirect
financial interest in the operation of the Plan relating to the Series or in
any agreements related thereto (all such trustees collectively being referred
to herein as the "Independent Trustees") cast in person at a meeting called for
the purpose of voting on such action.
(b) Notwithstanding the foregoing, with respect to any
Series, this Agreement may be terminated at any time, without the payment of
any penalty, by vote of the Board, by vote of a majority of the Independent
Trustees or by vote of a majority of the outstanding voting securities of the
Shares of such Series on sixty days' written notice to the Distributor or by
the Distributor at any time, without the payment of any penalty, on sixty days'
written notice to the Trust or such Series. This Agreement will automatically
terminate in the event of its assignment.
(c) Termination of this Agreement with respect to any
given Series shall in no way affect the continued validity of this Agreement or
the performance thereunder with respect to any other Series.
14. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
15. Governing Law. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Massachusetts and the 1940 Act. To the
extent that the applicable laws of the
- 12 -
<PAGE> 13
Commonwealth of Massachusetts conflict with the applicable provisions of the
l940 Act, the latter shall control.
16. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient upon receipt in writing at
the other party's principal offices.
17. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the l940 Act.
- 13 -
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: BARTLETT CAPITAL TRUST
By: By:
----------------------- ---------------------------------
Attest: BFP FINANCIAL PARTNERS, INC.
By: By:
----------------------- ---------------------------------
- 14 -
<PAGE> 1
BROWN, CUMMINS & BROWN CO., L.P.A.
ATTORNEYS AND COUNSELORS AT LAW
3500 CAREW TOWER
J.W. BROWN (1911-1995) 441 VINE STREET
JAMES R. CUMMINS CINCINNATI, OHIO 45202
ROBERT S BROWN TELEPHONE (513) 381-2121
DONALD S. MENDELSOHN TELECOPIER (513) 381-2125 OF COUNSEL
LYNNE SKILKEN GILBERT BETTMAN
AMY G. APPLEGATE
MELANIE S. CORWIN
JOANN M. STRASSER
July 18, 1997
Bartlett Capital
36 East Fourth Street
Cincinnati, Ohio 45202-3896
Gentlemen:
This letter is in response to your request for our opinion in
connection with the filing of the Post-Effective Amendment No. 24 to the
Registration Statement of Bartlett Capital Trust.
We have examined a copy of the Trust's Amended and Restated Agreement
and Declaration of Trust and the amendment thereto, the Trust's By-Laws and
amendments thereto, the Trust's record of the various actions by the Trustees
thereof, and all such agreements, certificates of public officials,
certificates of officers and representatives of the Trust and others, and such
other documents, papers, statutes and authorities as we deem necessary to form
the basis of the opinion hereinafter expressed. We have assumed the
genuineness of the signatures and the conformity to original documents of the
copies of such documents supplied to us as original or photstat copies.
Insofar as the opinions contained herein involve matters of laws of
the Commonwealth of Massachusetts, they are based solely on the opinion of
Brown, Rudnick, Freed & Gesmer, a copy of which is attached hereto.
Based upon the foregoing, we are of the opinion that, the shares of
each series of the Trust, which are registered pursuant to the Amendment, if
issued in accordance with the Prospectus and Statement of Additional
Information of the Trust, will be legally issued, fully paid and
non-assessable.
We herewith give you our permission to file this opinion with the
Securities and Exchange Commission as an exhibit to the Post-Effective
Amendment No. 24 referred to above.
Very truly yours,
BROWN, CUMMINS & BROWN CO., L.P.A.
BCB:tms
<PAGE> 2
Securities and Exchange Commission
July 18, 1997
Page 2
July 18, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
RE: Bartlett Capital Trust
Post-Effective Amendment No. 24
Gentlemen:
We have been requested to render an opinion in connection with the
filing by Bartlett Capital Trust (the "Trust") of Post-Effective Amendment No.
24 (the "Amendment") to the Trust's Registration Statement on Form N-1A.
We invite your attention to the fact that we have been retained as
special counsel to the Trust for the purpose of advising the Trust on
Massachusetts law and do not represent it generally.
In connection with this opinion, we have examined (i) a copy of the
Amended and Restated Agreement and Declaration of Trust dated July 15, 1997, as
amended by Amendment No. 1 dated July 15, 1997, (ii) the Trust's By-laws, as
amended through July 13, 1984, (iii) a certificate of the secretary of the
Trust as to the absence of changes thereto, and (iv) a certificate of good
standing of the Trust dated July 17, 1997 from the Secretary of the
Commonwealth of Massachusetts.
For purposes of this opinion, we have assumed (i) the legal capacity
of each natural person, (ii) the genuineness of each signature on and the
completeness of each document submitted to us as
<PAGE> 3
Securities and Exchange Commission
July 18, 1997
Page 2
an original, (iii) the conformity to the original of each document submitted to
us as a copy, and (iv) the authenticity of the original of each document
submitted to us as a copy and (v) that all official public records searched are
accurate and complete.
Based upon and subject to the foregoing, we are of the opinion that
the shares of each series of the Trust being registered pursuant to the
Amendment, if sold in accordance with the terms of the Trust's Prospectus and
Statement of Additional Information under the Securities Act of 1933 in effect
at the time of sale for the applicable series, will be legally issued, fully
paid and non-assessable by the Trust.
This opinion may be relied upon by Brown, Cummins & Brown Co., L.P.A.
in rendering an opinion on the subject matter hereof. We hereby consent to the
filing of this opinion with the Securities and Exchange Commission as an
exhibit to the Amendment.
Very truly yours,
BROWN, RUDNICK, FREED & GESMER
By: Brown, Rudnick, Freed &
Gesmer, P.C., a partner
By: /s/ David H. Murphree
---------------------------
David H. Murphree, duly
authorized
DHM/SRL/clm
-2-
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Post-Effective Amendment No. 24 of our report dated April 30,
1997 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
July 17, 1997
<PAGE> 1
[COOPERS & LYBRAND L.L.P. LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the Post-Effective Amendment No. 24 to
the Registration Statement on Form N-1A (File No. 2-80648) of Bartlett Capital
Trust of our report dated February 20, 1997, on our audit of the financial
statements and financial highlights of Worlwide Value Fund, Inc., which report
is included in the Annual Report to Shareholders for the year ended December
31, 1996, which is incorporated by reference in the Registration Statement. We
also consent to the reference to our firm under the caption "Financial
Highlights" in the Prospectus and "Independent Accountants" in the Statement of
Additional Information.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
July 17, 1997
<PAGE> 1
April 25, 1983
Midwest Group Capital Trust
522 Dixie Terminal Building
Cincinnati, Ohio 45202
Gentlemen:
The undersigned, having purchased 5,000 shares of the Bartlett Basic
Value Fund of Midwest Group Capital Trust on April 25, 1983, does hereby
represent that (1) such purchase was for investment purposes and (2) the
undersigned has no present intention of redeeming or selling said shares.
MIDWEST ADVISORY SERVICES, INC.
By: /s/ Robert H. Leshner
Robert H. Leshner, President
<PAGE> 2
April 25, 1983
Midwest Group Capital Trust
522 Dixie Terminal Building
Cincinnati, Ohio 45202
Gentlemen:
The undersigned, having purchased 5,000 shares of the Bartlett Basic
Value Fund of Midwest Group Capital Trust on April 25, 1983, does hereby
represent that (1) such purchase was for investment purposes and (2) the
undersigned has no present intention of redeeming or selling said shares.
BARTLETT & CO.
By: /s/ James B. Reynolds
Partner
<PAGE> 1
BARTLETT CAPITAL TRUST - CLASS A SHARES
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
UNDER THE INVESTMENT COMPANY ACT OF 1940
WHEREAS, Bartlett Capital Trust (the "Trust") is an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"), and has offered, and intends to continue
offering, distinct series of shares of beneficial interest ("Series") for
public sale, each corresponding to a distinct portfolio;
WHEREAS, the Trust has registered the offering of its shares of
beneficial interest under a Registration Statement filed with the Securities
and Exchange Commission and that Registration Statement is in effect as of the
date hereof;
WHEREAS, the Trust's Board of Trustees have established the Series
known as: Bartlett Value International Fund, Bartlett Basic Value Fund, and
Bartlett Europe Fund (each a "Fund" and collectively the "Funds");
WHEREAS, the Trust desires to adopt a Plan of Distribution pursuant
to Rule 12b-1 under the 1940 Act with respect to the Class A shares of the
Funds and of such other Series as may hereafter be designated by the Trust's
Board of Trustees ("Board"); and
WHEREAS, the Trust has entered into a Distribution Contract with BFP
Financial Partners, Inc. (the "Distributor") pursuant to which the Distributor
has agreed to serve as the principal underwriter and distributor of the Class A
shares of the Funds;
NOW, THEREFORE, the Trust hereby adopts this Distribution Plan (the
"Plan") with respect to the Class A shares of each Fund in accordance with Rule
12b-1 under the 1940 Act and on the following terms and conditions:
1. A. Each Fund is authorized to pay the Distributor as
compensation for the Distributor's services as principal underwriter of the
Fund's Class A shares, a service fee at the
<PAGE> 2
rate of 0.25% on an annualized basis of the average daily net assets of the
Fund's Class A shares, such fee to be calculated and accrued daily and paid
monthly or at such other intervals as the Board shall determine.
B. Any Fund may pay a service fee to the Distributor at
a lesser rate than the fee specified in paragraph 1.A. of this Plan, as agreed
upon by the Board and the Distributor and as approved in the manner specified
in paragraph 4 of this Plan. The service fees payable hereunder are payable
without regard to the aggregate amount that may be paid over the years,
provided that, so long as the limitations set forth in Article III, Section
26(d) of the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. ("NASD") remain in effect and apply to distributors or dealers in
the Funds' shares, the amounts paid hereunder shall not exceed those
limitations, including permissible interest.
2. As principal underwriter of the Class A shares of each Fund,
the Distributor may spend such amounts as it deems appropriate on any
activities or expenses primarily intended to result in the sale of the Class A
shares of the Funds and/or the servicing and maintenance of shareholder
accounts, including, but not limited to, compensation to employees of the
Distributor; compensation to and expenses, including overhead and telephone and
other communication expenses of the Distributor and other selected
broker-dealers who engage in or support the distribution of shares or who
service shareholder accounts; the printing of prospectuses, statements of
additional information, and reports for other than existing shareholders; and
the preparation and distribution of sales literature and advertising materials.
3. This Plan shall not take effect with respect to the Class A
shares of any Fund until it has been approved by a vote of at least a majority
of the outstanding voting securities, as defined in the 1940 Act, of that Fund.
4. This Plan shall take effect on July 18, 1997 and shall
continue in full force and effect for successive periods of one year from its
execution for so long as such continuance is specifically approved at least
annually together with any related agreements, by votes of a majority of both
(a) the Board of Trustees of the Trust and (b) those Trustees who are not
<PAGE> 3
"interested persons" of the Trust, as defined in the 1940 Act, and who have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Rule 12b-1 Trustees"), cast in person at a
meeting or meetings called for the purpose of voting on this Plan and such
related agreements; and only if the Trustees who approve the Plan taking effect
have reached the conclusions required by Rule 12b-1(e) under the 1940 Act.
5. Any person authorized to direct the disposition of monies paid
or payable by any Fund pursuant to this Plan or any related agreement shall
provide to the Trust's Board of Trustees and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made. The Distributor shall submit only
information regarding amounts expended for "service activities," as defined in
this paragraph 5, to the Board in support of the service fee payable hereunder.
For purposes of this Plan, "service activities" shall mean
activities covered by the definition of "service fee" contained in amendments
to Article III, Section 26(d) of the NASD's Rules of Fair Practice, including
the provision by the Distributor of personal, continuing services to investors
in the Funds' shares. Overhead and other expenses of the Distributor related
to its "service activities," including telephone and other communications
expenses, may be included in the information regarding amounts expended for
such service activities.
6. This Plan may be terminated with respect to any Fund at any
time by vote of a majority of the Rule 12b-1 Trustees or by vote of a majority
of the outstanding voting securities of that Fund.
7. This Plan may not be amended to increase materially the amount
of service fees provided for in paragraph 1.A. hereof unless such amendment is
approved by a vote of at least a majority of the outstanding securities, as
defined in the 1940 Act, of a Series, and no material amendment to the Plan
shall be made unless such amendment is approved in the manner provided for
continuing approval in paragraph 4 hereof.
<PAGE> 4
8. While this Plan is in effect, the selection and nomination of
trustees who are not interested persons of the Trust, as defined in the 1940
Act, shall be committed to the discretion of trustees who are themselves not
interested persons.
9. The Trust shall preserve copies of this Plan and any related
agreements for a period of not less than six years from the date of expiration
of the Plan or agreement, as the case may be, the first two years in an easily
accessible place; and shall preserve copies of each report made pursuant to
paragraph 5 hereof for a period of not less than six years from the date of
such report, the first two years in an easily accessible place.
<PAGE> 5
IN WITNESS WHEREOF, the Trust has executed this Distribution Plan as
of the day and year set forth below.
Date: BARTLETT CAPITAL TRUST
----------------------
Attest: By:
----------------------------
By:
-------------------------
Agreed and assented to by
BFP FINANCIAL PARTNERS, INC.
By:
-------------------------
Attest:
By:
-------------------------
<PAGE> 1
BARTLETT CAPITAL TRUST - CLASS C SHARES
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
UNDER THE INVESTMENT COMPANY ACT OF 1940
WHEREAS, Bartlett Capital Trust (the "Trust") is an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"), and has offered, and intends to continue
offering, distinct series of shares of beneficial interest ("Series") for
public sale, each corresponding to a distinct portfolio;
WHEREAS, the Trust has registered the offering of its shares of
beneficial interest under a Registration Statement filed with the Securities
and Exchange Commission and that Registration Statement is in effect as of the
date hereof;
WHEREAS, the Trust's Board of Trustees have established the Series
known as: Bartlett Value International Fund, Bartlett Basic Value Fund, and
Bartlett Europe Fund (each a "Fund" and collectively the "Funds");
WHEREAS, the Trust desires to adopt a Plan of Distribution pursuant
to Rule 12b-1 under the 1940 Act with respect to the Class C shares of the
Funds and of such other Series as may hereafter be designated by the Trust's
Board of Trustees ("Board"); and
WHEREAS, the Trust has entered into a Distribution Contract with BFP
Financial Partners, Inc. (the "Distributor") pursuant to which the Distributor
has agreed to serve as the principal underwriter and distributor of the Class C
shares of the Funds (the "Distribution Contract");
NOW, THEREFORE, the Trust hereby adopts this Distribution Plan (the
"Plan") with respect to the Class C shares of each Fund in accordance with Rule
12b-1 under the 1940 Act and on the following terms and conditions:
1
<PAGE> 2
1. A. Each Fund is authorized to pay the Distributor as
compensation for the Distributor's services as principal underwriter of the
Fund's Class C shares, a distribution fee at the rate of 0.75% on an annualized
basis of the average daily net assets of the Fund's Class C shares, such fee to
be calculated and accrued daily and paid monthly or at such other intervals as
the Board shall determine.
B. Each Fund is authorized to pay the Distributor, as
compensation for ongoing services provided to the Fund's shareholders, a
service fee at the rate of 0.25% on an annualized basis of the average daily
net assets of the Fund's Class C shares, such fee to be calculated and accrued
daily and paid monthly or at such other intervals as the Board shall determine.
C. Any Fund may pay a distribution or service fee to the
Distributor at a lesser rate than the fee specified in paragraphs 1.A. and 1.B,
respectively, of this Plan, as agreed upon by the Board and the Distributor and
as approved in the manner specified in paragraph 4 of this Plan. The
distribution and service fees payable hereunder are payable without regard to
the aggregate amount that may be paid over the years, provided that, so long as
the limitations set forth in Article III, Section 26(d) of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. ("NASD")
remain in effect and apply to distributors or dealers in the Funds' shares, the
amounts paid hereunder shall not exceed those limitations, including
permissible interest.
2. As principal underwriter of the Class C shares of each Fund,
the Distributor may spend such amounts as it deems appropriate on any
activities or expenses primarily intended to result in the sale of the Class C
shares of the Funds and/or the servicing and maintenance of shareholder
accounts, including, but not limited to, compensation to employees of the
Distributor; compensation to and expenses, including overhead and telephone and
other communication expenses of the Distributor and other selected
broker-dealers who engage in or support the distribution of shares or who
service shareholder accounts; the printing of prospectuses, statements of
additional information, and reports for other than existing shareholders; and
the preparation and distribution of sales literature and advertising materials.
2
<PAGE> 3
3. This Plan shall not take effect with respect to the Class C shares
of any Fund until it has been approved by a vote of at least a majority of the
outstanding voting securities, as defined in the 1940 Act, of that Fund.
4. This Plan shall take effect on July 18, 1997 and shall
continue in full force and effect for successive periods of one year from its
execution for so long as such continuance is specifically approved at least
annually together with any related agreements, by votes of a majority of both
(a) the Board of Trustees of the Trust and (b) those Trustees who are not
"interested persons" of the Trust, as defined in the 1940 Act, and who have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Rule 12b-1 Trustees"), cast in person at a
meeting or meetings called for the purpose of voting on this Plan and such
related agreements; and only if the Trustees who approve the Plan taking effect
have reached the conclusion required by Rule 12b-1(e) under the 1940 Act.
5. Any person authorized to direct the disposition of monies paid
or payable by any Fund pursuant to this Plan or any related agreement shall
provide to the Trust's Board of Trustees and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made. The Distributor shall submit only
information regarding amounts expended for "distribution activities," as
defined in this paragraph 5, to the Board in support of the distribution fee
payable hereunder and shall submit only information regarding amounts expended
for "service activities," as defined in this paragraph 5, to the Board in
support of the service fee payable hereunder.
For purposes of this Plan, "distribution activities" shall
mean any activities in connection with the Distributor's performance of its
obligations under the Distribution Contract that are not deemed "service
activities." For purposes of this Plan, "service activities" shall mean
activities covered by the definition of "service fee" contained in amendments
to Article III, Section 26(d) of the NASD's Rules of Fair Practice, including
the provision by the Distributor of personal, continuing services to investors
in the Funds' shares. Overhead
3
<PAGE> 4
and other expenses of the Distributor related to its "distribution activities"
or "service activities," including telephone and other communications expenses,
may be included in the information regarding amounts expended for such
distribution or service activities, respectively.
6. This Plan may be terminated with respect to any Fund at any
time by vote of a majority of the Rule 12b-1 Trustees or by vote of a majority
of the outstanding voting securities of that Fund.
7. This Plan may not be amended to increase materially the amount
of distribution fees provided for in paragraph 1.A. hereof or the amount of
service fees provided for in paragraph 1.B hereof unless such amendment is
approved by a vote of at least a majority of the outstanding securities, as
defined in the 1940 Act, of the Trust, and no material amendment to the Plan
shall be made unless such amendment is approved in the manner provided for
continuing approval in paragraph 4 hereof.
8. While this Plan is in effect, the selection and nomination of
trustees who are not interested persons of the Trust, as defined in the 1940
Act, shall be committed to the discretion of trustees who are themselves not
interested persons.
9. The Trust shall preserve copies of this Plan and any related
agreements for a period of not less than six years from the date of expiration
of the Plan or agreement, as the case may be, the first two years in an easily
accessible place; and shall preserve copies of each report made pursuant to
paragraph 5 hereof for a period of not less than six years from the date of
such report, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Trust has executed this Distribution Plan as
of the day and year set forth below.
Date: BARTLETT CAPITAL TRUST
----------------------
By:
-------------------
4
<PAGE> 5
Attest:
By:
-------------------------
Agreed and assented to by
BFP FINANCIAL PARTNERS, INC.
By:
-------------------------
Attest:
By:
-------------------------
5
<PAGE> 1
BARTLETT BASIC VALUE FUND
March 31, 1996 - March 31, 1997 (one year)
- --------------------------------
Cumulative Total Return:
-----------------------
ERV= (18.33 x 2.570091) - (17.94 x 2.3581586) x 1000 + 1000 = 1113.56
----------------------------------------
(17.94 x 2.3581586)
P = 1000
C = 1113.56 - 1 = 0.11356 = 11.36%
------- -----
1000
Average Annual Return: Same
- ----------------------
March 31, 1992 - March 31, 1997 (five years)
- ---------------------------------
Cumulative Total Return
-----------------------
ERV = (18.33 x 2.570091) - (13.47 x 1.9022977) x 1000 + 1000 = 1838.51
-----------------------------------------
(13.47 x 1.9022977)
P = 1000
C = 1838.51 - 1 = 0.838505 = 83.85%
------- -----
1000
Average Annual Return:
---------------------
(0.838505 + 1) (1/5) - 1 = 12.95%
-----
March 31, 1987 - March 31, 1997 (ten years)
- ---------------------------------
Cumulative Total Return:
-----------------------
ERV = (18.33 x 2.570091) - (12.96 x 1.3917334) x 1000 + 1000 = 2611.89
----------------------------------------
(12.96 x 1.3917334)
P = 1000
C = 2611.89 - 1 = 1.611894 = 161.19%
------- ------
1000
Average Annual Return:
---------------------
(1.611894 + 1) (1/10) - 1 = 10.08%
-----
<PAGE> 2
BARTLETT VALUE INTERNATIONAL FUND
March 31, 1996 - March 31, 1997 (one year)
- --------------------------------
Cumulative Total Return:
-----------------------
ERV= (13.64 x 1.30036) - (12.59 x 1.22026) x 1000 + 1000 = 1154.51
-------------------------------------
(12.59 x 1.22026)
P = 1000
C = 1154.51 - 1 = 0.15451 = 15.45%
------- -----
1000
Average Annual Return: Same
- ----------------------
March 31, 1992 - March 31, 1997 (five years)
- ---------------------------------
Cumulative Total Return
-----------------------
ERV = (13.64 x 1.30036) - (9.93 x 1.08658) x 1000 + 1000 = 1643.87
-------------------------------------
(9.93 x 1.08658)
P = 1000
C = 1643.87 - 1 = 0.64386 = 64.39%
------- -----
1000
Average Annual Return:
---------------------
(0.64386 + 1) (1/5) - 1 = 10.45%
-----
October 6, 1989 - March 31, 1997 (life of fund)
- ----------------------------------
Cumulative Total Return:
-----------------------
ERV = (13.64 x 1.30036) - (10.00 x 1.0) x 1000 + 1000 = 1773.69
---------------------------------
(10.00 x 1.0)
P = 1000
C = 1773.69 - 1 = 0.77369 = 77.37%
------- -----
1000
Average Annual Return:
---------------------
(0.77369 + 1) (1/7.48493150) - 1 = 7.95%
----
<PAGE> 3
WORLDWIDE VALUE FUND
December 31, 1995 - December 31, 1996 (one year)
- --------------------------------------
Cumulative Total Return:
-----------------------
ERV= (24.24 x .804746) - (21.13 x .701878) x 1000 + 1000 = 1315.32
-------------------------------------
(21.13 x .701878)
P = 1000
C = 1315.32 - 1 = 0.315317 = 31.53%
------- -----
1000
Average Annual Return: Same
- ----------------------
December 31, 1991 - December 31, 1996 (five years)
- --------------------------------------
Cumulative Total Return
-----------------------
ERV = (24.24 x .804746) - (15.44 x .693613) x 1000 + 1000 = 1821.49
--------------------------------------
(15.44 x .693613)
P = 1000
C = 1821.49 - 1 = 0.82149 = 82.15%
------- -----
1000
Average Annual Return:
---------------------
(0.82149 + 1) (1/5) - 1 = 12.74%
-----
December 31, 1986 - December 31, 1997 (ten years)
- --------------------------------------
Cumulative Total Return:
-----------------------
ERV = (24.24 x .804746) - (17.41 x .500) x 1000 + 1000 = 2240.90
----------------------------------
(17.41 x .500)
P = 1000
C = 2240.90 - 1 = 1.240900 = 124.09%
------- ------
1000
Average Annual Return:
---------------------
(1.240900 + 1)1/10 - 1 = 8.40%
----
<PAGE> 1
BARTLETT CAPITAL TRUST
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
Bartlett Capital Trust hereby adopts this revised Multiple Class Plan
pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), on behalf of its current series, Bartlett Value Fund,
Bartlett Value International Fund and Bartlett Europe Fund, and any series that
may be established in the future (referred to hereinafter collectively as the
"Funds" and individually as a "Fund").
A. GENERAL DESCRIPTION OF CLASSES THAT ARE OFFERED:
1. Class A Shares. Class A shares of each Fund are offered and
sold to the public generally subject to an initial sales charge. The initial
sales charge for each Fund may be waived for certain eligible purchasers and
reduced or waived for certain other eligible purchasers.
The maximum sales charge is 4.75% of the public offering price for
Class A shares of each Fund.
Class A shares of each Fund which were purchased pursuant to the sales
charge waiver for purchases of $1 million or more are subject to a contingent
deferred sales charge ("CDSC") of 1% of the shares' net asset value at the time
of purchase or sale, whichever is less, on shares redeemed within one year of
such purchase. Class A shares of each Fund held one year or longer and Class
A shares of each Fund acquired through reinvestment of dividends or capital
gains distributions on shares otherwise subject to this Class A CDSC are not
subject to the CDSC.
Class A shares of each Fund are subject to a service fee at an annual
rate of 0.25% of the average daily net assets of the Class A shares of such
Fund under a plan of distribution adopted pursuant to Rule 12b-1 under the 1940
Act.
2. Class C Shares. Class C shares are offered and sold to the
public generally without imposition of an initial sales charge.
<PAGE> 2
Bartlett Capital Trust
Multiple Class Plan
Page 2
Class C shares of each Fund are subject to a CDSC of 1% of the shares'
net asset value at the time of purchase or sale, whichever is less, on shares
redeemed within one year of such purchase. Class C shares of each Fund held
one year or longer and Class C shares of each Fund acquired through
reinvestment of dividends or capital gains distributions on shares otherwise
subject to this Class C CDSC are not subject to the CDSC.
Class C shares of each Fund are subject to a service fee at an annual
rate of 0.25% of the average daily net assets and a distribution fee at an
annual rate of 0.75% of average daily net assets of the Class C shares of such
Fund, each under a plan of distribution adopted pursuant to Rule 12b-1 under
the 1940 Act.
3. Class Y Shares. Class Y shares of each Fund are sold
without imposition of a sales charge or CDSC and are not subject to any service
or distribution fees.
Class Y shares of each Fund are available for purchase only by: (i)
Bartlett & Co. advisory clients that are employee benefit and retirement plans,
other than individual retirement accounts and self-employed retirement plans;
(ii) retirement plans having net assets of at least $10 million; (iii)
purchasers of $5 million or more of any Fund; and (iv) participants in certain
wrap fee investment advisory programs that are currently or in the future
sponsored by Bartlett & Co. and that may invest in Bartlett proprietary funds,
provided that shares are purchased through or in connection with those
programs.
B. EXPENSE ALLOCATIONS OF EACH CLASS:
Certain expenses may be attributable to a particular Class of shares
of each Fund ("Class Expenses"). Class Expenses are charged directly to the
net assets of the particular Class and, thus, are borne on a pro rata basis by
the outstanding shares of that Class.
<PAGE> 3
Bartlett Capital Trust
Multiple Class Plan
Page 3
In addition to the distribution and service fees described above, each
Class may also pay a different amount of the following other expenses:
(1) printing and postage expenses related to preparing
and distributing materials such as shareholder
reports, prospectuses, and proxies to current
shareholders of a specific Class;
(2) Blue Sky registration fees incurred by a specific
Class of shares;
(3) SEC registration fees incurred by a specific Class of
shares;
(4) expenses of administrative personnel and services
required to support the shareholders of a specific
Class of shares;
(5) Trustees' fees incurred as a result of issues
relating to a specific Class of shares;
(6) litigation expenses or other legal expenses relating
to a specific Class of shares;
(1. transfer agent fees and shareholder
servicing expenses identified as being attributable to a
specific Class; and
(2. such other expenses actually incurred in a
different amount by a Class or related to a Class'
receipt of services of a different kind or to a different
degree than another Class.
<PAGE> 4
Bartlett Capital Trust
Multiple Class Plan
Page 4
C. EXCHANGE PRIVILEGES:
Class A, Class C and Class Y shares of each Fund may be exchanged for
shares of the corresponding Class of other Bartlett mutual funds or for shares
of Legg Mason Cash Reserve Trust, or may be acquired through an exchange of
shares of the corresponding Class of those other Bartlett funds or for shares
of Legg Mason Cash Reserve Trust.
These exchange privileges may be modified or terminated by a Fund, and
exchanges may only be made into funds that are legally registered for sale in
the investor's state of residence.
D. CLASS DESIGNATION:
Subject to approval by the Board of Trustees of Bartlett Capital
Trust, a Fund may alter the nomenclature for the designations of one or more of
its Classes of shares.
E. ADDITIONAL INFORMATION:
This Multiple Class Plan is qualified by and subject to the terms of
the then current prospectus for the applicable Classes; provided, however, that
none of the terms set forth in any such prospectus shall be inconsistent with
the terms of the Classes contained in this Plan. The prospectus for each Fund
contains additional information about the Classes and each Fund's multiple
class structure.
DATE OF EFFECTIVENESS:
This Multiple Class Plan is effective on July 18, 1997, provided that
this Plan shall not become effective with respect to any Fund unless such
action has first been approved by the vote of a majority of the Board of
Trustees of Bartlett Capital Trust, and by vote of a majority of those trustees
who are not interested persons of Bartlett Capital Trust.
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<NAME> BARTLETT CAPITAL TRUST
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<NUMBER> 1
<NAME> BARTLETT BASIC VALUE FUND
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 86,273,452
<INVESTMENTS-AT-VALUE> 117,764,971
<RECEIVABLES> 1,768,581
<ASSETS-OTHER> 154
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 119,533,706
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 325,634
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<SHARES-COMMON-STOCK> 6,503,987
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<ACCUMULATED-NET-GAINS> 8,936,987
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<DIVIDEND-INCOME> 2,547,287
<INTEREST-INCOME> 422,237
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<EXPENSES-NET> 1,468,801
<NET-INVESTMENT-INCOME> 1,500,723
<REALIZED-GAINS-CURRENT> 14,218,555
<APPREC-INCREASE-CURRENT> (1,663,068)
<NET-CHANGE-FROM-OPS> 14,056,210
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<DISTRIBUTIONS-OF-INCOME> 1,780,551
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<NUMBER-OF-SHARES-REDEEMED> 3,123,012
<SHARES-REINVESTED> 557,595
<NET-CHANGE-IN-ASSETS> (6,428,313)
<ACCUMULATED-NII-PRIOR> 489,399
<ACCUMULATED-GAINS-PRIOR> 3,689,948
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<AVG-DEBT-PER-SHARE> 0
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<TABLE> <S> <C>
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<CIK> 0000710434
<NAME> BARTLETT CAPITAL TRUST
<SERIES>
<NUMBER> 3
<NAME> BARTLETT VALUE INTERNATIONAL FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 72,378,075
<INVESTMENTS-AT-VALUE> 83,847,649
<RECEIVABLES> 275,901
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 46,804
<TOTAL-ASSETS> 84,170,354
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 196,966
<TOTAL-LIABILITIES> 196,966
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,173,011
<SHARES-COMMON-STOCK> 6,155,483
<SHARES-COMMON-PRIOR> 5,721,825
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 1,726,450
<INTEREST-INCOME> 189,947
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<EXPENSES-NET> 1,430,591
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<APPREC-INCREASE-CURRENT> 5,827,351
<NET-CHANGE-FROM-OPS> 11,347,856
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<DISTRIBUTIONS-OF-INCOME> 485,806
<DISTRIBUTIONS-OF-GAINS> 4,402,999
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<NUMBER-OF-SHARES-SOLD> 2,833,243
<NUMBER-OF-SHARES-REDEEMED> 2,692,355
<SHARES-REINVESTED> 292,770
<NET-CHANGE-IN-ASSETS> 11,932,784
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,748,689
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 1,430,591
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<PER-SHARE-NAV-BEGIN> 12.59
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> 1.81
<PER-SHARE-DIVIDEND> (.08)
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<PER-SHARE-NAV-END> 13.64
<EXPENSE-RATIO> 1.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<CIK> 0000794279
<NAME> WORLDWIDE VALUE FUND, INC.
<MULTIPLIER> 1,000
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<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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<INVESTMENTS-AT-VALUE> 80,604
<RECEIVABLES> 200
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<TOTAL-LIABILITIES> 9,846
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<SHARES-COMMON-PRIOR> 2,946
<ACCUMULATED-NII-CURRENT> (183)
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> (359)
<ACCUM-APPREC-OR-DEPREC> 18,902
<NET-ASSETS> 70,991
<DIVIDEND-INCOME> 1,391
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<EXPENSES-NET> 1,431
<NET-INVESTMENT-INCOME> 55
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</TABLE>
