<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. / /
------
Post-Effective Amendment No. 16 /X/
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 17 /X/
------
(Check appropriate box or boxes.)
BARTLETT MANAGEMENT TRUST File Nos. 811-4071 and 2-92293
- --------------------------------------- -----------------------
(Exact Name of Registrant as Specified in Charter)
36 East Fourth Street, Cincinnati, Ohio 45202
- --------------------------------------- ------------
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code (513) 621-0066
Marie K. Karpinski, 7 East Redwood St., Baltimore, MD 21202
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Release Date: _____________________
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/X/ on August 1, 1996 pursuant to paragraph (a) of Rule 485
Registrant continues its election, made by the filing of its Registration
Statement, effective November 30, 1984, to register an indefinite number and
amount of securities under Rule 24f-2 under the Investment Company Act of 1940.
Pursuant to paragraph (b)(1) of Rule 24f-2, Registrant filed a Rule 24f-2
Notice for the fiscal year ended March 31, 1996, on May 30, 1996.
TOTAL NUMBER OF PAGES: _____.
EXHIBIT INDEX: PAGE _____.
<PAGE> 2
BARTLETT MANAGEMENT TRUST
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. SECTION IN PROSPECTUS
<S> <C>
1............ Cover Page
2............ Fund Expenses
3............ Financial Highlights, Investment Performance
4............ Operation of the Trusts, Investment Objectives and
Strategies, General Information, Investment Policies
and Techniques, Investment Limitations, Portfolio
Management Policies for Bartlett Cash Reserves Fund
5............ Operation of the Trusts, Financial Highlights
5a........... In Registrant's Annual Report
6............ General Information, Cover Page, Dividends and
Distributions, Taxes
7............ Purchase of Shares, Calculation of Share Price,
Exchange Privilege
8............ Redemption of Shares
9............ None
14........... Trustees and Officers
15........... General Information
16........... Trustees and Officers
</TABLE>
<TABLE>
<CAPTION>
SECTION IN STATEMENT OF ADDITIONAL
INFORMATION
<S> <C>
10........... Cover Page
11........... Table of Contents
12........... Description of the Trust
13........... Investment Limitations, State Restrictions,
Additional Information about Fund Investments,
Portfolio Transactions and Brokerage
14........... The Investment Advisor, Management of the Trust
15........... Description of the Trust
16........... The Investment Advisor, Custodian, Accountants,
Transfer and Accounting Services Agent
17........... Portfolio Transactions and Brokerage
18........... Description of the Trust
19........... Calculation of Share Price
20........... None
21........... None
22........... Investment Performance
23........... Financial Statements
</TABLE>
<PAGE> 3
PROSPECTUS
BARTLETT VALUE INTERNATIONAL FUND
BARTLETT BASIC VALUE FUND
BARTLETT FIXED INCOME FUND
BARTLETT SHORT TERM BOND FUND
BARTLETT CASH RESERVES FUND
AUGUST 1, 1996
BARTLETT VALUE INTERNATIONAL FUND seeks capital appreciation by investing
primarily in foreign equity securities believed by its Advisor, Bartlett & Co.,
to be attractively priced relative to their intrinsic value. Income is a
secondary consideration. The Fund provides a means for individuals and
institutional investors to invest a portion of their assets outside the United
States. Foreign investments involve opportunities and risks not typically
associated with domestic investments.
BARTLETT BASIC VALUE FUND seeks capital appreciation by investing primarily in
common stocks or securities convertible into common stocks that are believed by
its Advisor, Bartlett & Co., to be attractively priced relative to their
intrinsic value. Income is a secondary consideration.
BARTLETT FIXED INCOME FUND seeks to provide a high level of current income by
investing primarily in high quality intermediate-term bonds. Capital
appreciation is a secondary consideration.
BARTLETT SHORT TERM BOND FUND seeks to provide a high level of current income
while maintaining a high degree of principal stability by investing primarily
in high quality short-term bonds.
BARTLETT CASH RESERVES FUND seeks the highest level of current income
consistent with stability of principal and liquidity. The Fund is a money
market fund designed for the short-term cash balances of corporations,
institutions and individuals.
An investment in the Bartlett Cash Reserves Fund is neither insured
nor guaranteed by the U.S. Government, and there can be no assurance that the
Fund will be able to maintain a stable net asset value of $1.00 per share.
Shares of these Funds are not deposits or obligations of any bank, are
not endorsed or guaranteed by any bank, and are not insured by the Federal
Deposit Insurance Corporation (FDIC) the Federal Reserve Board, or any other
government agency, entity or person. The purchase of Fund shares involves
investment risks, including the possible loss of principal.
Each Fund is a "no-load" fund. There are no sales or redemption
charges, and the Funds have no 12b-1 plans. The Bartlett Value International
Fund, the Bartlett Basic Value Fund, the Bartlett Fixed Income Fund and the
Bartlett Short Term Bond Fund are separate series of Bartlett Capital Trust.
The Bartlett Cash Reserves Fund is a series of Bartlett Management Trust. Both
Trusts are diversified open-end investment companies.
This Prospectus sets forth concisely the information about the Funds
that you ought to know before investing. Please read and retain this
Prospectus for future reference. Statements of Additional Information for the
Funds dated August 1, 1996 have been filed with the Securities and Exchange
Commission and are hereby incorporated by reference in their entirety. A copy
of any Statement can be obtained at no charge by calling the numbers listed
below.
- ------------------------------------------------------------
For Information or Assistance in Opening an Account, Please Call:
Nationwide (Toll Free).............................(800)800-3609
Cincinnati.........................................(513)345-6212
- ------------------------------------------------------------
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
BARTLETT CAPITAL TRUST
BARTLETT MANAGEMENT TRUST
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Fund Expenses. . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . 3
Investment Objectives and Strategies . . . 10
General. . . . . . . . . . . . . . . . . . 15
Trustees and Officer . . . . . . . . . . . 16
Purchase of Shares . . . . . . . . . . . . 18
Redemption of Shares . . . . . . . . . . . 20
Exchange Privilege . . . . . . . . . . . . 21
Operation of the Trusts . . . . . . . . . 22
Calculation of Share Price. . . . . . . . . . . 24
Dividends and Distributions . . . . . . . . . . 25
Taxes . . . . . . . . . . . . . . . . . . . . . 26
Investment Policies, Techniques and Risk
Considerations . . . . . . . . . . . . 27
Portfolio Management Policies for Bartlett
Cash Reserves Fund . . . . . . . . . . 40
Investment Limitations . . . . . . . . . . . . 40
General Information . . . . . . . . . . . . . . 41
Investment Performance . . . . . . . . . . . . 42
</TABLE>
<PAGE> 4
FUND EXPENSES
The purpose of the table below is to assist shareholders in understanding
the costs and expenses that shareholders of each Fund will bear directly or
indirectly. The expense information is based upon the operating expenses
incurred during the fiscal year ended March 31, 1996. The expenses are
expressed as a percentage of average net assets. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR EXPENSES, BOTH OF
WHICH WILL VARY.
Shareholders should be aware that the Funds are no-load funds and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Funds. Unlike most other mutual funds,
the management fees paid by the Funds include transfer agency, pricing,
custodial, auditing and legal services, and general administrative and other
operating expenses.
<TABLE>
<CAPTION>
Bartlett Value Bartlett Bartlett Bartlett Bartlett
International Basic Value Fixed Income Short Term Cash Reserves
Fund Fund Fund Bond Fund Fund
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load on
Purchases None None None None None
Maximum Sales Load on
Reinvested
Dividends None None None None None
Deferred Sales Load None None None None None
Redemption Fee None None None None None
Exchange Fee None None None None None
ANNUAL FUND OPERATING
EXPENSES
Management Fees* 1.83% 1.17% 1.00% .85% .78%
12b-1 Fees None None None None None
Total Fund Operating
Expenses* 1.83% 1.17% 1.00% .85% .78%
</TABLE>
*The Fund's total operating expenses are equal to the management fee paid to
the Advisor. Unlike most other mutual funds, the management fees paid by the
Funds include transfer agency, pricing, custodial, auditing and legal services,
and general administrative and other operating expenses.
- 2 -
<PAGE> 5
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Bartlett Value International Fund $19 $58 $99 $215
Bartlett Basic Value Fund $12 $37 $64 $142
Bartlett Fixed Income Fund $10 $32 $55 $122
Bartlett Short Term Bond Fund $ 9 $27 $47 $105
Bartlett Cash Reserves Fund $ 8 $25 $43 $97
</TABLE>
FINANCIAL HIGHLIGHTS
The following condensed financial information for all periods presented
for Bartlett Value International Fund, Bartlett Basic Value Fund, Bartlett
Fixed Income Fund and Bartlett Short Term Bond Fund and, for periods ending
subsequent to June 30, 1988, for Bartlett Cash Reserves Fund, has been audited
by Arthur Andersen LLP. The condensed financial information is an integral
part of Bartlett Capital Trust's and Bartlett Management Trust's audited
financial statements and should be read in conjunction with the financial
statements. The financial statements (excluding total return) for Bartlett
Management Trust for the period ending June 30, 1988 were audited by another
independent public accountant. The financial statements as of March 31, 1996
and related auditors' report appear in the Annual Report to Shareholders and are
incorporated by reference in the applicable Statements of Additional
Information of the Trusts. The annual report is available to shareholders
without charge by calling Bartlett & Co. at 800-800-3609 or Legg Mason Funds
Marketing Department at 800-822-5544.
- 3 -
<PAGE> 6
BARTLETT VALUE INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92 3/31/91 3/31/90(a)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.64 $ 12.46 $ 10.08 $9.93 $ 9.09 $ 9.79 $ 10.00
Income From Investment Operations:
Net Investment Income .13 .09 .07 .12 .18 .30 .08
Net Realized and Unrealized Gains
(Losses) on Securities 1.33 (.21) 2.38 .15 .88 (.70) (.05)
Total From Investment Operations 1.46 (.12) 2.45 .27 1.06 (.40) .03
Less Distributions:
Dividends From Net Investment Income (.13) (.09) (.07) (.10) (.22) (.28) (.08)
In Excess of Net Investment Income (.01) -- -- -- -- -- --
Distributions From Realized Gains (.37) (.61) -- (.02) -- (.02) (.16)
Total Distributions (.51) (.70) (.07) (.12) (.22) (.30) (.24)
Net Asset Value, End of Period $ 12.59 $ 11.64 $ 12.46 $ 10.08 $ 9.93 $ 9.09 $ 9.79
Total Return 12.76% (1.18%) 24.42% 2.71% 11.88% (3.84%) 0.59%(c)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $72,041 $57,664 $49,607 $29,572 $22,042 $23,661 $20,557
Ratios Net of Fees Waived
by Advisor(b):
Ratio of Net Expenses to Average
Net Assets 1.83% 1.83% 1.88% 2.00% 2.00% 1.99% 1.41%(c)
Ratio of Net Investment Income
to Average Net Assets 1.06% .80% .55% 1.13% 1.79% 3.31% 1.80%(c)
Portfolio Turnover Rate 38% 24% 19% 19% 27% 39% 155%(c)
<FN>
(a) From the date of the public offering of the Bartlett Value International
Fund (October 6, 1989) through March 31, 1990.
(b) The Advisor has periodically absorbed expenses of the Bartlett Value
International Fund through management fee waiver. If the Advisor had not
waived any fees, the ratios of net expenses to average net assets would
have been 1.94% and 2.14% and the ratios of net investment income to
average net assets would have been .49% and 1.07% for the periods ended
March 31, 1994 and 1990, respectively.
(c) Annualized.
</TABLE>
- 4 -
<PAGE> 7
BARTLETT BASIC VALUE FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 15.39 $ 14.89 $ 14.76 $ 13.47 $ 12.60
Income From Investment Operations:
Net Investment Income .30 .27 .22 .30 .36
Net Realized and Unrealized Gains
(Losses) on Securities 3.32 1.53 .28 1.57 .87
Total From Investment Operations 3.62 1.80 .50 1.87 1.23
Less Distributions:
Dividends From Net Investment
Income (.24) (.27) (.23) (.30) (.36)
Distributions From Realized Gains (.83) (1.03) (.14) (.28) --
Total Distributions (1.07) (1.30) (.37) (.58) (.36)
Net Asset Value, End of Year $ 17.94 $ 15.39 $ 14.89 $ 14.76 $ 13.47
Total Return 24.05% 12.67% 3.42% 14.22% 9.91%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $125,636 $102,721 $94,289 $103,507 $88,536
Ratio of Expenses to Average
Net Assets 1.17% 1.20% 1.20% 1.21% 1.22%
Ratio of Net Investment Income
to Average Net Assets 1.79% 1.81% 1.48% 2.14% 2.77%
Portfolio Turnover Rate 25% 26% 33% 43% 49%
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
3/31/91 3/31/90 3/31/89 3/31/88 3/31/87
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 12.34 $ 12.56 $ 12.44 $ 12.96 $ 13.13
Income From Investment Operations:
Net Investment Income .46 .62 .57 .35 .46
Net Realized and Unrealized Gains
(Losses) on Securities .26 .21 1.20 (.51) 1.07
Total From Investment Operations .72 .83 1.77 (.16) 1.53
Less Distributions:
Dividends From Net Investment
Income (.46) (.62) (.56) (.36) (.45)
Distributions From Realized Gains -- (.43) (1.09) -- (1.25)
Total Distributions (.46) (1.05) (1.65) (.36) (1.70)
Net Asset Value, End of Year $ 12.60 $ 12.34 $ 12.56 $ 12.44 $ 12.96
Total Return 6.29% 6.49% 15.61% (1.24%) 11.38%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $$96,165 105,842 $100,333 $80,583 $91,091
Ratio of Expenses to Average
Net Assets 1.21% 1.19% 1.23% 1.57% 1.28%
Ratio of Net Investment Income
to Average Net Assets 3.87% 4.81% 4.57% 2.75% 3.49%
Portfolio Turnover Rate 92% 77% 99% 97% 58%
</TABLE>
- 5 -
<PAGE> 8
BARTLETT FIXED INCOME FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92 3/31/91
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.70 $ 10.02 $ 10.48 $ 9.93 $ 9.63 $ 9.46
Income From Investment Operations:
Net Investment Income .57 .54 .48 .59 .67 .73
Net Realized and Unrealized Gains
(Losses) on Securities .20 (.32) (.30) .55 .31 .17
Total From Investment Operations .77 .22 .18 1.14 .98 .90
Less Distributions:
Dividends From Net Investment Income (.57) (.54) (.48) (.59) (.68) (.73)
Distributions From Realized Gains -- -- (.16) -- -- --
Total Distributions (.57) (.54) (.64) (.59) (.68) (.73)
Net Asset Value, End of Period $ 9.90 $ 9.70 $ 10.02 $ 10.48 $ 9.93 $ 9.63
Total Return 8.04% 2.41% 1.70% 11.81% 10.46% 9.86%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $79,377 $91,349 $111,414 $135,487 $147,992 $159,218
Ratio of Expenses to Average
Net Assets(b) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income
to Average Net Assets 5.74% 5.60% 4.58% 5.81% 6.85% 7.68%
Portfolio Turnover Rate 131% 118% 163% 175% 126% 165%
Amount of Debt Outstanding
at End of Period $ -- $ -- $ -- $ -- $ -- $ --
Average Amount of Debt
Outstanding During the
Period (c) (000's) $ -- $ 255 $ 2,550 $ 12,627 $ 6,601 $ --
Average Number of Shares
Outstanding During the
Period (d) (000's) 8,954 10,270 12,095 13,689 15,577 --
Average Amount of Debt Per
Share During the Period $ -- $ 0.02 $ 0.21 $ 0.92 $ 0.42 $ --
<CAPTION>
Year Year Year Period
Ended Ended Ended Ended
3/31/90 3/31/89 3/31/88 3/31/87(a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.36 $ 9.76 $ 10.18 $ 10.00
Income From Investment Operations:
Net Investment Income .82 .86 .83 .87
Net Realized and Unrealized Gains
(Losses) on Securities .10 (.40) (.42) .18
Total From Investment Operations .92 .46 .41 1.05
Less Distributions:
Dividends From Net Investment Income (.82) (.86) (.83) (.87)
Distributions From Realized Gains -- -- -- --
Total Distributions (.82) (.86) (.83) (.87)
Net Asset Value, End of Period $ 9.46 $ 9.36 $ 9.76 $ 10.18
Total Return 10.07% 4.83% 4.41% 11.27%(e)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $156,587 $158,536 $157,116 $145,138
Ratio of Expenses to Average
Net Assets(b) 1.00% 1.00% 1.00% .93%(e)
Ratio of Net Investment Income
to Average Net Assets 8.56% 8.95% 8.56% 8.57%(e)
Portfolio Turnover Rate 95% 104% 205% 192%(e)
Amount of Debt Outstanding
at End of Period $ -- $ -- $ -- $ --
Average Amount of Debt
Outstanding During the
Period (c) (000's) $ -- $ -- $ -- $ --
Average Number of Shares
Outstanding During the
Period (d) (000's) -- -- -- --
Average Amount of Debt Per
Share During the Period $ -- $ -- $ -- $ --
</TABLE>
(a) Income earned and expenses incurred by the Fund from the date of the
initial purchase of shares by the Trust's Advisor (April 1, 1986) through
the initial public offering (April 22, 1986) were insignificant.
(b) Ratios do not include interest paid on reverse repurchase agreements.
(c) The average amount of debt outstanding during the period was calculated
by aggregating borrowings at the end of each day and dividing that sum by
the number of days in the period.
(d) The average number of shares outstanding during the period was calculated
by averaging the number of shares outstanding at the end of each month in
the period.
(e) Annualized.
- 6 -
<PAGE> 9
BARTLETT CASH RESERVES FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment Operations:
Net Investment Income .05 .04 .03 .03 .05
Total From Investment Operations .05 .04 .03 .03 .05
Less Distributions:
Dividends From Net Investment Income (.05) (.04) (.03) (.03) (.05)
Total Distributions (.05) (.04) (.03) (.03) (.05)
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return 5.13% 4.22% 2.69% 3.26% 5.07%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $48,464 $90,172 $77,558 $65,962 $75,867
Ratios Net of Fees Waived by Advisor (b):
Ratio of Net Expenses to Average
Net Assets .78% .78% .77% .72% .67%
Ratio of Net Investment Income
to Average Net Assets 5.13% 4.16% 2.71% 3.26% 5.05%
<CAPTION>
Year Nine Year Period
Ended Months Ended Ended
3/31/91 Ended 6/30/89 6/30/88
3/31/90 (a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment Operations:
Net Investment Income .07 .06 .08 .02
Total From Investment Operations .07 .06 .08 .02
Less Distributions:
Dividends From Net Investment Income (.07) (.06) (.08) (.02)
Total Distributions (.07) (.06) (.08) (.02)
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return 7.32% 8.13%(c) 8.42% 6.95%(c)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $130,250 $105,503 $100,531 $71,780
Ratios Net of Fees Waived by Advisor (b):
Ratio of Net Expenses to Average
Net Assets .73% .75%(c) .86% .35%(c)
Ratio of Net Investment Income
to Average Net Assets 7.08% 7.97%(c) 8.11% 6.56%(c)
</TABLE>
(a) No income was earned or expense incurred by the Fund from the date of
organization (January 4, 1988) through the initial public offering date
(February 16, 1988).
(b) The Advisor has periodically absorbed expenses of the Bartlett Cash
Reserves Fund through management fee waiver. If the Advisor had not
waived any fees, the ratios of net expenses to average net assets would
have been .88%, .90%, .90%, .90%, .90%, .89%, and .88%, and the ratios of
net investment income to average net assets would have been 2.60%,
3.07%, 4.82%, 6.91%, 7.83%, 8.07% and 6.03% for the periods ended March
31, 1994 through 1988, respectively.
(c) Annualized.
- 7 -
<PAGE> 10
BARTLETT SHORT TERM BOND FUND
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Year Year Period
Ended Ended Ended
3/31/96 3/31/95 3/31/94(a)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.66 $ 9.94 $ 10.00
Income From Investment Operations:
Net Investment Income .54 .53 .06
Net Realized and Unrealized Gains
(Losses) on Securities .11 (.28) (.06)
Total From Investment Operations .65 .25 .00
Less Distributions
Dividends From Net Investment Income (.54) (.53) (.06)
Total Distributions (.54) (.53) (.06)
Net Asset Value, End of Period $ 9.77 $ 9.66 $ 9.94
Total Return 6.87% 2.58% .04%(b)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) $15,286 $19,748 $22,288
Ratio of Expenses to Average
Net Assets .85% .85% .85%(c)
Ratio of Net Investment Income
to Average Net Assets 5.70% 5.38% 4.55%(c)
Portfolio Turnover Rate 145% 158% 202%(c)
</TABLE>
(a) The period is from the date of the public offering of the Bartlett Short
Term Bond Fund (February 4, 1994) through March 31, 1994.
(b) Total return is for the period February 4, 1994 through March 31, 1994.
(c) Annualized.
- 8 -
<PAGE> 11
INVESTMENT OBJECTIVES AND STRATEGIES
VALUE-ORIENTED STRATEGY
The investment advisor to the Funds, Bartlett & Co. ("the Advisor") uses
an active, value-oriented investment strategy in the management of the Bartlett
Value International Fund, the Bartlett Basic Value Fund, the Bartlett Fixed
Income Fund, the Bartlett Short Term Bond Fund and the Bartlett Cash Reserves
Fund.
Under this approach, the Advisor seeks to identify undervalued
securities. Evaluation of equity securities by the Advisor is based upon
analysis of several factors, including:
* low or declining debt levels
* comparatively low price to cash flow ratios
* comparatively low price to asset value ratios
Similarly, the Advisor seeks to identify undervalued fixed income securities
based upon an ongoing analysis of the following three major factors:
* yield curve -- evaluating the relative attractiveness of individual
bond maturities along the yield curve
* sector spreads -- monitoring the relative attractiveness between
U.S. Treasuries and other fixed income sectors, such as corporates,
mortgages and municipals
* credit quality -- seeking out issuers whose trend in credit quality
is stable or improving
The Advisor also employs a disciplined approach to the sell process.
Securities are sold from a Fund's portfolio when their relative valuations are
no longer favorable, generally when one of three triggering events occurs:
* a pre-determined price objective has been met
* a more attractive investment opportunity becomes available
* a change in the underlying fundamentals, such as a downgrade in
ratings
- 9 -
<PAGE> 12
BARTLETT VALUE INTERNATIONAL FUND
The Bartlett Value International Fund provides a means for individuals
and institutional investors to invest a portion of their assets outside the
United States. The investment objective of the Bartlett Value International
Fund is to seek capital appreciation. The Fund seeks its objective by
investing primarily in foreign equity securities believed by the Advisor to be
attractively priced relative to their intrinsic value. Income is a secondary
consideration.
The Fund invests primarily in equity securities of non-U.S. issuers
generally consisting of common stocks, common stock equivalents and preferred
stocks. The Fund also may invest indirectly in foreign equity securities by
purchasing American Depositary Receipts, European Depositary Receipts or other
similar securities and by purchasing shares of closed-end investment companies
that hold foreign equity securities in their portfolios.
However, there is no requirement that the Fund invest exclusively in
foreign equity securities. The Fund may invest in other types of foreign
securities such as debt obligations of foreign companies, foreign governments,
foreign governmental agencies and international organizations. In addition,
the Fund may invest a portion of its assets in U.S. government obligations,
debt and equity obligations of U.S. issuers, and repurchase agreements, and may
hold a portion of its assets in cash and U.S. dollar denominated time deposits.
For temporary defensive or temporary liquidity purposes, the Bartlett
Value International Fund may hold all or a portion of its assets in domestic or
foreign money market instruments, cash equivalents, securities of other no-load
registered investment companies or repurchase agreements.
In seeking its objective, the Fund intends to diversify its investments
among issuers representing various countries. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in non-United States
issuers and at least three different foreign countries will be represented in
the Fund's portfolio. The Fund may invest in countries in Western Europe, the
Far East, Canada, Australia and other geographic regions. The Fund may, from
time to time, have more than 25% of its assets invested in any major industrial
or developed country which in the view of the Advisor poses no unique
investment risk. If circumstances warrant, for temporary, defensive purposes,
the Fund may invest substantially all of its assets in one or two countries.
The Advisor selects portfolio securities on the basis of what the Advisor
considers to be the intrinsic value of each
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<PAGE> 13
security. In analyzing the intrinsic value of a specific security, particular
emphasis is given to such characteristics as relative price/earnings ratio,
dividend yield, and price/book value ratio. In making investment decisions,
the Advisor considers all other pertinent factors affecting the intrinsic value
of a security, including financial, tax, social, political and national
conditions.
Although the Fund provides a means for individuals and institutional
investors to invest a portion of their assets outside the U.S., it should not
be considered to be a complete investment program. In addition, investments in
foreign securities may be subject to risks not typically associated with
investments in domestic securities. See "Foreign Securities" for a more
complete discussion of certain risks associated with investments in foreign
securities.
See "General" at page 15 and "Investment Policies, Techniques and Risk
Considerations" beginning at page 27 for a more detailed discussion of risks
associated with the securities and investment techniques discussed above.
BARTLETT BASIC VALUE FUND
The investment objective of the Bartlett Basic Value Fund is to seek
capital appreciation. The Fund seeks its objective by investing primarily in
common stocks or securities convertible into common stocks that the Advisor
believes to be selling at attractive prices relative to their intrinsic value.
Income is a secondary consideration. In determining whether a specific
security represents investment value, particular emphasis is given to such
characteristics as low debt, relative price/earnings ratio, dividend yield, and
price/book value ratio. The Fund seeks to diversify its investments across
industry sectors. The Fund's investments may include foreign securities.
In seeking its objective, the Bartlett Basic Value Fund invests only in
securities of companies with at least three years of operating history. Due
to the Bartlett Basic Value Fund's disciplined investment methodology, and the
cyclical nature of the economy and investment markets, there will be times when
the Advisor is unable to purchase reasonably valued common stocks and common
stock equivalents. At these times, the Fund may hold all or a portion of its
assets in fixed income securities.
For a further discussion of the risks associated with these securities
and techniques, see "General" at page 15 and "Investment Policies, Techniques
and Risk Considerations," beginning on page 27.
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<PAGE> 14
BARTLETT FIXED INCOME FUND
The investment objective of the Bartlett Fixed Income Fund is to seek a
high level of current income by investing primarily in high quality
intermediate-term bonds. Capital appreciation is a secondary consideration.
The Fund seeks to limit price volatility by investing primarily in
intermediate-term bonds, although it also may invest in short- and long-term
bonds. Historically, the Fund's dollar weighted average effective portfolio
maturity has ranged between four to eight years. Fixed income securities with
intermediate-term maturities generally have greater price stability than that
of long-term bonds that offer somewhat higher yields, but less price stability
than that of short-term bonds that offer somewhat lower yields.
The Fund seeks to achieve its objective by:
* maintaining at least 65% of the total assets of the Fund, under
normal circumstances, in U.S. Government securities or high quality
fixed income securities rated AA or higher by Standard & Poor's
Corporation ("S&P"), Moody's Investor Services ("Moody's"), Duff &
Phelps ("D&P") or Fitch Investors Services ("Fitch") (or if
unrated, judged by the Advisor to be of comparable quality);
* purchasing fixed income securities of predominately
investment-grade quality, while reserving the right to invest no
more than 5% of its assets in securities below investment grade;
* focusing on intermediate-term fixed income investments, although it
may also invest in short-term and long-term fixed income
investments; and
* using a "bottom up" value-oriented investment strategy to identify
undervalued fixed income securities or sectors.
Under normal circumstances, at least 65% of the total assets of the Fund
will be invested in a portfolio of U. S. Government securities or high quality
bonds rated AA or higher by Standard & Poor's Corporation ("S&P"), Moody's
Investor Services ("Moody's"), Duff & Phelps ("D&P") or Fitch Investors
Services ("Fitch"). The Fund's portfolio securities will include U.S.
Government obligations, securities of foreign governments, domestic or foreign
corporate debt securities, municipal obligations, mortgage-related securities,
financial service industry obligations, preferred stock and repurchase
agreements. Bonds are debt securities with a maturity of one year or
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<PAGE> 15
more at issuance. Eligible securities will include unrated securities judged by
the Advisor to be comparable to securities rated AA or higher.
The Fund generally will invest the remainder of its portfolio in debt
securities rated at the time of purchase as investment grade (BBB by S&P, Baa
by Moody's, BBB by D&P or BBB by Fitch). If the rating of a security held in
the portfolio is downgraded below investment grade, the Advisor will determine
whether it is in the best interest of the Fund's shareholders to continue to
hold such security. The Fund may invest in fixed income securities which are
unrated if they are judged by the Advisor to be of investment grade or higher
quality.
The Fund reserves the right to invest no more than five percent of its
portfolio in debt securities rated at the time of purchase as below investment
grade. Such securities commonly are known as "junk bonds" and entail default
and other risks (including weakened capacity to pay interest and repay
principal) greater than those associated with higher-rated securities. See
"Fixed Income Securities" for a further discussion of quality ratings, as well
as the discussion of ratings under "Additional Information About Fund
Investments" in the Statement of Additional Information.
For a further discussion of the risks associated with these securities
and techniques, see "General" at page 15 and "Investment Policies, Techniques
and Risk Considerations" beginning on page 27.
BARTLETT SHORT TERM BOND FUND
The investment objective of the Bartlett Short Term Bond Fund is to seek
a high level of current income while maintaining a high degree of principal
stability by investing primarily in high quality short-term bonds.
The Fund is designed for individual, institutional and corporate
investors who seek:
* higher current income than is normally provided by money market
investments
* greater price stability than is generally available from
intermediate or long-term bonds, and
* the relative safety provided by higher quality fixed income
securities.
Money market funds usually are managed for total price stability, but
generally tend to provide somewhat lower yields
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<PAGE> 16
than do short-term bond funds. Unlike money market funds, the Bartlett Short
Term Bond Fund does not maintain a stable net asset value of $1.00 per share.
Investors seeking high levels of price stability may find the Fund attractive
compared to intermediate or long-term bond funds that generally offer somewhat
higher yields, but less price stability.
Certain investors may view the Fund as an alternative to a bank
certificate of deposit ("CD"). Although an investment in the Fund is not
federally insured and there is no guarantee of price stability, an investment
in the Fund may be redeemed at its current value at any time without incurring
early withdrawal penalties generally associated with CDs. The Fund also may
provide a higher yield than CDs. The Fund may be appropriate for Individual
Retirement Accounts ("IRAs"), 401(k) plans and other retirement plans which
compound income on a tax-deferred basis.
The Fund seeks to achieve its objective by:
* purchasing fixed income securities of at least investment-grade
quality;
* maintaining at least 65% of the total assets of the Fund, under
normal circumstances, in U.S. Government securities or high quality
fixed income securities rated AA or higher by Standard & Poor's
Corporation ("S&P"), Moody's Investor Services ("Moody's"), Duff &
Phelps ("D&P") or Fitch Investors Services ("Fitch") (or if
unrated, judged by the Advisor to be of comparable quality);
* focusing on short-term fixed income investments, normally
maintaining a dollar weighted average effective portfolio maturity
from one to three years; and
* using a "bottom up" value-oriented investment strategy to identify
undervalued fixed income securities or sectors.
The share price of the Fund will fluctuate. However, the Fund seeks to
maintain a high degree of principal stability by:
* maintaining a relatively short portfolio maturity;
* investing in higher quality securities;
* investing in undervalued securities, which tend to experience less
negative price volatility; and
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<PAGE> 17
* investing in some securities whose prices exhibit a low, no or
negative correlation to broad movements in interest rates.
To maintain a shorter portfolio maturity, the Fund will not invest in
individual securities with remaining expected maturities longer than ten years
from the date of purchase (although the face maturity may be longer than ten
years). The "expected" maturity of a security and the "effective" portfolio
maturity will take into account the availability of demand features and
anticipated calls or prepayments of securities to shorten the face maturity of
the security or portfolio.
Under normal circumstances, at least 65% of the total assets of the Fund
will be invested in a portfolio of high quality securities rated AA or higher
by S&P, Moody's, D&P, or Fitch. These securities will include U.S. Government
securities (including bonds, notes and bills issued by the U.S. Treasury and
securities issued by agencies of the U.S. Government), securities of foreign
governments, domestic or foreign high-grade corporate debt securities
(including bonds, notes and debentures), mortgage-related securities, financial
service industry obligations, municipal obligations, repurchase agreements and
other asset-backed securities. Eligible securities will include unrated
securities judged by the Advisor to be comparable to securities rated AA or
higher. Under normal circumstances, at least 65% of the total assets of the
Fund will be invested in bonds, which are debt securities with a maturity of
one year or more at issuance.
The Fund will not invest in any debt security rated at the time of
purchase lower than investment grade (BBB by S&P, Baa by Moody's, BBB by D&P or
BBB by Fitch). If the rating of a security held in the portfolio is downgraded
below investment grade, the Advisor will determine whether it is in the best
interest of the Fund's shareholders to continue to hold such security. The
Fund may invest in fixed income securities which are unrated if they are judged
by the Advisor to be of investment grade or higher quality. See "Fixed Income
Securities" for a further discussion of quality ratings, as well as the
discussion of ratings under "Additional Information About Fund Investments" in
the Statement of Additional Information.
In addition, the Fund may invest in money market instruments (including
commercial paper) reverse repurchase agreements and privately placed debt
obligations. The Fund also may purchase securities on a when-issued or forward
delivery basis and utilize foreign currency transactions, hedging and other
investment strategies. See "Investment Policies and Techniques."
For a further discussion of the risks associated with these securities
and techniques, see "General" at page 15 and
- 15 -
<PAGE> 18
"Investment Policies, Techniques and Risk Considerations" beginning on page 27.
BARTLETT CASH RESERVES FUND
The investment objective of the Bartlett Cash Reserves Fund is to produce
the highest level of current income consistent with stability of principal and
liquidity. The Fund is a money market fund designed for the investment of
short-term cash reserves, and the Advisor believes the Fund is an appropriate
investment for corporations, pension and profit sharing plans, and other
institutional and individual investors.
In seeking its objective, the Fund invests in a broad range of short-term
money market securities, which may include: (i) U.S. government obligations,
(ii) corporate debt securities (including commercial paper), (iii) municipal
obligations, (iv) mortgage-related securities, (v) financial services industry
(including bank and savings and loan association) obligations, (vi) repurchase
agreements involving these securities, (vii) U.S. dollar denominated foreign
securities (securities issued by foreign issuers, including foreign governments
and foreign branches of U.S. banks) and (viii) shares of money market funds.
See "Investment Policies and Techniques" for a more detailed discussion of the
Fund's investment practices.
The Fund seeks to maintain a stable net asset value of $1.00 per share
pursuant to a rule of the Securities and Exchange Commission, which requires
that the Fund's portfolio meet certain maturity, quality and diversification
standards. Those standards are described in "Portfolio Management Policies for
the Bartlett Cash Reserves Fund."
The Fund under normal market conditions will invest at least 25% of its
total assets in the financial services industry, and an investment in the Fund
should be made with an understanding of the characteristics of the industry and
the risks which such an investment may entail. See "Financial Service Industry
Obligations" for a discussion of these matters.
GENERAL
In addition to the securities and investment techniques described above,
the Bartlett Basic Value Fund, the Bartlett Fixed Income Fund and the Bartlett
Short Term Bond Fund may invest in a wide variety of other securities,
including U. S. Government securities, mortgage-related securities, municipal
obligations, asset- or receivable backed securities and foreign securities, and
they may employ several investment techniques, including the use of options,
hedging programs, currency
- 16 -
<PAGE> 19
transactions, repurchase agreements, reverse repurchase agreements and dollar
rolls, lending of portfolio securities and forward commitment transactions.
See "Investment Policies, Techniques and Risk Considerations" beginning on page
27.
For temporary defensive purposes, each of the Bartlett Mutual Funds
(other than the Bartlett Cash Reserves Fund) may hold all or a portion of its
assets in money market instruments, cash equivalents (fixed income securities
with maturities of less than one year), securities of other no-load registered
investment companies or repurchase agreements. See "Investment Policies,
Techniques and Risk Considerations" beginning on page 27.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, no Fund can give any assurance that its investment objective
will be achieved. The values of fixed income securities fluctuate inversely to
interest rate changes. Current yields or rates of total return quoted by a Fund
may be higher or lower than past quotations, and there can be no assurance that
any current yield or rate of total return will be maintained.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of Bartlett Capital
Trust and Bartlett Management Trust are shown below. Each Trustee who is an
"interested person" of either Trust, as defined in the Investment Company Act
of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
POSITION WITH POSITION WITH BARTLETT
NAME BARTLETT CAPITAL TRUST MANAGEMENT TRUST
<S> <C> <C>
*Dale H. Rabiner, CFA Trustee, Chairman Vice President
of the Board and
President
*James B. Reynolds, CFA Vice President Trustee, Chairman of
the Board and
President
Lorrence T. Kellar Trustee Trustee
Philip J. Ringo Trustee Trustee
Alan R. Schriber Trustee Trustee
William P. Sheehan Trustee Trustee
Marie K. Karpinski Vice President and Vice President and
Treasurer Treasurer
Kathi D. Bair Secretary Secretary
Brian M. Eakes Assistant Secretary Assistant Secretary
Blanche P. Roche Assistant Secretary Assistant Secretary
Thomas A. Steele, CPA Assistant Treasurer and Assistant Treasurer and
Assistant Secretary Assistant Secretary
R. Stuart Crickmer, CFA,CPA Vice President Vice President
Madelynn M. Matlock, CFA Vice President
James A. Miller, CFA Vice President
Donna M. Prieshoff Vice President Vice President
Troy R. Snider,CFA Vice President
Woodrow H. Uible, CFA Vice President
</TABLE>
- 17 -
<PAGE> 20
The principal occupations of the executive officers and Trustees of the
Trusts during the past five years are set forth below:
Dale H. Rabiner, CFA, 36 East Fourth Street, Cincinnati, Ohio is a Senior
Portfolio Manager and a Managing Director of Bartlett & Co.
James B. Reynolds, CFA, 36 East Fourth Street, Cincinnati, Ohio is a Senior
Portfolio Manager and a Managing Director of Bartlett & Co.
Lorrence T. Kellar, 1014 Vine Street, Cincinnati, Ohio is Vice President --
Real Estate Services for K Mart Corp., an international retailer.
Philip J. Ringo, 102 Pickering Way, Exton, Pennsylvania is the President and
Chief Executive Officer of Chemical Lehman Tank Lines, Inc. a bulk motor
carrier. Prior to July 1995, he was Chairman of the Board and Chief Executive
Officer of Morgan Drive Away, Inc., a transporter of mobile homes, recreational
vehicles and other commodities. Prior to August, 1992, he was Chief Executive
Officer and President of Energy Innovations, Inc., Dayton, Ohio, a monitoring
and communications equipment firm.
Alan R. Schriber, 133 South Main Street, Batesville, Indiana is the President
of ARS Broadcasting Corp., a company which owns and operates radio stations.
William P. Sheehan, 65 East State Street, Columbus, Ohio is a member of the
State of Ohio Employment Relations Board.
Thomas A. Steele, CPA, 36 East Fourth Street, Cincinnati, Ohio is the Secretary
and Treasurer for Bartlett & Co.
- 18 -
<PAGE> 21
R. Stuart Crickmer, CPA, CFA, 36 East Fourth Street, Cincinnati, Ohio is a
Portfolio Manager and Fixed Income Analyst for Bartlett & Co.
Madelynn M. Matlock, CFA, 36 East Fourth Street, Cincinnati, Ohio is the
Director of International Equities for Bartlett & Co.
James A. Miller, CFA, 36 East Fourth Street, Cincinnati, Ohio is a Senior
Portfolio Manager, President and a Director of Bartlett & Co.
Donna M. Prieshoff, 36 East Fourth Street, Cincinnati, Ohio is the Director of
Operations of Bartlett & Co.
Troy R. Snider, CFA, 36 East Fourth Street, Cincinnati, Ohio has been a Fixed
Income Analyst of Bartlett & Co. since April 1991. Prior thereto he was an
energy analyst with Duff & Phelps, an investment research firm.
Woodrow H. Uible, CFA, 36 East Fourth Street, Cincinnati, Ohio is a Senior
Portfolio Manager of Bartlett & Co.
PURCHASE OF SHARES
Shares of each Fund are sold without a sales charge at the next price
calculated after receipt of the order in proper form by the Fund. A minimum
investment of $5,000 is required to open an account in any Fund ($250 for IRAs
or other tax sheltered retirement plans). Additional purchases may be made in
any Fund in amounts of $100 or more. In its discretion, the Fund may waive
such minimums for investments made by employer sponsored qualified retirement
plans or through automatic investment programs, investments made through
brokerage firms or other financial institutions, or for investments made by
advisory clients of Bartlett & Co. and employees of Bartlett & Co. and their
families.
If your check or wire does not clear, or if any telephone purchase must
be cancelled due to nonpayment, you will be responsible for any loss incurred.
If you are already a shareholder, the Fund can redeem shares from any
identically registered account in any of the Funds as reimbursement for any
loss incurred. You may be prohibited or restricted from making future
purchases in any of the Funds.
- 19 -
<PAGE> 22
INITIAL INVESTMENTS BY MAIL
You may purchase shares of each Fund by completing and signing the
investment application form which accompanies this Prospectus and mailing it,
together with a check made payable to Bartlett Mutual Funds (subject to the
above minimum amounts), c/o Bartlett & Co., 36 E. Fourth St., Cincinnati, Ohio
45202.
Your order for shares of the Bartlett Cash Reserves Fund will not be
complete until the Fund has received federal funds. If a check for purchase of
shares is not drawn on federal funds, shares will be purchased at the next
share price calculated after the check is converted into federal funds
(normally two days or less).
INITIAL INVESTMENTS BY WIRE
You also may purchase shares of each Fund by bank wire. Prior to your
initial investment by wire, you must telephone Bartlett & Co. (Nationwide call
toll free 800-800-3609; in Cincinnati call 513-345-6212) to advise it of the
investment and to receive instructions. You should be prepared to give the
name(s) of the Fund in which you wish to invest, the name(s) in which the
account is to be registered, the address, telephone number and taxpayer
identification number for the account(s) and the name of the bank which will
wire the money.
Then, you must instruct your bank (which must be a member of, or have a
corresponding relationship with a member of, the Federal Reserve System) to
wire federal funds to:
Northern Trust Company
Chicago, Illinois 60675
ABA #0710-0015-2
A/C #57711 Legg Mason Wood Walker, Incorporated
Your purchase will be effected at the share price next determined after
receipt of your wire. Any wire purchase for which a specific Fund is not
indicated will be invested in the Bartlett Cash Reserves Fund.
You are required to mail a signed application to Bartlett Mutual Funds at
the above address in order to complete your initial wire purchase. Your bank
may impose a charge for sending your wire. There is presently no fee for the
receipt of wired funds, but the right to charge shareholders for this service
is reserved by the Fund.
- 20 -
<PAGE> 23
ADDITIONAL INVESTMENTS
You may purchase additional shares of each Fund at any time by mail or by
bank wire (minimum of $100). In its discretion, the Fund may waive such
minimums for investments made by employer sponsored qualified retirement plans
or through automatic investment programs, investments made through brokerage
firms or other financial institutions, or for investments made by advisory
clients of Bartlett & Co. and employees of Bartlett & Co. and their families.
Each additional purchase request must contain your name, your client number(s),
the name of your account(s), your account number(s) and the Fund(s) in which
you wish to invest. Checks should be made payable to Bartlett Mutual Funds and
should be sent to the Bartlett Mutual Funds' address. A bank wire should be
sent as outlined on the previous page.
AUTOMATIC INVESTMENT PROGRAM
You also may be able to purchase shares of any Fund through an automatic
investment program. By using such a program, funds are automatically
transferred from your payroll check or your bank checking or savings account
into your Fund account on a regular basis. This type of automatic investment
program is offered free of charge. For further information, you or your
employer may contact the Bartlett Mutual Funds.
TAX SHELTERED RETIREMENT PLANS
Shares of any Fund are available for purchase in connection with the
following tax sheltered retirement plans:
-- individual retirement account (IRA) plans for individuals and their
non-employed spouses
-- Keogh Plans (H.R. 10) for self-employed individuals
-- qualified pension and profit-sharing plans for employees, including those
profit-sharing plans with a 401(k) provision
-- 403(b) retirement plans for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Internal Revenue Code.
OTHER PURCHASE INFORMATION
Shares of each Fund also may be purchased through a broker at the share
price next determined after receipt by the broker of your order in proper form.
The broker may charge a fee for its services in connection with the purchase.
The Funds do not issue share certificates. You will receive a confirmation of
all
- 21 -
<PAGE> 24
investments in or withdrawals from your account in the Bartlett Value
International Fund, the Bartlett Basic Value Fund, the Bartlett Fixed Income
Fund and the Bartlett Short Term Bond Fund. You will receive a confirmation of
your initial investment and a statement of subsequent investments and
withdrawals at least monthly from the Bartlett Cash Reserves Fund. The rights
to limit the amount of purchases and to refuse to sell to any person are
reserved by each Fund.
You may exchange securities that you own for shares of any Fund, provided
the securities meet the Fund's investment criteria and the Advisor deems them
to be a desirable investment for the Fund. Any exchange will be a taxable
event and you may incur certain transaction costs relating to the exchange.
Contact Bartlett Mutual Funds for additional information.
REDEMPTION OF SHARES
You may redeem any part of your account in any Fund by mail or telephone.
Each Fund will redeem your shares without charge at the next share price
calculated after receipt of your properly completed request for withdrawal.
BY MAIL
To redeem shares by mail, you must send a letter to Bartlett Mutual
Funds, c/o Legg Mason Funds Processing, P.O. Box 1476, Baltimore, MD
21203-1476, stating your client number(s), your account number(s), the Fund(s)
from which the shares are to be redeemed and the number or dollar amount of the
shares to be redeemed. Although such requests will be accepted by the Bartlett
Mutual Funds in Cincinnati, processing delays may occur if such requests are
sent to the Cincinnati address. The letter must be signed by each shareholder,
including each joint owner, exactly as the shareholder's name appears on the
Fund's client registration. Although you are not required to do so currently,
for withdrawals in excess of $5,000, the Trust may require that signatures be
guaranteed by a domestic commercial bank or trust company or by a member firm
of a national securities exchange. Signature guarantees are for the protection
of shareholders. At the discretion of a Fund or Bartlett & Co., a shareholder,
prior to redemption, may be required to furnish additional legal documents to
insure proper authorization.
BY TELEPHONE
You may request a redemption of your shares in any Fund by calling
Bartlett Mutual Funds at 800-800-3609 or Legg Mason Funds Marketing Department
at 800-822-5544 and requesting that proceeds be mailed to you or wired to
your bank or brokerage firm. It is not necessary for you to first make a
written election to initiate a telephone redemption. The redemption will be
effected at the next determined share price. The proceeds will then be made
- 22 -
<PAGE> 25
payable to the registered shareholder and mailed to the address registered on
the account, or wired to your bank or brokerage firm, as previously authorized
by you on your application or in some other written form. The Trusts, Boston
Financial Data Services, Inc. ("Transfer Agent") and State Street Bank and
Trust Co. ("Custodian") will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures will
include recording telephone instructions and requiring a form of personal
identification from the caller. There is no charge for wire redemptions;
however, the Fund reserves the right, upon 30 days' written notice, to charge
for this service. Any charges for wire redemptions will be deducted from the
shareholder's Fund account by redemption of shares.
The Trusts, the Transfer Agent and the Custodian are not liable for
following instructions communicated by telephone that they reasonably believe
to be genuine. However, if they do not employ reasonable procedures to confirm
that telephone instructions are genuine, they may be liable for any losses due
to unauthorized or fraudulent instructions. The telephone redemption procedure
may be terminated at any time by the Fund or the Transfer Agent. During
periods of extreme market activity it is possible that shareholders may
encounter some difficulty in telephoning the Funds, although neither the Funds
nor the Transfer Agent has ever experienced difficulties in receiving and in a
timely fashion responding to telephone requests for redemptions or exchanges.
If you are unable to reach the Funds by telephone, you may request a redemption
or exchange by mail or facsimile.
CHECKWRITING PRIVILEGES
Shareholders of the Bartlett Short Term Bond Fund and the Bartlett Cash
Reserves Fund also may elect to write checks on their accounts with those
Funds. With this feature, shareholders may redeem by check, provided that the
checks(s) contain the proper signatures, and that the appropriate
authorizations are provided to the Bartlett Mutual Funds. Ordinarily, shares
will be redeemed on the day a check drawn on the Bartlett Mutual Fund Account
is presented in proper form to the Transfer Agent. However, Bartlett Mutual
Fund shares purchased by check may not be redeemed by writing a check against
the account until the purchase check has been collected, which normally may
take up to fifteen days.
There will be no charge for this service, but checks written against a
Fund account must be for at least $500 in the case of the Bartlett Cash
Reserves Fund or $1,000 in the case of the Bartlett Short Term Bond Fund. An
investment in a Fund will continue to earn dividends until a check is presented
to the Fund for payment. As would occur with a bank check, if there are
insufficient funds to cover the withdrawal amount, the
- 23 -
<PAGE> 26
check will be returned by the Fund's Transfer Agent. Shareholders should not
attempt to close an account by check, because the exact account balance at the
time the check clears likely will be different from the account balance at the
time the check is written.
Shareholders should be aware that a redemption by check entails a sale of
shares in the Fund and thus may have tax consequences.
Shareholders should be aware that the checkwriting feature is not
available for certain retirement plans or accounts.
OTHER REDEMPTION INFORMATION
Each Fund generally will make payment on the next business day, but in no
event later than seven days, after it accepts your request, except under
unusual circumstances as determined by the Securities and Exchange Commission.
However, payment for redemption made against shares purchased by check will be
made only after the check has been collected, which normally may take up to
fifteen days. To eliminate this delay, you may purchase shares by certified
check or bank wire.
Shares of each Fund also may be redeemed through a broker which may
charge a fee for its services in connection with the redemption.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $5,000 due to redemption ($250 for tax
sheltered retirement plans), or such other minimum amount as the Fund may
determine from time to time. A shareholder may increase the value of his or
her shares in the Fund to the minimum amount within the 30 day period. The
shares of each Fund are subject to redemption at any time if the Board of
Trustees of the applicable Trust determines in its sole discretion that failure
to so redeem may have materially adverse consequences to all or any of the
shareholders of the Trust or any Fund of the Trust. The net asset value of
your shares will fluctuate with the value of the underlying securities, and
your account at the time of redemption may be worth more or less than the
amount you invested. However, it is anticipated that the Bartlett Cash
Reserves Fund will maintain a stable net asset value of $1.00.
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<PAGE> 27
EXCHANGE PRIVILEGE
The Funds have made arrangements to enable you, if your investment
objectives change, to exchange shares of any Fund without sales charge for
shares of any other Bartlett Fund and any Bartlett Fund offered in the future.
An exchange is generally a taxable event and shareholders should consult their
tax advisors about the tax effect of an exchange. Exchanges may only be made
for shares of Bartlett Funds then offering shares for sale in your state of
residence. Exchanges are subject to the applicable minimum initial investment
requirement.
You may request exchanges in writing or by telephone. It is not
necessary for you to first make a written election to initiate a telephone
exchange. The Trusts and the Transfer Agent are not liable for following
exchange instructions communicated by telephone that they reasonably believe to
be genuine. However, if they do not employ reasonable procedures to confirm
that telephone instructions are genuine, they may be liable for any losses due
to unauthorized or fraudulent instructions. Procedures employed will include
recording telephone instructions and requiring a form of personal
identification from the caller. Shareholders will be given 60 days' prior
notice of any modifications or termination of this Exchange Privilege.
In addition, an excessive number of exchanges may be disadvantageous to
the shareholders of the Funds, in that such exchanges increase transaction
costs and may require the maintenance of excessive cash positions, both of
which may reduce investment returns. Therefore, each Fund reserves the right
to limit the amount of any exchange or at any time temporarily or permanently
terminate the exchange privilege for any person who makes more than twelve
exchanges into or out of any Fund in any twelve month period.
OPERATION OF THE TRUSTS
Bartlett Capital Trust is a diversified, open-end management investment
company organized as a Massachusetts business trust on October 31, 1982.
Bartlett Management Trust is a diversified, open-end management investment
company organized as an Ohio business trust on July 16, 1984. The business
activities of each Trust are supervised by its Board of Trustees. Like other
mutual funds, the Trusts retain various organizations to perform specialized
services.
THE ADVISOR
Each Trust retains Bartlett & Co., 36 East Fourth Street, Cincinnati,
Ohio (the "Advisor") to manage its investments.
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The Advisor, a wholly owned subsidiary of Legg Mason, Inc. ("Legg Mason"), is
an investment advisory firm which has provided investment advice to
individuals, corporations, pension and profit sharing plans and trust accounts
since 1898.
In return for its services, the Advisor receives a monthly fee from each
Fund, computed and accrued daily, based on the Fund's average net assets. For
the year ended March 31, 1996, the Bartlett Basic Value Fund paid the Advisor a
fee equal to 1.17% of its daily net assets; the Bartlett Fixed Income Fund paid
the Advisor a fee equal to 1.00% of its average daily net assets; the Bartlett
Value International Fund paid the Advisor a fee equal to 1.83% of its average
daily net assets; the Bartlett Short Term Bond Fund paid the Advisor a fee
equal to .85% of its average daily net assets; and the Bartlett Cash Reserves
Fund paid the Advisor a fee equal to .78% of its average daily net assets.
Unlike most other mutual funds, the management fees paid by the Funds to
the Advisor include transfer agency, pricing, custodial, auditing and legal
services, and general administrative and other operating expenses. The Advisor
pays all of the expenses of each Fund except brokerage, taxes, interest and
extraordinary expenses. The rates of the advisory fees paid by most investment
companies to their investment advisors is lower than the rates of the advisory
fees paid by the Bartlett Value International Fund, the Bartlett Basic Value
Fund, the Bartlett Fixed Income Fund, the Bartlett Short Term Bond Fund and the
Bartlett Cash Reserves Fund. In this regard, it should be noted that most
investment companies pay their own operating expenses, while each Fund's
expenses (except those specified above) are paid by the Advisor. In addition,
the expenses of the Bartlett Value International Fund, like those of other
international funds, generally can be expected to be higher than expenses of
investment companies investing in domestic securities due to the greater costs
of custody, communications and investment advisory services for foreign
securities.
Each Trust retains Legg Mason Fund Adviser, Inc. (the "Administrator"),
an affiliate of the Advisor, to manage the Trust's business affairs and
provide the Trust with administrative services, including all regulatory
reporting and necessary office equipment, personnel and facilities. The
Administrator is compensated for its services by the Advisor, which
compensation is limited to reimbursement for the allocable salary and benefits
costs in providing the services. Each Trust retains Boston Financial Data
Services, Inc., 2 Heritage Drive, North Quincy, Massachusetts to serve as
Transfer Agent, dividend paying agent and shareholder service agent. The
servies of the Administrator and the Transfer Agent are operating expenses paid
by the Advisor.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Funds as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Advisor (not the Funds) may pay certain financial
institutions (which may include banks, securities dealers and other industry
professionals) a servicing fee for performing certain administrative functions
for Fund shareholders to the extent these institutions are allowed to do so by
applicable statute, rule or regulation. In addition, registered
representatives of broker/dealers (including affiliates of the Advisor) may
receive compensation from the broker/dealer based upon the number of shares of
the Funds purchased by clients of such broker/dealers.
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THE BARTLETT MUTUAL FUNDS PORTFOLIO MANAGERS
Dale H. Rabiner, CFA, Chairman of the Board of Trustees and
President of the Bartlett Capital Trust and Vice President of the
Bartlett Management Trust is responsible for managing the portfolios of the
Bartlett Fixed Income Fund, the Bartlett Short Term Bond Fund and the Bartlett
Cash Reserves Fund. Mr. Rabiner is a Senior Portfolio Manager of the Advisor.
Mr. Rabiner has been employed by the Advisor since 1983 and has served since
then as Director of its Fixed Income Group. In managing the Fund's portfolio,
Mr. Rabiner works closely with other members of the Advisor's Fixed Income
Group who specialize in fixed income securities.
James A. Miller, CFA, Vice President of the Bartlett Capital Trust, and
Woodrow H. Uible, CFA, Vice President of the Bartlett Capital Trust, are
responsible for co-managing the portfolio of the Bartlett Basic Value Fund. Mr.
Miller is a Senior Portfolio Manager, President and a Director of the Advisor.
Mr. Miller joined the Advisor in 1977, and is a member of its Institutional
Investment Group. Mr. Uible is a Senior Portfolio Manager of the Advisor. Mr.
Uible has been employed by the Advisor since 1980. He chairs the Advisor's
Equity Investment Group, and is responsible for the Advisor's equity investment
processes. Messrs. Miller and Uible work closely with other members of the
Advisor's Equity Investment and Institutional Investment Groups who specialize
in equity securities.
Madelynn M. Matlock, CFA, Vice President of the Bartlett Capital Trust,
is primarily responsible for managing the portfolio of the Bartlett Value
International Fund. Ms. Matlock, Director of International Investment for the
Advisor, joined the Advisor in 1981. She also served as Director of Research
for the Advisor from 1983 to 1992.
CALCULATION OF SHARE PRICE
The share prices (net asset values) of the Bartlett Value International
Fund, the Bartlett Basic Value Fund, the Bartlett Fixed Income Fund and the
Bartlett Short Term Bond Fund are
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calculated once daily, as of the close of trading on the New York Stock
Exchange (generally, 4:00 p.m., New York time), on each day the Trust and the
custodian of the applicable Fund are open for business. The net asset value of
shares of the Bartlett Cash Reserves Fund is calculated twice daily as of 12:00
p.m. and 4:00 p.m., New York time, on any day when the Trusts and the Fund's
custodian are open for business. The price of the shares of a Fund will also
be calculated on other days if there is sufficient trading in the Fund's
portfolio securities that its net asset value might be materially affected.
The net asset value per share of each Fund is computed by dividing the sum of
the value of the securities held by the Fund plus any cash or other assets
minus all liabilities (including estimated accrued expenses) by the total
number of shares outstanding at such time, rounded to the nearest cent. For
the Bartlett Cash Reserves Fund, which is a money market fund, this is known as
the penny-rounding method of pricing.
Equity securities, options and commodities listed on exchanges are valued
at the last sale price as of the close of business on the day the securities
are being valued. Listed securities not traded on a particular day and
securities traded in the over-the-counter market are valued at the mean
between closing bid and ask prices quoted by brokers or dealers that make
markets in the securities. Portfolio securities which are traded both in the
over-the-counter market and on an exchange are valued according to the broadest
and most representative market.
Fixed income securities generally are valued by using market quotations,
or independent pricing services which use prices provided by market makers or
estimates of market values. However, if the Advisor believes the market value
of a security will be more accurately reflected thereby, it will use market
value estimates obtained from yield spreads relating to securities with similar
characteristics as to credit quality, coupon rate, maturity and other factors.
Fixed income securities having a maturity of less than 60 days (except
for those in the Bartlett Cash Reserves Fund) are valued at amortized cost.
Securities and other assets of a Fund for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Advisor, subject to review of the Board of Trustees. Any of the Funds may use
pricing services to determine the market value of its portfolio securities,
subject to the Advisor's review. If the Board of Trustees determines in good
faith that another method of valuing options and futures contracts is necessary
to appraise their fair value, such other method will be used.
For valuation purposes, quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents at the time of pricing. In
computing the net asset value of a Fund,
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the values of foreign portfolio securities are generally based upon market
quotations which, depending upon the exchange or market, may be last sale
price, last bid price, or the mean between last bid and asked prices as of, in
each case, the close of the appropriate exchange or another designated time.
Trading in securities on European and Far Eastern securities exchanges
and over-the-counter markets is normally completed at various times before the
close of business on each day on which the NYSE is open. Trading of these
securities may not take place on every NYSE business day. In addition, trading
may take place in various foreign markets on Saturdays or on other days when
the NYSE is not open and on which a Fund's share price is not calculated.
Therefore, the value of the portfolio of a Fund holding foreign securities may
be significantly affected on days when shares of the Fund may not be purchased
or redeemed.
The calculation of the share price of a Fund holding foreign securities
in its portfolio does not take place contemporaneously with the determination
of the values of many of the foreign portfolio securities used in such
calculation. Events affecting the values of foreign portfolio securities that
occur between the time their prices are determined and the calculation of the
Fund's share price will not be reflected in the calculation unless the Advisor
determines, subject to review by the Board of Trustees, that the particular
event would materially affect net asset value, in which case an adjustment will
be made.
DIVIDENDS AND DISTRIBUTIONS
Each Fund intends to distribute substantially all of its net investment
income, if any, in the form of dividends to its shareholders. The Bartlett
Value International Fund and the Bartlett Basic Value Fund each intend to
declare and pay dividends on a quarterly basis. The Bartlett Fixed Income
Fund, the Bartlett Short Term Bond Fund and the Bartlett Cash Reserves Fund
each intend to declare dividends daily and pay them monthly. Each Fund intends
to distribute net long term and net short term capital gains, if any, at least
once a year.
Distributions from each Fund are made pursuant to one of the following
options:
SHARE OPTION. Income distributions and capital gains distributions
reinvested in additional shares.
INCOME OPTION. Income distributions in cash; capital gains
distributions reinvested in additional shares.
CASH OPTION. Income distributions and capital gains distributions in
cash.
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You should indicate your choice of options on the application. If no
option is specified on your application, distributions will automatically be
reinvested in additional shares. You may change the option you have chosen by
sending a written request to Bartlett Mutual Funds indicating the Fund(s) for
which the change in option is requested. All distributions (regardless of the
option you select) will be based on the share price in effect on the payable
date. Reinvestment of distributions in additional shares are also made on the
payable date; however, distributions in cash may be mailed to the shareholder
several days subsequent to the payable date.
TAXES
Each Fund has qualified and intends to qualify each year as a "regulated
investment company" under federal tax law. By so qualifying, the Fund will not
be subject to federal income taxes to the extent that it distributes
substantially all of its net investment income and any net realized capital
gains.
For federal income tax purposes, each Fund is treated as a separate
entity for the purpose of computing taxable net income and net realized capital
gains and losses. Dividends paid by each Fund from ordinary income are taxable
to shareholders as ordinary income, but may be eligible in part for the
dividends received deduction for corporations. Any distributions designated as
being made from net realized long term capital gains are taxable to
shareholders as long term capital gains regardless of the holding period of the
shareholder. The tax consequences described in this section apply whether
distributions are taken in cash or reinvested in additional shares.
Each Fund will mail a statement to each shareholder setting forth the
federal income tax status of distributions made during the year. Dividends and
capital gains distributions also may be subject to state and local taxes.
Income received by the Bartlett Value International Fund and any other
Fund holding foreign securities may be subject to foreign tax withholding. Tax
treaties between certain countries and the U.S. may reduce or eliminate such
taxes. Shareholders may be entitled to claim tax credits or deductions,
subject to provisions and limitations of the Internal Revenue Code, for foreign
income taxes paid by the Fund. The Fund will notify its shareholders if such
credit or deduction is available.
Shareholders of each Fund are urged to consult their own tax advisers
regarding specific questions as to federal, state or local taxes, applicable
foreign tax credits and deductions and
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the tax effect of distributions, redemptions and the use of the Exchange
Privilege.
Unless a shareholder of a Fund furnishes his certified taxpayer
identification number (social security number for individuals) and certifies
that he is not subject to backup withholding, the Fund will be required to
withhold and remit to the U.S. Treasury 31% of the dividend, distributions and
redemption proceeds payable to the shareholder. Shareholders should be aware
that, under regulations promulgated by the Internal Revenue Service, a Fund may
be fined $50 annually for each account for which a certified taxpayer
identification number is not provided. In the event that such a fine is
imposed with respect to a specific account in any year, the Fund will make a
corresponding charge against the account.
INVESTMENT POLICIES, TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques. Each Fund may invest in any security or
employ any investment technique described in this section unless specifically
noted otherwise. Each Fund may purchase combinations of different types of
securities provided that the securities in the combination are permissible
investments of the Fund.
EQUITY SECURITIES
Each Fund (other than the Bartlett Cash Reserves Fund) may invest in
equity securities. Equity securities include common stock, preferred stock and
common stock equivalents such as convertible preferred stock, convertible
debentures, rights and warrants.
CONVERTIBLE PREFERRED STOCK is preferred stock that can be converted into
common stock pursuant to its terms. CONVERTIBLE DEBENTURES are debt
instruments that can be converted into common stock pursuant to their terms.
WARRANTS are options to purchase equity securities at a specified price
valid for a specific time period. RIGHTS are similar to warrants, but normally
have a short duration and are distributed by the issuer to its shareholders. A
Fund may not invest more than 5% of its assets at the time of purchase in
rights and warrants other than those that have been acquired in units or
attached to other securities. No more than 2% of assets at the time of
purchase may be invested in warrants which are not listed on either the New
York Stock Exchange or the American Stock Exchange.
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FIXED INCOME SECURITIES
Fixed income securities include corporate debt securities, municipal
obligations, mortgage related securities, asset-backed and receivable-backed
securities, U.S. government obligations and participation interests in such
securities. Certain fixed income securities are floating rate obligations or
variable rate obligations. Certain fixed income securities may carry demand
features that permit a Fund to sell the obligation back to the issuer or to a
third party at a specified price upon short notice at any time or prior to
specific dates. Preferred stock and certain common stock equivalents may also
be considered to be fixed income securities. Financial service industry
obligations are fixed income securities issued by a specific industry. Under
normal circumstances, at least 65% of the total assets of the Bartlett Fixed
Income Fund will be invested in fixed income securities other than floating
rate and variable rate obligations.
CORPORATE DEBT SECURITIES AND MUNICIPAL OBLIGATIONS. Each Fund is
permitted to invest in CORPORATE DEBT SECURITIES, i.e., long-term and
short-term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). Corporate debt securities
include variable amount master demand notes. These obligations permit the
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangements between a Fund, as lender, and the borrower. Variable
amount master demand notes are direct lending arrangements between the lender
and borrower and are not generally transferable. A Fund may invest in such
notes only if the Board of Trustees believes that the notes are of comparable
quality to the other obligations in which the Fund may invest. Variable amount
master demand notes may be deemed illiquid under certain circumstances and a
Fund's investment in such notes would be limited to the extent that it is not
permitted to invest more than 10% of the value of its net assets in illiquid
investments.
Each Fund is also permitted to invest in municipal obligations.
MUNICIPAL OBLIGATIONS are debt obligations issued by or on behalf of states,
territories and possessions of the United States and the District of Columbia,
and their political subdivisions, agencies, authorities and instrumentalities
and other qualifying issuers which pay interest that is, in the opinion of bond
counsel to the issuer, exempt from federal income tax. Each Fund may also
invest less than 5% of its total assets in participation interests in municipal
obligations.
Each Fund (except the Bartlett Cash Reserves Fund--see "Portfolio
Management Policies for the Bartlett Cash Reserves Fund" and the Bartlett Short
Term Bond Fund) may invest in debt obligations (such as corporate debt
securities and municipal obligations) in any rating category of the recognized
rating
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services, including issues that are in default, and may invest in unrated debt
obligations. Most foreign debt obligations are not rated (see "Foreign
Securities").
SECURITIES RATINGS. Generally, investments in securities in the lower
rating categories or comparable unrated securities provide higher yields but
involve greater price volatility and risk of loss of principal and interest
than investments in securities with higher ratings. Securities rated lower
than Baa by Moody's or BBB by Standard & Poor's (commonly known as "junk
bonds") are below investment grade and have speculative characteristics. None
of the Funds intends to invest more than 5% of its portfolio in securities
below investment grade; neither the Bartlett Short Term Bond Fund nor the
Bartlett Cash Reserves Fund may purchase any securities that are below
investment grade at the time of purchase.
Lower ratings reflect a greater possibility that an adverse change in
financial condition will affect the ability of the issuer to make payments of
principal and interest than is the case with higher grade securities. In
addition, lower-rated securities will also be affected by the market's
perception of their credit quality and the outlook for economic growth. In
the past, economic downturns or an increase in interest rates have under
certain circumstances caused a higher incidence of default by the issuers of
these securities and may do so in the future, especially in the case of highly
leveraged issuers. The prices for these securities may be affected by
legislative and regulatory developments. For example, new federal rules
require that savings and loan associations gradually reduce their holdings of
high yield securities. An effect of such legislation may be to significantly
depress the prices of outstanding lower-rated securities. The market for
lower-rated securities may be less liquid than the market for securities with
higher ratings. Furthermore, the liquidity of lower-rated securities may be
affected by the market's perception of their credit quality. Therefore,
judgment may at times play a greater role in valuing these securities than in
the case of higher-rated securities, and it also may be more difficult during
certain adverse market conditions to sell lower-rated securities at their fair
value to meet redemption requests or to respond to changes in the market.
Although the above risks apply to all lower-rated securities, the
investment risk increases when the rating of the security is below investment
grade. The lowest-rated securities (D by S&P and C by Moody's) are regarded as
having extremely poor prospects of ever attaining any real investment standing,
and, in fact, may be in default of payment of interest or repayment of
principal. To the extent a Fund (other than the Bartlett Short Term Bond Fund
and the Bartlett Cash Reserves Fund) invests in these lower rated securities,
the achievement of its investment objective may be more dependent on the
Advisor's own credit
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analysis than in the case of a Fund investing in higher-rated securities.
Each Fund (other than the Bartlett Short Term Bond Fund and the Bartlett
Cash Reserves Fund) may invest in securities which are in lower rating
categories or are unrated if the Advisor determines that the securities provide
the opportunity of meeting the Fund's objective without presenting excessive
risk. The Advisor will consider all factors which it deems appropriate,
including ratings, in making investment decisions for a Fund and will attempt
to minimize investment risks through diversification, investment analysis and
monitoring of general economic conditions and trends. While the Advisor may
refer to ratings, it does not rely exclusively on ratings, but makes its own
independent and ongoing review of credit quality.
LOAN PARTICIPATION INTERESTS. Loan participation interests are interests
in debt obligations (such as corporate loans) that are owned by banks or other
financial institutions. Loan participation interests are subject to the credit
risks generally associated with the corporate borrower; however, certain loan
participation interests may be backed by irrevocable letters of credit or a
guarantee of the bank or financial institution. Certain loan participation
interests may carry demand features that permit a Fund to sell the obligations
back to the financial intermediaries for the full amount of the Fund's interest
in the debt obligation plus accrued interest upon short notice at any time or
prior to specific dates. In the event of a default by the corporate borrower,
a Fund may be required to assert its rights through the financial intermediary
which may subject the Fund to delays, expenses and risks that are greater than
those that would have been involved if the Fund had purchased a direct
obligation (such as commercial paper) of such borrower. Moreover, under the
terms of the loan participation the Fund may be regarded as a creditor of the
bank or financial institution (rather than of the corporate borrower), so that
the Fund may also be subject to the risk that the financial intermediary may
become insolvent. Further, in the event of the bankruptcy or insolvency of the
corporate borrower, the loan participation may be subject to certain defenses
that can be asserted by such borrower as a result of improper conduct by the
financial intermediary. Loan participation interests which do not carry
unconditional demand features that can be exercised within seven days or less
are deemed illiquid and a Fund's investment in such interests would be limited
to the extent that it is not permitted to invest more than 10% of the value of
its net assets in illiquid investments.
MORTGAGE-RELATED SECURITIES. Each Fund may invest in mortgage-related
securities. Mortgage-related securities provide capital for mortgage loans
made to residential homeowners, including securities which represent interests
in pools of
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mortgage loans made by lenders such as savings and loan institutions, mortgage
bankers, commercial banks and others. Pools of mortgage loans are assembled
for sale to investors (such as the Funds) by various governmental,
government-related and private organizations, such as dealers. The market
value of mortgage-related securities will fluctuate as a result of changes in
interest rates and mortgage rates.
Interests in pools of mortgage loans generally provide a monthly payment
which consists of both interest and principal payments. In effect, these
payments are a "pass-through" of the monthly payments made by the individual
borrowers on their residential mortgage loans, net of any fees paid to the
issuer or guarantor of such securities. Additional payments are caused by
repayments of principal resulting from the sale of the underlying residential
property, refinancing or foreclosure, net of fees or costs which may be
incurred. Some mortgage-related securities (such as securities issued by the
Government National Mortgage Association) are described as "modified
pass-through" because they entitle the holder to receive all interest and
principal payments owed on the mortgage pool, net of certain fees, regardless
of whether the mortgagor actually makes the payment.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers, such
as dealers, create pass-through pools of conventional residential mortgage
loans. Such issuers also may be the originators of the underlying mortgage
loans as well as the guarantors of the mortgage-related securities. Pools
created by such non-governmental issuers generally offer a higher rate of
interest than government and government-related pools because there are no
direct or indirect government guarantees of payments with respect to such
pools. However, timely payment of interest and principal of these pools is
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance. There can be no assurance that the
private insurers can meet their obligations under the policies. A Fund may buy
mortgage-related securities without insurance or guarantees if, through an
examination of the loan experience and practices of the persons creating the
pools, the Advisor determines that the securities are appropriate investments
for the Fund.
Another type of security representing an interest in a pool of mortgage
loans is known as a collateralized mortgage obligation ("CMO"). CMOs represent
interests in a short term, intermediate term or long term portion of a mortgage
pool. Each portion of the pool receives monthly interest payments, but the
principal repayments pass through to the short term CMO first and the long term
CMO last. A CMO permits an investor to more accurately predict the rate of
principal repayments. CMOs are issued by private issuers, such as broker
dealers, and government
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agencies, such as the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation. Investments in CMOs are subject to the same
risks as direct investments in the underlying mortgage-backed securities. In
addition, in the event of a bankruptcy or other default of a broker who issued
the CMO held by a Fund, the Fund could experience both delays in liquidating
its position and losses. Each Fund (other than the Bartlett Short Term Bond
Fund and the Bartlett Cash Reserves Fund) may invest in CMOs in any rating
category of the recognized rating services and may invest in unrated CMOs.
Each Fund may also invest in "stripped" CMOs, which represent only the income
portion or the principal portion of the CMO.
The Advisor expects that governmental, government-related or private
entities may create mortgage loan pools offering pass-through investments in
addition to those described above. The mortgages underlying these securities
may be second mortgages or alternative mortgage instruments (for example,
mortgage instruments whose principal or interest payments may vary or whose
terms to maturity may differ from customary long-term fixed rate mortgages).
As new types of mortgage-related securities are developed and offered to
investors, the Advisor will, consistent with a Fund's investment objective and
policies, consider making investments in such new types of securities. The
Prospectus of a Fund will be amended with any necessary additional disclosure
prior to the Fund investing in such securities.
The average life of securities representing interests in pools of
mortgage loans is likely to be substantially less than the original maturity of
the mortgage pools as a result of prepayments or foreclosures of such
mortgages. Prepayments are passed through to the registered holder with the
regular monthly payments of principal and interest, and have the effect of
reducing future payments. To the extent the mortgages underlying a security
representing an interest in a pool of mortgages are prepaid, a Fund may
experience a loss (if the price at which the respective security was acquired
by the Fund was at a premium over par, which represents the price at which the
security will be redeemed upon prepayment) or a gain (if the price at which the
respective security was acquired by the Fund was at a discount from par). In
addition, prepayments of such securities held by a Fund will reduce the share
price of the Fund to the extent the market value of the securities at the time
of prepayment exceeds their par value, and will increase the share price of the
Fund to the extent the par value of the securities exceeds their market value
at the time of prepayment. Prepayments may occur with greater frequency in
periods of declining mortgage rates because, among other reasons, it may be
possible for mortgagors to refinance their outstanding mortgages at lower
interest rates.
Although the market for mortgage-related securities issued by private
organizations is becoming increasingly liquid, such
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securities may not be readily marketable. No Fund will purchase
mortgage-related securities for which there is no established market (including
CMOs and direct investments in mortgages as described below) or any other
investments which the Advisor deems to be illiquid pursuant to criteria
established by the Board of Trustees if, as a result, more than 10% of the
value of the Fund's net assets would be invested in such illiquid securities
and investments.
Mortgage-related securities include investments made directly in
mortgages secured by real estate. When a Fund makes a direct investment in
mortgages, the Fund, rather than a financial intermediary, becomes the
mortgagee with respect to such loans purchased by the Fund.
ASSET-BACKED AND RECEIVABLE-BACKED SECURITIES. Each Fund is permitted to
invest in asset-backed and receivable-backed securities. Several types of
asset-backed and receivable-backed securities are available to investors,
including CARs(SM) (Certificates for Automobile Receivables(SM)) and interests
in pools of credit card receivables. CARs(SM) represent a pool (the "Pool") of
motor vehicle retail installment sales contracts and security interests in the
vehicles securing the contracts. Payments of principal and interest on
CARs(SM) are passed through monthly to certificate holders. Such payments may
be guaranteed up to certain amounts and for a certain time period by a letter
of credit issued by a financial institution unaffiliated with the Pool. Early
prepayment of principal on the underlying vehicle sales contracts may reduce
the overall return to an investor. If the letter of credit is exhausted and if
the full amount of the underlying sales contracts are not repaid, certificate
holders may experience losses on CARs(SM) or delays in payment. Certificates
representing pools of credit card receivables have characteristics similar to
CARs(SM), however, the underlying receivables are not secured.
Consistent with each Fund's investment objective and subject to the
review and approval of the Board of Trustees, each Fund also may invest in
other types of asset-backed and receivable-backed securities. The Prospectus
of a Fund will be amended with any necessary additional disclosure prior to the
Fund investing in such securities.
FLOATING AND VARIABLE RATE OBLIGATIONS. Fixed income securities may be
offered in the form of floating and variable rate obligations. FLOATING RATE
OBLIGATIONS have an interest rate which is fixed to a specified interest rate,
such as a bank prime rate, and is automatically adjusted when the specified
interest rate changes. VARIABLE RATE OBLIGATIONS have an interest rate which
is adjusted at specified intervals to a specified interest rate. Periodic
interest rate adjustments help stabilize the obligations' market values.
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A Fund may purchase these obligations from the issuers or may purchase
participation interests in pools of these obligations from banks or other
financial institutions. Variable and floating rate obligations usually carry
demand features that permit a Fund to sell the obligations back to the issuers
or to financial intermediaries at par value plus accrued interest upon short
notice at any time or prior to specific dates. The inability of the issuer or
financial intermediary to repurchase an obligation on demand could affect the
liquidity of the Fund's portfolio. Frequently, obligations with demand
features are secured by letters of credit or comparable guarantees. The
Bartlett Cash Reserves Fund determines maturity of variable and floating rate
securities in accordance with Securities and Exchange Commission rules
applicable to money market funds which allow the Fund to consider certain of
such instruments as having maturities shorter than the maturity date on the
face of the instrument. Floating and variable rate obligations which do not
carry unconditional demand features that can be exercised within seven days or
less are deemed illiquid unless the Board determines otherwise. A Fund's
investment in illiquid floating and variable rate obligations would be limited
to the extent that it is not permitted to invest more than 10% of the value of
its net assets in illiquid investments.
FINANCIAL SERVICE INDUSTRY OBLIGATIONS. Fixed income securities issued
by domestic and foreign banks, domestic savings and loan associations, consumer
and industrial finance companies, securities brokerage companies, real
estate-related companies, leasing companies, and a variety of firms in all
segments of the insurance field such as multiline, property and casualty, and
life insurance are referred to in this Prospectus as financial service industry
obligations. Such obligations include certificates of deposit, bankers'
acceptances and other debt obligations. Each Fund may invest in financial
service industry obligations. The financial services industry is subject to
extensive governmental regulations which may limit both the amounts and types
of loans which may be made and interest rates which may be charged. In
addition, the profitability of the industry is largely dependent upon the
availability and cost of funds for lending purposes, general economic
conditions and exposure to credit losses arising from possible financial
difficulties of borrowers. Those financial services companies which are
engaged in insurance underwriting may be exposed to adverse competitive
conditions which may result in underwriting losses. If a Fund's portfolio
contains obligations issued by foreign branches of U.S. banks or those issued
by foreign banks, it may be subject to additional investment risks. For
example, possible actions by foreign governments, including the adoption of
governmental restrictions, nationalization of foreign deposits or establishment
of exchange controls, might adversely affect the payment of principal and
interest on the obligations issued by those branches. In addition, foreign
branches of U.S. banks and
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foreign banks are not subject to all of the federal and state laws and
regulations applicable to U.S. banks. The risks associated with investments in
this industry are particularly relevant to the Bartlett Cash Reserves Fund
because under normal market conditions its investments will be concentrated in
the industry.
U.S. GOVERNMENT OBLIGATIONS AND RELATED SECURITIES. U.S. government
obligations include a variety of securities which are issued or guaranteed by
the United States Treasury, by various agencies of the United States government
or by various instrumentalities that have been established or sponsored by the
United States government. U.S. Treasury securities and securities issued by
the Government National Mortgage Association and Small Business Administration
are backed by the "full faith and credit" of the United States government.
Other U.S. government obligations may or may not be backed by the "full faith
and credit" of the United States. In the case of securities not backed by the
"full faith and credit" of the United States, the investor must look
principally to the agency issuing or guaranteeing the obligation (such as the
Federal Farm Credit System, the Federal Home Loan Banks, the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation) for
ultimate repayment, and may not be able to assert a claim against the United
States itself in the event the agency or instrumentality does not meet its
commitments.
Participation interests in U.S. government obligations are pro rata
interests in such obligations which are generally underwritten by government
securities dealers. Certificates of safekeeping for U.S. government
obligations are documentary receipts for such obligations. Both participation
interests and certificates of safekeeping are traded on exchanges and in the
over-the- counter market.
Each Fund may invest in U.S. government obligations and related
participation interests. In addition, each Fund may invest in custodial
receipts that evidence ownership of future interest payments, principal
payments or both on certain U.S. government obligations. Such obligations are
held in custody by a bank on behalf of the owners. These custodial receipts
are known by various names, including Treasury Receipts, Treasury Investors
Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury Securities
("CATS"). Custodial receipts generally are not considered obligations of the
U.S. government for purposes of securities laws. The Funds will consider all
interest-only or principal-only fixed income securities as illiquid.
STRUCTURED SECURITIES. Each of the Funds (except the Bartlett Value
International Fund and the Bartlett Cash Reserves Fund) may invest in
structured securities which are derived from
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securities which are issued by U.S. government agencies and are denominated in
U.S. dollars. These short maturity notes differ from traditional government
agency securities in that the return (principal and/or interest) is linked to
the performance of a diversified array of financial indices.
An investment in structured securities entails risks not associated with
investments in conventional debt securities. However, the Funds use these
securities only as a hedge or to protect a Fund portfolio against rising
interest rates. Structured securities are privately issued securities, although
they are traded in the secondary market. The secondary market for such
securities is affected by factors independent of the creditworthiness of the
issuer and the value of the index, such as the volatility of the index, time
remaining to maturity and the amount of such securities outstanding.
FOREIGN SECURITIES
FOREIGN EQUITY SECURITIES include common stock, preferred stock and
common stock equivalents issued by foreign companies. Each Fund (other than
the Bartlett Cash Reserves Fund) may invest, without limitation, in foreign
equity securities.
American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and other similar securities convertible into securities of foreign
companies provide a means for investing indirectly in foreign equity
securities. ADRS are receipts typically issued by a U.S. bank evidencing
ownership of the underlying foreign securities. EDRS are receipts typically
issued by a European bank evidencing ownership of the underlying foreign
securities. To the extent the ADR or EDR is issued by a bank unaffiliated with
the foreign company issuer of the underlying security, the bank has no
obligation to disclose material information about the foreign company issuer.
In addition, the Bartlett Value International Fund may invest in any
closed-end investment company that holds foreign equity securities in its
portfolio provided the securities held by such investment company are otherwise
permitted investments for the Fund.
FOREIGN FIXED INCOME SECURITIES include corporate debt obligations issued
by foreign companies and debt obligations of foreign governments or
international organizations. This category may include floating rate
obligations, variable rate obligations, Yankee dollar obligations (U.S. dollar
denominated obligations issued by foreign companies and traded on U.S. markets)
and Eurodollar obligations (U.S. dollar denominated obligations issued by
foreign companies and traded on foreign markets). To the extent that the
Bartlett Fixed Income Fund and
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the Bartlett Short Term Bond Fund invest in foreign securities, they intend to
invest only in securities of developed countries.
FOREIGN GOVERNMENT OBLIGATIONS generally consist of debt securities
supported by national, state or provincial governments or similar political
units or governmental agencies. Such obligations may or may not be backed by
the national government's full faith and credit and general taxing powers.
Investments in foreign securities also include OBLIGATIONS ISSUED BY
INTERNATIONAL ORGANIZATIONS. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank.
In addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts
of the currencies of certain member states of the European Economic Community,
more commonly known as the Common Market.
Each Fund may include foreign fixed income securities and foreign
government obligations securities in its portfolio. The Bartlett Value
International Fund under normal conditions will invest at least 65% of its
assets in foreign securities. For purposes of this 65% test, foreign
securities includes securities of issuers: (1) which are organized under the
laws of a foreign country; (2) for which the principal trading market is in a
foreign country; or (3) which derive at least 50% of their revenues or profits
from goods produced or sold, investments made, or services performed in foreign
countries or which have at least 50% of their assets situated in foreign
countries.
Purchases of foreign securities are usually made in foreign currencies
and, as a result, a Fund may incur currency conversion costs and may be
affected favorably or unfavorably by changes in the value of foreign currencies
against the U.S. dollar. However, since the Bartlett Cash Reserves Fund may
only purchase U.S. dollar denominated foreign securities, it will not be
subject to these risks. In addition, there may be less information publicly
available about a foreign company than about a U.S. company, and foreign
companies are not generally subject to accounting, auditing and financial
reporting standards and practices comparable to those in the U.S. Other risks
associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes
in the administrations or economic and monetary policies of foreign
governments, the imposition of exchange control regulations, the possibility of
expropriation
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decrees and other adverse foreign governmental action, the imposition of
foreign taxes, less liquid markets, less government supervision of exchanges,
brokers and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In
addition, investing in foreign securities will generally result in higher
commissions than investing in similar domestic securities.
OPTION TRANSACTIONS
The Bartlett Basic Value Fund, the Bartlett Fixed Income Fund and the
Bartlett Short Term Bond Fund may engage in option transactions involving
equity securities, debt securities, futures contracts and stock indexes. The
Bartlett Value International Fund may engage in option transactions involving
foreign currencies, foreign stock indexes and futures contracts. The Bartlett
Cash Reserves Fund may not engage in option transactions.
To cover the potential obligations involved in option transactions, a
Fund will own the underlying equity security, debt security, futures contract
or foreign currency or the Fund will segregate with the Custodian (a) high
grade liquid debt assets sufficient to purchase the underlying equity security,
debt security, futures contract or foreign currency or (b) high grade liquid
debt assets equal to the market value of the stock index. A Fund will only
engage in options on futures contracts for hedging purposes (see "Hedging
Program" below). Option transactions involve the following principal risks:
(a) the loss of a greater percentage of the Fund's investment than a direct
investment in the underlying instrument, (b) the loss of opportunity to profit
from price movements in the underlying instrument, and (c) the inability to
effect a closing transaction on a particular option.
There is no restriction on the percentage of a Fund's total assets which
may be committed to transactions in options (except options on futures
contracts as discussed below and as indicated in the "State Restrictions"
section of the applicable Statement of Additional Information). However, the
Securities and Exchange Commission considers over-the-counter options to be
illiquid. As long as the Commission maintains this position, a Fund will not
engage in an over-the-counter option transaction if such transaction would
cause the value of such options purchased by the Fund and the assets used to
cover such options written (sold) by the Fund, together with the value of other
illiquid securities held by the Fund, to exceed 10% of the net assets of the
Fund. The policy of each Fund with respect to options is fundamental, although
the particular practices followed with respect to options, such as the
procedures used to cover or secure options
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which a Fund writes, are not deemed fundamental and may be changed by the Board
of Trustees without shareholder vote.
A more complete description of the characteristics, risks and possible
benefits of option transactions is included in the Funds' Statements of
Additional Information.
HEDGING PROGRAM
Any Fund (except the Bartlett Cash Reserves Fund) may hedge all or a
portion of its portfolio investments through the use of options, futures
contracts and options on futures contracts. Any Fund (except the Bartlett Cash
Reserves Fund) may hedge currency risks associated with investments in foreign
securities and in particular may hedge its portfolio through the use of forward
foreign currency transactions as described below. The objective of a hedging
program is to protect a profit or offset a loss in a portfolio security from
future price erosion or to assure a definite price for a security, stock index,
futures contract or currency. There are transactional costs connected with a
hedging program.
The principal risks associated with hedging transactions are: (a)
possible imperfect correlation between the prices of the options and futures
contracts and the market value of a Fund's portfolio securities, (b) possible
lack of a liquid secondary market for closing out an option or futures contract
transaction, (c) the need for additional skills and techniques beyond normal
portfolio management, and (d) losses resulting from market movements not
anticipated by the Advisor.
No Fund may purchase or sell futures contracts or purchase related
options if, immediately thereafter, more than one-third of its net assets would
be hedged. In addition, no Fund may enter into transactions involving futures
contracts and related options if such transactions would result in more than 5%
of the fair market value of the Fund's assets being deposited as initial margin
for such transactions. A Fund's ability to engage in the hedging transactions
and strategies described above may be limited by the tax requirement that the
Fund derive less than 30% of its gross income from the sale or other
disposition of stock or securities held for less than three months.
A more complete description of the characteristics, risks and possible
benefits of hedging transactions is included in the Statement of Additional
Information.
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FOREIGN CURRENCY TRANSACTIONS
Each Fund (other than the Bartlett Cash Reserves Fund) can purchase
securities denominated in a foreign currency. When a Fund purchases or sells a
security denominated in a foreign currency, it may be required to settle the
purchase transaction in the relevant foreign currency or to receive the
proceeds of the sale in the relevant foreign currency. In either event, the
Fund will be obligated to acquire or dispose of the foreign currency by selling
or buying an equivalent amount of U.S. dollars. To effect the conversion of
the amount of foreign currency involved in the purchase or sale of a foreign
security, the Fund may purchase or sell such foreign currency on a "spot"
(i.e., cash) basis.
In addition, the Fund may wish to lock in the U.S. dollar value of the
transaction at or near the time of the purchase or sale at the exchange rate or
rates then prevailing between the U.S. dollar and the currency in which the
foreign security is denominated. Therefore, the Fund may enter into a forward
foreign currency exchange contract. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders
(usually large commercial banks) and their customers. By entering into a
forward contract in U.S. dollars for the purchase or sale of the amount of
foreign currency involved in an underlying security transaction, the Fund is
able to protect itself against a possible loss between trade and settlement
dates resulting from an adverse change in the relationship between the U.S.
dollar and such foreign currency. This process is known as transaction
hedging. Transaction hedging may protect the Fund from a possible loss, but
will limit potential gains which might result from a positive change in the
currency relationships.
Some or all of a Fund's portfolio securities (except those of the
Bartlett Cash Reserves Fund) may be denominated in foreign currencies. As a
result, in addition to the risk of change in the market value of portfolio
securities, the value of the portfolio in U.S. dollars is subject to
fluctuations in the exchange rate between such foreign currencies and the U.S.
dollar. When it is desirable to limit or reduce exposure in a foreign currency
in order to moderate potential changes in the U.S. dollar value of the
portfolio, the Fund may enter into a forward foreign currency exchange contract
to sell, for a fixed amount of U.S. dollars, the amount of foreign currency
approximating the value of some or all of the Fund's portfolio securities
denominated in such foreign currency. This technique is known as portfolio
hedging. Hedging against a decline in the value of currency does not eliminate
fluctuations in the prices
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of portfolio securities or prevent losses if the prices of such securities
decline. The Fund may also employ forward foreign currency exchange contracts
to hedge against an increase in the value of the currency in which the
securities the Fund intends to buy are denominated.
A Fund may also hedge its foreign currency exchange rate risk by engaging
in currency futures contracts and options transactions described above. No
Fund will engage in foreign currency transactions for speculative purposes.
INVESTMENT TECHNIQUES
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements.
Repurchase agreements are transactions by which a Fund purchases a security and
simultaneously commits to resell that security to the seller at an agreed upon
price and date. In the event of a bankruptcy or other default of the seller of
a repurchase agreement, the Fund could experience both delays in liquidating
the underlying security and losses. To minimize these possibilities, each Fund
intends to enter into repurchase agreements only with the Custodian, other
banks that serve as custodian for the Funds, banks having assets in excess of
$1 billion and primary government securities dealers determined by the Advisor
(subject to review by the Board of Trustees) to be creditworthy.
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. Each Fund (except the
Bartlett Value International Fund) may enter into reverse repurchase
agreements. Reverse repurchase agreements involve sales of portfolio
securities by a Fund to member banks of the Federal Reserve System or
recognized securities dealers, concurrently with an agreement by the Fund to
repurchase the same securities at a later date at a fixed price, which is
generally equal to the original sales price plus interest. The Fund retains
record ownership and the right to receive interest and principal payments on
the portfolio security involved. The Fund's objective in such a transaction
would be to obtain funds to pursue additional investment opportunities whose
yield would exceed the cost of the reverse repurchase transaction. Generally,
the use of reverse repurchase agreements should reduce portfolio turnover and
increase yield.
In connection with each reverse repurchase agreement, a Fund will direct
its Custodian to place cash or U.S.government obligations in a separate account
in an amount equal to the repurchase price. In the event of bankruptcy or
other default by the purchaser, the Fund could experience both delays in
repurchasing the portfolio securities and losses.
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Each Fund also may enter into DOLLAR ROLL TRANSACTIONS with certain
broker-dealers and banks. For all purposes (including borrowing restrictions)
the Funds treat dollar roll transactions as reverse repurchase agreements.
Dollar roll transactions consist of the sale by a Fund of mortgage-backed
securities combined with a commitment to purchase similar (although not
identical) securities at a future date at the same price. The Fund would
receive a fee for entering into the commitment to purchase. The principal risk
of dollar roll transactions is that if the broker-dealer or bank to whom the
Fund sells the securities underlying a dollar roll transaction becomes
insolvent, the Fund's right to purchase similar securities may be restricted.
Similarly, the value of the securities may change adversely over the term of
the dollar roll transaction and the securities that the Fund is required to
repurchase may be worth less than the securities originally held by the Fund.
Finally, the return earned by the Fund with the proceeds of a dollar roll
transaction may not exceed transaction costs.
LOANS OF PORTFOLIO SECURITIES. Each Fund may make short and long term
loans of its portfolio securities. Under the lending policy authorized by the
Board of Trustees and implemented by the Advisor in response to requests of
broker-dealers or institutional investors which the Advisor deems qualified,
the borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time to vote
on any matter which the Board of Trustees determines to be serious. With
respect to loans of securities, there is the risk that the borrower may fail to
return the loaned securities or that the borrower may not be able to provide
additional collateral. No loan of securities will be made if, as a result, the
aggregate amount of such loans would exceed 25% of the value of the Fund's
total assets.
SHORT SALES. Each Fund (except the Bartlett Value International Fund)
may sell a security short in anticipation of a decline in the market value of
the security. When a Fund engages in a short sale, it sells a security which
it does not own. To complete the transaction, the Fund must borrow the
security in order to deliver it to the buyer. The Fund must replace the
borrowed security by purchasing it at the market price at the time of
replacement, which may be more or less than the price at which the Fund sold
the security. The Fund will incur a loss as a result of the short sale if the
price of the security increases between the date of the short sale and the date
on which the Fund replaces the borrowed security. The Fund will realize a
profit if the security declines in price between those dates.
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In connection with its short sales, a Fund will be required to maintain a
segregated account with its Custodian of cash or high grade liquid debt assets
equal to the market value of the securities sold less any collateral deposited
with its broker. The Fund will limit its short sales so that no more than 25%
of its net assets (less all its liabilities other than obligations under the
short sales) will be deposited as collateral and allocated to the segregated
account. However, the segregated account and deposits will not necessarily
limit the Fund's potential loss on a short sale, which is unlimited. Each
Fund's policy with respect to short sales is fundamental, although the
particular practices followed with respect to short sales, such as the
percentage of the Fund's assets which may be deposited as collateral or
allocated to the segregated account, are not deemed fundamental and may be
changed by the Board of Trustees without the vote of the Fund's shareholders.
SHORT SALES AGAINST THE BOX. Each Fund may make short sales "against the
box." Short sales "against the box" are transactions in which a security
identical to one owned by the Fund is borrowed and sold short. The transaction
may serve to defer a gain or loss for federal income tax purposes. There is no
limit as to the percentage of a Fund's assets that may be committed to short
sales "against the box."
FORWARD COMMITMENTS. Each Fund may purchase or sell securities on a
"forward commitment" basis, including purchases on a "when-issued" basis, a
"when, as and if issued basis" and a "to-be-announced" basis. When such
transactions are negotiated, the price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment
for the securities take place at a later date. Normally, the settlement date
occurs within two months after the transaction, but delayed settlements beyond
two months may be negotiated. During the period between a commitment and
settlement, no payment is made by the purchaser for the securities purchased
and, thus, no interest accrues to the purchaser from the transaction. In a
"when, as and if issued" transaction, the issuance of the security depends upon
the occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. In a "to-be-announced" transaction, a
Fund has committed to purchase or sell securities for which all specific
information is not yet known at the time of the trade, particularly the face
amount in Government National Mortgage Association securities transactions.
The use of forward commitments enables a Fund to hedge against
anticipated changes in interest rates and prices. Forward commitment
securities may be sold prior to the settlement date, but a Fund will enter into
forward commitment transactions only with the intention of actually receiving
or delivering the securities, as the case may be. Any significant commitment
of a
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Fund's assets to the purchase of securities on a forward commitment basis may
increase the possibility that its net asset value will fluctuate. In addition,
if a Fund chooses to dispose of the right to receive or deliver a forward
commitment security prior to the settlement date, it may incur a gain or loss.
Purchases of forward commitment securities also involve a risk of loss if the
value of the securities declines prior to the settlement date or if the seller
fails to deliver after the value of the securities has risen.
Each Fund will direct its Custodian to place cash or U.S. government
obligations in a separate account in an amount equal to the commitments of the
Fund to purchase securities as a result of its forward commitment obligations.
With respect to forward commitments to sell securities, the Fund will direct
its Custodian to place the securities in a separate account. The Fund will
direct its Custodian to segregate such assets for "when, as and if issued"
commitments only when it determines that issuance of the security is probable.
When a separate account is maintained in connection with forward commitment
transactions to purchase securities, the assets deposited in the separate
account will be valued daily at market for the purpose of determining the
adequacy of the assets in the account.
ILLIQUID SECURITIES. The portfolio of each Fund may contain illiquid
securities. A Fund will not invest more than 10% of its net assets in
securities for which there are legal or contractual restrictions on resale or
other illiquid securities. Illiquid securities generally include securities
which cannot be disposed of promptly and in the ordinary course of business
without taking a reduced price. Securities may be illiquid due to contractual
or legal restrictions on resale or lack of a ready market. The following
securities are considered to be illiquid: repurchase agreements and time
deposits maturing in more than seven days, options traded in the
over-the-counter market, nonpublicly offered securities, stripped CMOs, CMOs
for which there is no established market, direct investments in mortgages and
restricted securities. Certain types of variable amount master demand notes,
loan participation interests and floating and variable rate obligations are
also considered to be illiquid.
OTHER INVESTMENT COMPANIES. Each Fund is permitted to invest in other
investment companies at any time, except that Bartlett Cash Reserves Fund may
invest only in investment companies which are money market funds. A Fund will
not invest more than 10% of its total assets in securities of other investment
companies or invest more than 5% of its total assets in securities of any
investment company and will not purchase more than 3% of the outstanding voting
stock of any investment company. If the Fund acquires securities of another
investment company, the shareholders of the Fund may be subject to duplicative
management fees. Investments by the Fund in CMOs and
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foreign banks that are deemed to be investment companies under the Investment
Company Act of 1940 will be included in the limitation on investments in other
investment companies (except that the 10% limitation does not apply to debt
securities and non-voting preferred stock of foreign banks).
PORTFOLIO MANAGEMENT POLICIES FOR BARTLETT CASH RESERVES FUND
The Bartlett Cash Reserves Fund seeks to maintain a stable net asset
value of $1.00 per share pursuant to Rule 2a-7 under the Investment Company Act
of 1940. In accordance with Rule 2a-7, the Fund will maintain a
dollar-weighted average portfolio of 90 days or less, purchase only instruments
having remaining maturities of 397 days or less (except for U.S. Government
obligations, which will have remaining maturities of 762 days or less) and
invest only in U.S. dollar denominated securities determined in accordance with
procedures established by the Board of Trustees to present minimal credit risks
and which are rated in one of the two highest rating categories for debt
obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the instrument was rated by only
one such organization) or, if unrated, are of comparable quality as determined
in accordance with procedures established by the Board of Trustees.
In addition, the Fund will not invest more than 5% of its total assets
in: (1) securities of any one issuer (other than cash or U.S. Government
obligations), except that the Fund may invest more than 5% of its total assets
in securities of an issuer in the highest rating category for up to three
business days or (2) securities rated in the second highest rating category.
Investments in securities of any one issuer in the second highest rating
category are further limited to the greater of 1% of total assets or
$1,000,000. As to each security, these percentages are measured at the time
the Fund purchases the security. Securities of an issuer include securities
collateralizing a repurchase agreement and puts issued by the issuer (except
for unconditional puts if no more than 10% of the Fund's total assets is
invested in securities issued or guaranteed by the issuer of the unconditional
put).
INVESTMENT LIMITATIONS
Each Fund has adopted several investment limitations to reduce the risk
of an investment in the Fund. Some of these limitations are summarized below.
The limitations as well as other investment limitations applicable to each Fund
are set forth in their entirety under "Investment Limitations" in the
applicable Statement of Additional Information.
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BORROWING MONEY. The Fund will not borrow money, except (a) from a bank,
provided that immediately after such borrowing there is an asset coverage of
300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude a Fund (other than the
Bartlett Value International Fund) from entering into reverse repurchase
transactions (including dollar rolls), provided that the Fund has an asset
coverage of 300% for all borrowings and repurchase commitments of the Fund
pursuant to reverse repurchase transactions.
PLEDGING. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. (Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.)
Borrowing and reverse repurchase agreements (including dollar rolls)
magnify the potential for gain or loss on the portfolio securities of a Fund
and, therefore, increase the possibility of fluctuation in the Fund's net asset
value. This is the speculative factor known as leverage. To reduce the risks
of borrowing and reverse repurchase agreements, each Fund has adopted the
limitations described above.
GENERAL INFORMATION
FUNDAMENTAL POLICIES. The investment limitations set forth in the
Statements of Additional Information may not be changed without the affirmative
vote of the majority of the outstanding shares of the applicable Fund.
INVESTMENT OBJECTIVES. The investment objective of each Fund may be
changed without the affirmative vote of a majority of the outstanding shares of
the Fund. However, shareholders of any Fund will be given a minimum of 30
days' prior written notice before any change in investment objective becomes
effective.
SHORT TERM TRADING. None of the Funds intends to purchase or sell
securities for short term trading purposes.
PORTFOLIO TURNOVER. Although none of the Funds will purchase or sell
securities for short term trading purposes, each Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Advisor believes
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that market conditions, creditworthiness factors or general economic conditions
warrant such action. The sale of existing portfolio securities and the
repurchase of replacement securities is known as the "portfolio turnover." Due
to the shorter average portfolio maturities of the Bartlett Cash Reserves Fund
and the Bartlett Short Term Bond Fund, these Funds may be expected to have a
higher- than-average portfolio turnover rate. Although it has somewhat longer
maturities, the Bartlett Fixed Income Fund has a higher-than- average portfolio
turnover because those longer maturities subject that Fund to greater market
volatility, and, therefore, more trading in response to changing market
conditions.
A 100% turnover rate would occur if all of the portfolio securities were
replaced once in a one year period. Higher portfolio turnover rates will
result in greater aggregate brokerage commissions or dealer spreads, and may
result in the realization of greater net short-term capital gains or net
long-term capital gains for tax purposes. See "Taxes."
SHAREHOLDER RIGHTS. Any Trustee of either Trust may be removed by vote
of the shareholders holding not less than two-thirds of the outstanding shares
of the Trust. Neither Trust holds annual meetings of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of a Fund have equal voting rights and liquidation
rights.
JOINT PROSPECTUS. This prospectus contains information on five different
Funds. Each of the Funds is responsible and may be held liable for errors in
or omissions from this Prospectus, and the registration statement of which it
is a part, concerning any of the Funds.
INVESTMENT PERFORMANCE
AVERAGE ANNUAL TOTAL RETURN. Each Fund may periodically advertise
"average annual total return." The "total return" of a Fund refers to the
dividends and capital gain distributions generated by an investment in the Fund
plus the change in the value of the investment from the beginning of the period
to the end of the period. The "average annual total return" of a Fund refers
to the rate of total return for each year of the period which would be
equivalent to the cumulative total return for the period. All dividends and
capital gain distributions earned on the investment are assumed to be
reinvested.
OTHER PERFORMANCE INFORMATION. Each Fund may also periodically advertise
its TOTAL RETURN and CUMULATIVE TOTAL RETURN over various periods in addition
to the value of a $10,000 investment (made on the date of the initial public
offering of
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the Fund's shares) as of the end of a specified period. The "total return" and
"cumulative total return" for each Fund are calculated as indicated above for
"total return."
YIELD. The Bartlett Cash Reserves Fund may periodically advertise its
"yield" and "effective yield." The "yield" of the Fund refers to the income
generated by an investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then "annualized." That
is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated similarly
but, when annualized, the income earned by an investment in the Fund is assumed
to be reinvested. The "effective yield" will be slightly higher than the
"yield" because of the compounding effect of this assumed reinvestment.
The Bartlett Fixed Income Fund and the Bartlett Short Term Bond Fund may
also periodically advertise their yields for a thirty-day or one month period.
The "yield" of these Funds refers to the income generated by an investment in
that Fund over the period, calculated on a per share basis (using the net asset
value per share on the last day of the period and the average number of shares
outstanding during the period). Each Fund's yield quotation will always be
accompanied by that Fund's average annual total return information described
above.
The advertised performance data of each Fund is based on historical
performance and is not intended to indicate future performance. Yields and
rates of total return quoted by a Fund may be higher or lower than past
quotations, and there can be no assurance that any yield rate of total return
will be maintained. The principal value of an investment in the Bartlett Value
International Fund, the Bartlett Basic Value Fund, the Bartlett Fixed Income
Fund and the Bartlett Short Term Bond Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
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<PAGE> 55
INVESTMENT ADVISOR
Bartlett & Co.
36 East Fourth Street
Cincinnati, Ohio 45202-3896
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105
TRANSFER AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
AUDITORS
Arthur Andersen LLP
425 Walnut Street
Cincinnati, Ohio 45202
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS BEING AUTHORIZED BY
EITHER TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY EITHER TRUST TO
SELL ITS SHARES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH STATE.
- --------------------------------------------------------------------------------
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<PAGE> 56
BARTLETT MANAGEMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1996
Bartlett Cash Reserves Fund
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus of Bartlett Management Trust dated
August 1, 1996. A copy of the Prospectus can be obtained by writing the Trust
at 36 East Fourth Street, Cincinnati, Ohio 45202, or by calling the Trust
nationwide toll free 800-800-3609 or in Cincinnati at 513-345-6212.
<PAGE> 57
STATEMENT OF ADDITIONAL INFORMATION
Bartlett Capital Trust
36 East Fourth Street
Cincinnati, Ohio 45202
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . 3
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS . . . . . . 5
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . 17
STATE RESTRICTIONS . . . . . . . . . . . . . . . . . . . . 21
THE INVESTMENT ADVISOR . . . . . . . . . . . . . . . . . . 23
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . 25
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . 26
DETERMINATION OF SHARE PRICE . . . . . . . . . . . . . . . 29
INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . 30
CUSTODIANS . . . . . . . . . . . . . . . . . . . . . . . . 35
ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 35
TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . 35
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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<PAGE> 58
DESCRIPTION OF THE TRUST
The Trust is a diversified, open-end management investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated July 16, 1984 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. Shares of one series have been authorized,
which shares constitute the interests in the Bartlett Cash Reserves Fund (the
"Fund"), formerly Bartlett Enhanced Cash Reserves.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not
have cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares
of any series into a greater or lesser number of shares of that series so long
as the proportionate beneficial interest in the assets belonging to that series
and the rights of shares of any other series are in no way affected. In case
of any liquidation of a series, the holders of shares of the series being
liquidated will be entitled to receive as a class a distribution out of the
assets, net of the liabilities, belonging to that series. Expenses
attributable to any series are borne by that series. Any general expenses of
the Trust not readily identifiable as belonging to a particular series are
allocated by or under the direction of the Trustees in such manner as the
Trustees determine to be fair and equitable. No shareholder is liable to
further calls or to assessment by the Trust without his express consent.
If at least ten shareholders (the "Petitioning Shareholders") wish to
obtain signatures to request a meeting for the purpose of voting upon removal
of any Trustee of the Trust, they may make a written application to the Trust
requesting to communicate with other shareholders. The Petitioning
Shareholders must hold in the aggregate at least 1% of the shares then
outstanding or shares then having a net asset value of $25,000, whichever is
less, and each Petitioning Shareholder must have been a shareholder for at
least six months prior to the date of the application. The application must be
accompanied by the form of communication which the shareholders wish to
transmit. Within five business days after receipt of the application, the
Trust will (a) provide the Petitioning Shareholders with access to a list of
the names and addresses of all shareholders of the Trust; or (b) inform the
Petitioning Shareholders of the approximate number of shareholders and the
estimated costs of mailing such communication, and undertake such mailing
promptly after tender
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<PAGE> 59
by the Petitioning Shareholders to the Trust of the material to be mailed and
the reasonable expenses of such mailing.
As of May 28, 1996, the Trustees and officers as a group owned
beneficially less than 1% of the outstanding shares of Bartlett Cash
Reserves Fund.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
This section contains more detailed discussion of some of the
investments a Fund may make and some of the techniques it may use, as described
in the Prospectus (see "Investment Objective and Strategy" and "Investment
Policies and Techniques").
A. Municipal Obligations. Municipal obligations are issued to
obtain funds to construct, repair or improve various public facilities such as
airports, bridges, highways, hospitals, housing, schools, streets and water and
sewer works, to pay general operating expenses or to refinance outstanding
debts. They also may be issued to finance various private activities,
including the lending of funds to public or private institutions for
construction of housing, educational or medical facilities or the financing of
privately owned or operated facilities. Municipal obligations consist of tax
exempt bonds, tax exempt notes and tax exempt commercial paper. Tax exempt
notes generally are used to provide short term capital needs and generally have
maturities of one year or less. Tax exempt commercial paper typically
represents short term, unsecured, negotiable promissory notes.
The two principal classifications of Municipal obligations are
"general obligations" and "revenue" bonds. General obligation bonds are backed
by the issuer's full credit and taxing power. Revenue bonds are backed by the
revenues of a specific project, facility or tax. Industrial development
revenue bonds are a specific type of revenue bond backed by the credit of the
private issuer of the facility, and therefore investments in these bonds have
more potential risk that the issuer will not be able to meet scheduled payments
of principal and interest.
B. Zero Coupon and Pay-in Kind Bonds. Corporate debt securities
and municipal obligations include so-called "zero coupon" bonds and
"pay-in-kind" bonds. Zero coupon bonds are issued at a significant discount
from their principal amount in lieu of paying interest periodically.
Pay-in-kind bonds allow the issuer, at its option, to make current interest
payments on the bonds either in cash or in additional bonds. The value of
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zero coupon bonds and pay-in-kind bonds is subject to greater fluctuation in
response to changes in market interest rates than bonds which make regular
payment of interest. Both of these types of bonds allow an issuer to avoid the
need to generate cash to meet current interest payments. Accordingly, such
bonds may involve greater credit risks than bonds which make regular payments
of interest. Even though zero coupon bonds and pay-in-kind bonds do not pay
current interest in cash, the Fund is required to accrue interest income on
such investments and to distribute such amounts at least annually to
shareholders. Thus, the Fund could be required at times to liquidate other
investments in order to satisfy its dividend requirements.
C. Mortgage-Related Securities. Government-related organizations
which issue mortgage-related securities include the Government National
Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA")
and Federal Home Loan Mortgage Corporation ("FHLMC"). Securities issued by
GNMA and FNMA are fully modified pass through securities, i.e., the timely
payment of principal and interest is guaranteed by the issuer. FHLMC
securities are modified pass through securities, i.e., the timely payment of
interest is guaranteed by FHLMC, principal is passed through as collected but
payment thereof is guaranteed not later than one year after it becomes payable.
D. Financial Services Industry Obligations. Financial services
industry obligations include among others, the following:
(1) Certificates of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial bank or a
savings and loan association to repay funds deposited with it for a definite
period of time (usually from fourteen days to one year) at a stated or variable
interest rate.
(2) Time Deposits. Time deposits are non-negotiable
deposits maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are
credit instruments evidencing the obligation of a bank to pay a draft which has
been drawn on it by a customer, which instruments reflect the obligation both
of the bank and of the drawer to pay the face amount of the instrument upon
maturity.
E. Forward Commitments and Reverse Repurchase Agreements. The
Fund will direct its Custodian to place cash or U.S. government obligations in
a separate account of the Trust in an amount equal to the commitments of the
Fund to purchase or repurchase securities as a result of its forward commitment
or reverse repurchase agreement obligations. With respect to
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forward commitments to sell securities, the Trust will direct its Custodian to
place the securities in a separate account. The Fund will direct its Custodian
to segregate such assets for "when, as and if issued" commitments only when it
determines that issuance of the security is probable. When a separate account
is maintained in connection with forward commitment transactions to purchase
securities or reverse repurchase agreements, the assets deposited in the
separate account will be valued daily at market for the purpose of determining
the adequacy of the assets in the account. If the market value of such assets
declines, additional assets will be placed in the account on a daily basis so
that the market value of the account will equal the amount of the Fund's
commitments to purchase or repurchase securities. To the extent assets are in
a separate account, they will not be available for new investment or to meet
redemptions.
Commitments to purchase securities on a "when, as and if issued" basis
will not be recognized in the portfolio of the Fund until the Advisor
determines that issuance of the security is probable. At such time, the Fund
will record the transaction and, in determining its net asset value, will
reflect the value of the security daily.
Securities purchased on a forward commitment basis, securities subject
to reverse repurchase agreements and the securities held in the Fund's
portfolio are subject to changes in market value based upon the public's
perception of the creditworthiness of the issuer and changes in the level of
interest rates (which will generally result in all of those securities changing
in value in the same way, i.e., all those securities experiencing appreciation
when interest rates decline and depreciation when interest rates rise).
Therefore, if in order to achieve a higher level of income, the Fund remains
substantially fully invested at the same time that it has purchased securities
on a forward commitment basis or entered into reverse repurchase transactions,
there will be a possibility that the market value of the Fund's assets will
have greater fluctuation.
With respect to 75% of the total assets of the Fund, the value of the
Fund's commitments to purchase or repurchase the securities of any one issuer,
together with the value of all securities of such issuer owned by the Fund, may
not exceed 5% of the value of the Fund's total assets at the time the
commitment to purchase or repurchase such securities is made; provided,
however, that this restriction does not apply to U.S. government obligations or
repurchase agreements with respect thereto. In addition, the Fund will
maintain an asset coverage of 300% for all of its borrowings and reverse
repurchase agreements. Subject to the foregoing restrictions, there is no
limit on the percentage of the Fund's total assets which may be committed to
such purchases or repurchases.
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<PAGE> 62
F. Short Sales. When the Fund borrows a security in connection
with a short sale, the Fund is required to pay to the lender any dividends or
interest which accrue during the period of the loan. To borrow the security,
the Fund also may be required to pay a premium to the lender, which would
increase the cost of the security sold. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of any premium,
dividends or interest the Fund may be required to pay in connection with the
short sale. The proceeds of the short sale will be retained by the lender or
its broker, to the extent necessary to meet margin requirements, until the
short position is closed out by delivery of the underlying security.
G. Restricted Securities. Restricted securities are securities
the resale of which is subject to legal or contractual restrictions.
Restricted securities may be sold only in privately negotiated transactions, in
a public offering with respect to which a registration statement is in effect
under the Securities Act of 1933 or pursuant to Rule 144 or Rule 144A
promulgated under such Act. Where registration is required, the Fund may be
obligated to pay all or part of the registration expense, and a considerable
period may elapse between the time of the decision to sell and the time such
security may be sold under an effective registration statement. If during such
a period adverse market conditions were to develop, the Fund might obtain a
less favorable price than the price it could have obtained when it decided to
sell.
H. Money Market Funds. The Bartlett Cash Reserves Fund may
invest in shares of any money market fund that has substantially identical
investment objectives and policies as the Bartlett Cash Reserves Fund.
INVESTMENT LIMITATIONS
The investment limitations described below have been adopted by the
Trust with respect to the Fund and may not be changed without the affirmative
vote of a majority of the outstanding shares of the Fund. As used in the
Prospectus and this Statement of Additional Information, the term "majority" of
the outstanding shares of the Fund means the lesser of (1) 67% or more of the
outstanding shares of the Fund present at a meeting, if the holders of more
than 50% of the outstanding shares of the Fund are present or represented at
such meeting; or (2) more than 50% of the outstanding shares of the Fund.
1. Borrowing Money. The Fund will not borrow money, except (a)
from a bank, provided that immediately after such borrowing there is an asset
coverage of 300% for all borrowings of the Fund; or (b) from a bank or other
persons for temporary purposes only, provided that such temporary borrowings
are in an
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amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering
into reverse repurchase transactions, provided that the Fund has an asset
coverage of 300% for all borrowings and repurchase commitments of the Fund
pursuant to reverse repurchase transactions.
2. Pledging. The Fund will not mortgage, pledge, hypothecate or
in any manner transfer, as security for indebtedness, any assets of the Fund
except as may be necessary in connection with borrowings described in
limitation (1) above. (Margin deposits, security interests, liens and
collateral arrangements with respect to transactions involving options, futures
contracts, short sales and other permitted investments and techniques are not
deemed to be a mortgage, pledge or hypothecation of assets for purposes of this
limitation.)
3. Underwriting. The Fund will not act as underwriter of
securities issued by other persons. This limitation is not applicable to the
extent that, in connection with the disposition of portfolio securities
(including restricted securities), the Fund may be deemed an underwriter under
certain federal securities laws.
4. Illiquid Investments. The Fund will not invest more than 10%
of its net assets in securities for which there are legal or contractual
restrictions on resale and other illiquid securities.
5. Real Estate. The Fund will not purchase, hold or deal in real
estate. This limitation is not applicable to investments in securities which
are secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing
directly in mortgages.
6. Commodities. The Fund will not purchase, hold or deal in
commodities or commodities futures contracts except as described in the
Prospectus and Statement of Additional Information.
7. Loans. The Fund will not make loans to other persons, except
(a) by loaning portfolio securities, (b) by engaging in repurchase agreements,
(c) by purchasing nonpublicly offered debt securities, or (d) through direct
investments in mortgages. For purposes of this limitation, the term "loans"
shall not include the purchase of a portion of an issue of publicly distributed
bonds, debentures or other securities.
8. Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable
to short term credit obtained by the
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<PAGE> 64
Fund for the clearance of purchases and sales or redemption of securities, or
to arrangements with respect to transactions involving options, futures
contracts, short sales and other permitted investments and techniques.
9. Short Sales. The Fund will not effect short sales of
securities except as described in the Prospectus and Statement of Additional
Information.
10. Options. The Fund will not purchase or sell puts, calls,
options or straddles except as described in the Prospectus and Statement of
Additional Information.
11. Other Investment Companies. The Fund will not invest more
than 10% of its total assets in securities of other investment companies or
invest more than 5% of its total assets in securities of any investment company
and will not purchase more than 3% of the outstanding voting stock of any
investment company.
12. Concentration. The Fund will not invest more than 25% of its
total assets in a particular industry except that under normal market
conditions the Fund will invest more than 25% of its total assets in the
financial services industry. This limitation is not applicable to investments
in obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
13. Oil and Gas Programs. The Fund will not purchase, hold or
deal in oil, gas or other mineral explorative or development programs.
14. Diversification. As a diversified series of the Trust, the
Fund will not purchase the securities of any issuer if such purchase at the
time thereof would cause less than 75% of the value of the total assets of the
Fund to be invested in cash and cash items (including receivables), securities
issued by the U.S. government, its agencies or instrumentalities and repurchase
agreements with respect thereto, securities of other investment companies,
other securities for the purposes of this calculation limited in respect of any
one issuer to an amount not greater in value than 5% of the value of the total
assets of the Fund and to not more than 10% of the outstanding voting
securities of such issuer.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken.
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Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a
personal holding company, may be merged or consolidated with or acquired by the
Trust, provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer
so acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
For purposes of the diversification requirements described above, the
Fund will treat both the corporate borrower and the financial intermediary as
issuers of a loan participation interest. Investments by a Fund in CMOs that
are deemed to be investment companies under the Investment Company Act of 1940
will be included in the limitation on investments in other investment
companies.
The Advisor is aware of the provisions of the Public Utility Holding
Company Act of 1935 (the "1935 Act"). While it is not a fundamental policy,
the Fund presently intends to limit its investments so that it will not be a
public utility holding company or acquire public utility company securities in
violation of the 1935 Act.
STATE RESTRICTIONS
To comply with current blue sky regulations, the Fund presently
intends to observe the following restrictions, which may be changed by the
Board of Trustees without shareholder approval.
Ohio Restrictions
The Fund will not purchase or retain securities of any issuer if the
Trustees and officers of the Trust or of the Advisor, who individually own
beneficially more than 0.5% of the outstanding securities of such issuer,
together own beneficially more than 5% of such securities. The Fund will not
purchase securities issued by other investment companies except by purchase in
the open market where no commission or profit to a sponsor or dealer results
from such purchase other than customary broker's commission or except when such
purchase is part of a plan of merger, consolidation, reorganization or
acquisition. The Fund will not borrow (other than by entering into reverse
repurchase agreements), pledge, mortgage or hypothecate more than one-third of
its total assets. In addition, the Fund will engage in borrowing (other than
reverse repurchase agreements) only for emergency or extraordinary purposes and
not for
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<PAGE> 66
leverage. The Fund will not invest more than 15% of its total assets in
securities of issuers which, together with any predecessors, have a record of
less than three years continuous operation or securities of issuers which are
restricted as to disposition.
California Restrictions
As long as the rules promulgated under the California Corporate
Securities Law prohibit the Fund from acquiring or retaining securities of any
open-end investment company, the Fund will not acquire or retain such
securities, unless the acquisition is part of a merger or acquisition of assets
or other reorganization. In addition, as long as such rules include
restrictions on options transactions by an investment company, the Fund will
adhere to such restrictions as interpreted by the staff of the California
Department of Corporations.
THE INVESTMENT ADVISOR
The Trust's investment advisor is Bartlett & Co., 36 East Fourth
Street, Cincinnati, Ohio 45202. Bartlett & Co. became a wholly owned
subsidiary of Legg Mason, Inc. ("Legg Mason") effective January 2, 1996. The
Advisor has provided investment advice to individuals, corporations, pension
and profit sharing plans and trust accounts since 1898.
The directors and officers of Bartlett & Co. are James A. Miller,
William A. Friedlander, Raymond A. Mason, Edward A. Taber, III, Robert G.
Sabelhaus and Thomas A. Steele.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Trust's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Trust except brokerage, taxes,
interest and extraordinary expenses. As compensation for its advisory services
and agreement to pay the Trust's expenses, the Advisor receives a fee computed
and accrued daily and paid monthly at an annual rate of .78% of the average
daily net assets of the Fund up to and including $500,000,000 and .75% of such
assets in excess of $500,000,000. Most investment companies make smaller
payments to their investment advisors because such companies directly pay their
own operating expenses, while all of the Trust's expenses except those
specified above are paid by the Advisor.
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<PAGE> 67
The Advisor has agreed to reimburse the Trust to the extent that the
expenses of the Trust for the same fiscal year exceed the expense limitations
applicable to the Trust imposed by state securities administrators, as such
limitations may be lowered or raised from time to time. The most restrictive
applicable limitation is presently 2.5% of the first $30 million of average net
assets, 2% of the next $70 million and 1.5% of average net assets in excess of
$70 million. If any such reimbursement is required, the payment of the
advisory fee at the end of any month will be reduced or postponed or, if
necessary, a refund will be made to the Trust. Certain expenses such as
brokerage commissions, if any, taxes, interest, extraordinary items and other
expenses subject to approval of state securities administrators are excluded
from such limitations. If the expenses of the Trust or the Fund approach the
applicable limitation in any state, the Trust will consider the various actions
that are available to it, including suspension of sales to residents of that
state.
For the fiscal years ended March 31, 1994, 1995 and 1996, the Advisor
received management fees from the Fund of $541,065, $614,397 and $653,617,
respectively. To reduce the operational expenses of the Fund, the Advisor
voluntarily reduced its fee for these periods by $79,150, $0 and $0,
respectively, which otherwise would have been payable by the Fund.
The Advisor retains the right to use the name "Bartlett" in connection
with another investment company or business enterprise with which the Advisor
is or may become associated. The Trust's right to use the name "Bartlett"
automatically ceases thirty days after termination of the Agreement and may be
withdrawn by the Advisor on thirty days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Trust believes
that the Glass-Steagall Act should not preclude a bank from providing such
services. However, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Trust or its shareholders. Banks and other financial institutions may charge
their customers fees for offering these services to the extent permitted by
applicable regulatory authorities, and the overall return to those shareholders
availing themselves of the financial institution services will be lower than to
those shareholders who do not. The Trust may from time to time purchase
securities issued by financial institutions which provide such services;
however, in selecting investments for the Trust, no preference will be
shown for such securities.
- 12 -
<PAGE> 68
MANAGEMENT OF THE TRUST
For the fiscal year ended March 31, 1996, the Trustees of the Trust
received the following compensation:
<TABLE>
<CAPTION>
Name of Person, Aggregate Compensation Total Compensation From
Position From Trust Registrant and Trust
Complex Paid to
Trustees
<S> <C> <C>
James B. Reynolds* $0 $0
Lorrence T. Kellar $1800 $9000
Philip J. Ringo $1200 $6000
Alan R. Schriber $1400 $7000
William P. Sheehan $1400 $7000
George J. Wile $1400 $7000
<FN>
*Interested Person
</TABLE>
The Trust and Bartlett Capital Trust are the two investment companies
in the Bartlett Mutual Funds complex. They have identical Boards of Trustees,
and board and committee meetings of both Trusts are held at the same time.
Although the fees paid to Trustees are expenses of the Trusts, the Advisor
makes the actual payment pursuant to its management agreements with the Trusts,
which obligate the Advisor to pay all of the operating expenses of the Trusts
(with limited exceptions). Mr. Reynolds, who is an employee of the Advisor,
receives no remuneration for his services as Trustee and officer of the Trust.
Similarly, the other officers of the Trust, all of whom are employees of the
Advisor or one of its affiliates, receive no remuneration for their services.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Trust's portfolio decisions and the placing
of the Trust's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Trust, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. The Trust has
no obligation to deal with any broker or dealer in the execution of its
transactions.
- 13 -
<PAGE> 69
The Advisor is specifically authorized to select brokers or dealers
who also provide brokerage and research services to the Trust and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to
other accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Trust effects securities
transactions may also be used by the Advisor in servicing all of its accounts
and all such services may not be used by the Advisor in connection with the
Trust. Similarly, research and information provided by brokers or dealers
serving other clients may be useful to the Advisor in connection with its
services to the Trust. Although research services and other information are
useful to the Trust and the Advisor, it is not possible to place a dollar value
on the research and other information received. It is the opinion of the Board
of Trustees and the Advisor that the review and study of the research and other
information will not reduce the overall cost to the Advisor of performing its
duties to the Trust under the Agreement.
Over-the-counter transactions may be placed either directly with
principal market makers, or with broker-dealers if the same or a better price,
including commissions and execution, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to market makers may include the spread between the bid and
asked prices. The Advisor will not receive reciprocal
- 14 -
<PAGE> 70
brokerage business as a result of the brokerage business placed by the Trust
with others.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the
same security on a given date, the purchases and sales will normally be made by
random client selection.
- 15 -
<PAGE> 71
For the fiscal years ended March 31, 1996, 1995 and 1994, the Fund paid no
brokerage commissions and no brokerage commissions were paid to the Advisor.
As of March 31, 1996, the Fund owned securities of its regular
broker-dealers or their parents (as defined in Rule 10b-10 promulgated under
the Investment Company Act of 1940) as indicated: American General Finance
Corp. - $998,524, IBM Credit Corp. - $1,990,479, and Norwest Financial -
$1,999,102.
CALCULATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is calculated
twice daily, as of 12:00 p.m. and the close of trading on the New York Stock
Exchange (generally 4:00 p.m. New York time), on any day when the New York
Stock Exchange and the Custodian are open for business. The Trust is open for
business on every day except Saturdays, Sundays and the following holidays:
New Year's Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas, or any national holiday which results in
the closing of the New York Stock Exchange. For a description of the methods
used to determine the net asset value (share price), see "Calculation of Share
Price" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return (over the one and five year periods and the period from initial
public offering through the end of the Fund's most recent fiscal year) that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)n=ERV
- 16 -
<PAGE> 72
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the applicable
period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
Current yield is computed by determining the net change in the value
of a hypothetical pre-existing account with a balance of one share at the
beginning of a seven calendar day period (the "Base Period") and dividing the
net change by the value of the account at the beginning of the Base Period to
obtain the base period return, and then multiplying the base period return by
(365/7) with the resulting yield figure carried to at least the nearest
hundredth of one percent. Effective yield is computed by compounding the base
period return, according to the following formula: effective yield = [(base
period return + 1)365/7] - 1. The Fund's current and effective yields for the
seven day period ended March 31, 1996 were 4.79% and 4.90%, respectively.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time
periods used in calculating non-standardized investment performance should be
considered when comparing the Fund's performance to those of other investment
companies or investment vehicles. The risks associated with the Fund's
investment objective, policies and techniques should also be considered. At
any time in the future, investment performance may be higher or lower than past
performance, and there can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered
to be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the fixed income securities market in
general. The Fund may use the Salomon Brothers Inc. "Bond Market Round-Up,"
which tracks yield and yield spreads on a large group of money market
securities, corporate debt securities and U.S. government obligations, Telerate
Systems, Inc., which tracks rates on similar securities or the Bank Rate
Monitor National Index, which represents an average of money market account
yields paid by the five largest banks and the five largest thrift institutions
in the ten largest national markets. The Bank Rate
- 17 -
<PAGE> 73
Monitor National Index is compiled weekly by Advertising News Service, Inc.
The investment performance figures for the Fund and the indices will include
reinvestment of dividends and capital gains distributions.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Morningstar, Inc., Lipper Analytical Services, Inc. or the
Donoghue Organization, Inc. The objectives, policies, limitations and expenses
of other mutual funds in a group may not be the same as those of the Fund.
Performance rankings and ratings reported periodically in national financial
publications such as Barron's and Fortune, also may be used.
The following table shows the rate of total return for the indicated
period as well as the value of a $10,000 investment made on February 16, 1988,
as of the end of the specified period.
<TABLE>
<CAPTION>
Period End Value of
Period Net Asset Dividends $10,000 Total Return
Ended Value Paid Investment(a) One Year Cumulative(b)
- ------ ----- --------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
6/30/88 $1.00 $0.0248 $10,251 2.50%(b) 2.50%
6/30/89 $1.00 $0.0811 $11,114 8.42% 11.14%
3/31/90(c) $1.00 $0.0595 $11,792 8.13%(d) 17.92%
3/31/91 $1.00 $0.0708 $12,655 7.32% 26.55%
3/31/92 $1.00 $0.0495 $13,296 5.07% 32.96%
3/31/93 $1.00 $0.0321 $13,730 3.26% 37.30%
3/31/94 $1.00 $0.0266 $14,099 2.69% 40.99%
3/31/95 $1.00 $0.0415 $14,694 4.22% 46.94%
3/31/96 $1.00 $0.0501 $15,447 5.13% 54.47%
</TABLE>
(a) Value at end of fiscal year of $10,000 investment made on February 16,
1988.
(b) Not annualized and from the date of the initial public offering of
shares (February 16, 1988).
(c) For the nine month period then ended.
(d) Annualized.
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 1713, Boston,
Massachusetts, is Custodian of the Trust's investments. The Custodian acts as
the Trust's depository, safekeeps its portfolio securities, collects all income
and other payments with respect thereto, disburses funds at the Trust's request
and maintains records in connection with its duties. While the Trust intends to
enter into repurchase agreements with the Custodian and may
- 18 -
<PAGE> 74
purchase other securities of the Custodian, the Custodian will not receive any
preferential treatment from the Trust.
ACCOUNTANTS
The firm of Arthur Andersen LLP has been selected as independent
public accountants for the Trust for the fiscal year ending March 31, 1996.
Arthur Andersen LLP, 425 Walnut Street, Cincinnati, Ohio, performs an annual
audit of the Trust's financial statements, reviews the Trust's federal tax
return and provides financial and accounting consulting services as requested.
TRANSFER AND ACCOUNTING SERVICES AGENT
Boston Financial Data Services, Inc., 2 Heritage Drive, North Quincy,
Massachusetts acts as the Trust's transfer and accounting services agent and,
in such capacities, maintains the records of each shareholder's account,
answers shareholders' inquiries concerning their accounts, processes purchases
and redemptions of the Trust's shares, acts as dividend and distribution
disbursing agent and performs other accounting and shareholder service
functions.
FINANCIAL STATEMENTS
The Portfolios of Investments as of March 31, 1996; the Statements of
Assets and Liabilities as of March 31, 1996; the Statements of Operations for
the year ended March 31, 1996; the Statements of Changes in Net Assets for the
years ended March 31, 1996 and 1995; the Financial Highlights for all periods;
the Notes to Financial Statements and the Report of Independent Public
Accountants for the Bartlett Capital Trust and the Bartlett Management Trust,
all of which are included in the Annual Report for the year ended March 31,
1996, are hereby incorporated by reference in this Statement of Additional
Information.
- 19 -
<PAGE> 75
BARTLETT MANAGEMENT TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part A:
Financial Highlights for Bartlett Basic Value
Fund, Bartlett Fixed Income Fund, Bartlett
Value International Fund, Bartlett Short Term
Bond Fund and Bartlett Cash Reserves Fund.
(b) Financial Statements included in Part B:
The financial statements of Bartlett Basic
Value Fund, Bartlett Fixed Income Fund,
Bartlett Value International Fund and Bartlett
Cash Reserves Fund for the year ended March
31, 1996 and the report of the Independent
Public Accountants thereon are incorporated
into the applicable Statement of Additional
Information by reference to the Annual Report
for the same period.
The Financial Data Schedules with respect to the above series
are included as Exhibit 27.1 to 27.5.
- C-1 -
<PAGE> 76
(b) Exhibits:
(1) (i) Copy of Registrant's Agreement and
Declaration of Trust, which was
filed as an Exhibit to Registrant's
Registration Statement, is hereby
incorporated by reference.
(ii) Copy of Amendment Nos. 1 and 2 to
Registrant's Agreement and
Declaration of Trust, which was
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 7, is
hereby incorporated by reference.
(iii) Copy of Amendment No. 2b to
Registrant's Agreement and
Declaration of Trust, which was
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 9, is
hereby incorporated by reference.
(iv) Copies of Amendments Nos. 3 and 4 to
Registrant's Agreement and
Declaration of Trust, which were
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 11, are
hereby incorporated by reference.
(2) Copy of Registrant's By-Laws, which was filed
as an Exhibit to Registrant's Registration
Statement, is hereby incorporated by
reference.
(3) Voting Trust Agreements - None.
(4) Specimen of each Security issued by the
Registrant and of each Security being
registered - None.
(5) Copy of Registrant's Management Agreement
with its Adviser, Bartlett & Co., is filed
herewith.
(6) Underwriting or Distribution Contracts and
Agreements with Principal Underwriters and
Dealers - None.
- C-2 -
<PAGE> 77
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.
(8) Copy of Registrant's Custodian Agreement,
with State Street Bank, is filed herewith.
(9) Other Material Contracts - None.
(10) (i) Opinion and Consent of Brown,
Cummins & Brown Co., L.P.A. which
was filed with the Registrant's Rule
24f-2 Notice for the fiscal year
ended March 31, 1996, is hereby
incorporated by reference.
(11) Consent of Arthur Andersen LLP is filed
herewith.
(12) Financial Statements Omitted from Item 23 -
None.
(13) Copy of Letter of Initial Shareholder, which
was filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1 to its
Registration Statement, is hereby
incorporated by reference.
(14) Form of 401(k) Plan Used by Bartlett Mutual
Funds which was filed as an Exhibit to
Registrant's Post-Effective Amendment
No. 15, is hereby incorporated by reference.
(15) 12b-1 Plan and Implementation Agreements -
None.
(16) Schedule of Computation for Each Performance
Quotation, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 8,
is hereby incorporated by reference.
(17) (i) Power of Attorney for Registrant and
Certificate with respect thereto are
filed herewith.
(ii) Powers of Attorney for Trustees and
Officers of Registrant are filed
herewith.
(27) Financial Data Schedules are filed herewith.
- C-3 -
<PAGE> 78
Item 25. Persons Controlled by or Under Common Control with the
Registrant - None
Item 26. Number of Holders of Securities (as of April 30, 1996)
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Bartlett Cash Reserves Fund 1,295
</TABLE>
Item 27. Indemnification
(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and Trustees
as follows:
Section 6.4 Indemnification of Trustees, Officers,
etc. The Trust shall indemnify each of its Trustees
and officers (including persons who serve at the
Trust's request as directors, officers or trustees of
another organization in which the Trust has any
interest as a shareholder, creditor or otherwise
(hereinafter referred to as a "Covered Person")
against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the
defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which
such Covered Person may be or may have been involved
as a party or otherwise or with which such person may
be or may have been threatened, while in office or
thereafter, by reason of being or having been such a
Trustee or officer, director or trustee, and except
that no Covered Person shall be indemnified against
any liability to the Trust or its Shareholders to
which such Covered Person would otherwise be subject
by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's
office ("disabling conduct"). Anything herein
contained to the contrary notwithstanding, no Covered
Person shall be indemnified for any liability to the
Trust or its Shareholders to which such Covered
Person would otherwise by subject unless (1) a final
decision on the merits is made by a court or other
body before whom the proceeding was brought that the
Covered Person to
- C-4 -
<PAGE> 79
be indemnified was not liable by reason of disabling
conduct or, (2) in the absence of such a decision, a
reasonable determination is made, based upon a review
of the facts, that the Covered Person was not liable
by reason of disabling conduct, by (a) the vote of a
majority of a quorum of Trustees who are neither
"interested persons" of the Company as defined in the
Investment Company Act of 1940 nor parties to the
proceeding ("disinterested, non-party Trustees"), or
(b) an independent legal counsel in a written
opinion.
Section 6.5 Advances of Expenses. The Trust shall
advance attorneys' fees or other expenses incurred by
a Covered Person in defending a proceeding, upon the
undertaking by or on behalf of the Covered Person to
repay the advance unless it is ultimately determined
that such Covered Person is entitled to
indemnification, so long as one of the following
conditions is met: (i) the Covered Person shall
provide security for his undertaking, (ii) the Trust
shall be insured against losses arising by reason of
any lawful advances, or (iii) a majority of a quorum
of the disinterested non-party Trustees of the Trust,
or an independent legal counsel in a written opinion,
shall determine, based on a review of readily
available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the
Covered Person ultimately will be found entitled to
indemnification.
Section 6.6 Indemnification Not Exclusive, etc.
The right of indemnification provided by this Article
VI shall not be exclusive of or affect any other
rights to which any such Covered Person may be
entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" is
one against whom the action, suit or other proceeding
in question or another action, suit or similar
grounds is then or has been pending or threatened,
and a "disinterested" person is a person against whom
none of such actions, suits or other proceedings or
another action, suit or other proceeding on the same
or similar grounds is then or has been pending or
threatened. Nothing contained in this article shall
affect any rights to indemnification to which
personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by
- C-5 -
<PAGE> 80
contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on
behalf of any such person.
The Registrant may not pay for insurance which
protects the Trustees and officers against
liabilities rising from action involving willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of
their offices.
(b) The Registrant maintains a standard mutual fund and
investment advisory professional and directors and
officers liability policy. The policy provides
coverage to the Registrant, its trustees and officers
and its Adviser, among others. Coverage under the
policy includes losses by reason of any act, error,
omission, misstatement, misleading statement, neglect
or breach of duty.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant pursuant to the provisions of Ohio law and
the Agreement and Declaration of Trust of the
Registrant or the By-Laws of the Registrant, or
otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by a trustee, officer or controlling person of
the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed
by the final adjudication of such issue.
- C-6 -
<PAGE> 81
Item 28. Business and Other Connections of the Investment Adviser
Bartlett & Co. is a registered broker-dealer and a registered
investment adviser. It has provided investment advice to
individuals, corporations, pension and profit sharing plans
and trust accounts since 1898.
The following list sets forth the business and other
connections of and officers of Bartlett & Co.
(1) James A. Miller -
(a) President and Director of Bartlett &
Co., 36 East Fourth Street, Cincinnati, Ohio
45202.
(b) Chairman of the Board and Director of
Bartlett Real Estate, Inc., 36 East Fourth
Street, Cincinnati, Ohio 45202.
(c) Chairman of the Board of BRE Group, Inc., 36
East Fourth Street, Cincinnati, Ohio 45202.
(d) Vice President of Bartlett Capital Trust, 36
East Fourth Street, Cincinnati, Ohio 45202.
(2) Willaim A. Friedlander -
(a) Portfolio Manager and Director of Bartlett &
Co., 36 East Fourth Street, Cincinnati, Ohio
45202.
(3) Raymond A. Mason -
(a) Director of Bartlett & Co., 36 East Fourth
Street, Cincinnati, Ohio 45202.
(b) Chairman of the Board, Legg Mason, Inc., 111
South Calvert St., Baltimore, MD 21202.
(c) Chairman of the Board, Legg Mason Wood
Walker, Incorporated, 111 South Calvert
Street, Baltimore, MD 21202.
(4) Edward A. Taber III -
(a) Director of Bartlett & Co., 36 East Fourth
Street, Cincinnati, Ohio 45202.
(b) Vice Chairman and Director, Legg Mason Fund
Adviser, Inc., 111 South Calvert Street,
Baltimore, MD 21202.
(c) Director and Executive Vice President, Legg
Mason Wood Walker, Incorporated, 111 South
Calvert Street, Baltimore, MD 21202.
(5) Robert G. Sabelhaus -
(a) Director of Bartlett & Co., 36 East Fourth
Street, Cincinnati, Ohio 45202.
(b) Executive Vice President and Director, Legg
Mason Wood Walker, Incorporated, 111 South
Calvert Street, Baltimore, MD 21202.
- C-7 -
<PAGE> 82
(6) James B. Reynolds -
(a) Trustee, Chairman of the Board and President
of Bartlett Management Trust, 36 East Fourth
Street, Cincinnati, Ohio 45202.
(b) Vice President of Bartlett Capital Trust, 36
East Fourth Street, Cincinnati, Ohio 45202.
(7) Dale H. Rabiner -
(a) Vice President of Bartlett Management Trust,
36 East Fourth Street, Cincinnati, Ohio
45202.
(b) Chairman of the Board, Trustee and President
of Bartlett Capital Trust, 36 East Fourth
Street, Cincinnati, Ohio 45202.
(8) Thomas A. Steele -
(a) Secretary/Treasurer of Bartlett & Co., 36
East Fourth Street, Cincinnati, Ohio 45202.
- C-8 -
<PAGE> 83
Item 29. Principal Underwriters
None.
- C-9 -
<PAGE> 84
Item 30. Location of Accounts and Records
State Street Bank and trust Company
P.O. Box 1713
Boston, MA 02105-1713
Item 31. Management Services Not Discussed in Parts A or B
None.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders upon request and without charge.
(d) The Registrant undertakes that, within five business
days after receipt of a written application by
shareholders holding in the aggregate at least 1% of
the shares then outstanding or shares then having a
net asset value of $25,000, whichever is less, each
of whom shall have been a shareholder for at least
six months prior to the date of application
(hereinafter the "Petitioning Shareholders"),
requesting to communicate with other shareholders
with a view to obtaining signatures to a request for
a meeting for the purpose of voting upon such removal
of any Trustee of the Registrant, which application
shall be accompanied by a form of communication and
request which such Petitioning Shareholders wish to
transmit, Registrant will:
(i) provide such Petitioning
Shareholders with access to a list of the names and
addresses of all shareholders of the Registrant; or
(ii) inform such Petitioning Shareholders
of the approximate number of shareholders and the
estimated costs of mailing such communication, and to
undertake such mailing promptly after tender by such
Petitioning Shareholders to the Registrant of the
material to be mailed and the reasonable expenses of
such mailing.
- C-10 -
<PAGE> 85
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 16 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Baltimore, State of Maryland, on the 29th day of May, 1996.
BARTLETT MANAGEMENT TRUST
By /s/ Marie K. Karpinski
---------------------------------
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 16 to the Registrant's Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
<TABLE>
<S> <C> <C>
JAMES B. REYNOLDS Chairman of
the Board,
Trustee and President
MARIE K. KARPINSKI Vice President By: /s/ Marie K. Karpinski
and Treasurer -----------------------------
Attorney-in-Fact
LORRENCE T. KELLAR Trustee May 29, 1996
------
ALAN R. SCHRIBER Trustee
WILLIAM P. SHEEHAN Trustee
PHILIP J. RINGO Trustee
</TABLE>
- C-11 -
<PAGE> 1
SECOND AMENDED AND RESTATED
MANAGEMENT AGREEMENT
---------------------------
TO: BARTLETT & CO.
36 East Fourth Street
Cincinnati, Ohio 45202
Dear Sirs:
Bartlett Management Trust (hereinafter referred to as the "Trust") herewith
confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently consists of one series: Bartlett Cash Reserves
Fund. The Trust's Board of Trustees (the "Board") is authorized from time to
time, as it deems necessary or desirable, to establish and designate additional
series of shares. The Trust previously entered into an amended and restated
management agreement dated January 1, 1994, (the "Original Agreement") with you
on behalf of Bartlett Cash Reserves Fund. The Trust hereby further amends and
restates the Original Agreement, in its entirety, as set forth herein.
You have been selected to act as the sole investment adviser of the Trust
and to provide certain other services, as more fully set forth below, and you
are willing to act as such investment adviser and to perform such services under
the terms and conditions hereinafter set forth. Accordingly, the Trust agrees
with you as follows upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
-----------------
You will regularly provide the Trust with such investment advice as you in
your discretion deem advisable and will furnish a continuous investment program
for each of the Trust's series consistent with the respective series'
investment objectives and policies. You will determine the securities to be
purchased for each series of the Trust, the portfolio securities to be held or
sold by each series of the Trust, and the portion of each series' assets to be
held uninvested, subject always to the series' investment objectives, policies
and restrictions, as each of the same shall be from time to time in effect, and
subject further, to such policies and instructions as the Board may from time
to time establish and supply to you copies thereof. You will advise and assist
the officers of the Trust in taking such steps as are necessary or appropriate
to carry out the decisions of the Board and the appropriate committees of the
Board regarding the conduct of the business of the Trust.
2. ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
You will pay all operating expenses of the Trust, including, but not
limited to, the compensation and expenses of any trustees, officers and
employees of the Trust and of any other
<PAGE> 2
persons rendering any services to the Trust; clerical and shareholder service
staff salaries; office space and other office expenses; fees and expenses
incurred by the Trust in connection with membership in investment company
organizations; legal, auditing and accounting expenses; expenses of registering
shares under federal and state securities laws; insurance expenses; fees and
expenses of the custodian, transfer agent, dividend disbursing agent,
shareholder service agent and accounting and pricing services agent of the
Trust; expenses including clerical expenses of issue, sale, redemption or
repurchase of shares of the Trust; the cost of preparing and distributing
reports and notices to shareholders, the cost of printing or preparing
prospectuses and statements of additional information for delivery to the
Trust's current and prospective shareholders; the cost of printing or preparing
stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
advertising, promotion and other expenses incurred directly or indirectly in
connection with the sale or distribution of the Trust's shares; and all other
operating expenses not specifically assumed by the Trust.
The Trust will pay all brokerage fees and commissions, taxes, interest,
expenses incurred by the Trust in connection with the organization and
registration of shares of any series of the Trust established after the date of
this Agreement, and such extraordinary or non-recurring expenses as may arise,
including litigation to which the Trust may be a party and indemnification of
the Trust's trustees and officers with respect thereto. You may obtain
reimbursement from the Trust, at such time or times as you may determine in
your sole discretion, for any of the expenses advanced by you, which the Trust
is obligated to pay, and such reimbursement shall not be considered to be part
of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
---------------------------
For all of the services to be rendered and payments to be made as provided
in this Agreement with respect to the Bartlett Cash Reserves Fund (the "Fund"),
the Fund will pay you, as of the last day of each month, a fee equal to the
annual rate of .78% of the average daily net assets of the Fund up to and
including $500,000,000 and .75% of such assets in excess of $500,000,000.
Your compensation with respect to each additional series of the Trust
effectively registered for sale in a public offering after the date of this
Agreement shall be determined by the Board of Trustees, including a majority of
the Trustees who are not interested persons as defined in the Investment
Company Act of 1940 (the "Act") of you or the Trust and approved pursuant to
the provisions of section 15 of the Act.
The average value of the daily net assets of a series shall be determined
pursuant to the applicable provisions of the Declaration of Trust of the Trust
or a resolution of the Board, if required. If, pursuant to such provisions,
the determination of net asset value of a series is suspended for any
particular business day, then for the purposes of this paragraph, the value of
the net assets of the series as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the net assets of the series may lawfully be determined, on
that day. If the determination of the net asset value of a series has been
suspended for a period including a month, your compensation payable at the end
of such month shall be computed on the basis of the value of the net assets of
the series as last determined (whether during or prior to the month).
- 2 -
<PAGE> 3
You agree that your compensation during any fiscal year shall be reduced by
an amount, if any, by which the expenses of the Trust or a series for such
fiscal year exceed the lowest expense limitation applicable to the Trust or the
series imposed by state securities administrators in states where the series'
shares are qualified for sale, as such limitations may be lowered or raised
from time to time. The payment of your compensation at the end of any month
will be reduced or postponed or, if necessary, a refund will be made to the
Trust or the series as soon as practicable, so that at no time will there be
any accrued but unpaid liability in excess of the above expense limitation.
You shall refund to the Trust and the series within sixty days after the close
of each year the amount of any additional reduction of your compensation
pursuant to this paragraph; provided, however, that you will not be required to
refund to the Trust or the series an amount greater than the fee paid to you by
the Trust or the series in respect of such year pursuant to this Agreement. As
used in this paragraph "expenses" shall mean those expenses included in the
applicable expense limitation, and "expense limitation" means a limit on the
maximum annual expenses which may be incurred by an investment company or a
series of an investment company determined by multiplying a fixed percentage by
the average or multiplying more than one such percentage by different specified
amounts of the average of the values of the net assets of the investment
company or the series for a fiscal year. The words "lowest expense limitation"
shall be construed to result in the largest reduction of your compensation for
any fiscal year of the Trust.
4. EXECUTION OF PURCHASE AND SALE ORDERS
-------------------------------------
In connection with purchases or sales of portfolio securities for the
account of each series of the Trust, it is understood that you will arrange for
the placing of all orders for the purchase and sale of portfolio securities for
the account with brokers or dealers selected by you subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage.
In the selection of such brokers or dealers and the placing of such orders, you
are directed at all times to seek for the series the best qualitative
execution, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), the execution capability, financial
responsibility and responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer.
You should generally seek favorable prices and commission rates that are
reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Trust and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a Trust portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Trust and to accounts over which you exercise investment
discretion. The Trust and you understand and acknowledge that, although the
information may be useful to the Trust and you, it is not possible to place a
dollar
- 3 -
<PAGE> 4
value on such information. The Board shall periodically review the commissions
paid by the Trust to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the Trust.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution as
described above, you may give consideration to sales of shares of the Trust as
a factor in the selection of brokers and dealers to execute Trust portfolio
transactions.
You and your affiliates may retain compensation in connection with
effecting Trust portfolio transactions, provided that such compensation does
not exceed the maximum amount permitted by the Investment Company Act of 1940.
If any occasion should arise in which you give any advice to your clients
concerning the shares of the Trust, you will act solely as investment counsel
for such client and not in any way on behalf of the Trust. Your services to
the Trust pursuant to this Agreement are not to be deemed to be exclusive and
it is understood that you may render investment advice, management and other
services to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
----------------------------------
You may rely on information reasonably believed by you to be accurate and
reliable. Except as may otherwise be required by the Act or the rules
thereunder, neither you nor your shareholders, officers, directors, employees,
agents, control persons or affiliates of any thereof shall be subject to any
liability for, or any damages, expenses or losses incurred by the Trust in
connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under or payments made
pursuant to this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of your duties under this Agreement
or by reason of reckless disregard by any of such persons of your obligations
and duties under this Agreement.
Any person, even though also a director, officer, employee, shareholder or
agent of you, who may be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of you, or one under your control or direction, even
though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall take effect on the date of its execution and shall
remain in force for a period of two (2) years from the date of its execution
with respect to each of the Trust's series registered on the date of such
execution and, with respect to any additional series registered after the date
of execution, until the next anniversary date of the Agreement following the
date on which such series become effectively registered for sale in a public
offering, and from
- 4 -
<PAGE> 5
year to year thereafter as to each series of the Trust's shares, subject to
annual approval by (i) the Board or (ii) a vote of a majority (as defined in
the Act) of the outstanding voting securities of such series, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons" as defined in the Act of you or the Trust, by a vote
cast in person at a meeting called for the purpose of voting such approval.
If the shareholders of any series of the Trust's shares fail to approve the
Agreement in the manner set forth above, upon request of the Board, you will
continue to serve or act in such capacity for that series for the period of
time pending required approval of the Agreement, of a new agreement with you or
a different adviser or other definitive action; provided that the compensation
to be paid by the Trust to you for your services to and payments on behalf of
the series will be equal to the lesser of your actual costs incurred in
furnishing such services and payments or the amount you would have received
under this Agreement for furnishing such services and payments.
This Agreement may, on sixty days' written notice, be terminated with
respect to a series at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the
series or by you. This Agreement shall automatically terminate in the event of
its assignment.
7. USE OF NAME
-----------
The Trust and you acknowledge that all rights to the name "Bartlett" belong
to you and that the Trust is being granted a limited license to use such word
in its name or in any series' name. In the event you cease to be the adviser
to the Trust, the Trust's right to the use of the name "Bartlett" shall
automatically cease on the thirtieth day following the termination of this
Agreement. The right to the name may also be withdrawn by you during the term
of this Agreement upon thirty (30) days' written notice by you to the Trust.
Nothing contained herein shall impair or diminish in any respect, your right to
use the name "Bartlett" in the name of or in connection with any other business
enterprises with which you are or may become associated. There is no charge to
the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the series to which the amendment relates and by the Board,
including a majority of the trustees who are not interested persons of you or
of the Trust, cast in person at a meeting called for the purpose of voting on
such approval.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
-----------------------------------------
The term "Bartlett Management Trust" means and refers to the trustees from
time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
- 5 -
<PAGE> 6
employees of the Trust, personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and
shareholders of the Trust and signed by the officers of the Trust, acting as
such, and neither such authorization by such trustees and shareholders nor such
execution and delivery by such officers shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the trust property of the Trust as provided in its
Agreement and Declaration of Trust. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of the State of Ohio.
10. SEVERABILITY
------------
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
---------------------------
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Act.
In addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
12. NOTICES
-------
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust and your address
for this purpose shall be 36 East Fourth Street, Cincinnati, Ohio 45202.
13. COUNTERPARTS
------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
14. BINDING EFFECT
--------------
Each of the undersigned expressly warrants and represents that he has the
full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
- 6 -
<PAGE> 7
15. CAPTIONS
--------
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
If you are in agreement with the foregoing, please sign the form of
acceptance on this letter and return it to the Trust, whereupon this letter
shall become a binding contract effective as of January 2, 1996.
Yours very truly,
ATTEST: BARTLETT MANAGEMENT TRUST
/s/ Tom A. Steele By: /s/ James B. Reynolds
- ------------------------------- ----------------------------------
Title: Trustee
-------------------------------
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
ATTEST: BARTLETT & CO.
/s/ James F. Lummanick By: /s/ Gerald L. Oaks
- ------------------------------- ----------------------------------
Title: CFO
-------------------------------
- 7 -
<PAGE> 1
EXHIBIT 24.08
CUSTODIAN CONTRACT
Between
BARTLETT MANAGEMENT TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By
It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States . . . . . . . . . . . . . . . . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Availability of Federal Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Deposit of Fund Assets in Securities System . . . . . . . . . . . . . . . . . . . . . . 6
2.10A Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.11 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.12 Ownership Certificates for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . 9
2.13 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.14 Communications Relating to Portfolio Securities . . . . . . . . . . . . . . . . . . . . 9
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Foreign Securities Depositories . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Agreements with Foreign Banking Institutions . . . . . . . . . . . . . . . . . . . . . 10
3.6 Access of Independent Accountants of the Fund . . . . . . . . . . . . . . . . . . . . 10
3.7 Reports by Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Transactions in Foreign Custody Account . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C> <C>
3.9 Liability of Foreign Sub-Custodians . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Liability of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Monitoring Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6. Actions Permitted Without Express Authority . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income . . . . . . . . . . . . . . . . . . . . . . . . 14
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10. Opinion of Fund's Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11. Reports to Fund by Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . 15
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14. Effective Period, Termination and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 17
15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
16. Interpretive and Additional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
17. Additional Portfolios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
18. Massachusetts Law to Apply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
20. Shareholder Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
21.1 Expenses of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
21.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21.5 Separate Portfolios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21.6 Limitations on Liability of the Trustees and Shareholders . . . . . . . . . . . . . . 20
</TABLE>
4
<PAGE> 5
CUSTODIAN CONTRACT
------------------
This Contract between Bartlett Management Trust, an Ohio business
trust having its principal place of business at 36 East Fourth Street,
Cincinnati, Ohio 45202, hereinafter called the "Fund", and State Street Bank
and Trust Company, a Massachusetts trust company, having its principal place of
business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in one series,
Bartlett Cash Reserves Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets
of the Portfolios of the Fund, including securities which the Fund, on behalf
of the applicable Portfolio, desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside the
United States ("foreign securities") pursuant to the provisions of this
Contract. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities, similar investments and cash of the Portfolios, and
all payments of income, payments of principal or capital distributions received
by it with respect to all securities owned by the Portfolio(s) from time to
time, and the cash consideration received by it for such new or treasury shares
of beneficial interest of the Fund representing interests in the Portfolios,
("Shares") as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of a Portfolio held or received by the
Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only
in accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian; provided, however, that (a) the Custodian
will be liable to the Fund for the Custodian's own negligence in transmitting
any instructions received by it from the Fund and for the Custodian's own
negligence in connection with the delivery of any securities, cash or other
assets held by it to any sub-custodian and (b) in the event of any loss, damage
or expense suffered or incurred by the Fund caused by or resulting from actions
or omissions for which the Custodian would be liable pursuant to this section,
the Custodian shall promptly reimburse the Fund in the amount of any such loss,
damage or expense. The Custodian may employ as sub-custodian for the Fund's
<PAGE> 6
foreign securities on behalf of the applicable Portfolio(s) the foreign banking
institutions and foreign securities depositories designated in Schedule A
hereto but only in accordance with the provisions of Article 3. The Fund may
instruct the Custodian, through Proper Instructions, to cease the employment of
any one or more sub-custodians for maintaining custody of the Portfolio's
assets, and to cause the prompt delivery of such assets to another
sub-custodian acceptable to the Fund and the Custodian.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned
by such Portfolio, other than (a) securities which are maintained
pursuant to Section 2.10 in a clearing agency which acts as a
securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein as
"Securities System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.10A.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a
Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions from the Fund on behalf of
the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent
2
<PAGE> 7
appointed pursuant to Section 2.9 or into the name or nominee
name of any sub-custodian appointed pursuant to Article 1; or
for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units; PROVIDED that, in any such case, the new
securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving
payment for such securities except as may arise from the
Custodian's own negligence or willful misfeasance or
misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided
that, in any such case, the new securities and cash, if any,
are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, BUT ONLY against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge
of assets by the Fund on behalf of the Portfolio, BUT ONLY
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and a
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
<PAGE> 8
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee signed by
an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of
the Portfolio or of any nominee of the Custodian which nominee shall
be assigned exclusively to the Portfolio, UNLESS the Fund has
authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.9 or in the name or nominee
name of any sub-custodian appointed pursuant to Article 1. All
securities accepted by the Custodian on behalf of the Portfolio under
the terms of this Contract shall be in "street name" or other good
delivery form. If, however, the Fund directs the Custodian to
maintain securities in "street name," the Custodian shall utilize its
best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained
by the Portfolio in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940. Funds held
by the Custodian for a Portfolio may be deposited by
4
<PAGE> 9
it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; PROVIDED, however, that
every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each such
bank or trust company and the funds to be deposited with each such
bank or trust company shall on behalf of each applicable Portfolio be
approved by vote of a majority of the Board of Trustees of the Fund.
Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund
on behalf of each applicable Portfolio and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the Fund
on behalf of a Portfolio, make federal funds available to such
Portfolio as of specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks received in payment for
Shares of such Portfolio which are deposited into the Portfolio's
account.
2.6 COLLECTIONS. Subject to the provisions of Section 2.3, the Custodian
shall, and shall require any sub-custodian to, collect on a timely
basis all income, payments of principal and other payments with
respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom
in the securities business, and shall collect on a timely basis all
income, payments of principal and other payments with respect to
bearer domestic securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent thereof and
shall promptly credit such income, as collected, to such Portfolio's
custodian account. Without limiting the generality of the foregoing,
the Custodian shall detach, endorse where necessary and present for
payment all coupons and other income items requiring presentation as
and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection with income due on securities loaned,
other than to provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery to
the Custodian of the income to which the Portfolio is properly
entitled. The Custodian shall promptly notify the Fund by facsimile
transmission or in such other manner as the Fund and the Custodian may
agree in writing if any amount payable with respect to Shares of the
Portfolios or other assets of the Portfolios is not received by the
Custodian when due.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in
<PAGE> 10
proper form for transfer; (b) in the case of a purchase
effected through a Securities System, in accordance with
the conditions set forth in Section 2.10 hereof; (c) in the
case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.10A; (d)
in the case of repurchase agreements entered into between the
Fund on behalf of the Portfolio and the Custodian, or another
bank, or a broker-dealer which is a member of NASD, (i)
against delivery of the securities either in certificate form
or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio or (e) for transfer to a time
deposit account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant
to Proper Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following
payments for the account of the Portfolio: interest, taxes,
management, accounting, transfer agent and legal fees, and
operating expenses of the Fund whether or not such expenses
are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee of the Fund signed by
an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for
the account of a Portfolio is made by the Custodian in advance of
receipt of the securities purchased in
6
<PAGE> 11
the absence of specific written instructions from the Fund on
behalf of such Portfolio to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the same extent
as if the securities had been received by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to
carry out such of the provisions of this Article 2 as the Custodian
may from time to time direct; PROVIDED, however, that the appointment
of any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder. In the event of any loss, damage or expense
suffered or incurred by the Fund, on behalf of a Portfolio, caused by
or resulting from the actions or omissions of any agent for which the
Custodian would otherwise be liable, the Custodian shall promptly
reimburse the Fund in the amount of any such loss, damage or expense.
2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as
a securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may deposit and/or maintain securities of the
Portfolio in a Securities System provided that such securities
are represented in an account ("Account") of the Custodian in
the Securities System which shall not include any assets of
the Custodian other than assets held as a fiduciary, custodian
or otherwise for customers;
2) The books and records of the Custodian with respect to
securities of the Portfolio which are maintained in a
Securities System shall identify by book-entry those
securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer
for the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the Portfolio upon
(i) receipt of advice from the Securities System that payment
for such securities has been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the Securities System
of transfers of securities for the account of the Portfolio
shall identify the Portfolio, be maintained for the Portfolio
by the Custodian and be provided to the Fund at its request.
Upon request, the Custodian shall furnish the Fund on behalf
of the Portfolio confirmation of each transfer to or from the
account of the Portfolio in the form of a written advice or
notice and shall furnish to the Fund on behalf of the
Portfolio copies of daily
<PAGE> 12
transaction sheets reflecting each day's transactions in the
Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial certificate required by Article 14
hereof;
6) At the written request of the Fund, the Custodian will
terminate the use of any such Securities System on behalf of
the Portfolios as promptly as practicable; and
7) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of
the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against
the Securities System or any other person which the Custodian
may have as a consequence of any such loss or damage if and to
the extent that the Portfolio has not been made whole for any
such loss or damage. In the event of any such subrogation,
the Custodian shall cooperate with the Fund in asserting such
rights and shall take all actions reasonably necessary to
enable the Fund to assert such rights.
2.10A FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The
Custodian may deposit and/or maintain securities owned by a Portfolio
in the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may deposit and/or maintain securities of the
Portfolio in the Direct Paper System only if such securities
are represented in an account ("Account") of the Custodian
in the Direct Paper System which shall not include any assets
of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
8
<PAGE> 13
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Securities System for the account of
the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal
accounting control as the Fund may reasonably request from
time to time.
2.11 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash, securities and/or similar investments, including
securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and
a broker-dealer registered under the Exchange Act and a member of the
NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio, (ii) for purposes of segregating
cash or securities in connection with options purchased, sold or
written by the Portfolio or commodity futures contracts or options
thereon purchased or sold by the Portfolio, (iii) for the purposes of
compliance by the Portfolio with the procedures required by Investment
Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance
of segregated accounts by registered investment companies and (iv) for
other proper purposes, BUT ONLY, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions from the Fund on behalf
of the applicable Portfolio, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee signed by an officer
of the Fund and certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated account and
declaring such purposes to be proper purposes.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall, and
shall require any sub-custodian to, promptly execute ownership and
other certificates and affidavits for all federal, state and foreign
tax purposes in connection with receipt of income or other payments
with respect to securities or similar investments of each Portfolio
held by it and in connection with transfers of securities or similar
investments.
<PAGE> 14
2.13 PROXIES; NOTICES. The Custodian shall cause to be promptly executed
by the registered holder of such securities, if the securities are
registered otherwise than in the name of the Portfolio or a
nominee of the Portfolio, all forms of proxies that are received by
the Custodian or any agent for the Custodian or any nominee of either
of them, without indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the Portfolio such proxies,
all proxy soliciting materials and all notices relating to such
securities.
2.14 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to
the Fund for each Portfolio all written information (including,
without limitation, pendency of calls and maturities of domestic
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund on
behalf of the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to
the Portfolio all written information received by the Custodian from
issuers of the securities whose tender or exchange is sought and from
the party (or his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Portfolio shall
notify the Custodian at least three business days prior to the date on
which the Custodian is to take such action.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the
Portfolio's securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined
in Section 5 of this Contract, together with a certified resolution of
the Fund's Board of Trustees, the Custodian and the Fund may agree to
amend Schedule A hereto from time to time to designate additional
foreign banking institutions and foreign securities depositories to
act as sub-custodian. The Fund may instruct the Custodian through
Proper Instructions to cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio's assets and
to cause the delivery of such assets to another sub-custodian
acceptable to the Custodian and the Fund.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to:
(a) "foreign securities", as defined in paragraph (c)(1) of Rule
17f-5 under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may determine
to be reasonably necessary to effect the Portfolio's foreign
securities transactions. The Custodian shall identify on its books as
belonging to the Fund, the foreign securities of the Fund held by each
foreign sub-custodian.
10
<PAGE> 15
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of the
Portfolios shall be maintained in foreign securities
depositories only through arrangements implemented by the foreign
banking institutions serving as sub-custodians pursuant to the terms
hereof. Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in Section 3.4 hereof.
3.4 HOLDING SECURITIES. The Custodian may hold securities and other
non-cash property for all of its customers, including the Fund, with a
Foreign Sub-custodian in a single account that is identified as
belonging to the Custodian for the benefit of its customers, PROVIDED
HOWEVER, that (i) the records of the Custodian with respect to
securities and other non-cash property of the Fund which are
maintained in such account shall identify by book-entry those
securities and other non-cash property belonging to the Fund and (ii)
the Custodian shall require that securities and other non-cash
property so held by the Foreign Sub-custodian be held separately from
any assets of the Foreign Sub-custodian or of others.
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall provide that: (a) the assets of
each Portfolio will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial ownership for the
assets of each Portfolio will be freely transferable without the
payment of money or value other than for safe custody or
administration; (c) adequate records will be maintained identifying
the assets as belonging to each applicable Portfolio; (d) officers of
or auditors employed by, or other representatives of the Custodian,
including to the extent permitted under applicable law the independent
public accountants for the Fund, will be given access to the books and
records of the foreign banking institution relating to its actions
under its agreement with the Custodian; and (e) assets of the
Portfolios held by the foreign sub-custodian will be subject only to
the instructions of the Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the Fund,
its independent accountants and/or its attorneys to be afforded
access to the books and records of any foreign banking institution
employed as a foreign sub-custodian insofar as such books and records
relate to the performance of such foreign banking institution under
its agreement with the Custodian.
3.7 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity of
the entity having physical possession of such securities. The
Custodian shall also provide to the Fund such other information as may
be reasonably requested by the Fund on behalf of the Portfolios to
evidence compliance with Rule 17f-5 under the Investment Company Act.
<PAGE> 16
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2, 2.7 and 2.8 of this Contract shall apply, MUTATIS
MUTANDIS to the foreign securities of the Fund held outside the United
States by foreign sub-custodians. (b) Notwithstanding any provision
of this Contract to the contrary, settlement and payment for
securities received for the account of each applicable Portfolio and
delivery of securities maintained for the account of each applicable
Portfolio may be effected in accordance with the customary established
securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer. (c)
Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of this Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of
such securities (except liability for failing to act in accordance
with instructions).
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable
care and diligence in the performance of its duties and to
indemnify, and hold harmless, the Custodian and each Fund from and
against any loss, damage, cost, expense, liability or claim arising
out of or in connection with the institution's performance of such
obligations. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims
against a foreign banking institution as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim. In the event of any such subrogation,
the Custodian shall cooperate with the Fund in asserting such rights
and shall take all actions reasonably necessary to enable the Fund to
assert such rights.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a
foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.12 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care and
diligence. Notwithstanding the foregoing provisions of this paragraph
3.9, in delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to the Fund for
any loss, damage or expense due to such delegation, except such loss
as may result from (a) political risk (including, but not limited to,
exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due
12
<PAGE> 17
to Acts of God, nuclear incident or other losses under circumstances
where the Custodian and State Street London Ltd. have exercised
reasonable care and diligence.
In the event that any sub-custodian appointed pursuant to the provisions of
this Section 3 fails to perform any of its obligations under the
terms and conditions of the applicable sub-custodian agreement, the
Custodian shall use its best efforts to cause such sub-custodian to
fully perform its obligations. In the event that the Custodian is
unable to cause such sub-custodian to perform fully its obligations
thereunder, the Custodian shall forthwith notify the Fund of the same
and, upon the Fund's request, terminate such sub-custodian as a sub-
custodian for the Fund in accordance with the termination provisions
of the applicable sub-custodian agreement and, if requested by the
Fund, appoint another sub-custodian acceptable to the Custodian and
the Fund.
The Custodian will not amend any sub-custodian agreement or agree to change
or permit any changes thereunder in respect of the Fund except upon the
prior written approval of the Fund.
3.11 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to
the Fund, during the month of June, and as reasonably requested by the
Fund from time to time, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in
connection with the initial approval of this Contract. In addition,
the Custodian shall monitor the performance and financial condition of
the foreign sub-custodians and foreign securities depositories to the
extent practicable and shall promptly inform the Fund in the event
that the Custodian learns of a material adverse change in the
performance or financial condition of a foreign sub-custodian or any
material loss of the assets of the Fund or in the case of any foreign
sub-custodian not the subject of an exemptive order from the
Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S. dollars
or the equivalent thereof) or that its shareholders' equity has
declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles).
3.12 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Portfolios assets are maintained in a foreign branch of a
banking institution which is a "bank" as defined by Section 2(a)(5) of
the Investment Company Act of 1940 meeting the qualification set forth
in Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract. (b)
Cash held for each Portfolio of the Fund in the United Kingdom shall
be maintained in an interest bearing account established for the Fund
with the Custodian's London branch, which account shall be subject to
the direction of the Custodian, State Street London Ltd. or both.
3.13 TAX LAW. Except as provided in Section 2.12, the Custodian shall have
no responsibility or liability for any obligations now or hereafter
imposed on the Fund or the Custodian as custodian of the Fund by
the tax law of the United States of America or any state or political
subdivision thereof. It shall be the responsibility of the Fund to
notify the Custodian of the obligations imposed on the Fund, or the
Custodian with respect to assets of the Fund, by the tax law of
jurisdictions other than those mentioned
<PAGE> 18
in the above sentence, including responsibility for withholding and
other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility of
the Custodian with regard to such tax law shall be to use reasonable
efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of jurisdictions for which the Fund has
provided such information.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND
The Custodian shall receive from the distributor for the Shares or
from the Transfer Agent of the Fund and promptly deposit into the account of
the appropriate Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The Custodian will
provide timely notification to the Fund on behalf of each such Portfolio and
the Transfer Agent of any receipt by it of payments for Shares of such
Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust of the Fund and any applicable votes of
the Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the
redemption or repurchase of Shares of a Portfolio, the Custodian is authorized
upon receipt of instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by the redeeming shareholders. In
connection with the redemption or repurchase of Shares of the Fund, the
Custodian shall honor checks drawn on the Custodian by a holder of Shares,
which checks have been furnished by the Fund to the holder of Shares, when
presented to the Custodian in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Fund and the Custodian.
5. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract means a tested
telex from the Fund, or a written request, direction, instruction or
certification signed or initialed on behalf of the Fund by one or more person
or persons as the Board of Trustees shall have from time to time authorized.
Each such writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the purpose for which
such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed by tested
telex or in writing in the manner set forth above. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the authorization
by the Board of Trustees of the Fund accompanied by a detailed description of
procedures approved by the Board of Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices in addition to tested telex, provided that the Fund and the Custodian
are satisfied that such procedures afford adequate safeguards for the
Portfolios' assets. For purposes of this Section, Proper Instructions shall
include
14
<PAGE> 19
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.11.
Proper Instructions may be in the form of standing instructions.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, PROVIDED that all such payments
shall be accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Trustees of the Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of the Fund. The Custodian may receive and accept a certified copy of a vote
of the Board of Trustees of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Trustees pursuant to the
Declaration of Trust of the Fund as described in such vote, and such vote may
be considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus related to such
Portfolio and shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent periodically of the division of
such net income among its various components. The calculations of the net
asset value per share and the daily income of each Portfolio shall be made at
the time or times described from time to time in the Fund's currently effective
prospectus related to such Portfolio. On each day that the
<PAGE> 20
Custodian computes the net asset value per share of each Portfolio, the
Custodian will provide information sufficient to permit the Fund to verify that
portfolio transactions have been recorded in accordance with the prospectus and
are reconciled with the Portfolio's trading records.
9. BOOKS AND RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all books and records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to Section 31 thereof
and Rules 31a-1 and 31a-2 thereunder and under applicable state and federal tax
laws. All such books and records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection and audit by duly authorized officers, employees, agents and
auditors of and attorneys for, the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by each
Portfolio and held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to the Custodian's activities hereunder in connection with the preparation of
the Fund's Form N-1A, and Form N-SAR or other periodic reports to Fund
shareholders or to the Securities and Exchange Commission and with respect to
any other requirements of such Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding cash, securities, futures contracts and
options on futures contracts, including cash, securities and other assets
deposited and/or maintained in a Securities System or with a sub-custodian,
relating to the services provided by the Custodian, directly or through any
agent, under this Contract; such reports shall be of sufficient scope and in
sufficient detail as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.
12. COMPENSATION OF CUSTODIAN
16
<PAGE> 21
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon in writing from time to time
between the Fund on behalf of each applicable Portfolio and the Custodian. The
Custodian shall provide the Fund a written invoice for each such payment.
13. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in good faith without negligence. It shall
be entitled to rely on and may act upon advice of counsel (who may be counsel
for the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice of counsel that such
actions or omissions comply with the terms of this Contract and with all
applicable laws, provided the Custodian acts in good faith and without
negligence.
If the Fund on behalf of a Portfolio requires the Custodian to take
any action with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Portfolio being liable for
the payment of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including, but not
limited to, securities settlements, foreign exchange contracts and assumed
settlement) for the benefit of a Portfolio including the purchase or sale of
foreign exchange or of contracts for foreign exchange (any such amount is
referred to herein as an "Advance") or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's or agent's own negligent
action, negligent failure to act or willful misfeasance or misconduct (any
such liability is referred to herein as a "Liability"), then in such event cash
held for the account of the appropriate Portfolio and securities issued by
United States issuers or other securities selected by the Custodian equal in
value to not more than 125% of such Advance and accrued interest on the Advance
or the reasonably anticipated amount of such Liability, held at any time for
the account of the appropriate Portfolio by the Custodian or sub-custodian,
shall be held as security for such Liability or for such Advance and the
accrued interest on the Advance. Each Portfolio hereby grants to the Custodian
a security interest and lien on cash held by the Custodian for the account of
such Portfolio and any assets of such Portfolio as may be designated from time
to time by the Custodian as provided in this Section 13. The Custodian shall
designate the security or securities constituting security for an Advance or
Liability (the "Designated Securities") by notice in writing to the Fund (which
may be sent by tested telefax). In the event the value of the Designated
Securities shall decline to less than 110% of the amount of such Advance and
accrued interest on the Advance or the reasonably anticipated amount of such
Liability, then the Custodian may designate in the same manner additional
securities to be held as security for such obligation ("Additional Securities")
but
<PAGE> 22
the aggregate value of the Designated Securities and the Additional Securities
shall not be in excess of 125% of the amount of such Advance and the accrued
interest on the Advance or the reasonably anticipated amount of such Liability.
At the request of the Fund, the Custodian shall agree to substitution of a
security or securities which have a value equal to the value of the Designated
or Additional Securities which the Fund desires to be released from their
status as security, and such release from status as security shall be effective
upon the Custodian and the Fund agreeing in writing as to the identity of the
substituted security or securities, which shall thereupon become Designated
Securities.
Notwithstanding the above, the Custodian shall, at the request of the
Fund, immediately release from their status as security any or all of the
Designated Securities or Additional Securities upon the Custodian's receipt
from such Fund of cash or cash equivalents in an amount equal to 100% of the
value of the Designated Securities or Additional Securities that the Fund
desires to be released from their status as security pursuant to this Section.
The Fund shall reimburse the Custodian in respect of a Liability and shall pay
any Advances upon demand; provided, however, that the Custodian first notifies
the Fund of such demand for repayment or reimbursement. If, upon notification,
the Fund shall fail to pay such advance or interest when due or shall fail to
reimburse the Custodian promptly in respect of a Liability, the Fund, on behalf
of the Portfolios, acknowledges and agrees that the Custodian shall be entitled
to apply cash held for the applicable Portfolio and/or dispose of the
Designated Securities and Additional Securities to the extent necessary to
obtain repayment or reimbursement. Interest, dividends and other distributions
paid or received on the Designated Securities or Additional Securities, other
than payments of principal or payments upon retirement, redemption or
repurchase, shall remain the property of the Fund, and shall not be subject to
this Section. To the extent that the disposition of the Fund's property,
designated as security for such Advance or Liability, results in an amount less
than necessary to obtain repayment or reimbursement, the Fund shall continue to
be liable to the Custodian for the difference between the proceeds of the
disposition of the Fund's property, designated as security for such Advance or
Liability, and the amount of the repayment or reimbursement due to the
Custodian and the Custodian shall be entitled to designate Additional
Securities to secure the amount of the shortfall and shall have the same rights
with respect to such Additional Securities as are provided herein with respect
to Designated Securities generally.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; PROVIDED,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of the Fund has
approved the initial use of a particular Securities System by such Portfolio,
as required by Rule 17f-4 under the Investment Company Act of 1940, as amended
and that the Custodian shall not with respect to a Portfolio act under Section
2.10A hereof in the absence of receipt of an initial certificate of the
Secretary or an
18
<PAGE> 23
Assistant Secretary that the Board of Trustees has approved the initial use of
the Direct Paper System by such Portfolio; PROVIDED FURTHER, however, that the
Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of its Board of Trustees (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract
in the event of the appointment of a conservator or receiver for the Custodian
by the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its reasonable costs, expenses and disbursements. Termination of this
Contract with respect to one Portfolio (but less than all of the Portfolios)
will not constitute termination of the Contract, and the terms of the Contract
continue to apply to the other Portfolios.
15. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, or one or more of the
Portfolios , shall be appointed by the Board of Trustees of the Fund, the
Custodian shall, upon termination, promptly deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer, all
cash, securities, similar investments and other property, as well as all books
and records, of each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of each
such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Trustees of the Fund, deliver at the office of the Custodian and promptly
transfer such securities, similar investments, cash, books, records and other
properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Trustees shall have been delivered
to the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the Investment Company Act of
1940, doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, similar
investments, cash, books, records and other properties held by the Custodian
on behalf of each applicable Portfolio and all instruments held by the
Custodian relative thereto and all other property held by it under this
Contract on behalf of each applicable Portfolio and to transfer to an account
of such successor custodian all of the securities of each such Portfolio held
in any Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract. The Custodian agrees to
cooperate with the successor custodian and the Fund in execution of documents
and performance of other actions necessary or desirable in order to substitute
the successor custodian for the Custodian.
<PAGE> 24
In the event that securities, similar investments, cash and other
properties remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the certified copy
of the vote referred to or of the Board of Trustees to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its
services during such period as the Custodian retains possession of such
securities, similar investments, cash and other properties and the provisions
of this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, PROVIDED that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Articles of Incorporation
of the Fund. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
17. ADDITIONAL PORTFOLIOS
In the event that the Fund establishes one or more series of Shares in
addition to Bartlett Cash Reserves Fund with respect to which it desires to
have the Custodian render services as custodian under the terms hereof, it
shall so notify the Custodian in writing, and if the Custodian agrees in
writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
18. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
19. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
20. SHAREHOLDER COMMUNICATIONS
Securities and Exchange Commission Rule 14b-2 requires banks which
hold securities for the account of customers to respond to requests by issuers
of securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure
20
<PAGE> 25
of this information. In order to comply with the rule, the Custodian needs the
Fund to indicate whether the Fund authorizes the Custodian to provide the
Fund's name, address, and share position to requesting companies whose stock
the Fund owns. If the Fund tells the Custodian "no", the Custodian will not
provide this information to requesting companies. If the Fund tells the
Custodian "yes" or do not check either "yes" or "no" below, the Custodian is
required by the rule to treat the Fund as consenting to disclosure of this
information for all securities owned by the Fund or any funds or accounts
established by the Fund. For the Fund's protection, the Rule prohibits the
requesting company from using the Fund's name and address for any purpose other
than corporate communications. Please indicate below whether the Fund consent
or object by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
21. MISCELLANEOUS
21.1 EXPENSES OF THE FUND. In addition to any liability to the Fund for
which the Custodian is determined to be liable under this Contract,
the Custodian shall be liable to the Fund for all reasonable costs
and expenses incurred by the Fund in connection with a claim by the
Fund against the Custodian, an Agent or sub-custodian for which the
Custodian is determined to be liable under this Contract, including,
reasonable attorneys' fees and expenses and other reasonable fees
incurred in any investigation, lawsuit or other proceeding related to
such claim. Nothing in this paragraph shall preclude the parties from
agreeing to payment of such expenses by Custodian in connection with a
claim settled by arbitration, mediation or negotiation.
21.2 ASSIGNMENT. This Contract may not be assigned by either party without
the written consent of the other.
21.3 INSURANCE. The Custodian agrees to maintain insurance adequate to the
protection of all assets of the Fund that may come into the
Custodian's care under this Contract.
21.4 CONFIDENTIALITY. The Custodian agrees that all books, records,
information and data pertaining to the business of the Fund which are
exchanged or received pursuant to the negotiation or carrying out
of this Contract shall remain confidential, shall not be voluntarily
disclosed to any other person, except as may be required by law, and
shall not be used by the Custodian for any purpose not directly
related to the business of the Fund, except with the Fund's written
consent.
21.5 SEPARATE PORTFOLIOS. Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of each
series of the Fund are separate and distinct from the assets and
liabilities of each other series and that no series shall be liable or
shall be charged for any debt, obligation or liability of any other
series, whether arising under this Contract or otherwise.
<PAGE> 26
21.6 LIMITATIONS ON LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. Notice is
hereby given that this Contract is executed on behalf of the Trustees
of the Trust as Trustees and not individually and that the obligations
of this Contract are not binding upon any of the Trustees or
Shareholders individually but are binding only upon the assets and
property of the Fund.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 1st day of February, 1996.
ATTEST BARTLETT MANAGEMENT TRUST
/s/Tom A. Steele By: /s/ James B. Reynolds
- ------------------------- ---------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/Francine S. Hayes By: /s/ Ronald E. Logue
- ------------------------- -------------------
Executive Vice President
22
<PAGE> 27
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Bartlett Management
Trust for use as sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
______________________________
Fund's Authorized Officer
Date: _________________________
<PAGE> 1
Exhibit 24.11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Post-Effective Amendment No. 16 of our report dated May 3,
1996 and to all references to our Firm included in or made a part of this
Post-Effective Amendment.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
May 28, 1996
22
<PAGE> 1
Exhibit 24.17
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BARTLETT MANAGEMENT TRUST , a business trust organized under
the laws of the State of Ohio (hereinafter referred to as the "Trust"), proposes
to file with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 16 to its Registration Statement;
NOW, THEREFORE, the Trust hereby constitutes and appoints JOHN F.
CURLEY, JR., MARIE K. KARPINSKI and DONALD S. MENDELSOHN, and each of them, its
attorneys for it and in its name, place and stead, to execute and file such
Post-Effective Amendment No. 16, hereby giving and granting to said attorneys
full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as fully
to all intents and purposes as it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused its name to be subscribed
hereto by the President this 6th day of May, 1996.
ATTEST: BARTLETT MANAGEMENT TRUST
/s/ Thomas A. Steele By /s/ James B. Reynolds
-------------------------------------- ----------------------------
Thomas A. Steele, Assistant Secretary James B. Reynolds, President
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
Before me, a Notary Public, in and for said county and state,
personally appeared JAMES B. REYNOLDS, President and THOMAS A. STEELE,
Assistant Secretary, who represented that they are duly authorized in the
premises, and who are known to me to be the persons described in and who
executed the foregoing instrument, and they duly acknowledged to me that they
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 6th day of May, 1996.
/s/ JoAnn M. Strasser
------------------------------------
Notary Public
State of Ohio
My Commission has no expiration date
<PAGE> 2
CERTIFICATE
The undersigned, Assistant Secretary of BARTLETT MANAGEMENT TRUST, hereby
certifies that the following resolution was duly adopted by the Board of
Trustees at the meeting held on May 6, 1996 and is in full force and effect:
WHEREAS, BARTLETT MANAGEMENT TRUST , a business trust organized under
the laws of the State of Ohio (hereinafter referred to as the "Trust"),
proposes to file with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and the Investment Company Act
of 1940, Post-Effective Amendment No. 16 to its Registration Statement;
NOW, THEREFORE, the Trust hereby constitutes and appoints JOHN F.
CURLEY, JR., MARIE K. KARPINSKI and DONALD S. MENDELSOHN, and each of
them, its attorneys for it and in its name, place and stead, to
execute and file such Post-Effective Amendment No. 16, hereby
giving and granting to said attorneys full power and authority to do
and perform all and every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents
and purposes as it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do or cause to be done by virtue hereof."
Dated: May 6, 1996 /s/ Thomas A. Steele
-------------------------------------
THOMAS A. STEELE, Assistant Secretary
Bartlett Management Trust
<PAGE> 1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BARTLETT MANAGEMENT TRUST , a business trust organized under
the laws of the Commonwealth of Massachusetts (hereinafter referred to as the
"Trust"), proposes to file with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and the Investment Company Act of 1940,
as amended, Post-Effective Amendment No. 16 to its Registration Statement; and
WHEREAS, the undersigned is an officer of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN
F. CURLEY, JR. and DONALD S. MENDELSOHN, and each of them, her attorneys for
her and in her name, place and stead, and in her office and capacity in the
Trust, to execute and file such Post-Effective Amendment No. 16, hereby giving
and granting to said attorneys full power and authority to do and perform all
and every act and thing whatsoever requisite and necessary to be done in and
about the premises as fully to all intents and purposes as it might or could do
if personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 6th
day of May, 1996.
/s/ Marie K. Karpinski
------------------------------------------
MARIE K. KARPINSKI,
Principal Accounting Officer and Treasurer
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
Before me, a Notary Public, in and for said county and state, personally
appeared MARIE K. KARPINSKI, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that she executed
and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 6th day of May, 1996.
/s/ JoAnn M. Strasser
------------------------------------
Notary Public
State of Ohio
My Commission has no expiration date
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BARTLETT MANAGEMENT TRUST , a business trust organized under
the laws of the State of Ohio (hereinafter referred to as the "Trust"), proposes
to file with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 16 to its Registration Statement; and
WHEREAS, the undersigned is an officer of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN
F. CURLEY, JR., MARIE K. KARPINSKI and DONALD S. MENDELSOHN, and each of them,
their attorneys for them and in their name, place and stead, and in his office
and capacity in the Trust, to execute and file such Post-Effective Amendment
No. 16, hereby giving and granting to said attorneys full power and authority
to do and perform all and every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as it might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set their hands this 6th
day of May, 1996.
/s/ James B. Reynolds /s/ Lorrence T. Kellar
- --------------------------------- ---------------------------------
James B. Reynolds, Trustee, Lorrence T. Kellar, Trustee
Chairman of the Board and
President
/s/ Alan R. Schriber
---------------------------------
Alan R. Schriber, Trustee
/s/ William P. Sheehan /s/ George J. Wile
- --------------------------------- ---------------------------------
William P. Sheehan, Trustee George J. Wile, Trustee
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
Before me, a Notary Public, in and for said county and state, personally
appeared JAMES B. REYNOLDS, LORRENCE T. KELLAR, ALAN R. SCHRIBER, WILLIAM P.
SHEEHAN AND GEORGE J. WILE, known to me to be the persons described in and who
executed the foregoing instrument, and who acknowledged to me that they executed
and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 6th day of May, 1996.
/s/ JoAnn M. Strasser
------------------------------------
Notary Public
State of Ohio
My Commission has no expiration date
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BARTLETT MANAGEMENT TRUST , a business trust organized under
the laws of the State of Ohio (hereinafter referred to as the "Trust"), proposes
to file with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 16 to its Registration Statement; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN F.
CURLEY, JR., MARIE K. KARPINSKI and DONALD S. MENDELSOHN, and each of them, his
attorneys for him and in his name, place and stead, and in his office and
capacity in the Trust, to execute and file such Post-Effective Amendment No. 16,
hereby giving and granting to said attorneys full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully to all intents and purposes as it might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 13th
day of May, 1996.
/s/ Phillip J. Ringo
-------------------------
PHILLIP J. RINGO, Trustee
STATE OF PA )
) ss:
COUNTY OF CHESTER )
Before me, a Notary Public, in and for said county and state,
personally appeared PHILLIP J. RINGO, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 13th day of May, 1996.
/s/ Donna D. Riess
------------------------------------
Notary Public
State of PA
My Commission Expires Sept. 22, 1997
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BARTLETT MANAGEMENT TRUST , a business trust organized under
the laws of the State of Ohio (hereinafter referred to as the "Trust"), proposes
to file with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 15 to its Registration Statement; and
WHEREAS, the undersigned is an officer or both an officer and a trustee
of the Trust, as indicated beside his name;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS, DONALD S. MENDELSOHN and JAMES F. LUMMANICK, and each of them, his
attorneys for him and in his name, place and stead, and in each of his/her
offices and capacities in the Trust, to execute and file such Post-Effective
Amendment No. 15, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as he/she might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand
this 8th day of May, 1995.
/s/ James B. Reynolds /s/ Dale H. Rabiner
- ------------------------------- ----------------------------
JAMES B. REYNOLDS, Trustee and DALE H. RABINER, Trustee and
Chairman of the Board of Trustees Vice President
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
Before me, a Notary Public, in and for said county and state,
personally appeared, DALE H. RABINER and JAMES B. REYNOLDS, known to me to be
the persons described in and who executed the foregoing instrument, and they
duly acknowledged to me that they executed and delivered the same for the
purposes therein expressed.
WITNESS my hand and official seal this 8th day of May, 1995.
/s/ Doris J. Leonard
------------------------------------
Notary Public
State of Ohio
My Commission Expires Sept. 27, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PERIOD-TYPE> YEAR
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<PERIOD-START> APR-01-1995
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<INVESTMENTS-AT-VALUE> 123,865,689
<RECEIVABLES> 210,933
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<OTHER-ITEMS-ASSETS> 1,709,765
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 150,823
<TOTAL-LIABILITIES> 150,823
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<PAID-IN-CAPITAL-COMMON> 88,302,489
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<SHARES-COMMON-PRIOR> 6,673,071
<ACCUMULATED-NII-CURRENT> 489,399
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 33,154,549
<NET-ASSETS> 125,636,385
<DIVIDEND-INCOME> 2,589,704
<INTEREST-INCOME> 861,425
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<EXPENSES-NET> 1,366,123
<NET-INVESTMENT-INCOME> 2,085,006
<REALIZED-GAINS-CURRENT> 7,904,641
<APPREC-INCREASE-CURRENT> 14,980,193
<NET-CHANGE-FROM-OPS> 24,969,840
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<DISTRIBUTIONS-OF-GAINS> 5,714,691
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<NUMBER-OF-SHARES-REDEEMED> 6,758,445
<SHARES-REINVESTED> 424,930
<NET-CHANGE-IN-ASSETS> 22,915,467
<ACCUMULATED-NII-PRIOR> 22,163
<ACCUMULATED-GAINS-PRIOR> 1,499,998
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,366,123
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,366,123
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<PER-SHARE-NAV-BEGIN> 15.39
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> 3.32
<PER-SHARE-DIVIDEND> .24
<PER-SHARE-DISTRIBUTIONS> .83
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<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> BARTLETT CAPITAL TRUST
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<NAME> BARTLETT FIXED INCOME FUND
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 77,070,421
<INVESTMENTS-AT-VALUE> 76,732,041
<RECEIVABLES> 4,015,280
<ASSETS-OTHER> 607
<OTHER-ITEMS-ASSETS> 4,658
<TOTAL-ASSETS> 80,752,586
<PAYABLE-FOR-SECURITIES> 1,091,668
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 283,587
<TOTAL-LIABILITIES> 1,375,255
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 81,785,857
<SHARES-COMMON-STOCK> 8,014,911
<SHARES-COMMON-PRIOR> 9,418,434
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,070,146)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (338,380)
<NET-ASSETS> 79,377,331
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,032,746
<OTHER-INCOME> 0
<EXPENSES-NET> 900,170
<NET-INVESTMENT-INCOME> 5,132,576
<REALIZED-GAINS-CURRENT> 1,977,601
<APPREC-INCREASE-CURRENT> 205,780
<NET-CHANGE-FROM-OPS> 7,315,957
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,132,576
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,078,188
<NUMBER-OF-SHARES-REDEEMED> 3,903,266
<SHARES-REINVESTED> 421,555
<NET-CHANGE-IN-ASSETS> (11,972,127)
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<ACCUMULATED-GAINS-PRIOR> (4,047,747)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 900,170
<AVERAGE-NET-ASSETS> 89,397,000
<PER-SHARE-NAV-BEGIN> 9.70
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> .20
<PER-SHARE-DIVIDEND> .57
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.90
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 65,394,658
<INVESTMENTS-AT-VALUE> 71,035,887
<RECEIVABLES> 972,759
<ASSETS-OTHER> 2,521
<OTHER-ITEMS-ASSETS> 173,250
<TOTAL-ASSETS> 72,184,417
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 143,813
<TOTAL-LIABILITIES> 143,813
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<PAID-IN-CAPITAL-COMMON> 63,652,243
<SHARES-COMMON-STOCK> 5,721,825
<SHARES-COMMON-PRIOR> 4,952,364
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 1,683,228
<INTEREST-INCOME> 238,106
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<EXPENSES-NET> 1,215,664
<NET-INVESTMENT-INCOME> 705,670
<REALIZED-GAINS-CURRENT> 5,091,672
<APPREC-INCREASE-CURRENT> 1,979,041
<NET-CHANGE-FROM-OPS> 7,776,383
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<DISTRIBUTIONS-OF-INCOME> 709,658
<DISTRIBUTIONS-OF-GAINS> 2,033,031
<DISTRIBUTIONS-OTHER> 56,680
<NUMBER-OF-SHARES-SOLD> 2,030,782
<NUMBER-OF-SHARES-REDEEMED> 1,434,766
<SHARES-REINVESTED> 173,445
<NET-CHANGE-IN-ASSETS> 14,376,891
<ACCUMULATED-NII-PRIOR> 11,126
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 253,272
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<GROSS-EXPENSE> 1,215,664
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<AVG-DEBT-PER-SHARE> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
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<INVESTMENTS-AT-VALUE> 15,193,376
<RECEIVABLES> 299,890
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<TOTAL-ASSETS> 15,494,033
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<SHARES-COMMON-PRIOR> 2,043,270
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<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 15,286,302
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<INTEREST-INCOME> 1,464,525
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<NET-INVESTMENT-INCOME> 1,266,884
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<APPREC-INCREASE-CURRENT> 205,670
<NET-CHANGE-FROM-OPS> 1,618,503
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
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<SHARES-REINVESTED> 90,267
<NET-CHANGE-IN-ASSETS> (4,461,799)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (510,375)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 197,641
<AVERAGE-NET-ASSETS> 2,541,000
<PER-SHARE-NAV-BEGIN> 9.66
<PER-SHARE-NII> .54
<PER-SHARE-GAIN-APPREC> .11
<PER-SHARE-DIVIDEND> .54
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 9.77
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<CIK> 0000750006
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<SERIES>
<NUMBER> 5
<NAME> BARTLETT CASH RESERVES FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 50,422,324
<INVESTMENTS-AT-VALUE> 50,430,436
<RECEIVABLES> 41,309
<ASSETS-OTHER> 19
<OTHER-ITEMS-ASSETS> 6,671
<TOTAL-ASSETS> 50,478,435
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,014,656
<TOTAL-LIABILITIES> 2,014,656
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,537,696
<SHARES-COMMON-STOCK> 48,537,696
<SHARES-COMMON-PRIOR> 90,269,413
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (82,029)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,112
<NET-ASSETS> 48,463,779
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,840,892
<OTHER-INCOME> 0
<EXPENSES-NET> 653,617
<NET-INVESTMENT-INCOME> 4,187,275
<REALIZED-GAINS-CURRENT> 14,493
<APPREC-INCREASE-CURRENT> 8,717
<NET-CHANGE-FROM-OPS> 4,210,485
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,187,275
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 341,933,423
<NUMBER-OF-SHARES-REDEEMED> 387,402,262
<SHARES-REINVESTED> 3,737,122
<NET-CHANGE-IN-ASSETS> (41,708,507)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (96,522)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 653,617
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 653,617
<AVERAGE-NET-ASSETS> 81,590,000
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
