BARTLET
MUTUAL FUNDS
Semi-Annual Report
June 30, 1999
BARTLETT
BASIC VALUE FUND
BARTLETT
VALUE INTERNATIONAL FUND
BARTLETT
EUROPE FUND
BARTLETT
FINANCIAL SERVICES FUND
<PAGE>
BARTLETT & CO.
PROFILE
[Bartlett Bartlett & Co., headquartered in Cincinnati, Ohio, is an asset
mutual funds management firm which manages over $3.0 billion for individuals,
graphic family groups and institutions. Established in 1898, Bartlett &
appears here] Co. has built a reputation among individual and institutional
investors of strong performance and superior client service for the last
century.
Bartlett & Co. offers its clients a diversity of services through four business
divisions:
[diamond] Mutual Funds
[diamond] Institutional Client Services
[diamond] Private Client Services
[diamond] Real Estate Programs
Our tradition of excellence, the breadth of our services, and the depth of our
experience give Bartlett & Co. the capabilities to serve as your financial
advisor.
<PAGE>
CONTENTS
Pages
- --------------------------------------------------------------------------------
BARTLETT & CO. PROFILE Inside Cover
- --------------------------------------------------------------------------------
PRESIDENT'S LETTER 2
- --------------------------------------------------------------------------------
REPORTS TO SHAREHOLDERS
Bartlett Basic Value Fund 3
Bartlett Value International Fund 5
Bartlett Europe Fund 6
Bartlett Financial Services Fund 7
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
Bartlett Basic Value Fund 8
Bartlett Value International Fund 10
Bartlett Europe Fund 11
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION 13
- --------------------------------------------------------------------------------
STATEMENTS OF NET ASSETS
Bartlett Basic Value Fund 14
Bartlett Value International Fund 15
Bartlett Europe Fund 17
Bartlett Financial Services Fund 19
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS 21
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Bartlett Basic Value Fund 22
Bartlett Value International Fund 23
Bartlett Europe Fund 24
Bartlett Financial Services Fund 25
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Bartlett Basic Value Fund 26
Bartlett Value International Fund 27
Bartlett Europe Fund 28
Bartlett Financial Services Fund 29
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 30
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS Back Cover
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the Bartlett Mutual Funds.
It may be used as sales literature if preceded or accompanied by a current
prospectus of the Bartlett Mutual Funds.
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder,
We are pleased to provide you with the semi-annual report for the Bartlett
Capital Trust, comprised of the Bartlett Basic Value Fund, the Bartlett Value
International Fund, the Bartlett Europe Fund, and the Bartlett Financial
Services Fund, covering the six months ended June 30, 1999.
During the second quarter, several significant events occurred in the market.
First, cyclical stocks rallied strongly and posted their largest gains relative
to the rest of the market in 50 years. Second, the U.S. Federal Reserve raised
the federal funds rate by 25 basis points.(1) The Fed surprised the markets, not
by raising the federal funds rate, but by announcing that they had moved away
from a tightening bias to a neutral one. This led to an immediate strong rally
in the markets.
While the cyclical stocks were rebounding during the quarter (led by steel,
aluminum, paper and other industrial sectors), the big growth stocks which have
dominated the markets over the last few years were relative losers.
Smaller-capitalization and value stocks were better performers during this
period, reflected in the better relative performance of our funds, as described
elsewhere in this report. While one quarter certainly does not constitute a
trend, an expansion of market performance to value and small-cap stocks would be
a welcome, and perhaps overdue, change.
On the following pages, the portfolio managers discuss each Fund's performance
and the investment outlook.
During 1998 and into 1999, focus on the Year 2000 issue increased significantly.
As you know, the Year 2000 issue is a computer programming problem that affects
the ability of computers to correctly process dates of January 1, 2000, and
beyond. The Funds' Year 2000 project is well underway, and is designed to ensure
that the Year 2000 date change will have no adverse impact on our ability to
service our shareholders. The Funds are committed to taking those steps
necessary to protect our investors, including efforts to determine that the Year
2000 problem will not affect such vital service functions as shareholder
transaction processing and recordkeeping. In addition, we are continuously
monitoring the Year 2000 efforts of our vendors, and will perform tests with our
critical vendors throughout 1999. Although the Funds are taking steps to ensure
that all of their systems will function properly before, during, and after the
Year 2000, the Funds could be adversely affected by computer-related problems
associated with the Year 2000. Contingency plans are in place to ensure that
functions critical to the Funds' operations will continue without interruption.
We are on target to complete this important project and look forward to
continuing extensive testing (including industry-wide testing) with our industry
peers, regulators and vendors throughout 1999.
The Board of Trustees approved the following dividends and distributions per
share, which were payable to shareholders of record on May 21st for Basic Value,
and June 9th for Basic Value, Value International, and Europe Fund (there were
no dividends or distributions declared for Financial Services Fund):
Class A Class C Class Y
Basic Value:
Ordinary Income Dividend $0.175 $0.024 $0.192
Long-Term Capital Gain Distribution $0.122 $0.122 $0.122
Value International:
Ordinary Income Dividend $0.469 $0.469 $0.469
Europe Fund:
Ordinary Income Dividend $0.071 $0.071 $0.071
Short-Term Capital Gain Distribution $0.017 $0.017 $0.017
As always, we appreciate your support and welcome your comments or questions.
Sincerely,
/s/ Edward A. Taber, III
---------------------------
Edward A. Taber, III
President
- --------------
(1) 100 basis points = 1%.
<PAGE>
BARTLETT
BASIC VALUE
FUND REPORT
[Bartlett A shift in market conditions began to take place in the second
mutual funds quarter as value stocks came to life. The compelling values that
graphic continue to exist outside the mega-cap "great names of America"
appears here] give us confidence that this positive trend for value stocks is
sustainable.
Over 40% of the portfolio is concentrated in our ten most compelling investment
holdings. Among these are Fannie Mae (5.2%),(1) H & R Block (4.8%), Citigroup
(3.4%), and Charter One Financial (4.5%). These financial service companies have
outstanding records of growth and profitability, while trading at modest
price/earnings ratios. Just as important is their ability to sustain these
records, which is quite high. Other large holdings include AMR (3.8%), Philip
Morris (3.5%), and Chateau Communities (4.5%), the largest owner, developer, and
operator of mobile home communities. These companies are leaders in their
respective industries and generate substantial free cash flow, while selling for
very low cash flow multiples.
We took advantage of the spike in the stock prices of Kansas City Southern
(3.3%) and Union Pacific (3.4%) during the quarter to reduce these large
holdings. We established new positions in Abbott (1.4%), Intel (1.3%), and
Unocal (1.7%). Upheaval in the drug, technology and energy industries allowed us
to be opportunistic in acquiring these high quality companies at reasonable
prices.
Although we are disappointed with our results over the last year, we know that
this outcome is the result of a conscious decision to avoid unnecessary risk.
Unfortunately, risk, from our perspective, has been excessively rewarded. Recent
market trends give us encouragement that our relative performance will improve
as markets broaden and more sensible valuations return.
/s/ James A. Miller, CFA /s/ Woodrow H. Uible, CFA
- --------------------------- ----------------------------
James A. Miller, CFA Woodrow H. Uible, CFA
Portfolio Manager Portfolio Manager
- --------------
(1) Figures in parentheses represent percentage of the Fund's portfolio invested
in this stock
Measuring Both Risk and Return
Bartlett Basic Value Fund vs. Standard & Poor's 500 Index
May 31, 1983, to June 30, 1999
[CHART APPEARS HERE]
RETURN RISK
------ ----
Bartlett Basic Value Fund 12.5%* 12.1%
S&P 500 Index 17.7% 14.7%
This chart compares the historical average annual total return and the risk (as
measured by the standard deviation) of the Bartlett Basic Value Fund and the
Standard & Poor's 500 Index from May 31, 1983, to June 30, 1999. The S&P 500
Index is an unmanaged index of common stocks widely used as a measure of stock
market activity. The return for the Index does not include any expenses or
transaction costs. The return for the Fund includes such expenses and costs.
Standard deviation is a statistical measure of volatility often used as a
measure of risk. In general, the greater the standard deviation, the greater the
tendency to vary from the average annual total return. By comparing the
magnitude of the standard deviations, the relative volatility of each investment
can be determined. A lower standard deviation reflects lower volatility.
The average annual total return figures for both the Fund and the Index assume
the reinvestment of dividends.
Of course, past performance is no guarantee of future results. The principal
value and investment returns of the Fund fluctuate so that upon redemption, you
may receive more or less than your original investment.
*Reflects return on Class A shares, excluding the 4.75% maximum sales charge
effective July 21, 1997. Return information for the other share classes may be
found on page 9.
3
<PAGE>
Largest Industry Allocations
Bartlett Basic Value Fund vs. Standard & Poor's 500 Index
June 30, 1999
[CHART APPEARS HERE]
FUND S&P 500
---- -------
Finance 27% 16%
Transportation 14% 1%
Consumer Cyclical 8% 9%
Basic Industry 15% 3%
Consumer Staples 8% 13%
Technology/Defense 14% 22%
4
<PAGE>
BARTLETT
VALUE INTERNATIONAL
FUND REPORT
[Bartlett The recovery in Asia took hold in the second quarter, propelling
mutual funds Pacific markets, including Japan's, into the top spots of global
graphic market performance. Conversely, European markets were sluggish
appears here] on continued weakness in the Euro currency and disappointing
economic fundamentals. While the U.S. remains the main growth engine of the
global economy, it has lost its rank as the best performing stock market.
Increasingly, it looks as if Asia will also take up some of the slack that
plagued global growth over the last year and a half.
Consumer demand and industrial activity could not be called robust anywhere
except in the U.S., but restructuring, reform and consolidation have provided
enough positive news to encourage investors to look beyond the current sluggish
level of activity in many of the world's economies. In addition, there is an
undercurrent of optimism about technological advances in the telecommunications
and computer industries that may boost productivity for businesses even though
activity does not grow much.
The Bartlett Value International portfolio has performed well so far this year,
partly due to a substantial investment in the Pacific markets, and also because
of exposure to technology and some of the more cyclical parts of the
international markets. The large valuation disparities that developed during
1998 between the industrial and commodity-related sectors, and the more
consumer-oriented industries, like health care and staple goods, have corrected
somewhat. This trend could continue for a while if cyclical activity and
restructuring stay on course. In addition, if Japan continues to wake from its
economic coma, both its own market and those around it should see increasing
earnings potential.
Valuations continue to look more promising in non-U.S. markets, and the momentum
of future growth could also start to work in favor of international stocks.
While the strength of the U.S. economy continues to confound the
prognosticators, improving economic conditions in the rest of the world could
also create a pleasantly positive surprise. Good valuations combined with better
than expected earnings usually result in positive market performance.
/s/ Madelynn M. Matlock, CFA
-------------------------------
Madelynn M. Matlock, CFA
Portfolio Manager
Portfolio Composition
Bartlett Value International Fund vs.
MSCI EAFE Index*
June 30, 1999
[CHART APPEARS HERE]
FUND EAFE INDEX
---- ----------
Americas 17% 0%
Latin America 3% 0%
Canada 7% 0%
Cash Equivalents 7% 0%
Europe 52% 69%
Pacific 31% 31%
Japan 20% 24%
*The Morgan Stanley Capital International Europe, Australia, Far East (MSCI
EAFE)Index is an unmanaged index of common stocks of foreign companies.
5
<PAGE>
BARTLETT
EUROPE
FUND REPORT
Quarter Twelve Months
Ended Ended
6/30/99 6/30/99
------- -------------
Bartlett Europe Fund(1) -1.31% +5.36%
MSCI Europe Index -0.31% -0.84%
MSCI EAFEIndex +2.54% +7.62%
S&P500 Index +7.06% +22.77%
[Bartlett The launch of the European single currency seemed to be the
mutual funds milestone that was to characterise the first half of 1999. But
graphic ever since its initial rise to E1.18 = 1 US$, the Euro has been
appears here] making headlines for all the wrong reasons, and now finds
itself, at the half-year stage, valued at El.03 = 1 US$. The weakness of the
Euro is indicative of the problems that have beset Europe over the past six
months. Weak economic growth and a lack of cohesion on the policy front from
European leaders was further compounded by the problems in Kosovo, which added
to the poor visibility in European markets. Added to this, Asia seemed to have
bottomed and the anticipated slowdown in the U.S. failed to materialise,
providing investors with better alternatives in which to park their cash. By the
end of the period under review, however, the Euro appears to have found a base.
Stronger economic data from Europe and the cessation of hostilities in the
Balkans lead us to believe that Europe's new currency will strengthen over the
coming months from these levels.
Over the first six months of 1999, European markets were driven by the continued
strong outlook in the U.S. (where the Dow reached an all-time high) and M&A
activity. The new single currency and new Euro-indices act as catalysts for
companies to focus on streamlining their operations, restructuring, and becoming
more competitive. Size also seemed to be important, as the takeover of Telecom
Italia by Olivetti, the battle for control among the major banking groups in
France, the merger of Vodafone and Airtouch, and the recent bid for Asda by
Wal-Mart have shown. The single currency and the new indices were also catalysts
for a move to a more sector-oriented outlook by investors, and the first half of
1999 will be remembered for the rotation away from growth and defensive stocks
to more cyclical-oriented stocks, reflecting a bottoming-out of many commodity
prices as well as a belief in the recovery of Asia and an end to the worries of
a potential global meltdown which characterised the second half of 1998.
The recent months have seen improved sentiment in Europe (helped by the cut in
rates to 2.5% in April), and renewed worries about potential inflation in the
U.S. with the long U.S. government bond yield going above 6%, and good economic
data from Japan signaling an end to fears over a global crisis. The Fed
ultimately raised rates by only 25 basis points(2) (which was largely priced
into the markets), and affirmed that they had moved to a neutral basis, and this
along with stronger than expected first quarter GDP numbers from Italy has
increased the positive sentiment in European markets, which had been gaining
momentum for some time.
German business confidence is also improving. The renewed bullishness on the
Asian markets has, overall, made for a much rosier outlook for the global
markets, and although trading conditions in Europe remain tough, we believe that
low interest rates and record high consumer confidence should result in
accelerating growth in Europe in the second half of 1999, which, coupled with
the attractive valuation of the European markets, provide the reasons for our
optimism on Europe.
In terms of activity, the Fund has retained its core positions, although we have
cut our weighting in the Mediterranean area to increase our exposure to the U.K.
Overall, we have maintained our growth stance, concentrating on the key tenets
of strong management and visible earnings, which we believe to be the main
drivers of stock performance.
/s/ Neil Worsley /s/ William Lovering
- --------------------- -----------------------
Neil Worsley William Lovering
Co-Portfolio Manager Co-Portfolio Manager
- --------------
(1) Reflects return on Class A shares, excluding the 4.75% maximum sales charge
effective July 21, 1997. Return information for the other share classes may
be found on page 12. The returns for the indices do not include any
transaction costs or other administrative expenses associated with buying
and selling securities in the index. The returns for the Fund include such
expenses.
(2) 100 basis points = 1%.
6
<PAGE>
BARTLETT
FINANCIAL SERVICES
FUND REPORT
Quarter Six Months
Ended Ended
6/30/99 6/30/99
------- ----------
Bartlett Financial Services(1) +5.22% -0.95%
Lipper Financial Services
Fund Index +4.55% +5.87%
S&P 500 Index +7.06% +12.39%
[Bartlett Since the beginning of the year, financial stocks have been held
mutual funds hostage to interest rates. The ransom was finally paid in the
graphic form of a 25 basis point(2) increase in the Federal Funds rate
appears here] at the end of the quarter. Having announced a neutral bias for
the future, we feel the pressure on these stocks will be lifted and investors
can begin to pay attention to important factors like earnings.
In our conversations with the managements of all of our financial holdings, none
have expressed any concern about earnings in 1999. We prefer to believe the
outlook of the managements of our financial holdings rather than that of an
analyst, for management has the most influence on earnings over the long term.
We have consistently informed our clients of our belief that "if we get the
earnings right, the performance will follow."
Looking forward, financial companies remain very attractive due to a positive
earnings outlook, attractive price/earnings multiples and the possible passage
of a banking bill in 1999, which would likely spur acquisitions, particularly in
the insurance arena. Banks, brokerages, and insurance companies as a group
currently sell at 50% to 60% of the S&P 500 average price earnings multiple.
When these positives are recognized, we expect the group to sell at closer to
market multiples.
We are pleased to report that in the second quarter we saw a return of merger
activity. Zions Bancorp bought First Security Corp., Firstar Corp bought
Mercantile Bancorp, Everen Capital Corp was bought out by First Union, and
AmSouth Bancorp and First American Corp agreed to tie the knot. We feel this
proves that Y2K concerns are behind us and that the second half of 1999 will
provide many more mergers.
Patience is a virtue not given freely to portfolio managers, so we truly
empathize with our shareholders. Although we all have been laboring with mid-cap
financial shares that are out of style, we feel the balance of the year will be
rewarding based on the above-mentioned factors.
Gray, Seifert & Co., Inc.
- --------------
(1 Reflects return on Class A shares, excluding the 4.75% maximum sales charge.
The returns for the indices do not include any transaction costs or other
administrative expenses associated with buying and selling securities in the
index. The returns for the Fund include such expenses.
(2) 100 basis points = 1%.
7
<PAGE>
GROWTH OF A $10,000 INVESTMENT
[Bartlett
mutual funds The following graphs compare each Fund's total return against
graphic that of a closely matched, broad-based securities market index.
appears here]
These performance tables and charts represent past performance and are no
guarantee of future results. The investment return and principal value of the
Funds will fluctuate so that upon redemption, you may receive more or less than
your original cost.
The charts illustrate the cumulative total return of an initial $10,000
investment in each Fund for the periods indicated. The returns reflected in the
chart for Class A shares reflect the maximum sales charge of 4.75% (the Average
Annual Total Return table within each Class A chart provides information both
including and excluding the effect of the maximum sales charge). A contingent
deferred sales charge may be imposed under certain circumstances on Class A and
C shares. Please refer to the prospectus for details. The performance tables and
charts assume all dividends and distributions are reinvested at the net asset
value on the reinvestment date and reflect the periodic absorption of some Fund
expenses through the waiver of management fees. Had a portion of these fees not
been waived, the Funds' total returns would have been slightly lower.
The lines representing the securities market indices (which is, in each case, an
unmanaged index) do not include any transaction costs or other administrative
expenses associated with buying and selling securities in the index.
No performance information is shown for Financial Services Fund since the Fund
only began operations on November 16, 1998, and the information would not be
meaningful.
*This line reflects Bartlett Basic Value Fund
return information Class A Shares
on Class A shares June 30, 1989, through June 30, 1999
excluding the
maximum 4.75% sales
charge which became Average Annual Total Returns
effective July 21, For periods ended June 30, 1999
1997. The second --------------------------------------------------------
line in the table 1 Year 3 Years 5 Years 10 Years Life of the Fund
reflects return (since 5/5/83)
information --------------------------------------------------------
including the sales (0.40)%* 14.90%* 16.76%* 11.89%* 12.42%*
charge. (5.12)% 13.05% 15.63% 11.35% 12.09%
--------------------------------------------------------
**The initial
investment for Basic [CHART APPEARS HERE]
Value Fund Class A
shares is net of the
4.75% sales charge. $55,900 $29,291
S&P 500 Index Basic Value Fund
The Standard & ------------- ----------------
Poor's 500 Index is 6/30/89 10,000 9,525
a broad-based, 6/30/90 11,649 10,034
unmanaged index of 6/30/91 12,510 10,061
common stocks 6/30/92 14,188 11,731
commonly used to 6/30/93 16,122 12,762
measure general 6/30/94 16,349 13,496
stock market 6/30/95 20,611 16,120
activity. 6/30/96 25,970 19,310
6/30/97 34,983 23,873
6/30/98 45,533 29,410
6/30/99 55,900 29,291
8
<PAGE>
Bartlett Basic Value Fund
Class C Shares
September 12, 1997, through June 30, 1999
Average Annual Total Returns
For periods ended June 30, 1999
---------------------------------------
1 Year Life of the Fund
(since 9/12/97)
---------------------------------------
(1.09)% 5.97%
---------------------------------------
[CHART APPEARS HERE]
$15,682 $11,101 The Standard &
S&P 500 Index Basic Value Fund Poor's 500 Index is
------------- ---------------- a broad-based,
9/12/97 10,000 10,000 unmanaged index of
9/30/97 10,547 10,381 common stocks
12/31/97 10,850 10,607 commonly used to
3/31/98 12,363 11,654 measure general
6/30/98 12,773 11,224 stock market
9/30/98 11,505 9,501 activity. Index
12/31/98 13,953 10,921 returns are for the
3/31/99 14,649 10,485 periods beginning
6/30/99 15,682 11,101 August 31, 1997.
Bartlett Basic Value Fund
Class Y Shares
August 15, 1997, through June 30, 1999
Average Annual Total Returns
For periods ended June 30, 1999
---------------------------------------
1 Year Life of the Fund
(since 8/15/97)
---------------------------------------
(0.15)% 8.24%
---------------------------------------
[CHART APPEARS HERE]
$14,804 $11,605 The Standard &
S&P 500 Index Basic Value Fund Poor's 500 Index is
------------- ---------------- a broad-based,
8/18/97 10,000 10,000 unmanaged index of
9/30/97 9,957 10,651 common stocks
12/31/97 10,243 10,922 commonly used to
3/31/98 11,670 12,022 measure general
6/30/98 12,058 11,623 stock market
9/30/98 10,861 9,860 activity. Index
12/31/98 13,172 11,359 returns are for the
3/31/99 13,829 10,937 periods beginning
6/30/99 14,804 11,605 July 31, 1997.
9
<PAGE>
Growth of a $10,000 Investment (Continued)
Bartlett Value International Fund *This line reflects
Class A Shares return information on
October 6, 1989, through June 30, 1999 Class A shares excluding
the maximum 4.75% sales
charge which became
Average Annual Total Returns effective July 21, 1997.
For periods ended June 30, 1999 The second line in the
- ------------------------------------------- table reflects return
1 Year 3 Years 5 Years Life of the Fund information including the
(since 10/6/89) sales charge.
- -------------------------------------------
5.59%* 6.92%* 7.94%* 7.27%* **The initial investment
0.56% 5.21% 6.89% 6.73% for Value International
- ------------------------------------------- Fund Class A shares is
net of the 4.75% sales
charge.
[CHART APPEARS HERE]
The Morgan Stanley Capital
International Europe,
$16,859 $18,865 Australia, Far East (MSCI
MSCI EAFE Index Value International Fund EAFE) Index is a broad-
--------------- ------------------------ based, unmanaged
10/6/89 10,000 9,524 index composed of select
6/30/90 9,187 9,932 common stocks of
6/30/91 8,128 8,821 companies based outside
6/30/92 8,075 10,927 the United States and
6/30/93 9,712 10,753 including Europe,
6/30/94 11,364 12,877 Australia, and the Far
6/30/95 11,552 13,511 East. It is often used to
6/30/96 13,086 15,433 measure international
6/30/97 14,766 19,096 stock market activity.
6/30/98 15,666 17,867 Index returns are for the
6/30/99 16,859 18,865 periods beginning
September 30, 1989.
Bartlett Value International Fund
Class C Shares
July 23, 1997, through June 30, 1999
Average Annual Total Returns
For periods ended June 30, 1999
-----------------------------------
The Morgan Stanley 1 Year Life of the Fund
Capital International (since 7/23/97)
Europe, Australia, Far -----------------------------------
East (MSCI EAFE) Index 4.80% (2.25)%
is a broad-based, -----------------------------------
unmanaged index
composed of select
common stocks of [CHART APPEARS HERE]
companies based outside
the United States and
including Europe, $11,236 $9,568
Australia, and the Far MSCI EAFE Index Value International Fund
East. It is often used --------------- ------------------------
to measure 7/23/97 10,000 10,000
international stock 9/30/97 9,772 10,070
market activity. Index 12/31/97 9,006 8,913
returns are for the 3/31/98 10,331 9,601
periods beginning July 6/30/98 10,441 9,130
31, 1997. 9/30/98 8,957 7,618
12/31/98 10,807 8,588
3/31/99 10,957 8,755
6/30/99 11,236 9,568
10
<PAGE>
Bartlett Value International Fund
Class Y Shares
August 15, 1997, through June 30, 1999
Average Annual Total Returns
For periods ended June 30, 1999
--------------------------------------
1 Year Life of the Fund
(since 8/15/97)
--------------------------------------
5.76% (1.60)%
--------------------------------------
The Morgan Stanley Capital
[CHART APPEARS HERE] International Europe,
Australia, Far East (MSCI
EAFE) Index is a
$11,236 $9,701 broad-based, unmanaged
MSCI EAFE Index Value International Fund index composed of select
--------------- ------------------------ common stocks of companies
8/15/97 10,000 10,000 based outside the United
9/30/97 9,772 10,045 States and including
12/31/97 9,006 8,906 Europe, Australia, and the
3/31/98 10,331 9,621 Far East. It is often used
6/30/98 10,441 9,173 to measure international
9/30/98 8,957 7,671 stock market activity.
12/31/98 10,807 8,670 Index returns are for the
3/31/99 10,957 8,860 periods beginning August
6/30/99 11,236 9,701 31, 1997.
*This line reflects
return information on Bartlett Europe Fund
Class A shares Class A Shares
excluding the maximum June 30, 1989, through June 30, 1999
4.75% sales charge
which became effective Average Annual Total Returns
July 21, 1997. The For periods ended June 30, 1999
second line in the ------------------------------------------------------
table reflects return 1 Year 3 Years 5 Years 10 Years Life of the Fund
information including (since 08/19/86)
the sales charge. ------------------------------------------------------
5.36%* 21.94%* 21.53%* 10.33%* 9.48%*
**The initial 0.34% 19.97% 20.35% 9.80% 9.06%
investment for Europe ------------------------------------------------------
Fund Class A shares is
net of the 4.75% sales
charge. [CHART APPEARS HERE]
Prior to July 21,
1997, the Fund was a $38,440 $25,459
closed-end fund which MSCI Europe Index Europe Fund
reinvested all ----------------- -----------
dividends and 6/30/89 10,000 9,526
distributions at an 6/30/90 13,193 10,073
average reported sales 6/30/91 11,542 8,629
price on the New York 6/30/92 14,140 9,191
Stock Exchange. 6/30/93 13,785 8,560
6/30/94 15,972 9,604
The Morgan Stanley 6/30/95 18,973 10,833
Capital International 6/30/96 21,758 14,043
(MSCI) Europe Index is 6/30/97 28,284 17,311
a broad-based, 6/30/98 38,767 24,164
unmanaged index based 6/30/99 38,440 25,459
on the share prices of
common stocks in
different European
countries. The
countries included in
this index are
Austria, Belgium,
Denmark, Finland,
France, Germany,
Ireland, Italy, the
Netherlands, Norway,
Spain, Sweden,
Switzerland, and the
U.K.
11
<PAGE>
Growth of a $10,000 Investment (Continued)
Bartlett Europe Fund
Class C Shares
July 23, 1997, through June 30, 1999
Average Annual Total Returns
For periods ended June 30, 1999
-------------------------------------
1 Year Life of the Fund
(since 7/23/97)
------------------------------------- The Morgan Stanley
4.53% 18.39% Capital International
------------------------------------- (MSCI) Europe Index is
a broad-based,
unmanaged index based
[CHART APPEARS HERE] on the share prices of
common stocks in
different European
$12,982 $13,874 countries. The
MSCI Europe Index Europe Fund countries included in
----------------- ----------- this index are Austria,
7/23/97 10,000 10,000 Belgium, Denmark,
9/30/97 10,343 10,143 Finland, France,
12/31/97 10,350 10,068 Germany, Ireland,
3/31/98 12,452 12,616 Italy, the Netherlands,
6/30/98 13,093 13,273 Norway, Spain, Sweden,
9/30/98 11,205 11,522 Switzerland, and the
12/31/98 13,303 14,143 U.K. Index returns are
3/31/99 13,023 14,091 for the periods
6/30/99 12,982 13,874 beginning July 31,
1997.
The Morgan Stanley Bartlett Europe Fund
Capital International Class Y Shares
(MSCI) Europe Index is a August 21, 1997, through June 30, 1999
broad-based, unmanaged
index based on the share Average Annual Total Returns
prices of common stocks For periods ended June 30, 1999
in different European --------------------------------------
countries. The countries 1 Year Life of the Fund
included in this index (since 8/21/97)
are Austria, Belgium, --------------------------------------
Denmark, Finland, France, 5.71% 22.91%
Germany, Ireland, Italy, --------------------------------------
the Netherlands, Norway,
Spain, Sweden,
Switzerland, and the U.K.
Index returns are for the [CHART APPEARS HERE]
periods beginning August
31, 1997.
$13,769 $14,687
MSCI Europe Index Europe Fund
----------------- -----------
8/21/97 10,000 10,000
9/30/97 10,970 10,538
12/31/97 10,978 10,476
3/31/98 13,207 13,170
6/30/98 13,886 13,894
9/30/98 11,884 12,094
12/31/98 14,109 14,930
3/31/99 13,812 14,888
6/30/99 13,769 14,687
12
<PAGE>
INDUSTRY DIVERSIFICATION
Bartlett Capital Trust
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE INTERNATIONAL FUND EUROPE FUND
% OF NET MARKET % OF NET MARKET
ASSETS VALUE ASSETS VALUE
- ----------------------------------------------- ------------------------------------------------
(000) (000)
<S><C>
Automotive 5.5% $ 2,460 Aerospace/Defense 2.2% $ 2,308
Banking 9.9 4,366 Automotive 4.7 4,965
Chemicals 3.9 1,744 Banking 9.3 9,794
Computer Services 3.1 1,389 Computer Services 2.4 2,523
Construction 4.6 2,033 Diversified 3.7 3,890
Consumer Durable Goods 10.8 4,783 Electronics 4.2 4,459
Diversified 9.1 4,053 Finance 7.7 8,108
Electronics 5.3 2,340 General Industry 3.3 3,503
Investment Companies 1.6 699 Insurance 6.3 6,685
Media/Broadcast 1.1 490 Leisure 1.8 1,898
Metals & Mining 9.1 4,035 Miscellaneous Manufacturing 4.7 4,974
Miscellaneous Services 2.6 1,146 Miscellaneous Services 1.9 2,002
Oil & Gas 7.4 3,265 Oil & Gas 7.7 8,116
Real Estate 2.7 1,189 Pharmaceuticals & Health Care 7.7 8,074
Retail Sales 8.1 3,572 Publishing 1.3 1,359
Telecommunications 3.7 1,619 Real Estate 0.4 377
Transportation 4.6 2,051 Retail Sales 7.8 8,263
Short-Term Investments 5.6 2,477 Telecommunications 15.7 16,533
----- ------- Transportation 4.6 4,834
Total Investment Portfolio 98.7 43,711 ----- --------
Other Assets Less Liabilities 1.3 557 Total Investment Portfolio 97.4 102,665
----- ------- Other Assets Less Liabilities 2.6 2,708
NET ASSETS 100.0% $44,268 ----- --------
===== ======= NET ASSETS 100.0% $105,373
===== ========
</TABLE>
13
<PAGE>
STATEMENT OF NET ASSETS
Bartlett Basic Value Fund
June 30, 1999 (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Market Market
Shares Value Shares Value
- ----------------------------------------------------------- -----------------------------------------------------------
<S><C>
COMMON STOCKS AND EQUITY INTERESTS - 99.2% Metals/Mining - 2.6%
- ----------------------------------------------------------- Potash Corporation of
Advertising/Media - 2.8% Saskatchewan, Inc. ADR 47 $ 2,432
Time Warner, Inc. 36 $ 2,646 -----------------------------------------------------------
- ----------------------------------------------------------- Miscellaneous Services - 2.0%
Aerospace/Defense - 2.8% Service Corporation International 100 1,925
Lockheed Martin Corporation 71 2,645 -----------------------------------------------------------
- ----------------------------------------------------------- Real Estate Investment Trusts (REITS) - 4.5%
Automotive - 2.1% Chateau Communities, Inc. 143 4,281
Ford Motor Company 35 1,975 -----------------------------------------------------------
- ----------------------------------------------------------- Savings and Loan - 4.5%
Chemicals - 2.0% Charter One Financial, Inc. 154 4,291
Ferro Corporation 70 1,925 -----------------------------------------------------------
- ----------------------------------------------------------- Telecommunications - 4.8%
Computer Services and Systems - 2.0% AT&T Corporation 82 4,577
Compaq Computer Corporation 79 1,871 -----------------------------------------------------------
- ----------------------------------------------------------- Transportation - 13.6%
Construction and Building Materials - 2.5% AMR Corporation 53 3,617(A)
Martin Marietta Materials, Inc. 40 2,360 GATX Corporation 77 2,931
- ----------------------------------------------------------- Kansas City Southern Industries, Inc. 50 3,159
Electronics - 4.1% Union Pacific Corporation 55 3,207
Intel Corporation 20 1,190 -------
Molex Incorporated 87 2,740 12,914
------- -----------------------------------------------------------
3,930 TOTAL COMMON STOCKS AND
- ----------------------------------------------------------- EQUITY INTERESTS $94,448
Energy - 5.1% -----------------------------------------------------------
Phillips Petroleum Company 46 2,314 (Identified Cost - $61,481)
Total Fina SA ADR 15 967 -----------------------------------------------------------
Unocal Corporation 40 1,585 Total Investments - 99.2% $94,448
------- -----------------------------------------------------------
4,866 (Identified Cost - $61,481)
- ----------------------------------------------------------- -----------------------------------------------------------
Financial Services - 21.6% OTHER ASSETS LESS LIABILITIES - 0.8% $ 803
Citigroup Inc. 67 3,183 -----------------------------------------------------------
Fannie Mae 72 4,923 NET ASSETS CONSISTING OF:
First Tennessee National Corporation 65 2,490 Capital shares $51,464
H&R Block, Inc. 90 4,500 Distributions in excess of
Marshall & Ilsley Corporation 45 2,897 net investment income (44)
Mellon Bank Corporation 72 2,619 Undistributed net realized gains
------- from security transactions and
20,612 foreign currency transactions 10,864
- ----------------------------------------------------------- Net unrealized appreciation of
Food, Beverage and Tobacco - 8.2% investments and foreign
Anheuser-Busch Companies, Inc. 30 2,128 currency transactions 32,967
McDonald's Corporation 57 2,355 -----------------------------------------------------------
Philip Morris Companies, Inc. 82 3,295 NET ASSETS - 100.0% $95,251
------- ===========================================================
7,778 Net asset value and redemption
- ----------------------------------------------------------- price per share - Class A
Health Care - 1.4% ($91,497 / 4,972 shs) $18.40
Abbott Laboratories 30 1,365 ===========================================================
- ----------------------------------------------------------- Maximum offering price per share -
Investment Companies - 2.1% Class A (net asset value plus sales
Royce Value Trust, Inc. 153 2,021 charge of 4.75% of offering price) $19.32
- ----------------------------------------------------------- ===========================================================
Manufacturing - 10.5% Net asset value, offering price and
Dover Corporation 60 2,100 redemption price per share -
Fleetwood Enterprises, Inc. 100 2,644 Class C ($1,877 / 103 shs) $18.18
HON INDUSTRIES Inc. 23 671 ===========================================================
Kaydon Corporation 112 3,766 Net asset value, offering price and
Tyco International Ltd. 9 853 redemption price per share -
------- Class Y ($1,877 / 102 shs) $18.38
$10,034 ===========================================================
- ----------------------------------------------------------- (A) Non-dividend paying investment.
See notes to financial statements.
</TABLE>
14
<PAGE>
STATEMENT OF NET ASSETS
Bartlett Value International Fund
June 30, 1999 (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Market Market
Shares Value Shares Value
- ----------------------------------------------------------- -----------------------------------------------------------
<S><C>
COMMON STOCKS AND EQUITY INTERESTS - 90.6% Korea - 1.6%
- ----------------------------------------------------------- Korea Fund, Inc. 20 $ 299(A)
Argentina - 2.7% Pohang Iron & Steel Company
IRSA Inversiones y Representaciones Ltd. ADR 12 407
S.A. GDR 39 $ 1,189 -------
- ----------------------------------------------------------- 706
Australia - 5.8% -----------------------------------------------------------
Brambles Industries Ltd. 43 1,136 Malaysia(B) - 0.9%
National Australia Bank ADR 11 943 Perlis Plantations Bhd 386 400
News Corporation Limited ADR 14 490 -----------------------------------------------------------
------- Netherlands - 3.4%
2,569 New Holland NV ADR 89 1,520
- ----------------------------------------------------------- -----------------------------------------------------------
Canada - 4.6% Norway - 2.7%
Northern Telecom Ltd. ADR 19 1,619 Elkem ASA 31 558
Potash Corporation of Norsk Hydro ASA ADR 17 635
Saskatchewan, Inc. ADR 8 435 -------
------- 1,193
2,054 -----------------------------------------------------------
- ----------------------------------------------------------- Portugal - 2.3%
France - 7.4% Banco Comercial Portugues, SA ADR 34 864
Cie de Saint Gobain 6 1,017 Portugal Fund Inc. 11 159
Michelin 27 1,108 -------
Total Fina SA ADR 18 1,148 1,023
------- -----------------------------------------------------------
3,273 Singapore - 1.9%
- ----------------------------------------------------------- Dairy Farm International
Germany - 10.6% Holdings Ltd. 695 834
Buderus AG 3 1,343 -----------------------------------------------------------
DaimlerChrysler AG 15 1,323 Spain - 2.8%
Deutsche Lufthansa AG 51 915 Repsol SA ADR 62 1,253
Hoechst AG ADR 24 1,109 -----------------------------------------------------------
------- Sweden - 4.8%
4,690 AGA AB 70 863
- ----------------------------------------------------------- AssiDoman AB 15 223
India - 0.2% Cardo AB 46 1,017
Morgan Stanley India -------
Investment Fund 7 71(A) 2,103
- ----------------------------------------------------------- -----------------------------------------------------------
Ireland - 1.3% Switzerland - 2.0%
Allied Irish Banks PLC ADR 22 589 Novartis 1 876
- ----------------------------------------------------------- -----------------------------------------------------------
Italy - 2.5% Taiwan - 0.4%
Istituto Bancario San Paolo di Taiwan Fund Inc. 8 170
Torino ADR 40 1,094 -----------------------------------------------------------
- ----------------------------------------------------------- United Kingdom - 12.6%
Japan - 20.1% Cadbury Schweppes PLC ADR 37 985
Canon, Inc. 45 1,295 Diageo PLC ADR 27 1,172
Fujitsu Ltd. 69 1,389 Invensys plc 213 1,008
Ito-Yokado ADR 19 1,269 Rio Tinto plc ADR 17 1,116
Matsumotokiyoshi 25 1,468 Tomkins PLC ADR 71 1,301
Matsushita Electric Industrial -------
Company Ltd. 64 1,243 5,582
Rohm Company Ltd. 7 1,097 -----------------------------------------------------------
Secom Co., Ltd. 11 1,146 TOTAL COMMON STOCKS AND
------- EQUITY INTERESTS $40,096
8,907 -----------------------------------------------------------
- ----------------------------------------------------------- (Identified Cost - $32,088)
-----------------------------------------------------------
</TABLE>
15
<PAGE>
STATEMENT OF NET ASSETS
Bartlett Value International Fund
(Continued)
June 30, 1999 (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Face Market
Amount Value
- ----------------------------------------------------------- -----------------------------------------------------------
<S><C>
CONVERTIBLE BONDS - 2.5% Net asset value and redemption
- ----------------------------------------------------------- price per share - Class A
Canada - 2.5% ($36,795 / 2,973 shs) $12.38
Magna International Inc. ===========================================================
5%, 10/15/02 $1,050 $ 1,138 Maximum offering price per share -
- ----------------------------------------------------------- Class A (net asset value plus sales
TOTAL CONVERTIBLE BONDS $ 1,138 charge of 4.75% of offering price) $13.00
- ----------------------------------------------------------- ===========================================================
(Identified Cost - $1,050) Net asset value, offering price and
- ----------------------------------------------------------- redemption price per share -
REPURCHASE AGREEMENT - 5.6% Class C ($3,615 / 297 shs) $12.15
- ----------------------------------------------------------- ===========================================================
State Street Bank & Trust Company Net asset value, offering price and
3.5%, dated 6/30/99, to be redemption price per share -
repurchased at $2,477 on 7/1/99 Class Y ($3,858 / 313 shs) $12.34
(Collateral: $2,520 Freddie Mac ===========================================================
mortgage-backed securities, (A) Non-dividend paying investment.
5.25%, due 8/24/01, value $2,536) 2,477 2,477 (B) As of February 15, 1999, the repatriation of proceeds
- ----------------------------------------------------------- held since August 31, 1998, from the sale of Malaysian
TOTAL REPURCHASE AGREEMENT $ 2,477 securities cannot be accomplished without a levy until
- ----------------------------------------------------------- at least September 1, 1999. The Fund's Malaysian
(Identified Cost - $2,477) securities are therefore considered illiquid and are
- ----------------------------------------------------------- being fair valued following procedures approved by the
TOTAL INVESTMENTS - 98.7% $43,711 Board of Trustees.
- -----------------------------------------------------------
(Identified Cost - $35,615) See notes to financial statements.
- -----------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 1.3% $ 557
- -----------------------------------------------------------
NET ASSETS CONSISTING OF:
Capital shares $39,780
Distributions in excess of
net investment income (2,339)
Accumulated net realized losses
from security transactions and
foreign currency transactions (1,268)
Net unrealized appreciation of
investments and foreign
currency transactions 8,095
- -----------------------------------------------------------
NET ASSETS - 100.0% $44,268
===========================================================
</TABLE>
16
<PAGE>
STATEMENT OF NET ASSETS
Bartlett Europe Fund
June 30, 1999 (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Market Market
Shares Value Shares Value
- ----------------------------------------------------------- -----------------------------------------------------------
<S><C>
COMMON STOCKS AND EQUITY INTERESTS - 93.6% Spain - 3.6%
- ----------------------------------------------------------- Argentaria, Caja Postal y Banco
Finland - 3.1% Hipotecario de Espana, SA 64 $ 1,443
Nokia AB Oy 38 $ 3,308 Telefonica S.A. 49 2,366
- ----------------------------------------------------------- -------
France - 15.7% 3,809
Accor SA 8 1,898 -----------------------------------------------------------
Axa 16 1,902 Sweden - 5.2%
Castorama Dubois 6 1,507 Electrolux AB 102 2,145
Elf Aquitaine SA 24 3,457 Hennes & Mauritz AB (H&M) 51 1,251
Pinault-Printemps-Redoute SA 11 1,844 Telefonaktienbolaget LM Ericsson 66 2,124
Societe Generale 8 1,409 -------
STMicroelectronics 34 2,291 5,520
Vivendi 28 2,269 -----------------------------------------------------------
------- Switzerland - 7.8%
16,577 Adecco SA 4 2,002
- ----------------------------------------------------------- Roche Holding AG N.M. 2,538
Germany - 9.2% UBS - Union Bank of Switzerland 7 1,959
Allianz AG 5 1,383 Zurich Allied AG 3 1,736
DaimlerChrysler AG 40 3,442 -------
Deutsche Lufthansa AG 72 1,309 8,235
Mannesmann AG 23 3,503 -----------------------------------------------------------
------- United Kingdom - 31.1%
9,637 BP Amoco Plc 260 4,659
- ----------------------------------------------------------- British Aerospace PLC 355 2,308
Greece - 1.6% British Telecommunications plc 174 2,914
Alpha Credit Bank 26 1,701 Cable & Wireless plc 171 2,176
- ----------------------------------------------------------- Glaxo Wellcome plc 85 2,373
Ireland - 6.0% Granada Group plc 88 1,621
Allied Irish Banks plc 110 1,462 Kingfisher plc 147 1,714
Anglo Irish Bank Corporation plc 648 1,599 Lloyds TSB Group plc 132 1,789
CRH plc 160 2,830 National Westminster Bank PLC 138 2,920
Green Property plc 69 377 Railtrack Group PLC 90 1,843
------- SmithKline Beecham plc 243 3,163
6,268 Stagecoach Holdings plc 471 1,682
- ----------------------------------------------------------- Vodafone Group plc 185 3,645
Italy - 2.1% -------
Tecnost SpA 884 2,179 32,807
- ----------------------------------------------------------- -----------------------------------------------------------
Netherlands - 8.2% TOTAL COMMON STOCKS AND
AEGON N.V. 23 1,665 EQUITY INTERESTS $98,619
ING Groep N.V. 27 1,440 -----------------------------------------------------------
Koninklijke (Royal) Philips (Identified Cost - $87,501)
Electronics N.V. 22 2,168 -----------------------------------------------------------
Koninklijke Ahold NV 57 1,946
VNU NV 34 1,359
-------
8,578
- -----------------------------------------------------------
</TABLE>
17
<PAGE>
STATEMENT OF NET ASSETS
Bartlett Europe Fund
(Continued)
June 30, 1999 (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Market
Shares Value
- ----------------------------------------------------------- -----------------------------------------------------------
<S><C>
PREFERRED SHARES - 3.8% Maximum offering price per share -
- ----------------------------------------------------------- Class A (net asset value plus sales
Germany - 3.8% charge of 4.75% of offering price) $25.56
Porsche AG 1 $ 1,523 ===========================================================
SAP AG 6 2,523 Net asset value, offering price and
-------- redemption price per share -
4,046 Class C ($44,827 / 1,877 shs) $23.88
- ----------------------------------------------------------- ===========================================================
TOTAL PREFERRED SHARES $ 4,046 Net asset value, offering price and
- ----------------------------------------------------------- redemption price per share -
(Identified Cost - $4,586) Class Y ($309 / 13 shs) $24.40
- ----------------------------------------------------------- ===========================================================
TOTAL INVESTMENTS - 97.4% $102,665 (A) Non-dividend paying investment.
- ----------------------------------------------------------- N.M. - Not meaningful.
(Identified Cost - $92,087)
- ----------------------------------------------------------- See notes to financial statements.
OTHER ASSETS LESS LIABILITIES - 2.6% $ 2,708
- -----------------------------------------------------------
NET ASSETS CONSISTING OF:
Capital shares $ 85,931
Distributions in excess of
net investment income (1,170)
Undistributed net realized gain
on investments and foreign
currency transactions 10,093
Unrealized appreciation of
investments and foreign
currency transactions 10,519
- -----------------------------------------------------------
NET ASSETS - 100.0% $105,373
===========================================================
Net asset value
and redemption price
per share - Class A
($60,237 / 2,474 shs) $24.35
===========================================================
</TABLE>
18
<PAGE>
STATEMENT OF NET ASSETS
Bartlett Financial Services Fund
June 30, 1999 (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Market Market
Shares Value Shares Value
- ----------------------------------------------------------- -----------------------------------------------------------
<S><C>
COMMON STOCKS AND EQUITY INTERESTS - 99.6% Insurance - Continued
- ----------------------------------------------------------- ReliaStar Financial Corp. 12 $ 507
Asset Manager - 2.4% StanCorp Financial Group, Inc. 14 420(A)
T. Rowe Price Associates, Inc. 15 $ 557 The Progressive Corporation 3 435
Waddell & Reed Financial, Inc. 17 466 UNUM Corporation 8 411
------- -------
1,023 5,398
- ----------------------------------------------------------- -----------------------------------------------------------
Brokerage Firms - 5.1% Miscellaneous - 19.3%
A.G. Edwards, Inc. 12 371 Abbott Laboratories 10 432
Merrill Lynch & Co., Inc. 7 559 Albertson's Inc. 9 455
Morgan Keegan, Inc. 12 227 CVS Corporation 10 508
Paine Webber Group Inc. 10 444 Eli Lilly and Company 6 430
Ragen Mackenzie Group Furniture Brands International, Inc. 14 390(A)
Incorporated 18 214(A) Hannaford Bros. Co. 8 401
Raymond James Financial, Inc. 16 383 Hershey Foods Corporation 8 445
------- Hillenbrand Industries, Inc. 9 368
2,198 Hooper Holmes, Inc. 25 509
- ----------------------------------------------------------- Johnson & Johnson 4 431
Educational Services - 1.9% Kohl's Corporation 8 579(A)
ITT Educational Services, Inc. 16 417(A) Maytag Corporation 8 523
Sylvan Learning Systems, Inc. 15 408(A) Medtronic, Inc. 7 545
------- Pfizer Inc. 4 461
825 Riviana Foods, Inc. 13 250
- ----------------------------------------------------------- Safeway Inc. 8 396(A)
Finance - 1.0% The Home Depot, Inc. 7 419
Financial Federal Corporation 20 440(A) Walgreen Co. 16 470
- ----------------------------------------------------------- Wm. Wrigley Jr. Company 4 333
Financial Technology -------
Companies - 6.3% 8,345
DST Systems, Inc. 8 471(A) -----------------------------------------------------------
Fiserv, Inc. 14 423(A) Regional Banks - 37.5%
Jack Henry & Associates, Inc. 11 432 AmSouth Bancorporation 14 313
SunGard Data Systems Inc. 12 397(A) Bank of Commerce 13 265
The BISYS Group, Inc. 8 468(A) BB&T Corporation 12 433
Transaction Systems Architects, Inc. 14 526(A) Cascade Bancorp 16 256
------- CCB Financial Corporation 7 344
2,717 Centennial Bancorp 29 401(A)
- ----------------------------------------------------------- Centura Banks, Inc. 7 366
Insurance - 12.5% City National Corporation 12 431
American General Corporation 7 513 Colorado Business Bankshares, Inc. 16 184(A)
American International Group, Inc. 4 410 Commerce Bancshares, Inc. 12 463
Jefferson-Pilot Corporation 8 496 Community First Bankshares, Inc. 13 310
Lincoln National Corporation 11 596
Medical Assurance, Inc. 12 339(A)
Nationwide Financial Services, Inc. 9 385
Philadelphia Consolidated Holding
Corp. 17 424(A)
Protective Life Corporation 14 462
</TABLE>
19
<PAGE>
STATEMENT OF NET ASSETS
Bartlett Financial Services Fund
(Continued)
June 30, 1999 (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Market Market
Shares Value Shares Value
- ----------------------------------------------------------- -----------------------------------------------------------
<S><C>
Regional Banks - Continued Savings and Loan - 3.5%
Cullen/Frost Bankers, Inc. 13 $ 358 First Washington Bancorp, Inc. 10 $ 201
Fifth Third Bancorp 7 466 FirstBank Corp. 16 236
First American Corporation 9 382 Harbor Florida Bancshares, Inc. 27 331
First Security Corporation 20 545 Peoples Heritage Financial
First Tennessee National Group, Inc. 20 376
Corporation 12 460 Washington Mutual, Inc. 11 371
Firstar Corporation 5 126 -------
Frontier Financial Corporation 7 171 1,515
Greater Bay Bancorp 15 499 -----------------------------------------------------------
Hudson United Bancorp 15 459 Super-Regional Banks - 10.1%
Marshall & Ilsley Corporation 7 470 BankAmerica Corporation 6 440
Mercantile Bancorporation Inc. 7 400 Fleet Financial Group, Inc. 13 555
Mid-State Bancshares 16 548 National City Corporation 6 393
Mississippi Valley Bancshares, Inc. 10 331 Northern Trust Corporation 6 582
National Bancorp of Alaska, Inc. 6 159 SunTrust Banks, Inc. 7 507
North Fork Bancorporation, Inc. 21 448 The Bank of New York
Pacific Capital Bancorp 16 501 Company, Inc. 15 532
Pacific Century Financial U.S. Bancorp 9 306
Corporation 19 410 Wachovia Corporation 6 513
Seacoast Banking Corporation Wells Fargo Company 12 513
of Florida 10 290 -------
SierraWest Bancorp 9 276 4,341
Silicon Valley Bancshares 15 371(A) -----------------------------------------------------------
SouthTrust Corporation 8 288 TOTAL COMMON STOCKS AND
Southwest Bancorporation of EQUITY INTERESTS $42,970
Texas, Inc. 11 198(A) -----------------------------------------------------------
State Street Corporation 7 555 (Identified Cost - $41,115)
Summit Bancorp. 12 481 -----------------------------------------------------------
TCF Financial Corporation 16 446 TOTAL INVESTMENTS - 99.6% $42,970
Texas Regional Bancshares, Inc. 15 412 -----------------------------------------------------------
Umpqua Holdings Corporation 10 90 (Identified Cost - $41,115)
West Coast Bancorp 16 280 -----------------------------------------------------------
Westamerica Bancorporation 12 438 OTHER ASSETS LESS LIABILITIES - 0.4% $ 191
Western Bancorp 14 609 -----------------------------------------------------------
Wilmington Trust Corporation 8 459 NET ASSETS CONSISTING OF:
Zions Bancorporation 8 476 Capital shares $41,838
------- Accumulated net operating loss (98)
16,168 Accumulated net realized loss
- ----------------------------------------------------------- on investments (434)
Unrealized appreciation of investments 1,855
-----------------------------------------------------------
NET ASSETS - 100% $43,161
===========================================================
Net asset value and redemption
price per share - Class A
($11,090 / 1,058 shs) $10.48
===========================================================
Maximum offering price per share-
Class A (net asset value plus sales
charge of 4.75% of offering price) $11.00
===========================================================
Net asset value, offering price and
redemption price per share -
Class C ($32,071 / 3,074 shs) $10.43
===========================================================
(A) Non-dividend paying investment.
See notes to financial statements.
</TABLE>
20
<PAGE>
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1999 (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Bartlett Value Bartlett Bartlett
Bartlett International Europe Financial
Basic Value Fund Fund Fund Services Fund
- --------------------------------------------------------------------------------------------
<S><C>
INVESTMENT INCOME:
Dividends $ 1,115 $ 763 $ 1,062 $ 256
Less foreign taxes withheld (3) (68) (77) -
Interest 24 72 43 2
- --------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,136 767 1,028 258
- --------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------
Investment advisory fees 397 313 505 174
Distribution and service fees 137 71 282 138
Custodian fees 54 58 134 45
Legal and audit fees 21 24 28 25
Trustees' fees 16 16 17 16
Registration fees 14 16 16 9
Reports to shareholders 9 6 14 5
Transfer agent and shareholder
servicing expense 7 6 34 6
Other expenses 2 2 33 N.M.
Less expenses waived (44) (53) - (62)
- --------------------------------------------------------------------------------------------
TOTAL EXPENSES 613 459 1,063 356
- --------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 523 308 (35) (98)
- --------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Realized gain (loss) on:
Investments 10,835 2,601 10,129 (434)
Foreign currency transactions N.M. N.M. (30) -
Change in unrealized appreciation of:
Investments (9,854) 2,353 (11,822) 838
Assets and liabilities denominated
in foreign currencies N.M. (1) (62) -
- --------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) 981 4,953 (1,785) 404
- --------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,504 $5,261 $ (1,820) $ 306
============================================================================================
</TABLE>
N.M.- Not meaningful.
See notes to financial statements.
21
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Bartlett Basic Value Fund
(Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
6/30/99 12/31/98
(Unaudited)
- --------------------------------------------------------------------------------------
<S><C>
FROM OPERATIONS:
- --------------------------------------------------------------------------------------
Net investment income (loss) $ 523 $ 1,372
Net realized gain (loss) on investments and foreign
currency transactions 10,835 4,845
Change in unrealized appreciation/(depreciation)
of investments and assets and liabilities denominated
in foreign currencies (9,854) (1,760)
- --------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS 1,504 4,457
- --------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
- --------------------------------------------------------------------------------------
From net investment income:
Class A shares (907) (889)
Class C shares (3) (8)
Class Y shares (19) (16)
From net realized gains on security transactions:
Class A shares (623) (7,398)
Class C shares (13) (128)
Class Y shares (12) (144)
- --------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (1,577) (8,583)
- --------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
- --------------------------------------------------------------------------------------
Proceeds from shares sold:
Class A shares 1,705 11,170
Class C shares 218 2,334
Class Y shares 29 153
Net asset value of shares issued in reinvestment
of shareholder distributions:
Class A shares 1,471 8,032
Class C shares 15 135
Class Y shares 32 160
Payment for shares redeemed:
Class A shares (31,218) (28,706)
Class C shares (587) (526)
Class Y shares (591) (234)
- --------------------------------------------------------------------------------------
NET INCREASE (DECREASE) FROM FUND SHARE
TRANSACTIONS (28,926) (7,482)
- --------------------------------------------------------------------------------------
CHANGE IN NET ASSETS (28,999) (11,608)
NET ASSETS:
Beginning of period 124,250 135,858
- --------------------------------------------------------------------------------------
End of period $ 95,251 $124,250
- --------------------------------------------------------------------------------------
UNDER/(OVER) DISTRIBUTED NET INVESTMENT INCOME $ (44) $ 362
======================================================================================
</TABLE>
See notes to financial statements.
22
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Bartlett Value International Fund
(Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
6/30/99 12/31/98
(Unaudited)
- --------------------------------------------------------------------------------------
<S><C>
FROM OPERATIONS:
- --------------------------------------------------------------------------------------
Net investment income (loss) $ 308 $ 265
Net realized gain (loss) on investments and foreign
currency transactions 2,601 (2,640)
Change in unrealized appreciation/(depreciation)
of investments and assets and liabilities denominated
in foreign currencies 2,352 (467)
- --------------------------------------------------------------------------------------
CHANGE IN NET ASSET RESULTING
FROM OPERATIONS 5,261 (2,842)
- --------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
- --------------------------------------------------------------------------------------
From net investment income:
Class A shares (1,547) (947)
Class C shares (135) (46)
Class Y shares (143) (94)
From net realized gains on security transactions:
Class A shares - (1,860)
Class C shares - (128)
Class Y shares - (260)
- --------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (1,825) (3,335)
- --------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
- --------------------------------------------------------------------------------------
Proceeds from shares sold:
Class A shares 3,471 7,184
Class C shares 255 3,966
Class Y shares 17 328
Net asset value of shares issued in reinvestment
of shareholder distributions:
Class A shares 1,290 2,519
Class C shares 132 163
Class Y shares 100 203
Payment for shares redeemed:
Class A shares (18,722) (25,562)
Class C shares (939) (639)
Class Y shares (1,954) (7,430)
- --------------------------------------------------------------------------------------
NET INCREASE (DECREASE) FROM FUND SHARE
TRANSACTIONS (16,350) (19,268)
- --------------------------------------------------------------------------------------
CHANGE IN NET ASSETS (12,914) (25,445)
NET ASSETS:
Beginning of period 57,182 82,627
- --------------------------------------------------------------------------------------
End of period $ 44,268 $ 57,182
- --------------------------------------------------------------------------------------
UNDER/(OVER) DISTRIBUTED NET INVESTMENT INCOME $ (2,339) $ (822)
======================================================================================
</TABLE>
See notes to financial statements.
23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Bartlett Europe Fund
(Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
6/30/99 12/31/98
(Unaudited)
- --------------------------------------------------------------------------------------------
<S><C>
FROM OPERATIONS:
- --------------------------------------------------------------------------------------------
Net investment income (loss) $ (35) $ (179)
Net realized gain (loss) on investments and foreign
currency transactions 10,099 13,074
Change in unrealized appreciation/(depreciation) of investments
and assets and liabilities denominated in foreign currencies (11,884) 10,360
- --------------------------------------------------------------------------------------------
Change in net assets resulting
from operations (1,820) 23,255
- --------------------------------------------------------------------------------------------
Distributions to Shareholders:
- --------------------------------------------------------------------------------------------
From net investment income:
Class A shares (166) (862)
Class C shares 132) (355)
Class Y shares (1) (4)
From net realized gains on security transactions:
Class A shares (40) (8,621)
Class C shares (32) (4,213)
Class Y shares N.M. (31)
- --------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (371) (14,086)
- --------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
- --------------------------------------------------------------------------------------------
Proceeds from shares sold:
Class A shares 19,050 10,886
Class C shares 19,940 33,629
Class Y shares 64 219
Net asset value of shares issued in reinvestment
of shareholder distributions:
Class A shares 164 6,156
Class C shares 162 4,541
Class Y shares 1 35
Payment for shares redeemed:
Class A shares (15,301) (20,632)
Class C shares (6,494) (4,162)
Class Y shares -- (10,443)
- --------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) FROM FUND SHARE
TRANSACTIONS 17,586 20,229
- --------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS 15,395 29,398
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 89,978 60,580
- --------------------------------------------------------------------------------------------
End of period $105,373 $ 89,978
- --------------------------------------------------------------------------------------------
UNDER/(OVER) DISTRIBUTED NET INVESTMENT INCOME $ (1,170) $ (836)
============================================================================================
</TABLE>
N.M. - Not meaningful.
See notes to financial statements.
24
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Bartlett Financial Services Fund
(Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
6/30/99 12/31/98(A)
(Unaudited)
- -----------------------------------------------------------------------------------------
<S><C>
FROM OPERATIONS:
- -----------------------------------------------------------------------------------------
Net investment income (loss) $ (98) $ (5)
Net realized gain (loss) on investments and foreign
currency transactions (434) --
Change in unrealized appreciation/(depreciation) of
investments and assets and liabilities
denominated in foreign currencies 838 1,017
- -----------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS 306 1,012
- -----------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
- -----------------------------------------------------------------------------------------
Proceeds from shares sold:
Class A shares 4,314 7,112
Class C shares 19,646 14,009
Payment for shares redeemed:
Class A shares (718) (15)
Class C shares (2,436) (70)
- -----------------------------------------------------------------------------------------
NET INCREASE FROM FUND SHARE
TRANSACTIONS 20,806 21,036
- -----------------------------------------------------------------------------------------
CHANGE IN NET ASSETS 21,112 22,048
NET ASSETS:
Beginning of period 22,049 1
- -----------------------------------------------------------------------------------------
End of period $43,161 $22,049
- -----------------------------------------------------------------------------------------
UNDER/(OVER) DISTRIBUTED NET INVESTMENT INCOME $ (98) --
=========================================================================================
</TABLE>
(A) For the period November 16, 1998 (commencement of operations) to December
31, 1998.
See notes to financial statements.
25
<PAGE>
FINANCIAL HIGHLIGHTS
Bartlett Basic Value Fund
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Investment Operations Distributions
---------------------------------------- -------------------------------------
Net Asset Net Realized Total From From Net Asset
Value, Net and Unrealized From Net Net Value,
Beginning Investment Gains on Investment Investment Realized Total End of
of Period Income Investments Operations Income Gains Distributions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C>
Class A Shares
Six Months Ended
June 30, 1999* $18.34 $0.11(B) $0.25 $0.36 $(0.18) $(0.12) $(0.30) $18.40
Year Ended Dec. 31,
1998 18.95 0.20(B) 0.48 0.68 (0.14) (1.15) (1.29) 18.34
Nine Months Ended
Dec. 31, 1997(A) 18.33 0.19(B) 5.59 5.78 (0.22) (4.94) (5.16) 18.95
Years Ended March 31,
1997 17.94 0.22 1.82 2.04 (0.26) (1.39) (1.65) 18.33
1996 15.39 0.30 3.32 3.62 (0.24) (0.83) (1.07) 17.94
1995 14.89 0.27 1.53 1.80 (0.27) (1.03) (1.30) 15.39
1994 14.76 0.22 0.28 0.50 (0.23) (0.14) (0.37) 14.89
Class C Shares
Six Months Ended
June 30, 1999* $18.03 $0.02(C) $0.27 $0.29 $(0.02) $(0.12) $(0.14) $18.18
Years Ended Dec. 31,
1998 18.75 0.10(C) 0.41 0.51 (0.08) (1.15) (1.23) 18.03
1997(F) 22.84 0.24(C) 0.88 1.12 (0.27) (4.94) (5.21) 18.75
Class Y Shares
Six Months Ended
June 30, 1999* $18.31 $0.13(D) $0.25 $0.38 $(0.19) $(0.12) $(0.31) $18.38
Years Ended Dec. 31,
1998 18.87 0.25(D) 0.47 0.72 (0.13) (1.15) (1.28) 18.31
1997(G) 21.92 0.18(D) 1.94 2.12 (0.23) (4.94) (5.17) 18.87
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
----------------------------------------------------------------------------
Net
Investment Net Assets,
Expenses Income (Loss) Portfolio End of
Total to Average to Average Turnover Period
Return(E) Net Assets Net Assets Rate (in thousands)
- ------------------------------------------------------------------------------------------------------------
<S><C>
Class A Shares
Six Months Ended
June 30, 1999* 2.02%(H) 1.15%(B,I) 1.00%(B,I) 43%(I) $ 91,497
Year Ended Dec. 31,
1998 3.76% 1.08%(B) 1.05%(B) 28% 119,626
Nine Months Ended
Dec. 31, 1997(A) 33.14%(H) 1.13%(B,I) 1.15%(B,I) 42%(I) 133,076
Years Ended March 31,
1997 11.30% 1.16% 1.18% 23% 119,208
1996 24.05% 1.17% 1.79% 25% 125,636
1995 12.67% 1.20% 1.81% 26% 102,721
1994 3.42% 1.20% 1.48% 33% 94,289
Class C Shares
Six Months Ended
June 30, 1999* 1.65%(H) 1.90%(C,I) 0.25%(C,I) 43%(I) $ 1,877
Years Ended Dec. 31,
1998 2.96% 1.90%(C) 0.29%(C) 28% 2,228
1997(F) 6.07%(H) 1.90%(C,I) 1.11%(C,I) 42%(I) 395
Class Y Shares
Six Months Ended
June 30, 1999* 2.17%(H) 0.90%(D,I) 1.26%(D,I) 43%(I) $ 1,877
Years Ended Dec. 31,
1998 3.99% 0.82%(D) 1.31%(D) 28% 2,396
1997(G) 10.97%(H) 0.86%(D,I) 1.51%(D,I) 42%(I) 2,387
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(A) The year end for Bartlett Basic Value Fund was changed from March 31 to
December 31.
(B) Net of fees waived pursuant to a voluntary expense limitation of 1.15%. If
no fees had been waived, the annualized ratio of expenses to average daily
net assets for each period would have been as follows: 1999, 1.23%; 1998,
1.20%; 1997, 1.19%.
(C) Net of fees waived pursuant to a voluntary expense limitation of 1.90%. If
no fees had been waived, the annualized ratio of expenses to average daily
net assets for each period would have been as follows: 1999, 2.06%; 1998,
2.02%; 1997, 2.00%.
(D) Net of fees waived pursuant to a voluntary expense limitation of 0.90%. If
no fees had been waived, the annualized ratio of expenses to average daily
net assets for each period would have been as follows: 1999, 0.98%; 1998,
0.94%; 1997, 0.96%.
(E) Excluding sales charge.
(F) For the period September 12, 1997 (commencement of operations of this class)
to December 31, 1997.
(G) For the period August 15, 1997 (commencement of operations of this class) to
December 31, 1997.
(H) Not annualized.
(I) Annualized.
* Unaudited.
See notes to financial statements.
26
<PAGE>
FINANCIAL HIGHLIGHTS
Bartlett Value International Fund
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Investment Operations Distributions
---------------------------------------- -------------------------------------------------
Net Asset Net Realized Total From In Excess From
Value, Net and Unrealized From Net of Net Net
Beginning Investment Gains on Investment Investment Investment Realized Total
of Period Income Investments Operations Income Income Gains Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C>
Class A Shares
Six Months Ended
June 30, 1999* $11.50 $(0.01)(C) $ 1.36 $ 1.35 $(0.47) $ -- $ -- $(0.47)
Year Ended Dec. 31,
1998 12.45 (0.02)(C) (0.35) (0.37) (0.20) -- (0.38) (0.58)
Nine Months Ended
Dec. 31, 1997(A) 13.64 0.05(C) 0.31 0.36 (0.17) -- (1.38) (1.55)
Years Ended March 31,
1997 12.59 0.08 1.81 1.89 (0.08) (0.01) (0.75) (0.84)
1996 11.64 0.13 1.33 1.46 (0.13) (0.01) (0.37) (0.51)
1995 12.46 0.09 (0.21) (0.12) (0.09) -- (0.61) (0.70)
1994 10.08 0.07(B) 2.38 2.45 (0.07) -- -- (0.07)
Class C Shares
Six Months Ended
June 30, 1999* $11.34 $ 0.05(D) $ 1.23 $ 1.28 $(0.47) $ -- $ -- $(0.47)
Years Ended Dec. 31,
1998 12.30 0.10(D) (0.55) (0.45) (0.13) -- (0.38) (0.51)
1997(G) 15.70 0.08(D) (1.82) (1.74) (0.28) -- (1.38) (1.66)
Class Y Shares
Six Months Ended
June 30, 1999* $11.46 $(0.22)(E) $ 1.57 $ 1.35 $(0.47) $ -- $ -- $(0.47)
Years Ended Dec. 31,
1998 12.33 (0.37)(E) 0.04 (0.33) (0.16) -- (0.38) (0.54)
1997(H) 15.27 (0.11)(E) (1.21) (1.32) (0.24) -- (1.38) (1.62)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------------------
Net
Net Asset Investment Net Assets,
Value, Expenses Income (Loss) Portfolio End of
End of Total to Average to Average Turnover Period
Period Return(F) Net Assets Net Assets Rate (in thousands)
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
Class A Shares
Six Months Ended
June 30, 1999* $12.38 11.86%(I) 1.80%(C,J) 1.26%(C,J) 17%(J) $36,795
Year Ended Dec. 31,
1998 11.50 (2.88)% 1.73%(C) 0.37%(C) 27% 47,856
Nine Months Ended
Dec. 31, 1997(A) 12.45 2.79%(I) 1.78(C,J) 0.49%(C,J) 44%(J) 68,648
Years Ended March 31,
1997 13.64 15.45% 1.81% 0.62% 31% 83,973
1996 12.59 12.76% 1.83% 1.06% 38% 72,041
1995 11.64 (1.18)% 1.83% 0.80% 24% 57,664
1994 12.46 24.42% 1.88%(B) 0.55%(B) 19% 49,607
Class C Shares
Six Months Ended
June 30, 1999* $12.15 11.40%(I) 2.55%(D,J) 0.60%(D,J) 17%(J) $ 3,615
Years Ended Dec. 31,
1998 11.34 (3.64)% 2.55%(D) (0.55)%(D) 27% 3,916
1997(G) 12.30 (10.87)%(I) 2.55%(D,J) (1.68)%(D,J) 44%(J) 895
Class Y Shares
Six Months Ended
June 30, 1999* $12.34 11.90%(I) 1.55%(E,J) 1.45%(E,J) 17%(J) $ 3,858
Years Ended Dec. 31,
1998 11.46 (2.65)% 1.47%(E) 0.61%(E) 27% 5,410
1997(H) 12.33 (8.38)%(I) 1.44%(E,J) (0.75)%(E,J) 44%(J) 13,084
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) The year end for Bartlett Value International Fund was changed from March 31
to December 31.
(B) The Advisor has periodically absorbed expenses of the Bartlett Value
International Fund through management fee waivers. If the Advisor had not
waived any fees, the ratio of net expenses to average net assets would have
been 1.94% and the ratio of net investment income to average net assets
would have been 0.49% for the period ended March 31, 1994.
(C) Net of fees waived pursuant to a voluntary expense limitation of 1.80%. If
no fees had been waived, the annualized ratio of expenses to average daily
net assets for each period would have been as follows: 1999, 2.01%; 1998,
1.87%; 1997, 1.95%.
(D) Net of fees waived pursuant to a voluntary expense limitation of 2.55%. If
no fees had been waived, the annualized ratio of expenses to average daily
net assets for each period would have been as follows: 1999, 2.76%; 1998,
2.69%; 1997, 2.70%.
(E) Net of fees waived pursuant to a voluntary expense limitation of 1.55%. If
no fees had been waived, the annualized ratio of expenses to average daily
net assets for each period would have been as follows: 1999, 1.74%; 1998,
1.61%; 1997, 1.59%.
(F) Excluding sales charge.
(G) For the period July 23, 1997 (commencement of operations of this class) to
December 31, 1997.
(H) For the period August 15, 1997 (commencement of operations of this class) to
December 31, 1997.
(I) Not annualized.
(J) Annualized.
* Unaudited.
See notes to financial statements.
27
<PAGE>
FINANCIAL HIGHLIGHTS
Bartlett Europe Fund(A)
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Investment Operations Distributions
------------------------------------------- ------------------------------------
Net Realized
and Unrealized
Net Asset Net Gain (Losses) on Total From From Net Asset
Value, Investment Investments and From Net Net Value,
Beginning Income Foreign Currency Investment Investment Realized Total End of
of Period (Loss) Transactions Operations Income Gains Distributions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C>
Class A Shares
Six Months Ended
June 30, 1999* $24.77 $ 0.05 $(0.38) $(0.33) $(0.07) $(0.02) $(0.09) $24.35
Years Ended Dec. 31,
1998 20.97 0.02(B) 8.52 8.54 (0.43) (4.31) (4.74) 24.77
1997 24.24 (0.05)(B) 4.11 4.06 -- (7.33) (7.33) 20.97
1996 21.13 0.02 6.34 6.36 -- (3.25) (3.25) 24.24
1995 17.68 0.01 3.50 3.51 (0.06) -- (0.06) 21.13
1994 18.46 (0.03) (0.75) (0.78) -- -- -- 17.68
Class C Shares
Six Months Ended
June 30, 1999* $24.39 $(0.03) $(0.39) $(0.42) $(0.07) $(0.02) $(0.09) $23.88
Years Ended Dec. 31,
1998 20.86 0.11(C) 8.09 8.20 (0.36) (4.31) (4.67) 24.39
1997(F) 26.56 (0.10)(C) 0.23 0.13 -- (5.83) (5.83) 20.86
Class Y Shares
Six Months Ended
June 30, 1999* $24.78 $ 0.36 $(0.65) $(0.29) $(0.07) $(0.02) $(0.09) $24.40
Years Ended Dec. 31,
1998 21.01 0.22(D) 8.37 8.59 (0.51) (4.31) (4.82) 24.78
1997(G) 25.61 (0.04)(D) 1.27 1.23 -- (5.83) (5.83) 21.01
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-----------------------------------------------------------------------
Net
Investment Net Assets,
Expenses Income (Loss) Portfolio End of
Total to Average to Average Turnover Period
Return(E) Net Assets Net Assets Rate (in thousands)
- --------------------------------------------------------------------------------------------------
<S><C>
Class A Shares
Six Months Ended
June 30, 1999* (1.5)%(H) 1.78%(I) 0.24%(I) 81%(I) $60,237
Years Ended Dec. 31,
1998 41.9% 1.81%(B) (0.10)%(B) 103% 57,406
1997 17.5% 1.90%(B) (0.12)%(B) 123% 52,253
1996 31.5% 2.00% 0.10% 109% 70,991
1995 19.9% 2.10% 0.10% 148% 62,249
1994 (4.2)% 2.10% -- 75% 53,135
Class C Shares
Six Months Ended
June 30, 1999* (1.9)%(H) 2.57%(I) (0.51)(I) 81%(I) $44,827
Years Ended Dec. 31,
1998 40.5% 2.51%(C) (1.15)%(C) 103% 32,325
1997(F) 0.7%(H) 2.50%(C),(I) (1.79)%(C),(I) 123% 302
Class Y Shares
Six Months Ended
June 30, 1999* (1.6)%(H) 1.51%(I) 0.53%(I) 81%(I) $ 309
Years Ended Dec. 31,
1998 42.5% 1.55%(D) 1.31%(D) 103% 247
1997(G) 4.9%(H) 1.31%(D),(I) (0.60)%(D),(I) 123% 8,025
- --------------------------------------------------------------------------------------------------
</TABLE>
(A) The financial information in this table for the years ended December 31,
1994 through 1996, is for the Worldwide Value Fund, Bartlett Europe Fund's
predecessor. The financial information for the year ended December 31, 1997,
is for Bartlett Europe Fund and Worldwide Value Fund. Prior to July 21,
1997, the Worldwide Value Fund operated as a closed-end fund (see note 8).
(B) The expense ratio shown reflects both the operations of Worldwide Value Fud,
Bartlett Europe Fund's predecessor, prior to its merger with Bartlett Europe
Fund on July 21, 1997, and Bartlett Europe Fund's operations through
December 31, 1997. For the period July 21 to December 31, 1997, the Fund's
annualized expense ratio was 1.71%, net of fees waived pursuant to a
voluntary expense limitation of 1.75% until April 30, 1998; and 1.85%
indefinitely. If no fees had been waived, the annualized ratio of expenses
to average daily net assets for each period would have been as follows:
1998, 1.89%; 1997, 2.08%.
(C) Net of fees waived pursuant to a voluntary expense limitation of 2.50% until
April 30, 1998; and 2.60% indefinitely. If no fees had been waived, the
annualized ratio of expenses to average daily net assets for each period
would have been as follows: 1998, 2.59%; 1997, 2.68%.
(D) Net of fees waived pursuant to a voluntary expense limitation of 1.50% until
April 30, 1998; and 1.60% indefinitely. If no fees had been waived, the
annualized ratio of expenses to average daily net asets for each period
would have been as follows: 1998, 1.63%; 1997, 1.49%.
(E) Excluding sales charge.
(F) For the period July 23, 1997 (commencement of operations of this class) to
December 31, 1997.
(G) For the period August 21, 1997 (commencement of operations of this class) to
December 31, 1997.
(H) Not annualized.
(I) Annualized.
* Unaudited.
See notes to financial statements.
28
<PAGE>
FINANCIAL HIGHLIGHTS
Bartlett Financial Services Fund
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Investment Operations Distributions
------------------------------------------- ------------------------------------
Net Asset Net Realized Total From From Net Asset
Value, Net and Unrealized From Net Net Value,
Beginning Investment Gains On Investment Investment Realized Total End of
of Period Income Investments Operations Income Gains Distributions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C>
Class A Shares
Six Months Ended
June 30, 1999* $10.58 $ -- (B) $(0.10) $(0.10) $ -- $ -- $ -- $10.48
Year Ended Dec. 31,
1998(D) 10.00 -- (B) 0.58 0.58 -- -- -- 10.58
Class C Shares
Six Months Ended
June 30, 1999* $10.57 $(0.03)(C) $(0.11) $(0.14) $ -- $ -- $ -- $10.43
Year Ended Dec. 31,
1998(D) 10.00 (0.01)(C) 0.58 0.57 -- -- -- 10.57
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-----------------------------------------------------------------------
Net
Investment Net Assets,
Expenses Income (Loss) Portfolio End of
Total to Average to Average Turnover Period
Return(A) Net Assets Net Assets Rate (in thousands)
- -----------------------------------------------------------------------------------------------
<S><C>
Class A Shares
Six Months Ended
June 30, 1999* (0.95)%(E) 1.50%(B,F) (0.03)%(B,F) 18.07%(F) $11,090
Year Ended Dec. 31,
1998(D) 5.80%(E) 1.50%(B,F) 0.22%(B,F) -- 7,451
Class C Shares
Six Months Ended
June 30, 1999* (1.32)%(E) 2.25%(C,F) (0.76)%(C,F) 18.07%(F) $32,071
Year Ended Dec. 31,
1998(D) 5.70%(E) 2.25%(C,F) (0.11)%(C,F) -- 14,598
- -----------------------------------------------------------------------------------------------
</TABLE>
(A) Excluding sales charge.
(B) Net of fees waived pursuant to a voluntary expense limitation of 1.50%. If
no fees had been waived, the annualized ratio of expenses to average daily
net assets would have been as follows: 1999, 1.85%; 1998, 1.65%
(C) Net of fees waived pursuant to a voluntary expense limitation of 2.25%. If
no fees had been waived, the annualized ratio of expenses to average daily
net assets would have been as follows: 1999, 2.60%; 1998, 2.40%.
(D) For the period November 16, 1998 (commencement of operations of each class)
to December 31, 1998.
(E) Not annualized.
(F) Annualized.
* Unaudited.
See notes to financial statements.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 (Unaudited)
(Amounts in Thousands)
[1] Significant Accountin Policies
Bartlett Capital Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company. Bartlett Capital Trust was established as a Massachusetts business
trust under a Declaration of Trust dated October 31, 1982. The Declaration of
Trust, as amended, permits the Trustees to issue an unlimited number of shares
of the Bartlett Basic Value Fund, Bartlett Value International Fund, Bartlett
Europe Fund and Bartlett Financial Srvices Fund (each a "Fund").
Each Fund consists of three classes of shares: Class A, offered since 1983
for Basic Value, since 1989 for Value International, since 1997 for Europe Fund,
and since November 16, 1998, for Financial Services Fund; Class C, offered since
1997 for Basic Value Fund, Value International Fund and Europe Fund and since
November 16, 1998, for Financial Services Fund; and Class Y, offered to certain
institutional investors since 1997 for Basic Value Fund, Value International
Fund and Europe Fund. As of the date of this report, Class Y shares of Financial
Services Fund have no operating history.
The income and expenses of each of these Funds are allocated proportionately
to the three classes of shares based on daily net assets, except for Rule 12b-1
distribution fees, which are charged only on Class A and Class C shares, and
transfer agent and shareholder servicing expenses, which are determined
separately for each class.
Prior to July 21, 1997, Worldwide Value Fund, Inc. was a closed-end
registered investment company whose single class of shares traded on the New
York Stock Exchange (NYSE). On July 21, 1997, Europe Fund, which had no previous
operating history, acquired the assets and assumed the liabilities of Worldwide
Value Fund, Inc.
The following is a summary of the investment objectives followed by the
Funds:
Bartlett Basic Value Fund seeks capital appreciation by investing primarily
in common stocks or securities convertible into common stocks that are believed
by Bartlett & Co. ("adviser") to be attractively priced relative to their
intrinsic value. Income is a secondary consideration.
Bartlett Value International Fund seeks capital appreciation by investing
primarily in foreign equity securities believed by the Adviser to be attratively
priced relative to their intrinsic value. Income is a secondary consideration.
Bartlett Europe Fund seeks long-term growth of capital by investing at least
65% of its total assets in equity securities of European issuers that its
sub-adviser, Lombard Odier International Portfolio Management Limited ("Lombard
Odier"), believes are undervalued.
Bartlett Financial Services Fund seeks long-term growth of capital by
investing primarily in securities of issuers in the financial services industry
which its sub-adviser, Gray, Seifert & Co., Inc. ("Gray, Seifert"), believes are
attractively priced relative to their intrinsic value.
The following is a summary of the significant accounting policies of
Bartlett Capital Trust:
Security Valuation - 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 the respective sub-adviser, under
authority delegated by the Board of Trustees.
Equity securities and options 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 the 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. Fixed income securities having a maturity of less
than 60 days are valued at amortized cost.
Foreign Currency Translation - The books and records of the Funds are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, assets and liabilities at the
closing daily rate of exchange; and
(ii) purchases and sales of investment securities, interest income and
expenses at the rate of exchange prevailing on the respective date of
such transactions.
The effect of changes in foreign exchange rates on realized and unrealized
security gains or losses is reflected as a component of such gains or losses.
30
<PAGE>
Investment Income and Distributions to Shareholders - Interest income and
expenses are recorded on the accrual basis. Bond premiums are amortized for
financial reporting and federal income tax purposes. Bond discounts, other than
original issue and zero-coupon bonds, are not amortized for financial reporting
and federa income tax purposes. Dividend income and distributions to
shareholders are allocated at the class level and are recorded on the
ex-dividend date. Dividends from net investment income, if available, will be
paid quarterly for Basic Value and Value Internaional, and annually for Europe
Fund and Financial Services Fund. Net capital gain distributions, which are
calculated at the composite level, are declared and paid after the end of the
tax year in which the gain is realized. Distributions are determined in
accordance with federal income tax regulations, which may differ from those
determined in accordance with generally accepted accounting principles;
accordingly, periodic reclassifications are made within the Funds' capital
accounts to reflect income and gains available for distribution under federal
income tax regulations.
Security Transactions - Security transactions are recorded on the trade
date. Realized gains and losses from security transactions are reported on an
identified cost basis for both finacial reporting and federal income tax
purposes.
At June 30, 1999, receivables for securities sold and payables for
securities purchased for each Fund were as follows:
Financial
Basic Value Europe Services
Value International Fund Fund
- ----------------------------------------------------------------------
Receivable for
Securities Sold $2,247 $998 $4,816 $ --
- ----------------------------------------------------------------------
Payable for
Securities Purchased $ 80 $ -- $5,229 $168
- ----------------------------------------------------------------------
Federal Income Taxes - No provision for federal income or excise taxes is
required since each Fund intends to qualify or continue to qualify as a
regulated investment company and distribute substantially all of its taxable
income to its shareholders. Value International has unused capital loss
carryforwards for federal income tax purposes of $3,503 which will expire in
2006.
Use of Estimates - Preparation of the financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
[2] Investment Transactions
For the six months ended June 30, 1999, investment transactions (excluding
short-term securities) were as follows:
Financial
Basic Value Europe Services
Value International Fund Fund
- ----------------------------------------------------------------------
Purchases of
investment securities $22,601 $ 4,061 $58,237 $23,768
- ----------------------------------------------------------------------
Proceeds from sales
and maturities of
investment securities $51,278 $20,632 $39,708 $ 3,109
- ----------------------------------------------------------------------
At June 30, 1999, cost, aggregate gross unrealized appreciation and gross
unrealized depreciation based on the cost of securities for federal income tax
purposes for each Fund were as follows:
Financial
Basic Value Europe Services
Value International Fund Fund
- ----------------------------------------------------------------------
Unrealized appreciation $33,760 $11,322 $15,702 $ 3,013
Unrealized depreciation (793) (3,226) (5,124) (1,158)
- ----------------------------------------------------------------------
Net unrealized appreciation
(depreciation) $32,967 $ 8,096 $10,578 $ 1,855
- ----------------------------------------------------------------------
Federal income tax cost
of investments $61,481 $35,615 $92,087 $41,115
- ----------------------------------------------------------------------
[3] Repurchase Agreements
All repurchase agreements are fully collateralized by obligations issued by the
U.S. Government or its agencies, and such collateral is in the possession of the
Funds' custodian. The value of such collateral includes accrued interest. Risks
arise from the possible delay in recovery or potential loss of rights in the
collateral should the issuer of the repurchase agreement fail financially. The
Funds' investment adviser, acting under the supervision of the Board of
Trustees, reviews the value of the collateral and the creditworthiness of those
banks and dealers with which the Funds enter into repurchase agreements to
evaluate potential risks.
[4] Options and Futures
As part of their investment programs, Basic Value, Value International and Erope
Fund may utilize options and futures. Options may be written (sold) or purchased
by these Funds. When a Fund purchases a put or call option, the premium paid is
recorded as an investment and its value is marked-to-market daily. When a Fund
writes a call or put option, an amount equal to the premium received by the Fund
is recorded as a liability and its value is marked-to-market daily.
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
When options, whether written or purchased, expire, are exercised or are
closed (by entering into a closing purchase or sale transaction), the Fund
realizes a gain or loss as described in the chart below:
<TABLE>
<CAPTION>
<S><C>
PURCHASED OPTION: IMPACT ON THE FUND:
The option expires Realize a loss in the amount of the cost of the option.
- -----------------------------------------------------------------------------------------------------
The option is closed through a closing Realize a gain or loss depending on whether the
sale transaction proceeds from the closing sale transaction are greater
or less than the cost of the option.
- -----------------------------------------------------------------------------------------------------
The Fund exercises a call option The cost of the security purchased through the
exercise of the option will be increased by the
premium originally paid to purchase the option.
- -----------------------------------------------------------------------------------------------------
The Fund exercises Realize a gain or loss from the sale of the underlying
a put option security. The proceeds of that sale will be reduced by
the premium originally paid to purchase the put option.
- -----------------------------------------------------------------------------------------------------
WRITTEN OPTION: IMPACT ON THE FUND:
The option expires Realize a gain equal to the amount of the premium
received.
- -----------------------------------------------------------------------------------------------------
The option is closed through a closing Realize a gain or loss without regard to any unrealized
purchase transaction gain or loss on the underlying security and eliminate
the option liability. The Fund will realize a loss in this
transaction if the cost of the closing purchase exceeds the
premium received when the option was written.
- -----------------------------------------------------------------------------------------------------
A written call option is exercised by the Realize a gain or loss from the sale of the underlying
option purchaser security. The proceeds of that sale will be increased by
the premium originally received when the option was
written.
- -----------------------------------------------------------------------------------------------------
A written put option is exercised by the The amount of the premium originally received will
option purchaser reduce the cost of the security that the Fund purchased
when the option was exercised.
- -----------------------------------------------------------------------------------------------------
</TABLE>
There were no options written during the six months ended June 30, 1999.
Upon entering into a futures contract, the Fund is required to deposit with
the broker cash or cash equivalents in an amount equal to a certain percentage
of the contract amount. This is known as the "initial margin." Subsequent
payments ("variation margin") are made or received by the Fund each day,
depending on the daily fluctuation in the value of the contract. The daily
changes in contract value are recorded as unrealized gains or losses and the
Fund recognizes a realized gain or loss when the contract is closed. Futures
contracts are valued daily at the settlement price established by the board of
trade or exchange on which they are traded.
The risk associated with purchasing options is limited to the premium
originally paid. Options written by a Fund involve, to varying degrees, risk of
loss in excess of the option value reflected in the Statement of Net Assets. The
risk in writing a call option is that a Fund may forego the opportunity of
profit if the market price of the underlying security increases and the option
is exercised. The risk in writing a put option is that a Fund may incur a loss
if the market price of the underlying security decreases and the option is
exercised. In addition, there is the risk a Fund may not be able to enter into a
closing transaction because of an illiquid secondary market or, for
over-the-counter options, because of the counterparty's inability to perform.
The Funds enter into futures contracts as a hedge against currency risks.
There are several risks in connection with the use of futures contracts as a
hedging device. Futures contracts involve, to varying degrees, the
32
<PAGE>
risk of loss in excess of amounts reflected in the financial statements. The
change in the value of futures contracts primarily corresponds with the value of
their underlying instruments, which may not correlate with the change in the
value of the hedged instruments. In addition, there is the risk that a Fund may
not be able to enter into a closing transaction because of an illiquid secondary
market.
There were no open futures contracts at June 30, 1999.
[5] Financial Instruments
Emerging Market Securities - Value International and Europe Fund may invest in
securities denominated in the currencies of emerging market countries, as well
as in securities issued by companies located in emerging market countries.
Future economic or political developments could adversely affect the liquidity
or value, or both, of such securities.
Forward Foreign Currency Contracts - Forward foreign currency contracts are
marked-to-market daily using foreign currency exchange rates supplied by an
independent pricing service. The change in a contract's market value is recorded
by a Fund as an unrealized gain or loss. When the contract is closed or delivery
is taken, the Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's securities, but it does
establish a rate of exchange that can be achieved in the future. These forward
foreign currency contracts involve market risk in excess of amounts reflected in
the financial statements. Although forward foreign currency contracts used for
hedging purposes limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Funds could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts. Each Fund's adviser will enter into forward foreign currency
contracts only with parties approved by the Board of Trustees because there is a
risk of loss to the Funds if the counterparties do not complete the transaction.
For the six months ended June 30, 1999, Basic Value, Value International,
and Bartlett Europe had not entered into any forward currency contracts.
[6] Line of Credit
The Funds, along with certain other Legg Mason Funds, participate in a $200
million line of credit ("Credit Agreement") to be utilized as an emergency
source of cash in the event of unanticipated, large redemption requests by
shareholders. Pursuant to the Credit Agreement, each participating Fund is
liable only for principal and interest payments related to borrowings made by
that Fund. Borrowings under the line of credit bear interest at prevailing
short-term interest rates. For the six months ended June 30, 1999, the Funds had
no borrowings under the line of credit.
[7] Transactions With Affiliates and
Related Parties
The officers of the Trust are shareholders or employees of the Adviser or
Legg Mason Wood Walker, Incorporated ("LMWW"). LMWW is affiliated with the
Adviser through their common parent company, Legg Mason, Inc. The Adviser became
a wholly owned subsidiary of Legg Mason, Inc. in January 1996. Bartlett Capital
Trust's investments were managed by the Adviser under the terms of a Management
Agreement. Under the Management Agreement that was effective through July 20,
1997, the Aviser paid all of the expenses of Basic Value and Value International
except brokerage, taxes, interest and extraordinary expenses. As compensation
for investment advisory services and the agreement to pay the above Fund
expenses, each of those Funds paid the Adviser a fee computed and accrued daily
and paid monthly. The fee for Basic Value was computed at an annual rate of
2.00% of the average daily net assets of the Fund up to and including $10,000,
1.50% of such assets from $10,000 up to and including $30,000, and 1% of such
assets in excess of $30,000. The fee for Value International was computed at an
annual rate of 2.00% of the average daily net assets of the Fund up to and
including $20,000, 1.75% of such assets from $20,000 up to and including
$200,000, and 1.25% of such assets in excess of $200,000.
The Worldwide Value Fund, Inc. ("Worldwide," predecessor to Europe Fund) had
an investment advisory agreement with Lombard Odier for which Lombard Odier
received a monthly fee at an annual rate of 1% of Worldwide's net assets, based
on the net assets on the last business day of each month. This rate was reduced
on net asset values in excess of $100 million. Lombard Odier managed Worldwide's
portfolio from its inception in 1986.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Worldwide had an administration contract with Legg Mason Fund Adviser, Inc.
("LMFA") for which LMFA received from Worldwide a monthly fee at an annual rate
of .20% of Worldwide's net assets, based on the net assets on the last business
day of each month. This rate was reduced on net asset values in excess of $100
million.
On July 15, 1997, the shareholders of the Trust approved an Investment
Management and Administration Agreement ("Agreement"). Under the Agreement, the
Adviser receives for its services an advisory fee from each Fund, computed daily
and payable monthly at annual rates of each Fund's average daily net assets.
The Adviser has agreed to waive its fees in any month (exclusive of taxes,
interest, brokerage and extraordinary expenses) as shown in the following chart:
Financial
Basic Value Europe Services
Value International Fund Fund
- ----------------------------------------------------------------------
Advisory Fee 0.75% 1.25% 1.00% 1.00%
======================================================================
Expense Limitation
Class A 1.15% 1.80% 1.85% 1.50%
Class C 1.90% 2.55% 2.60% 2.25%
Class Y 0.90% 1.55% 1.60% 1.25%
======================================================================
Fees in excess of these limits will be waived through May 1, 2000. For all
classes of the Funds, advisory fees waived for the six months ended June 30,
1999, and amounts due to the Adviser at June 30, 1999, were as follows:
Financial
Basic Value Europe Services
Value International Fund Fund
- ----------------------------------------------------------------------
Advisory Fees Waived $40 $47 $ -- $62
======================================================================
Advisory Fees Payable $35 $39 $ 79 $16
======================================================================
Lombard Odier 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 receives from the
Adviser (not Europe Fund) a monthly fee at the rate of 60% of the monthly fee
actually paid to the Adviser by Europe Fund under the Agreement, taking into
account any fee waiver arrangements in effect.
Gray, Seifert serves as investment sub-adviser to Financial Services Fund
pursuant to a Sub-Advisory Agreement, which was approved by the Board of
Trustees. For its services under the Sub-Adisory Agreement, Gray, Seifert
receives from the Adviser (not from Financial Services Fund) a monthly fee at
the rate of 60% of the monthly fee actually paid to the Adviser by Financial
Services Fund under the Agreement, taking into account any fee waiver
arrangements in effect.
LM Financial Partners, Inc., distributor of the Funds and an affiliate of
the Adviser, receives from each Fund an annual service fee of 0.25% of the
average daily net assets of each Fund's Class A shares and distribution and
service fees at an annual rate of 0.75% and 0.25%, respectively, of average
daily net assets of each Fund's Class C shares. These fees are calculated daily
and paid monthly. At June 30, 1999, distribution and service fees waived were $4
and $6 for Basic Value an Value International, respectively.
LMWW has an agreement with the Funds' transfer agent to assist it with some
of its duties. For this assistance, the transfer agent paid LMWW the following
amounts for the six months ended June 30, 1999: Basic Value, $8; Value
International, $2; Europe Fund, $9; and Financial Services Fund, $3.
[8] Reorganization of
Worldwide Value Fund, Inc.
On July 18, 1997, Bartlett Europe Fund, a series of the Bartlett Capital
Trust, an open-end management investment company, acquired all the net assets of
Worldwide Value Fund, Inc. pursuant to a plan of reorganization approved by
Worldwide's shareholders on April 30, 1997. The acquisition was accomplished by
a tax-free exchange of 3,357 shares of Worldwide (valued at $88,660) outstanding
on July 18, 1997. The net assets of Worldwide ($88,660, including $18,092 of
unrealized appreciation and $12,991 of undistributed net capital gain) were
merged into the newly-created Bartlett Europe Fund. Prior to the reorganization,
Worldwide Value Fund Inc. was a closed-end mutual fund whose shares traded on
the New York Stock Exchange.
[9] Fund Share Transactions
The Trust is authorized to issue an unlimited number of shares of beneficial
interest of separate series, all without par value. Shares of four 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. Share transactions are shown on the following page.
34
<PAGE>
<TABLE>
<CAPTION>
Reinvestment
Sold of Distributions Repurchased Net Change
----------------- ------------------- ------------------ ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
<S><C>
BASIC VALUE
- - Class A Shares
Six Months Ended June 30, 1999* 94 $ 1,705 81 $1,471 (1,727) $(31,218) (1,552) $(28,042)
Year Ended December 31, 1998 602 11,170 447 8,032 (1,547) (28,706) (498) (9,504)
- - Class C Shares
Six Months Ended June 30, 1999* 12 218 1 15 (33) (587) (20) (354)
Year Ended December 31, 1998 124 2,334 7 135 (29) (526) 102 1,943
- - Class Y Shares
Six Months Ended June 30, 1999* 1 29 2 32 (32) (591) (29) (530)
Year Ended December 31, 1998 7 153 9 160 (12) (234) 4 79
VALUE INTERNATIONAL
- - Class A Shares
Six Months Ended June 30, 1999* 295 3,471 107 1,290 (1,590) (18,722) (1,188) (13,961)
Year Ended December 31, 1998 583 7,184 220 2,519 (2,158) (25,562) (1,355) (15,859)
- - Class C Shares
Six Months Ended June 30, 1999* 21 255 11 132 (80) (939) (48) (55)
Year Ended December 31, 1998 313 3,966 15 163 (56) (639) 272 3,490
- - Class Y Shares
Six Months Ended June 30, 1999* 2 17 8 100 (169) (1,954) (159) (1,837)
Year Ended December 31, 1998 20 328 18 203 (627) (7,430) (589) (6,899)
EUROPE FUND
- - Class A Shares
Six Months Ended June 30, 1999* 764 19,050 7 164 (615) (15,301) 156 3,913
Year Ended December 31, 1998 415 10,886 253 6,156 (842) (20,632) (174) (3,590)
- - Class C Shares
Six Months Ended June 30, 1999* 811 19,940 7 162 (266) (6,494) 552 13,608
Year Ended December 31, 1998 1,279 33,629 194 4,541 (162) (4,162) 1,311 34,008
- - Class Y Shares
Six Months Ended June 30, 1999* 3 64 N.M. 1 -- -- 3 65
Year Ended December 31, 1998 9 219 1 35 (382) (10,443) (372) (10,189)
FINANCIAL SERVICES FUND
- - Class A Shares
Six Months Ended June 30, 1999* 425 4,314 -- -- (71) (718) 354 3,596
Period Ended December 31, 1998(A) 706 7,112 -- -- (2) (15) 704 7,097
- - Class C Shares
Six Months Ended June 30, 1999* 1,935 19,646 -- -- (242) (2,436) 1,693 17,210
Period Ended December 31, 1998(A) 1,388 14,009 -- -- (7) (70) 1,381 13,939
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) For the period November 16, 1998 (commencement of operations of this class)
to December 31, 1998.
* Unaudited.
N.M. - Not meaningful.
35
<PAGE>
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<PAGE>
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<PAGE>
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
Lorrence T. Kellar Chairman of the Board and Trustee
Edward A. Taber, III President and Trustee
A. John W. Campbell Trustee
Edmund J. Cashman, Jr. Trustee
Henri Deegenaar Trustee
Ian F.H. Grant Trustee
William P. Sheehan Trustee
Prinz Wolfgang E. Ysenburg Trustee
Marie K. Karpinski, CPA Vice President and Treasurer
Madelynn M. Matlock, CFA Vice President
James A. Miller, CFA Vice President
Donna M. Prieshoff Vice President
James B. Reynolds, CFA Vice President
Woodrow H. Uible, CFA Vice President
Susan L. Silva Secretary
Thomas A. Steele, CPA Assistant Treasurer and Assistant Secretary
- --------------------------------------------------------------------------------
Investment Adviser Bartlett & Co.
Cincinnati, Ohio
Investment Sub-Adviser to Lombard Odier International Portfolio
Europe Fund Management Limited
London, England
Investment Sub-Adviser to Gray, Seifert & Co., Inc.
Financial Services Fund New York, New York
Custodian State Street Bank & Trust Company
Boston, Massachusetts
Sub-Custodian for Europe Fund The Chase Manhattan Bank, N.A.
Bournemouth, England
Transfer Agent Boston Financial Data Services
Boston, Massachusetts
Independent Accountants PricewaterhouseCoopers LLP
Baltimore, Maryland
Legal Counsel Kirkpatrick & Lockhart LLP
Washington, DC
- --------------------------------------------------------------------------------
Bartlett & Co.
------------------------------
REGISTERED INVESTMENT ADVISORS
- --------------------------------------------------------------------------------
36 East Fourth Street, Cincinnati, OH 45202-3896
o 513-345-6212 o 800-800-3609 o FAX 513-621-6462
