Bartlett & Co.
--------------------------
REGISTERED INVESTMENT ADVISORS
BARTLETT
MUTUAL
FUNDS
SEMI-ANNUAL
REPORT
FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1996
BARTLETT
VALUE INTERNATIONAL FUND
BARTLETT
BASIC VALUE FUND
BARTLETT
FIXED INCOME FUND
BARTLETT
SHORT TERM BOND FUND
BARTLETT
CASH RESERVES FUND
<PAGE>
BARTLETT & CO.
PROFILE
Bartlett & Co., headquartered in Cincinnati, Ohio, is an asset management
firm which manages over $2 billion for individuals, family groups and
institutions. Established in 1898, Bartlett & Co. has built a reputation among
individual and institutional investors of strong performance and superior
client service for nearly a century.
Bartlett & Co. offers its clients a diversity of services through four business
divisions:
(bullet) Mutual Funds
(bullet) Institutional Client Services
(bullet) Private Client Services
(bullet) Real Estate Programs
Our tradition of excellence, the breadth of our services and the depth of our
experience give Bartlett &Co. the capabilities to serve as your financial
advisor.
<PAGE>
CONTENTS
Pages
- --------------------------------------------------------------------------------
Bartlett & Co. Profile Inside Cover
- --------------------------------------------------------------------------------
Chairmen's Letter 2
- --------------------------------------------------------------------------------
Reports to Shareholders
Bartlett Value International Fund Report 3
Bartlett Basic Value Fund Report 4
Bartlett Fixed Income Fund Report 6
Bartlett Short Term Bond Fund Report 7
Bartlett Cash Reserves Fund Report 7
- --------------------------------------------------------------------------------
Growth of a $10,000 Investment
Bartlett Value International Fund 8
Bartlett Basic Value Fund 8
Bartlett Fixed Income Fund 9
Bartlett Short Term Bond Fund 9
- --------------------------------------------------------------------------------
Portfolios of Investments
Bartlett Value International Fund 10
Bartlett Basic Value Fund 12
Bartlett Fixed Income Fund 14
Bartlett Short Term Bond Fund 15
Bartlett Cash Reserves Fund 16
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities 17
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Statements of Operations 19
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Statements of Changes in Net Assets 20
- --------------------------------------------------------------------------------
Financial Highlights
Bartlett Value International Fund 22
Bartlett Basic Value Fund 22
Bartlett Fixed Income Fund 23
Bartlett Short Term Bond Fund 24
Bartlett Cash Reserves Fund 24
- --------------------------------------------------------------------------------
Notes To Financial Statements 25
- --------------------------------------------------------------------------------
Trustees and Officers 29
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the Bartlett Mutual
Funds. It may be used as sales literature if preceded or accompanied by a
current prospectus of the Bartlett Mutual Funds.
1
<PAGE>
CHAIRMEN'S LETTER
Dear Fellow Shareholder,
The only change in the orientation of the U.S.
stock and bond markets is that the "bad news is
good news" investment theme has now been
replaced by the "not so bad news is good news"
mindset. Common stock investors have been taking
their cue from the bond market, which had tended
to plummet whenever there was news of a strong
economy. Now, common stock investors are
exhibiting a certain degree of common sense,
since their focus has been expanded to include
corporate earnings. In other words, there is
only so much that interest rates can do for
stock prices if corporate earnings do not
appear to be buoyant or, for that matter,
existent.
(Photo) Nevertheless, the stock market continues to
soar. From January 1, 1996 through September 30,
/s/ Dale H. Rabiner 1996, the date of this report, the S&P 500 had
________________________ generated a 13.5% total return. Now, the day
Dale H. Rabiner, CFA after the election, the market has produced a
Chairman return of 20%. Most investors and
Bartlett institutional money managers would have been
Capital Trust happy with low single digit returns after the
largesse bestowed upon them last year. With
regard to the fixed income markets, there is no
perceptible evidence that inflation is, or will
be, a problem. Without such anxieties, the
prospect for a more hospitable fixed income
market is a stronger likelihood than was present
at the beginning of the year.
One of the truly attractive aspects of
Bartlett & Co.'s merger with Legg Mason is that
one of our sister organizations under the Legg
Mason umbrella is Western Asset Management
Company, one of the most highly regarded
institutional fixed income managers. Bartlett
& Co. has determined, with the concurrence of
your Board of Trustees, that it would be in the
best interest of the shareholders of the
(Photo) Bartlett Fixed Income Fund, Bartlett Short Term
Bond Fund and Bartlett Cash Reserves Fund to
/s/ James B. Reynolds merge into similar funds managed by
__________________________ Western Asset. Consequently, it is our
James B. Reynolds, CFA intention, if you, the funds' shareholders
Chairman approve, to merge the Bartlett Cash Reserves
Bartlett Fund into the Legg Mason Cash Reserve Trust,
Management Trust and to merge the Bartlett Short Term Bond Fund
and the Bartlett Fixed Income Fund into the
Legg Mason U.S. Government Intermediate
Portfolio. Shareholders in the Bartlett Cash
Reserves Fund, Bartlett Short Term Bond Fund,
and the Bartlett Fixed Income Fund should
have recently received proxies for this tax
free exchange.
There is no contemplated merger of the
Bartlett Basic Value Fund and the Bartlett
Value International Fund into any of the Legg
Mason funds. First, our rather orthodox value
orientation is not totally congruent with the
investment methodology pursued by the other
fine mutual fund managers in the Legg Mason
system. In fact, due to the less erratic
movements of a value oriented equity portfolio
during extremely turbulent or less than
favorable market conditions, the managements
of Legg Mason and Bartlett & Co. have
determined that the Bartlett Basic Value Fund
and the Bartlett Value International Fund
should provide greater sanctuary to investors
seeking strong risk adjusted rates of return
from their common stock investments if the
markets take a turn for the worse.
In closing, we wish to thank you, our loyal
shareholders, for your continued appreciation
of our disciplined value approach. We assure
you that we shall continue new efforts to
provide you with attractive returns and an
enhanced array of investor services.
2
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BARTLETT
VALUE INTERNATIONAL
FUND REPORT
The third quarter in overseas markets could be described as "three yards and a
cloud of dust". It looked like a lot was happening, but a close look shows that,
after a quick dip in July and a recovery in August, not much changed. The
Europe, Australia and Far East (EAFE) Index* fell a minute 0.1% in the third
quarter, dragged down by poor stock performance in Pacific markets. European
stocks continued to post positive returns. For the year to date, EAFE has
increased 4.4%, once again reflecting good performance in Europe and a small
decline in the Pacific. Over the last year, EAFE has grown 8.6%, with the bulk
of the return coming from European markets.
Emerging markets dipped 4.3% in the quarter, once again reflecting poor
performance in some of the smaller Asian markets. The "tigers" dropped 6.1%,
while Latin America marked time with a 0.6% return. So far this year, these
smaller markets have managed a 5.5% return, and have gained 2.9% over the last
12 months. Latin American markets outperformed Asian markets by a substantial
margin over both time periods.
Bartlett Value International fell 0.5% in the third quarter, bringing the year
to date performance to 8.9%. For the last year, total return has been 9.0%. The
portfolio has a greater allocation to European markets than the EAFE index,
about 54% versus 52% for EAFE, while the allocation to the Japanese market is
about one-third of the index's 37%. The balance of the portfolio is invested in
other Pacific markets, about 18%, and the Americas (Canada and Latin America) at
slightly less than 9%. Industry exposure is focused on capital equipment,
energy, and materials, with a less-than-market exposure to consumer goods and
finance and an investment in service industries similar to the market's.
Continued moderate growth, low inflation and restructuring for efficiency and
better returns on capital continue to be the major themes in most world markets.
A slowdown in the growth of Asian "tiger" exports has dampened those markets,
but their economic performance continues to outpace that of the industrialized
G7 nations. This is especially true for Continental Europe, which is struggling
to fit high unemployment and large fiscal imbalances into the Maastricht corset.
Latin American markets are recovering quickly from the Mexican setback, but
there are lingering serious problems that must be solved soon to keep the
momentum going.
Portfolio Composition
Bartlett Value International Fund vs
Europe, Australia, Far East (EAFE) Index
September 30, 1996
[Graph appears here--please see plot points below]
Percent of Total Portfolio
Fund EAFE Index
-------- ----------
Americas: 15% 0%
Latin America 2% 0%
Canada 6% 0%
Cash Equivalents: 7% 0%
Europe: 54% 52%
Pacific: 31% 48%
Japan 13% 37%
/s/ Madelynn M. Matlock
____________________________
Madelynn M. Matlock, CFA
Portfolio Manager
The average annual total returns of the Bartlett Value International for one
year, five years and life of Fund (inception 10/6/89) as of September 30, 1996
were 8.95%, 9.60% and 7.07%, respectively.
*The EAFE Index is an unmanaged index of common stocks of foreign companies. The
returns for the Index do not include any expenses or transaction costs. The
returns for the Fund include such expenses.
3
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BARTLETT
BASIC VALUE
FUND REPORT
The Bartlett Basic Value Fund concluded the first half of its fiscal year on
September 30, 1996. For the six month period ended September 30, 1996, the
Bartlett Basic Value Fund produced a total return of 3.86%. For the first nine
months of 1996, the Bartlett Basic Value Fund produced a return of 7.45%. The
cumulative return since the Fund's inception on May 5, 1983 through September
30, 1996 was 339.37%, which equates to a compounded annual total return of
11.67%. This double-digit return was achieved while taking more than twenty
percent less risk, as measured by standard deviation, than the Standard & Poor's
500 Index*. By comparison, the S&P 500 Index returned 7.7% and 13.5% for the six
and nine months ended September 30, 1996, respectively. The S&P's average annual
total return for the period since the Fund's inception is 15.2%.
Although the market is high priced by almost any historical standard, one should
realize that market corrections are never caused by everyone waking up one
morning and saying, "The market is overvalued, I'm going to bail out." Usually,
there is some exogenous event, which ostensibly has little to do with economics,
that precipitates a market decline. The 1973-1974 market decline was fueled by
the first oil embargo. Although the nifty fifty stocks were trading at multiples
between 80 and 120 times earnings at that time, the feeling that our economy
could be held hostage so easily, with the attendant fears of inflation, set the
market firmly on its ear. The hit that was taken by the market in 1987 was
sparked by a bad balance of trade figure with Japan, then further exacerbated by
program trading. Of course, this market setback was nothing more than a blip.
The poor market environment during the third quarter of 1990, which resulted in
a 20% correction, was the result of the Iraqi invasion of Kuwait.
The truth of the matter is that the economy continues to grow at a slow, but
steady, pace with little perceptible inflation. Another source of comfort could
be that Alan Greenspan has always sought equanimity when the capital markets
were in disarray. This happened in 1987 after the crash, when he flooded the
economy with money. It also happened in 1994 when he raised interest rates in
small steps so as not to roil the markets.
The financial sector, during the month of September, was the strongest
performing group in the Fund, due largely to a lessening of interest rate
worries. Of course, these
Measuring Both Risk and Return
Bartlett Basic Value Fund vs Standard & Poor's 500 Index
May 1983 to September 1996
[Graph appears here--please see plot points below]
Bartlett
Basic S&P
Value 500
Fund Index
15.2%
-----
15%
11.7%
-----
10%
RETURN
5%
0%----------------------------------------
-5%
RISK -10% -----
10.9% -----
14.1%
-15%
-20%
This chart compares the historical average annual total return and the risk
(as measured by the standard deviation) of the Bartlett Basic Value Fund and
the Standard & Poor's 500 Index from May 1983 to September 30, 1996.
*The S&P 500 Index is an unmanaged index of common stocks widely used as a
measure of stock market activity. The return for the Index does not include
any expenses or transaction costs. The return for the Fund includes such
expenses and costs.
Standard deviation is a statistical measure of volatility often used as a
measure of risk. In general, the greater the standard deviation, the greater
the tendency to vary from the average annual total return. By comparing the
magnitude of the standard deviations, the relative volatility of each
investment can be determined. A lower standard deviation reflects lower
volatility.
The average annual total return figures assume the reinvestment of dividends.
Of course, past performance is no guarantee of future results. The principal
value and investment returns of the Fund will fluctuate so that upon
redemption you may receive more or less than your original investment.
4
<PAGE>
issues were further propelled in recent weeks by the announced acquisition of
Boatmen's Bank by Nations- Bank. Virtually all of the regional banks responded
favorably. This, combined with strong contributions from Federal National
Mortgage, have continued to buoy the portfolio's returns during the month of
October as well.
Of course, the moderation in interest rate anxieties has also rewarded
economically sensitive holdings such as Fleetwood Enterprises and General Motors
and, perhaps, has indirectly benefited retailers such as Federated Department
Stores and Toys `R' Us. The latter holding, the Fund's largest, responded very
favorably since the date of this report due to its planned acquisition of a
competitor in its baby store division.
A recent addition to the portfolio, Jostens, has been a standout. Jostens has a
dominant position in the school products business, which includes class rings
and yearbooks. The company is in the late stages of a restructuring, during
which it has closed numerous unprofitable businesses it had gotten into in the
early 1990s. Under new ownership, the company is turning the corner. At our
purchase price of S17.50 per share, we were receiving a dividend yield of over
5% on a stock that is an industry leader. The stock has advanced over 25% since
its purchase two months ago.
Then again, our technology investments have been disappointing. Companies Such
as Zilog, an integrated circuits manufacturer, and Pioneer Standard, a
wholesaler of semi-conductors and other electronic components, have done poorly.
One would think that, at some point in time, the extremely modest valuations
accorded these companies will become more widely known.
Although we are lagging the market on a year-to-date basis, this is a situation
that could be quickly reversed. For instance, last year at this time the equity
component of the Fund was trailing the S&P 500 by roughly 5 percentage points
and managed to catch up, and then eclipse, the market performance by
mid-December. Our lack of concentration in some of the hotter performing, but
overplayed, areas has caused us to lag, while it may allow us to dodge a bullet
if some of these more highly visible, highly priced stocks begin to falter.
As the market continues to set records, we have fully participated in recent
weeks. The key to a value discipline is to have a strong participation in a
favorable market environment, while not coming close to fully participating in a
weak market environment. The fact that the stocks which we own represent
investments in companies that are trading at two-thirds the market multiple, in
terms of cash flow and net worth, should provide somewhat of a cushion if and
when the market suffers a setback.
We truly appreciate your investment in the Bartlett Basic Value Fund and your
continued commitment to our value discipline.
Sincerely,
/s/ James A. Miller, CFA /s/ Woodrow H. Uible, CFA
________________________ _________________________
James A. Miller, CFA Woodrow H. Uible, CFA
Portfolio Manager Portfolio Manager
The average annual total returns of the Bartlett Basic Value Fund for the one,
three, five and ten year periods ended September 30, 1996 were 13.01%, 13.55%,
12.69% and 10.44%, respectively.
Largest Industry Allocations
Bartlett Basic Value Fund vs Standard & Poor's 500 Index
September 30, 1996
[Graph appears here--please see plot points below]
Percent of Total Equity Portfolio
Fund S&P 500
---- -------
Financial 24% 15%
Consumer Cyclical 21% 9%
Basic Industry 13% 13%
Consumer Staples 10% 22%
Technology/Defense 9% 12%
Energy 8% 8%
5
<PAGE>
BARTLETT
FIXED INCOME
FUND REPORT
Contrary opinion wins out again. In last quarter's Fixed Income Fund Report, we
expressed the view that fears about inflation were overblown and that we saw a
comparatively benign inflation outlook. Just prior to the August Federal
Reserve meeting, there was nearly complete unanimity that the Federal Reserve
would tighten at its upcoming meeting. As more data showing this benign
inflation outlook and moderating economic activity became available, the
Federal Reserve decided to refrain from tightening and bonds rallied through the
end of the third quarter.
More recently, we have continued to see favorable inflation and economic reports
and it appears that there was a pronounced reduction in economic activity from
the prior quarter. Going forward, the only concern that we see on the horizon is
oil prices which have been under upward pressure lately as a result of perceived
lower oil supplies. Other than this concern, we should see a rather benign
economic environment with low growth and low inflation. This type of environment
should be favorable for bond portfolios over the next six to twelve months.
During the quarter, we reduced the Fund's exposure to mortgage-backed securities
as the yield advantage of mortgages to treasuries narrowed from attractive
levels to more fairly valued levels. Even with the spread narrowing, we continue
to favor the mortgage sector, especially when compared to the corporate sector
which we consider to be extremely unattractive.
For the six-month period ended September 30, 1996, your investment in the
Bartlett Fixed Income Fund gained 1.88% versus a 2.46% increase for the Lehman
Brothers Intermediate Government/Corporate Bond Index*. For the trailing twelve
months, the Fund rose 3.72% while the Index returned 5.18%.
As always, we will endeavor to structure the portfolio of the Bartlett Fixed
Income Fund with what we believe to be the best blend of risk/reward
characteristics under prevailing market conditions.
Portfolio Composition
Bartlett Fixed Income Fund
September 30, 1996
[Pie chart appears here--please see values below]
2% Cash Equivalents
3% Corporate Bonds
22% Mortgage-Backed Securities
73% U.S. Government Obligations
Portfolio Highlights
Weighted Average Credit Quality AAA
Weighted Average Portfolio Maturity 5.3 Years
Weighted Average Portfolio Duration 3.6 Years
/s/ Dale H. Rabiner /s/ R. Stuart Crickmer
____________________ ____________________________
Dale H. Rabiner, CFA R. Stuart Crickmer, CPA, CFA
Portfolio Manager Fixed Income Analyst
* The Lehman Brothers Intermediate Government/Corporate Bond Index is
an unmanaged index of intermediate-term bonds. The returns for the Index do
not include any expenses or transaction costs. The returns of the Fund include
such expenses.
6
<PAGE>
BARTLETT
SHORT TERM BOND
FUND REPORT
Returns on bonds having one- to three-year average maturities came principally
in the form of coupon income during the period, partially offset by a modest
amount of depreciation from bond prices. Short and intermediate interest rates
moved higher throughout the June quarter, then declined, slightly, during the
September quarter. Consequently, bond prices recouped a small amount of their
June quarter losses during the September quarter.
The Fund returned 2.01% for the six months ending September 30, versus 2.68% for
the Merrill Lynch 1-3 year Government Bond Index*, a representative short-term
index. The Fund's performance for the trailing twelve months was 4.31%. By
comparison the Merrill Lynch 1-3 Year Government Bond Index returned 5.61%.
We continue to favor mortgage-backed securities along with short treasuries for
the majority of this Fund's portfolio holdings. We maintain minimum exposure to
corporate bonds, a sector that does not offer enough incremental yield over
treasury rates, in our opinion.
The Fund's 30-day SEC yield (annualized) was 5.68% on September 30, compared to
5.33% on March 31.
Portfolio Composition
Bartlett Short Term Bond Fund
September 30, 1996
[Pie chart appears here--please see values below]
46% U.S. Government Obligations
27% Mortgage-Backed Securities
18% Cash Equivalents
9% Corporate Bonds
Portfolio Highlights
Weighted Average Credit Quality AAA
Weighted Average Portfolio Maturity 3.6 Years
Weighted Average Portfolio Duration 2.1 Years
BARTLETT
CASH RESERVES
FUND REPORT
Yields available on "top tier" money market securities remained steady over
the past six months. Bond equivalent yields on 30-day top tier commercial paper
began and ended the period at 5.38%, with only slight variation in between. The
yield on the 3-month U.S. Treasury Bill declined slightly from 5.13% to 5.03% at
September 30, 1996.
Inflation, as measured by the Consumer Price Index (CPI), is running at a
relatively manageable 3% annual rate. Going forward, we expect a rather benign
inflation environment with low growth and continued low inflation. The only
concern that we see on the horizon is oil prices which have been under upward
pressure.
We reduced the Fund's average weighted maturity throughout the past quarter. At
September 30, 1996, the average weighted maturity stood at 14 days, compared to
66 days at March 31, 1996.
For the six months ended September 30, the Fund paid income dividends of 2.29
cents per share, which translates into a net annualized yield of 4.57%. If all
dividends were reinvested, shareholders received an effective annualized return
of 4.62%.
The Bartlett Cash Reserves Fund 7-day current yield (annualized) was 4.56% on
September 30, 1996 (versus 4.79% on March 31, 1996).
/s/ Dale H. Rabiner
______________________
Dale H. Rabiner, CFA
Portfolio Manager
/s/ R. Stuart Crickmer /s/ Troy R. Snider
____________________________ ____________________
R. Stuart Crickmer, CPA, CFA Troy R. Snider, CFA
Fixed Income Analyst Fixed Income Analyst
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.
*The Merrill Lynch 1-3 Year Government Bond Index is an unmanaged index of
short-term government bonds. The returns for the Index do not include any
expenses or transaction costs. The returns for the Fund include such expenses.
7
<PAGE>
GROWTH OF A
$10,000
INVESTMENT
The following graphs compare each Fund's total return against that of the most
closely matched broad-based securities market index.
The lines illustrate the cumulative total return of an initial $10,000
investment for the period indicated. The line for each Bartlett Mutual Fund
represents the total return after deducting all Fund investment management
expenses and the transaction costs of buying and selling securities. The line
representing the securities market index (which is, in each case, an unmanaged
index) does not include any transaction costs associated with buying and selling
securities in the index or other administrative expenses.
The Bartlett Cash Reserves Fund is excluded from these graphs because it does
not have a variable share price.
Growth of a $10,000 Investment
Bartlett Value International Fund
October 31, 1989 through September 30, 1996
Average Annual Total Returns*
For periods ended September 30, 1996
- --------------------------------------------------------------------------------
1 Year 3 Years 5 Years Life of the Fund
(since 10/06/89)
- --------------------------------------------------------------------------------
8.95% 8.97% 9.60% 7.07%
Bartlett Value International Fund
vs
Europe, Australia, Far East Index
$17,353
Bartlett Value $13,634
International EAFE
Fund Index
[Graph appears here--please supply plot points]
The Europe, Australia, Far East (EAFE) Index is a broad-based index
administered by Morgan Stanley Capital International and is composed of select
common stocks of companies based outside the United States and including
Europe, Australia, and the Far East. It is often used to measure international
stock market activity. The index does not include any expenses or transaction
costs associated with buying and selling stocks within the index. The total
returns for the Bartlett Value International Fund are quoted after deducting
Fund expenses and transaction costs, and assume the reinvestment of all
distributions. The performance figures reflect the periodic absorption of
some expenses of the Fund through the waiver of management fees. Had a portion
of these fees not been waived, the Fund's total returns would have been slightly
lower.
- --------------------------------------------------------------------------------
The Standard & Poor's 500 Index is a broad-based unmanaged index of common
stocks commonly used to measure general stock market activity. The index does
not include any expenses or transaction costs associated with buying and selling
stocks within the index. The total returns for the Bartlett Basic Value Fund are
quoted after deducting Fund expenses and transaction costs, and assume the
reinvestment of all distributions.
Growth of a $10,000 Investment
Bartlett Basic Value Fund
May 31, 1983 through September 30, 1996
Average Annual Total Returns*
For periods ended September 30, 1996
- --------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years Life of the Fund
(since 05/05/83)
- --------------------------------------------------------------------------------
13.01% 13.55% 12.69% 10.44% 11.67%
Bartlett Basic Value Fund
vs
Standard and Poors 500 Index
$43,892
$65,540 Bartlett Basic
S&P 500 Index Value Fund
[Graph appears here--please provide plot points]
8
<PAGE>
The Lehman Brothers Intermediate Government/Corporate Bond Index is a
broad-based unmanaged index of intermediate-term bonds often used to measure
bond market activity. The index does not include any expenses or transaction
costs associated with buying and selling bonds within the index. The total
returns for the Bartlett Fixed Income Fund are quoted after deducting Fund
expenses and transaction costs, and assume the reinvestment of all
distributions.
Growth of a $10,000 Investment
Bartlett Fixed Income Fund
April 22, 1986 through September 30, 1996
Average Annual Total Returns*
For periods ended September 30, 1996
- --------------------------------------------------------------------------------
30-Day Yield 1 Year 3 Years 5 Years Life of the Fund
(Annualized) (since 04/22/86)
- --------------------------------------------------------------------------------
5.72% 3.72% 3.39% 5.89% 7.23%
Bartlett Fixed Income Fund
vs
Lehman Brothers Intermediate Government/Corporate Bond Index
$22,262 $20,724
Lehman Brothers Bartlett Fixed
Index Income Fund
[Graph appears here--please supply plot points]
Growth of a $10,000 Investment
Bartlett Short Term Bond Fund
February 4, 1994 through September 30, 1996
Average Annual Total Returns*
For periods ended September 30, 1996
- --------------------------------------------------------------------------------
30-Day Yield 1 Year Life of the Fund
(Annualized) (since 02/04/94)
- --------------------------------------------------------------------------------
5.68% 4.31% 4.31%
Bartlett Short Term Bond Fund
vs
Merrill Lynch 1-3 Year
Government Bond Index
$11,456 $11,188
Merrill Lynch Bartlett Short Term
Index Bond Fund
[Graph appears here--please supply plot points]
The Merrill Lynch 1-3 Year Government Bond Index is a broad-based unmanaged
index of U.S. Treasury bonds with maturities of 1-3 years. The index does not
include any expenses or transaction costs associated with buying and selling
bonds within the index. The total returns for the Bartlett Short Term Bond Fund
are quoted after deducting Fund expenses and transaction costs and assume the
reinvestment of all distributions. The Fund also may invest in securities of
lower credit quality, which generally have greater yields than U.S. Treasury
securities of similar maturities.
* The average annual total return numbers and line graphs on pages 8 and 9
represent only past performance and are not a guarantee of future results. As
the graphs illustrate, the investment return and principal value of the Funds
will fluctuate and, upon redemption, you may receive more or less than your
original investment.
9
<PAGE>
PORTFOLIOS OF INVESTMENTS
Bartlett Value International Fund
As of September 30, 1996 (Unaudited)
Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock--93.17%
- --------------------------------------------------------------------------------
Argentina--2.40%
YPF Sociedad Anonima SA (ADR)
(Energy, Oil & Gas) 82,600 $ 1,889,475
- --------------------------------------------------------------------------------
Australia--6.74%
Brambles Industries Ltd.
(Transport Services) 115,800 1,879,275
Burns Philp &Company Ltd.
(Food, Manufacturing) 1,160,908 1,654,239
National Australia Bank (ADR)
(Banking) 33,600 1,776,600
-----------
5,310,114
- --------------------------------------------------------------------------------
Canada--5.73%
Hudson's Bay Co.
(Retailing) 152,800 2,243,594
Potash Corporation of
Saskatchewan Inc.
(Mining) 31,000 2,266,875
-----------
4,510,469
- --------------------------------------------------------------------------------
Finland--2.84%
Metra Oy B Shares
(Engineering/Construction) 39,000 2,235,299
- --------------------------------------------------------------------------------
France--6.99%
Alcatel Althsom (ADR)
(Capital Goods) 73,600 1,242,000
St. Gobain
(Glass/Building Materials) 16,834 2,281,251
Total Co. Francaise Petrole-B
(Energy) 8,200 645,301
Total SA (ADR)
(Energy) 34,100 1,334,162
-----------
5,502,714
- --------------------------------------------------------------------------------
Germany--2.95%
Deutsche Lufthansa AG
(Transportation) 16,300 2,321,861
- --------------------------------------------------------------------------------
HongKong--2.80%
Swire Pacific Ltd.-B
(Diversified) 246,000 2,202,961
- --------------------------------------------------------------------------------
India--2.06%
Morgan Stanley India
Investment Fund
(Closed-End Mutual Fund)* 185,200 1,620,500
- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
Ireland--1.99%
Allied Irish Banks PLC (ADR)
(Banking) 43,800 $1,565,850
- --------------------------------------------------------------------------------
Italy--7.15%
Isituto Mobilare SpA (ADR)
(Banking) 66,000 1,683,000
Sasib SpA - Savings Shares
(Capital Goods) 1,007,000 1,778,323
STET - Savings Shares
(Communications) 800,715 2,165,728
-----------
5,627,051
- --------------------------------------------------------------------------------
Japan--13.11%
Canon Inc.
(Visual Image Equipment) 86,000 1,687,634
Fujitsu Ltd.
(Computers) 192,000 1,823,656
Ito-Yokada (ADR)
(Retailing) 6,700 1,510,850
Matsushita Electric Industries
(Consumer Electronics Equip.) 87,000 1,457,796
Rohm Company
(Electronics) 32,000 2,015,771
Sumitomo Warehouse
(Storage) 276,000 1,825,161
-----------
10,320,868
- --------------------------------------------------------------------------------
Korea--1.51%
Korea Fund Inc.
(Closed-End Mutual Fund) 65,000 1,186,250
- --------------------------------------------------------------------------------
Malaysia--0.93%
Perlis Plantations Bhd
(Diversified) 237,500 729,632
- --------------------------------------------------------------------------------
Norway--5.30%
Kvaerner Cl. A Free Shares
(Shipbuilding) 58,200 2,200,953
Norsk Hydro AS (ADR)
(Chemicals) 42,000 1,974,000
-----------
4,174,953
- --------------------------------------------------------------------------------
Portugal--1.84%
Portugal Fund Inc.
(Closed-End Mutual Fund) 112,500 1,448,438
- --------------------------------------------------------------------------------
10
<PAGE>
Bartlett Value International Fund (Cont.)
As of September 30, 1996
Market
Shares Value
- --------------------------------------------------------------------------------
Singapore--2.44%
Dairy Farm International
Holdings Ltd. (ADR)
(Retail-Grocery) 1,896,000 $ 1,156,560
Perlis Plantations Bhd
(Diversified) 250,000 768,034
-----------
1,924,594
- --------------------------------------------------------------------------------
Spain--6.28%
Banco Santander SA
(Banking) 15,856 824,394
Banco Santander SA (ADR)
(Banking) 15,600 817,050
Repsol SA (ADR)
(Energy) 49,800 1,649,625
Telefonica de Espana SA(ADR)
(Communications) 29,650 1,649,281
-----------
4,940,350
- --------------------------------------------------------------------------------
Sweden--6.00%
AGA AB "B" Free Shares
(Gas Supplier) 46,000 749,694
Assidoman Ab
(Forest Products & Paper) 80,500 1,949,726
Cardo AB
(Engineering/Construction) 91,200 2,023,088
-----------
4,722,508
- --------------------------------------------------------------------------------
Switzerland--1.83%
Sandoz AG
(Pharmaceuticals) 1,200 1,439,771
- --------------------------------------------------------------------------------
Taiwan--1.88%
Taiwan Fund Inc.
(Closed-End Mutual Fund) 64,125 1,482,891
- --------------------------------------------------------------------------------
United Kingdom--10.40%
ADT Ltd.*
(Protection/Safety) 114,000 2,180,250
Cadbury Schweppes PLC (ADR)
(Beverages) 56,172 1,839,633
Grand Metropolitan PLC (ADR)
(Consumer Goods) 64,300 1,969,188
Tomkins PLC (ADR)
(Diversified) 127,600 2,201,100
-----------
8,190,171
- --------------------------------------------------------------------------------
Total Common Stock $73,346,720
- --------------------------------------------------------------------------------
(Cost-$66,591,979)
- --------------------------------------------------------------------------------
Face Market
Amount Value
- --------------------------------------------------------------------------------
Repurchase Agreement--5.45%
- --------------------------------------------------------------------------------
State Street Bank,
4.00% dated 9/30/96, to be
repurchased at $4,287,476 on
10/1/96 (Collateral: $4,485,000
U.S. Treasury Note, 4.75% due
9/30/98, value $4,375,678) $4,287,000 $ 4,287,000
- --------------------------------------------------------------------------------
Total Repurchase Agreement $ 4,287,000
- --------------------------------------------------------------------------------
(Cost-$4,287,000)
- --------------------------------------------------------------------------------
Total Investments
At Value--98.62% $77,633,720
- --------------------------------------------------------------------------------
(Cost-$70,878,979)
- --------------------------------------------------------------------------------
Other Assets Less Liabilities--1.38% 1,090,595
- --------------------------------------------------------------------------------
Net Assets--100.00% $78,724,315
================================================================================
*Non-dividend paying investment.
See accompanying notes to financial statements.
11
<PAGE>
Bartlett Basic Value Fund
As of September 30, 1996 (Unaudited)
Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock--91.13%
- --------------------------------------------------------------------------------
Aerospace/Defense -- 5.25%
Lockheed Martin Corp. 40,000 $ 3,605,000
Raytheon Co. 53,000 2,948,125
-----------
6,553,125
- --------------------------------------------------------------------------------
Air Transportation -- 1.73%
AMR Corp.* 27,150 2,161,819
- --------------------------------------------------------------------------------
Apparel -- 1.87%
Kellwood Co. 140,000 2,327,500
- --------------------------------------------------------------------------------
Automobiles &
Auto Parts -- 5.18%
Ford Motor Co. 35,000 1,093,750
General Motors Corp. 62,275 2,989,200
Stewart & Stevenson
Services, Inc. 110,100 2,380,913
-----------
6,463,863
- --------------------------------------------------------------------------------
Broadcasting -- 1.80%
Time Warner, Inc. 58,000 2,240,250
- --------------------------------------------------------------------------------
Chemicals -- 1.05%
Ferro Corporation 48,600 1,312,200
- --------------------------------------------------------------------------------
Communications -- 2.24%
Telefonica de Espana SA (ADR) 50,200 2,792,375
- --------------------------------------------------------------------------------
Diversified -- 4.53%
Canadian Pacific Ltd.(ADR) 107,050 2,475,531
Loews Corp. 41,000 3,172,375
-----------
5,647,906
- --------------------------------------------------------------------------------
Electronics -- 1.71%
Pioneer Standard
Electronics, Inc. 190,000 2,137,500
- --------------------------------------------------------------------------------
Energy -- 7.65%
Cabot Oil & Gas Corp., Class A 140,700 2,075,325
Phillips Petroleum Co. 70,000 2,992,500
Southwestern Energy Co. 140,000 2,082,500
Total SA (ADR) 61,000 2,386,625
-----------
9,536,950
- --------------------------------------------------------------------------------
Financial Services -- 17.99%
CCB Financial Corp. 20,000 1,095,000
Federal National Mortgage Assn. 100,000 3,487,500
First America Bank Corp. 43,650 2,297,081
First Tennessee National Corp. 60,938 2,022,380
John Alden Financial Corp. 57,600 1,188,000
MBIA, Inc. 34,300 2,941,225
Regions Financial Corp. 45,185 2,174,528
Salomon, Inc. 50,000 2,281,250
State Auto Financial Corp. 119,700 1,765,575
U.S. Trust Corp. 20,000 1,160,000
Washington Fed. Savings
& Loan, Inc. 86,000 2,031,750
-----------
22,444,289
- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
Food & Beverage -- 4.55%
Archer Daniels Midland Co. 148,065 $ 2,850,251
Universal Foods Corp. 87,000 2,827,500
-----------
5,677,751
- --------------------------------------------------------------------------------
Health Care -- 1.24%
Bristol Myers-Squibb Co. 16,000 1,542,000
- --------------------------------------------------------------------------------
Housewares -- 1.81%
National Presto Ind., Inc. 60,000 2,257,500
- --------------------------------------------------------------------------------
Insurance -- 1.05%
ITT Hartford Group, Inc. 22,125 1,305,375
- --------------------------------------------------------------------------------
Machinery -- 3.05%
Kaydon Corp. 40,000 1,720,000
York International 43,000 2,080,125
-----------
3,800,125
- --------------------------------------------------------------------------------
Manufactured Housing -- 2.71%
Fleetwood Enterprises, Inc. 110,000 3,382,500
- --------------------------------------------------------------------------------
Metals & Mining -- 2.03%
Potash Corporation of
Saskatchewan Inc. 34,600 2,530,125
- --------------------------------------------------------------------------------
Miscellaneous - Manufacturing
-- 1.04%
Watts Industries, Inc. 66,000 1,295,250
- --------------------------------------------------------------------------------
Paper -- 1.19%
Wausau Paper Mills Co. 77,151 1,485,157
- --------------------------------------------------------------------------------
Railroad -- 2.09%
Kansas City Southern Inds. Inc. 61,000 2,607,750
- --------------------------------------------------------------------------------
Retailing -- 4.21%
Federated Dept. Stores* 70,000 2,345,000
Jostens, Inc. 139,500 2,912,063
-----------
5,257,063
- --------------------------------------------------------------------------------
Security Services -- 1.69%
ADT Ltd.* 110,000 2,103,750
- --------------------------------------------------------------------------------
Technology -- 1.19%
Zilog Inc.* 77,400 1,480,275
- --------------------------------------------------------------------------------
Tobacco -- 1.66%
Philip Morris Cos., Inc. 23,000 2,064,250
- --------------------------------------------------------------------------------
Toys -- 3.50%
Toys `R' Us, Inc.* 150,000 4,368,750
- --------------------------------------------------------------------------------
Utilities -- 3.13%
KUEnergy, Inc. 61,300 1,762,375
NIPSCO Ind., Inc. 60,000 2,145,000
-----------
3,907,375
- --------------------------------------------------------------------------------
Other Common Stock -- 3.99%
ROC Communities (REIT) 65,000 1,584,375
Royce Value Trust, Inc.
(Closed-End Mutual Fund) 268,346 3,387,868
-----------
4,972,243
- --------------------------------------------------------------------------------
Total Common Stock $113,655,016
- --------------------------------------------------------------------------------
(Cost $80,431,287)
- --------------------------------------------------------------------------------
12
<PAGE>
Bartlett Basic Value Fund (Cont.)
As of September 30, 1996
Market
Shares Value
- --------------------------------------------------------------------------------
Preferred Shares--1.57%
- --------------------------------------------------------------------------------
J.P. Morgan Co.
Adj. Rate Pfd. "A" 12,000 $ 888,000
RJR Nabisco Holdings 200,000 1,075,000
Depositary Shares
- --------------------------------------------------------------------------------
Total Preferred Shares $ 1,963,000
- --------------------------------------------------------------------------------
(Cost $1,973,250)
- --------------------------------------------------------------------------------
Face
Amount
- --------------------------------------------------------------------------------
Commercial Paper -- 4.41%
- --------------------------------------------------------------------------------
Ford Motor Credit Co.
5.26%, 10/4/96 $ 2,500,000 $ 2,498,904
General Motors
Acceptance Corp.
5.26%, 10/4/96 2,000,000 1,999,123
Pacific Bell Telephone Co.
5.80%, 10/1/96 1,000,000 1,000,000
- --------------------------------------------------------------------------------
Total Commercial Paper $ 5,498,027
- --------------------------------------------------------------------------------
(Cost $5,498,027)
- --------------------------------------------------------------------------------
Face Market
Amount Value
- --------------------------------------------------------------------------------
Repurchase Agreement -- 1.80%
- --------------------------------------------------------------------------------
State Street Bank,
4.00%, dated 9/30/96, to be
repurchased at $2,252,250 on
10/1/96 (Collateral: $2,355,000
U.S. Treasury Note, 4.75%
due 9/30/98, value $2,297,597)
$ 2,252,000 $ 2,252,000
- --------------------------------------------------------------------------------
Total Repurchase Agreement $ 2,252,000
- --------------------------------------------------------------------------------
(Cost $2,252,000)
- --------------------------------------------------------------------------------
Total Investments
At Value-- 98.91% $123,368,043
- --------------------------------------------------------------------------------
(Cost $90,154,564)
- --------------------------------------------------------------------------------
Other Assets
Less Liabilities --1.09% 1,357,885
- --------------------------------------------------------------------------------
Net Assets-100.00% $124,725,928
================================================================================
*Non-dividend paying investment.
See accompanying notes to financial statements.
13
<PAGE>
Bartlett Fixed Income Fund
As of September 30, 1996 (Unaudited)
Face Market
Amount Value
- --------------------------------------------------------------------------------
U.S. Government and
Agency Obligations
--95.34%
- --------------------------------------------------------------------------------
U.S. Treasury Obligations
-- 73.63%
- --------------------------------------------------------------------------------
U.S. Treasury Note
6.125%, 05/15/98 $ 3,000,000 $ 3,003,750
U.S. Treasury Note
5.875%, 08/15/98 4,000,000 3,983,120
U.S. Treasury Note
6.875%, 08/31/99 1,000,000 1,015,310
U.S. Treasury Note
7.50%, 10/31/99 5,000,000 5,161,700
U.S. Treasury Note
7.125%, 02/29/00 4,000,000 4,092,480
U.S. Treasury Note
6.125%, 09/30/00 3,000,000 2,969,070
U.S. Treasury Bond Strip
0.000%, 05/15/98 1,000,000 908,050
U.S. Treasury Bond Strip
0.000%, 08/15/98 10,800,000 9,652,608
U.S. Treasury Bond Strip
0.000%, 02/15/99 6,000,000 5,187,360
U.S. Treasury Bond Strip
0.000%, 08/15/99 3,600,000 3,013,344
U.S. Treasury Bond Strip
0.000%, 08/15/03 11,500,000 7,345,625
U.S. Treasury Bond Strip
0.000%, 05/15/04 7,500,000 4,530,075
-----------
50,862,492
- --------------------------------------------------------------------------------
Mortgage-Backed Obligations
--21.71%
- --------------------------------------------------------------------------------
Government National
Mortgage Assn.
7.00%, 6/15/23 to 3/15/26 $ 6,058,796 $ 5,847,779
Government National
Mortgage Assn.
7.50%, 3/15/17 to 9/15/25 3,785,607 3,756,754
Government National
Mortgage Assn.
8.00%, 6/15/24 to 2/15/26 5,334,080 5,390,960
-----------
14,995,493
- --------------------------------------------------------------------------------
Total U.S. Government and
Agency Obligations $65,857,985
- --------------------------------------------------------------------------------
(Cost-$66,325,557)
- --------------------------------------------------------------------------------
Face Market
Amount Value
- --------------------------------------------------------------------------------
Corporate Obligations
--2.87%
- --------------------------------------------------------------------------------
Ford Motor Credit MTN
5.83%, 06/29/98 $2,000,000 $ 1,982,700
- --------------------------------------------------------------------------------
Total Corporate Obligations $ 1,982,700
- --------------------------------------------------------------------------------
(Cost-$1,985,813)
- --------------------------------------------------------------------------------
Repurchase Agreement
--1.58%
- --------------------------------------------------------------------------------
State Street Bank,
4.00%, dated 9/30/96, to be
repurchased at $1,091,121 on
10/1/96. (Collateral: $1,145,000
U.S. Treasury Note, 4.75%
due 9/30/98, value $1,117,091) $1,091,000 $ 1,091,000
- --------------------------------------------------------------------------------
Total Repurchase Agreement $ 1,091,000
- --------------------------------------------------------------------------------
(Cost-$1,091,000)
- --------------------------------------------------------------------------------
Total Investments at Value -- 99.79% $68,931,685
- --------------------------------------------------------------------------------
(Cost $69,402,370)
- --------------------------------------------------------------------------------
Other Assets Less Liabilities--0.21% 144,433
- --------------------------------------------------------------------------------
Net Assets--100.00% $69,076,118
================================================================================
See accompanying notes to financial statements.
14
<PAGE>
Bartlett Short Term Bond Fund
As of September 30, 1996 (Unaudited)
Face Market
Amount Value
- --------------------------------------------------------------------------------
U.S. Government and
Agency Obligations--72.75%
- --------------------------------------------------------------------------------
U.S. Treasury Obligations-- 46.29%
- --------------------------------------------------------------------------------
U.S. Treasury Note
5.125%, 02/28/98 $ 150,000 $ 148,242
U.S. Treasury Note
6.125%, 05/15/98 1,500,000 1,501,875
U.S. Treasury Note
5.25%, 07/31/98 1,500,000 1,478,670
U.S. Treasury Note
5.875%, 08/15/98 2,625,000 2,613,922
U.S. Treasury Bond Strip
0.00%, 05/15/99 600,000 510,384
-----------
6,253,093
- --------------------------------------------------------------------------------
Mortgage-Backed Obligations--26.46%
- --------------------------------------------------------------------------------
Government National
Mortgage Assn.
7.50%, 05/15/24 $ 88,718 $ 88,053
Government National
Mortgage Assn.
8.00%, 01/15/23 to 02/15/26 3,326,390 3,361,340
Government National
Mortgage Assn.
9.000%, 03/15/20 to 09/15/22 118,758 125,197
-----------
3,574,590
- --------------------------------------------------------------------------------
Total U.S. Government and
Agency Obligations $9,827,683
- --------------------------------------------------------------------------------
(Cost-$9,910,707)
- --------------------------------------------------------------------------------
Corporate Obligations--9.33%
- --------------------------------------------------------------------------------
AT&T Capital Corp. MTN
7.66%, 01/30/97 $ 750,000 $ 754,553
General Motors Accept. Corp.
MTN
7.20%, 01/29/98 500,000 506,485
- --------------------------------------------------------------------------------
Total Corporate Obligations $1,261,038
- --------------------------------------------------------------------------------
(Cost-$1,259,106)
- --------------------------------------------------------------------------------
Face Market
Amount Value
- --------------------------------------------------------------------------------
Commercial Paper--11.88%
- --------------------------------------------------------------------------------
Ford Motor Credit Co.
5.26%, 10/04/96 $500,000 $ 499,781
General Motors
Acceptance Corp.
5.26%, 10/04/96 500,000 499,781
Southwestern Bell
Telephone Co.
5.33%, 10/04/96 605,000 604,731
- --------------------------------------------------------------------------------
Total Commercial Paper $ 1,604,293
- --------------------------------------------------------------------------------
(Cost-$1,604,293)
================================================================================
Repurchase Agreement--4.91%
- --------------------------------------------------------------------------------
State Street Bank,
4.00% dated 9/30/96, to be
repurchased at $664,074 on
10/1/96. (Collateral: $695,000
U.S. Treasury Note, 4.75%
due 9/30/98, value $678,059) $664,000 $ 664,000
- --------------------------------------------------------------------------------
Total Repurchase Agreement $ 664,000
- --------------------------------------------------------------------------------
(Cost-$664,000)
- --------------------------------------------------------------------------------
Total Investments at Value--98.87% $13,357,014
- --------------------------------------------------------------------------------
(Cost-$13,438,106)
- --------------------------------------------------------------------------------
Other Assets Less Liabilities--1.13% 152,766
- --------------------------------------------------------------------------------
Net Assets--100.00% $13,509,780
================================================================================
See accompanying notes to financial statements.
15
Bartlett Cash Reserves Fund
As of September 30, 1996 (Unaudited)
Face Market
Amount Value
- --------------------------------------------------------------------------------
Commercial Paper-- 92.98%
- --------------------------------------------------------------------------------
American General Financial
5.31%, 10/9/96 $2,000,000 $1,997,658
Anheuser Busch Companies
5.26%, 10/1/96 500,000 500,000
Associates Corp. N.A.
5.25%, 10/1/96 2,000,000 2,000,000
Bell Atlantic Corp.
5.32%, 10/15/96 2,000,000 1,995,886
Bellsouth Telecomm. Inc.
5.30%, 10/2/96 1,000,000 999,854
Beneficial Corp.
5.36%, 10/8/96 2,000,000 1,997,951
CPCInternational Inc.
5.35%, 10/2/96 2,000,000 1,999,707
Chevron Oil
5.28%, 10/15/96 2,000,000 1,995,886
Coca Cola Co.
5.33%, 10/2/96 1,200,000 1,199,824
Coca Cola Co.
5.28%, 10/1/96 1,000,000 1,000,000
Colgate Palmolive
5.32%, 10/23/96 1,000,000 996,767
Consolidated Natural Gas
5.30%, 10/15/96 2,000,000 1,995,886
Ford Motor Credit Corp.
5.32%, 10/11/96 1,000,000 998,536
Ford Motor Credit Corp.
5.35%, 10/10/96 1,000,000 998,683
General Electric
5.31%, 10/10/96 2,000,000 1,997,365
General Motors Accept. Corp.
5.34%, 10/8/96 1,000,000 998,975
General Motors Accept. Corp.
5.27%, 10/3/96 1,000,000 999,707
Household Finance Corp.
5.36%, 10/7/96 2,000,000 1,998,243
IBM Credit Corp.
5.34%, 10/11/96 1,000,000 998,536
IBM Credit Corp.
5.34%, 10/1/96 1,000,000 1,000,000
John Deere
5.40%, 10/21/96 1,000,000 997,061
Motorola
5.31%, 10/23/96 2,000,000 1,993,535
Norwest Financial
5.34%, 10/4/96 1,000,000 999,561
Norwest Financial Inc.
5.34%, 10/3/96 1,000,000 999,707
Pepsico, Inc.
5.28%, 10/3/96 2,000,000 1,999,414
Face Market
Amount Value
- --------------------------------------------------------------------------------
Procter and Gamble
5.36%, 10/8/96 $1,400,000 $ 1,398,565
RRDonnelly
5.27%, 10/7/96 2,000,000 1,998,243
Raytheon Company
5.33%, 10/3/96 2,000,000 1,999,414
Sears Roebuck Acceptance
5.44%, 10/18/96 1,000,000 997,502
Sears Roebuck Acceptance
5.40%, 10/16/96 1,000,000 997,796
Toys `R' Us, Inc.
5.30%, 10/17/96 2,000,000 1,995,298
- --------------------------------------------------------------------------------
Total Commercial Paper $45,045,560
- --------------------------------------------------------------------------------
(Cost-$45,045,105)
- --------------------------------------------------------------------------------
Repurchase Agreement--4.32%
- --------------------------------------------------------------------------------
State Street Bank,
4.00% dated 9/30/96,
to be repurchased at
$2,095,233 on 10/1/96
(Collateral: $2,195,000
U.S. Treasury Note, 4.75%
due 9/30/98,
value $2,141,497) $2,095,000 $ 2,095,000
- --------------------------------------------------------------------------------
Total Repurchase Agreement $ 2,095,000
- --------------------------------------------------------------------------------
(Cost-$2,095,000)
- --------------------------------------------------------------------------------
U.S. Government Obligation--2.07%
- --------------------------------------------------------------------------------
U.S. Treasury Note
6.125%, 05/31/97 $1,000,000 $ 1,003,126
- --------------------------------------------------------------------------------
Total U.S. Government
Obligation $ 1,003,126
- --------------------------------------------------------------------------------
(Cost-$1,001,374)
- --------------------------------------------------------------------------------
Total Investments at Value $48,143,686
- --------------------------------------------------------------------------------
(Cost-$48,141,479)
- --------------------------------------------------------------------------------
Other Assets Less
Liabilities--0.63% 304,806
- --------------------------------------------------------------------------------
Net Assets--100.00% $48,448,492
================================================================================
See accompanying notes to financial statements.
16
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Bartlett
Bartlett Bartlett Bartlett Short Bartlett
Value Basic Fixed Term Cash
International Value Income Bond Reserves
Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
- -------------------------------------------------------------------------------------------------------------
Investment securities,
at cost (Note 1) $ 70,878,979 $ 90,154,564 $ 69,402,370 $13,438,106 $ 48,141,479
=============================================================================================================
Investment securities,
at value (Note 1) $ 77,633,720 $123,368,043 $ 68,931,685 $ 13,357,014 $ 48,143,686
Dividends and interest
receivable 315,080 158,337 387,014 117,361 20,817
Receivable for securities
sold -- 1,420,000 -- -- --
Cash 346 943 829 878 495
Shareholder subscriptions
receivable 932,716 18,290 34,306 116,188 1,300,687
- -------------------------------------------------------------------------------------------------------------
Total Assets 78,881,862 124,965,613 69,353,834 13,591,441 49,465,685
- -------------------------------------------------------------------------------------------------------------
Liabilities:
- -------------------------------------------------------------------------------------------------------------
Shareholder
distributions payable -- -- 149,120 26,937 84,103
Payable for securities
purchased -- -- -- --
Shareholder
redemptions payable 42,810 121,773 71,429 45,176 901,387
Management fee payable
(Note 3) 114,737 117,912 57,167 9,548 31,703
- -------------------------------------------------------------------------------------------------------------
Total Liabilities 157,547 239,685 277,716 81,661 1,017,193
- -------------------------------------------------------------------------------------------------------------
Net Assets $ 78,724,315 $124,725,928 $ 69,076,118 $ 13,509,780 $ 48,448,492
=============================================================================================================
</TABLE>
17
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (Cont.)
As of September 30, 1996
<TABLE>
<CAPTION>
Bartlett
Bartlett Bartlett Bartlett Short Bartlett
Value Basic Fixed Term Cash
International Value Income Bond Reserves
Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Net Assets Consist of:
- -------------------------------------------------------------------------------------------------------------
Capital shares $ 66,970,984 $ 83,483,252 $ 72,264,495 $ 13,990,507 $ 48,546,249
Accumulated
undistributed net
investment income 318,032 372,656 -- -- --
Accumulated net realized
gains (losses) from
security transactions 4,681,169 7,656,516 (2,717,692) (399,635) (99,964)
Net unrealized
appreciation (depreciation)
on investments and foreign
currency transactions 6,754,130 33,213,504 (470,685) (81,092) 2,207
- -------------------------------------------------------------------------------------------------------------
Net Assets $ 78,724,315 $124,725,928 $ 69,076,118 $ 13,509,780 $ 48,448,492
=============================================================================================================
Shares of beneficial
interest outstanding
(unlimited number
of shares authorized,
no par value) (Note 4) 5,981,831 6,740,896 7,040,918 1,391,482 48,546,249
- -------------------------------------------------------------------------------------------------------------
Net asset value,
offering and redemption
price per share (Note 1) $13.16 $18.50 $9.81 $9.71 $1.00
=============================================================================================================
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
STATEMENTS OF OPERATIONS
For the six months ended September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Bartlett
Bartlett Bartlett Bartlett Short Bartlett
Value Basic Fixed Term Cash
International Value Income Bond Reserves
Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
- -------------------------------------------------------------------------------------------------------------
Interest $ 83,659 $ 259,504 $ 2,437,144 $ 428,008 $ 1,290,501
Dividends 1,402,748 1,261,648 -- -- --
Misc. income -- 19,981 -- -- --
Less foreign taxes withheld (173,472) (33,319) -- -- --
- -------------------------------------------------------------------------------------------------------------
Total Investment Income 1,312,935 1,507,814 2,437,144 428,008 1,290,501
- -------------------------------------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------------------------------------
Management Fee (Note 3) 699,664 728,792 372,074 60,020 187,727
- -------------------------------------------------------------------------------------------------------------
Total Expenses 699,664 728,792 372,074 60,020 187,727
- -------------------------------------------------------------------------------------------------------------
Net Investment Income 613,271 779,022 2,065,070 367,988 1,102,774
- -------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain/(Loss)
on Investments:
Net realized gain/(loss) from
security transactions 1,932,480 3,966,568 (647,546) (35,209) (17,935)
Net change in net unrealized
appreciation (depreciation)
of investments and foreign
currency transactions 1,114,458 58,955 (132,305) (51,811) (5,905)
- -------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized
Gains on Investments 3,046,938 4,025,523 (779,851) (87,020) (23,840)
- -------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
from Operations $3,660,209 $4,804,545 $1,285,219 $280,968 $1,078,934
=============================================================================================================
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bartlett Bartlett
Value International Fund Basic Value Fund
Six Months Six Months
Ended Year Ended Year
9/30/96 Ended 9/30/96 Ended
(Unaudited) 3/31/96 (Unaudited) 3/31/96
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
From Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 613,271 $ 705,670 $ 779,022 $ 2,085,006
Net realized gains (losses) from
security transactions 1,932,480 5,091,672 3,966,568 7,904,641
Net change in net unrealized
appreciation (depreciation)
on investments 1,114,458 1,971,930 58,955 14,980,193
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 3,660,209 7,769,272 4,804,545 24,969,840
Distributions to Shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income (295,239) (709,685) (895,765) (1,617,770)
In excess of net investment income -- (56,680) -- --
From net realized gains from
security transactions -- (2,033,031) -- (5,714,691)
- ---------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (295,239) (2,799,396) (895,765) (7,332,461)
- ---------------------------------------------------------------------------------------------------------------
From Fund Share Transactions (Note 4):
- ---------------------------------------------------------------------------------------------------------------
Proceeds from shares sold 21,642,637 24,745,866 24,841,859 111,024,402
Net asset value of shares issued
in reinvestment of shareholder
distributions (18,528,909) 2,116,443 856,778 7,149,025
Payment for shares redeemed 205,013 (17,455,294) (30,517,874) (112,895,339)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) from Fund
share transactions 3,318,741 9,407,015 (4,819,237) 5,278,088
- ---------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets 6,683,711 14,376,891 (910,457) 22,915,467
Net Assets:
Beginning of period 72,040,604 57,663,713 125,636,385 102,720,918
- ---------------------------------------------------------------------------------------------------------------
End of period $ 78,724,315 $ 72,040,604 $124,725,928 $125,636,385
===============================================================================================================
Accumulated undistributed
net investment income $ 318,032 $ -- $ 372,656 $ 489,399
===============================================================================================================
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
Bartlett
Bartlett Short-Term Bartlett
Fixed Income Fund Bond Fund Cash Reserves Fund
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
9/30/96 Ended 9/30/96 Ended 9/30/96 Ended
(Unaudited) 3/31/96 (Unaudited) 3/31/96 (Unaudited) 3/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
From Operations:
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 2,065,070 $ 5,132,576 $ 367,988 $ 1,266,884 $ 1,102,774 $ 4,187,275
Net realized gains (losses) from
security transactions (647,546) 1,977,601 (35,209) 145,949 (17,935) 14,493
Net change in net unrealized
appreciation (depreciation)
on investments (132,305) 205,780 (51,811) 205,670 (5,905) 8,717
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 1,285,219 7,315,957 280,968 1,618,503 1,078,934 4,210,485
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income (2,065,070) (5,132,576) (367,988) (1,266,884) (1,102,774) (4,187,275)
In excess of net investment income -- -- -- -- -- --
From net realized gains from
security transactions -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (2,065,070) (5,132,576) (367,988) (1,266,884) (1,102,774) (4,187,275)
- -----------------------------------------------------------------------------------------------------------------------------------
From Fund Share Transactions (Note 4)
- -----------------------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold 2,082,461 20,748,841 1,570,648 27,069,933 67,475,810 341,933,423
Net asset value of shares issued
in reinvestment of shareholder
distributions 1,755,015 4,218,946 261,133 886,040 1,030,863 3,737,122
Payment for shares redeemed (13,358,838) (39,123,295) (3,521,283) (32,769,391) (68,498,120) (387,402,262)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from Fund
share transactions (9,521,362) (14,155,508) (1,689,502) (4,813,418) 8,553 (41,731,717)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets (10,301,213) (11,972,127) (1,776,522) (4,461,799) (15,287) (41,708,507)
Net Assets:
Beginning of period 79,377,331 91,349,458 15,286,302 19,748,101 48,463,779 90,172,286
- -----------------------------------------------------------------------------------------------------------------------------------
End of period 69,076,118 $ 79,377,331 $ 13,509,780 $ 15,286,302 $ 48,448,492 $ 48,463,779
===================================================================================================================================
Accumulated undistributed
net investment income $ -- $ -- $-- $ -- $ -- $ --
===================================================================================================================================
</TABLE>
21
<PAGE>
FINANCIAL HIGHLIGHTS
Bartlett Value International Fund
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months
Ended
9/30/96 Year Ended March 31,
(Unaudited) 1996 1995 1994 1993 1992
======================================================================================================================
<S> <C>
Net Asset Value, Beginning of Period $12.59 $11.64 $12.46 $10.08 $9.93 $9.09
- ----------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income .10 .13 .09 .07 .12 .18
Net Realized and Unrealized Gains
(Losses) on Securities .52 1.33 (.21) 2.38 .15 .88
- ----------------------------------------------------------------------------------------------------------------------
Total From Investment Operations .62 1.46 (.12) 2.45 .27 1.06
- ----------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment
Income (.05) (.13) (.09) (.07) (.10) (.22)
In Excess of Net Investment Income -- (.01) -- -- -- --
Distributions From Realized Gains -- (.37) (.61) -- (.02) --
- ----------------------------------------------------------------------------------------------------------------------
Total Distributions (.05) (.51) (.70) (.07) (.12) (.22)
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.16 $12.59 $11.64 $12.46 $10.08 $9.93
======================================================================================================================
Total Return 4.93%(c) 12.76% (1.18%) 24.42% 2.71% 11.88%
======================================================================================================================
Ratios / Supplemental Data:
- ----------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000's) $78,724 $72,041 $57,664 $49,607 $29,572 $22,042
Ratio of Net Expenses to Average
Net Assets (a) 1.82%(b) 1.83% 1.83% 1.88% 2.00% 2.00%
Ratio of Net Investment Income
to Average Net Assets (a) 1.59%(b) 1.06% .80% .55% 1.13% 1.79%
Portfolio Turnover Rate 31% (b) 38% 24% 19% 19% 27%
Average Commission rate paid (d) $.0309 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Bartlett Basic Value Fund
======================================================================================================================
Net Asset Value, Beginning of Period $17.94 $15.39 $14.89 $14.76 $13.47 $12.60
- ----------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income .12 .30 .27 .22 .30 .36
Net Realized and Unrealized Gains
on Securities .57 3.32 1.53 .28 1.57 .87
- ----------------------------------------------------------------------------------------------------------------------
Total From Investment Operations .69 3.62 1.80 .50 1.87 1.23
- ----------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment
Income (.13) (.24) (.27) (.23) (.30) (.36)
Distributions From Realized Gains -- (.83) (1.03) (.14) (.28) --
- ----------------------------------------------------------------------------------------------------------------------
Total Distributions (.13) (1.07) (1.30) (.37) (.58) (.36)
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $18.50 $17.94 $15.39 $14.89 $14.76 $13.47
======================================================================================================================
Total Return 3.86%(c) 24.05% 12.67% 3.42% 14.22% 9.91%
======================================================================================================================
Ratios / Supplemental Data:
- ----------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000's) $124,726 $125,636 $102,721 $94,289 $103,507 $88,536
Ratio of Expenses to Average
Net Assets 1.16%(b) 1.17% 1.20% 1.20% 1.21% 1.22%
Ratio of Net Investment Income
to Average Net Assets 1.24%(b) 1.79% 1.81% 1.48% 2.14% 2.77%
Portfolio Turnover Rate 19%(b) 25% 26% 33% 43% 49%
Average Commission rate paid (d) $.0611 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The Advisor has periodically absorbed expenses of the Bartlett Value
International Fund through management fee waivers. If the Advisor had not
waived any fees, the ratio of net expenses to average net assets would have
been 1.94% and the ratio of net investment income to average net assets
would have been .49% for the period ended March 31, 1994.
(b) Annualized
(c) Not annualized
(d) Pursuant to SEC regulations effective for fiscal years beginning after
September 1, 1995, this is the average rate paid on securities purchased
and sold by the fund.
See accompanying notes to financial statements.
22
<PAGE>
Bartlett Fixed Income Fund
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months
Ended
9/30/96 Year Ended March 31,
(Unaudited) 1996 1995 1994 1993 1992
===========================================================================================================================
<S> <C>
Net Asset Value, Beginning of Period $9.90 $9.70 $10.02 $10.48 $9.93 $9.63
- ---------------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income .27 .57 .54 .48 .59 .67
Net Realized and Unrealized Gains
(Losses) on Securities (.09) .20 (.32) (.30) .55 .31
- ---------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations .18 .77 .22 .18 1.14 .98
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment
Income (.27) (.57) (.54) (.48) (.59) (.68)
Distributions From Realized Gains -- -- -- (.16) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions (.27) (.57) (.54) (.64) (.59) (.68)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.81 $9.90 $9.70 $10.02 $10.48 $9.93
===========================================================================================================================
Total Return 1.88%(e) 8.04% 2.41% 1.70% 11.81% 10.46%
===========================================================================================================================
Ratios / Supplemental Data:
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000's) $69,076 $79,377 $91,349 $111,414 $135,487 $147,992
Ratio of Expenses to Average
Net Assets (a) 1.00%(d) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income
to Average Net Assets (a) 5.55%(d) 5.74% 5.60% 4.58% 5.81% 6.85%
Portfolio Turnover Rate 85%(d) 131% 118% 163% 175% 126%
Amount of Debt Outstanding
at End of Period $ -- $ -- $ -- $ -- $ -- $ --
Average Amount of Debt
Outstanding During the
Period (b) (000's) $ -- $ -- $ 255 $ 2,550 $12,627 $6,601
Average Number of Shares
Outstanding During the
Period (c) (000's) 7,586 8,954 10,270 12,095 13,689 15,577
Average Amount of Debt Per
Share During the Period $ -- $ -- $ 0.02 $ 0.21 $ 0.92 $ 0.42
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Ratios do not include interest paid on reverse repurchase agreements.
(b) 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.
(c) 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.
(d) Annualized
(e) Not annualized
See accompanying notes to financial statements.
23
<PAGE>
FINANCIAL HIGHLIGHTS
Bartlett Short Term Bond Fund
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months
Ended
9/30/96 Year Ended March 31,
(Unaudited) 1996 1995 1994(a) 1993 1992
===========================================================================================================================
<S> <C>
Net Asset Value, Beginning of Period $9.77 $9.66 $9.94 $10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income .25 .54 .53 .06
Net Realized and Unrealized Gains
(Losses) on Securities (.06) .11 (.28) (.06)
- ---------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations .19 .65 .25 .00
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment
Income (.25) (.54) (.53) (.06)
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions (.25) (.54) (.53) (.06)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.71 $9.77 $9.66 $9.94
===========================================================================================================================
Total Return 2.01%(e) 6.87% 2.58% .04%(b)
===========================================================================================================================
Ratios / Supplemental Data:
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000's) $13,510 $15,286 $19,748 $22,288
Ratio of Expenses to Average
Net Assets .85%(d) .85% .85% .85%(d)
Ratio of Net Investment Income
to Average Net Assets 5.21%(d) 5.70% 5.38% 4.55%(d)
Portfolio Turnover Rate 19%(d) 145% 158% 202%(d)
- ---------------------------------------------------------------------------------------------------------------------------
Bartlett Cash Reserves Fund
===========================================================================================================================
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income .02 .05 .04 .03 .03 .05
- ---------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations .02 .05 .04 .03 .03 .05
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment
Income (.02) (.05) (.04) (.03) (.03) (.05)
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions (.02) (.05) (.04) (.03) (.03) (.05)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===========================================================================================================================
Total Return 4.62%(d) 5.13% 4.22% 2.69% 3.26% 5.07%
===========================================================================================================================
Ratios / Supplemental Data:
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000's) $48,448 $48,464 $90,172 $77,558 $65,962 $75,867
Ratio of Net Expenses
to Average Net Assets (c) .78%(d) .78% .78% .77% .72% .67%
Ratio of Net Investment Income
to Average Net Assets (c) 4.58%(d) 5.13% 4.16% 2.71% 3.26% 5.05%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Except for the Bartlett Short Term Bond Fund which is from the date of
public offering (February 4, 1994) through March 31, 1994.
(b) Total return is for the period February 4, 1994 through March 31, 1994.
(c) The Advisor has periodically absorbed expenses of the Bartlett Cash Reserves
Fund through management fee waivers. If the Advisor had not waived any fees,
the ratios of net expenses to average net assets would have been .88%,
.90%, and .90%, and the ratios of net investment income to average net
assets would have been 2.60%, 3.07%, and 4.82% for the periods ended March
31, 1994 through 1992, respectively.
(d) Annualized
(e) Not annualized
See accompanying notes to financial statements.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
As of September 30, 1996 (Unaudited)
[1] Significant Accounting Policies
Bartlett Capital Trust and Bartlett Management Trust are registered under
the Investment Company Act of 1940, as amended, as no-load, diversified,
open-end management investment companies. Bartlett Capital Trust was established
as a Massachusetts business trust under a Declaration of Trust dated October 31,
1982. The Declaration of Trust, as amended, permits the Trustees to issue an
unlimited number of shares of the Bartlett Value International Fund, Bartlett
Basic Value Fund, Bartlett Fixed Income Fund and the Bartlett Short Term Bond
Fund. Bartlett Management Trust was established as an Ohio business trust under
a Declaration of Trust dated July 16, 1984. The Declaration of Trust, as
amended, permits the Trustees to issue an unlimited number of shares of the
Bartlett Cash Reserves Fund, the only series of the Trust presently authorized
by the Trustees.
The following is a summary of the investment objectives followed by the
Funds:
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.
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.
The following is a summary of the significant accounting policies of
Bartlett Capital Trust and Bartlett Management Trust:
Security Valuation - 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 asked 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 Bartlett & Co. (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 Bartlett Cash Reserves Fund) are valued at
amortized cost, which approximates market value.
Securities, primarily fixed income securities, of a Fund for which market
quotations or estimates 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.
The values of international securities are generally based upon market
quotations converted to U.S. dollar equivalents at 4:00 p.m. Eastern Standard
time which, depending upon the exchange or market, may be last sale price, last
bid price, or the mean between the 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 the New York Stock Exchange (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 the Fund's share price is not calculated.
Therefore, the value of Bartlett Value International
25
<PAGE>
Fund's portfolio may be significantly affected on days when shares may not be
purchased or redeemed.
Repurchase agreements are valued at cost which approximates market. It is
the policy of each of the Funds that their custodian take possession of the
underlying collateral securities. Collateral is marked-to-market daily to ensure
that the market value of the underlying assets equals or exceeds the value of
the seller's repurchase obligation. In the event of a bankruptcy or other
default of the seller of a repurchase agreement, a Fund could experience both
delays in liquidating the underlying securities and losses. The loss would equal
the amount by which the carrying value of the repurchase agreement(s) exceeded
the proceeds received in liquidation of the underlying collateral securities. To
minimize the possibility of loss, the Funds enter into repurchase agreements
only with institutions deemed to be creditworthy by the Advisor, including banks
that serve as custodian for the Funds, banks having assets in excess of $1
billion or primary government securities dealers.
Structured Securities - Bartlett Basic Value Fund, Bartlett Fixed Income
Fund and Bartlett Short Term Bond Fund may invest in structured securities, a
type of derivative security, which are derived from securities issued by U.S.
government agencies, or other issuers, and are denominated in U.S. dollars.
Structured securities are privately issued securities. These short maturity
notes differ from traditional debt securities in that the return (principal
and/or interest) is linked to the performance of a diversified array of
financial indices.
The Funds use structured securities to add to portfolio diversification to
protect the portfolio against rising interest rates. An investment in structured
securities entails risks not associated with investments in conventional debt
securities. The secondary market for such securities will be 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 Currency Translation - The books and records of each Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and
liabilities--at the daily rate of exchange as reported by the
custodian at 4:00 p.m. Eastern Standard time;
(ii) purchases and sales of investment securities, income and expenses--at
the rate of exchange prevailing on the respective dates of such
transactions.
Futures and Options Accounting Principles - Premiums received from put or
call options written are recorded as an asset with an equal liability which is
marked-to-market daily with any difference between the option's current market
value and premiums received recorded as an unrealized gain or loss. If the
option is not exercised, premiums received are realized as a gain at the
expiration date. If the position is closed prior to expiration, a gain or loss
is realized based on premiums received less the cost of the closing transaction.
When an option is exercised, premiums received are added to the proceeds from
the sale of the underlying securities and a gain or loss is realized
accordingly.
Put and call options purchased are accounted for in the same manner as
portfolio securities. The cost of securities acquired through the exercise of
call options is increased by premiums paid. The proceeds from securities sold
through the exercise of put options are decreased by the premiums paid.
Futures contracts are marked-to-market daily with fluctuations in value
settled daily in cash through a margin account. Gains or losses are realized at
the time the contract is closed out or the contract expires.
The primary risks associated with the use of futures contracts and options
are imperfect correlation between the change in market value of securities held
by the Funds and the prices of futures contracts and options, in addition to the
possibility of an illiquid market.
Reverse Repurchase Agreements - Bartlett Basic Value Fund, Bartlett Fixed
Income Fund, Bartlett Short Term Bond Fund and Bartlett Cash Reserves Fund may
enter into reverse repurchase agreements whereby the Funds transfer possession
of a security for cash with the intent to repay cash plus interest in exchange
for the return of the same security at a later date. A Fund's primary 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.
It is the policy of each of the Funds that their custodian place cash or
U.S. government obligations in a separate account in an amount equal to the
reverse repurchase agreement obligation. When a separate account is maintained
in connection with a reverse repurchase agreement, the securities deposited in
the separate account are valued daily at market for the purpose of determining
the adequacy of the securities in the account. If the market value of such
securities declines, additional cash or securities are placed in the account
daily to maintain the market value of the
26
<PAGE>
account equal to the amount of the reverse repurchase agreement obligation.
Share Valuation - The net asset value per share is calculated daily by
dividing the total value of each Fund's investments and other assets, less
liabilities, by the total number of shares outstanding.
Investment Income and Distributions to Shareholders - Interest income is
accrued as earned. Dividend income is recorded on the ex-dividend date.
Distributions to shareholders arising from net investment income for Bartlett
Fixed Income Fund, Bartlett Short Term Bond Fund and Bartlett Cash Reserves Fund
are declared daily and paid to shareholders monthly. Distributions to
shareholders from net investment income for Bartlett Basic Value Fund and
Bartlett Value International Fund are declared and paid quarterly and are
recorded on the ex-dividend date. Net realized capital gains, if any, are
distributed to shareholders at least once a year.
Security Transactions - Security transactions are accounted for on a trade
date basis, which is the date the order to buy or sell is executed. Securities
sold are valued on a specific identification basis.
Securities Purchased on a When-Issued Basis - Securities purchased on a
when-issued or delayed delivery basis may be settled a month or more after the
transaction date. Such securities are subject to market fluctuation during this
period. In the event that the seller fails to deliver the securities, a Fund
could experience a loss to the extent of any appreciation, or a gain to the
extent of any depreciation, in the price of the securities. A Fund will
maintain, in a segregated account with its custodian, cash or U.S. government
securities having an aggregate value at least equal to the amount of such
purchase commitments.
Federal Income Taxes - It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies,
and distributes at least 90% of its taxable net income, the Fund (but not its
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes is made.
In order to avoid imposition of the excise tax created by the Tax Reform
Act of 1986, as amended by the Revenue Act of 1987, it is each Fund's intention
to declare as dividends in each calendar year at least 98% of its net investment
income (earned during the calendar year) and 98% of its net realized capital
gains (earned during the twelve months ended Octo-ber 31 of the calendar year)
plus undistributed amounts from prior years.
Capital loss carryovers for tax purposes at September 30, 1996 are as
follows: Bartlett Fixed Income Fund $2,070,146, Bartlett Short Term Bond Fund
$364,426 and Bartlett Cash Reserves Fund $82,029. Such carryovers expire over
varying periods through March 31, 2004. The following amounts are based on cost
for both financial reporting and federal income tax purposes as of September 30,
1996:
<TABLE>
<CAPTION>
Bartlett
Bartlett Bartlett Bartlett Short Bartlett
Value Basic Fixed Term Cash
International Value Income Bond Reserves
Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------
<S> <C>
Unrealized
appreciation $10,811,295 $35,733,284 $ 282,986 $ 5,907 $ 2,215
Unrealized
depreciation (4,056,554) (2,519,805) (753,671) (86,999) (8)
- --------------------------------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation) $ 6,754,741 $33,213,479 $ (470,685) $ (81,092) $ 2,207
==================================================================================================
Federal income
tax cost of
investments $70,878,979 $90,154,564 $69,402,370 $13,438,106 $48,141,479
==================================================================================================
</TABLE>
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles require the Funds to make estimates and
assumptions that affect the reported amounts of assets and liabilites at the
date of the financial statements and the reported net changes in net assets from
operations during the reporting period.
[2] Investment Transactions
Investment transactions (excluding short-term securities) are as follows
for the period ended September 30, 1996:
Bartlett
Bartlett Bartlett Bartlett Short
Value Basic Fixed Term
International Value Income Bond
Fund Fund Fund Fund
- -------------------------------------------------------------------------------
Purchases of
investment
securities $13,833,744 $10,732,110 $30,349,625 $1,123,779
===============================================================================
Proceeds
from sales
and maturities
of investment
securities $11,214,698 $14,782,603 $38,811,564 $4,475,852
===============================================================================
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
[3] Transactions with Affiliates and Related Parties
The officers of each of the Trusts are shareholders or employees of the
Advisor or Legg Mason Wood Walker, Incorporated (LMWW). LMWW is affliated with
the Advisor through their common parent company, Legg Mason, Inc. The Advisor
became a wholly owned subsidiary of Legg Mason, Inc. in January 1996. Bartlett
Capital Trust's and Bartlett Management Trust's investments are managed by the
Advisor under the terms of Management Agreements. Under the Management
Agreements, the Advisor pays all of the expenses of each Fund except brokerage,
taxes, interest and extraordinary expenses. As compensation for investment
advisory services and agreement to pay the above Fund expenses, each Fund pays
the Advisor a fee computed and accrued daily and paid monthly. The fee for
Bartlett Basic Value Fund and Bartlett Fixed Income Fund is computed at an
annual rate of 2% of the average daily net assets of Bartlett Basic Value Fund
and Bartlett Fixed Income Fund up to and including $10,000,000, 1.50% of such
assets from $10,000,000 up to and including $30,000,000 and 1% of such assets in
excess of $30,000,000. The fee for Bartlett Basic Value Fund is determined by
applying the above rates to its average daily net assets, and the remainder of
the fee is allocated to Bartlett Fixed Income Fund. The fee for Bartlett Cash
Reserves Fund is computed at an annual rate of .78% of the average daily net
assets of Bartlett Cash Reserves Fund up to and including $500,000,000 and .75%
of such assets in excess of $500,000,000. The fee for Bartlett Value
International Fund is computed at an annual rate of 2% of the average daily net
assets of Bartlett Value International Fund up to and including $20,000,000,
1.75% of such assets from $20,000,000 up to and including $200,000,000 and 1.25%
of such assets in excess of $200,000,000. The fee for Bartlett Short Term Bond
Fund is computed at an annual rate of .85% of the average daily net assets of
Bartlett Short Term Bond Fund.
States in which shares of each Fund are offered may impose an expense
limitation based upon net assets. The Management Agreements between Bartlett
Capital Trust and Bartlett Management Trust and the Advisor allow for the
accrual and payment of the investment advisory services expense that does not
exceed the lowest of the applicable expense limitations imposed.
[4] Fund Share Transactions
Proceeds and payments on shares of the Funds as shown in the Statements
of Changes in Net Assets are the result of the following share transactions:
<TABLE>
<CAPTION>
Bartlett
Bartlett Bartlett Bartlett Short
Value Basic Fixed Term
International Value Income Bond
Fund Fund Fund Fund
Six Months Year Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended Ended Ended
9/30/96 3/31/96 9/30/96 3/31/96 9/30/96 3/31/96 9/30/96 3/31/96
================================================================================================================
<S> <C>
Shares sold 1,670,590 2,030,782 1,359,517 6,663,901 212,488 2,078,188 162,215 2,759,057
Shares issued in
reinvestment of
distributions 15,819 173,445 46,789 424,930 179,242 421,555 26,923 90,267
- ----------------------------------------------------------------------------------------------------------------
1,686,409 2,204,227 1,406,306 7,088,831 391,730 2,499,743 189,138 2,849,324
Less shares
redeemed (1,426,403) (1,434,766) (1,668,867) (6,758,445) (1,365,723) (3,903,266) (362,780) (3,327,470)
- ----------------------------------------------------------------------------------------------------------------
Net increase
(decrease)
in shares
outstanding 260,006 769,461 (262,561) 330,386 (973,993) (1,403,523) (173,642) (478,146)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Bartlett
Cash
Reserves
Fund
Six Months Year
Ended Ended
9/30/96 3/31/96
=================================================
Shares sold 67,475,810 341,933,423
Shares issued in
reinvestment of
distributions 1,030,863 3,737,122
- -------------------------------------------------
68,506,673 345,670,545
Less shares
redeemed (68,498,120) (387,402,262)
- -------------------------------------------------
Net increase
(decrease)
in shares
outstanding 8,553 (41,731,717)
- ------------------------------------------------
28
<PAGE>
TRUSTEES AND OFFICERS
================================================================================
Dale H. Rabiner, CFA Chairman of the Board, President and
Trustee of Bartlett Capital Trust
Vice President of Bartlett Management
Trust
James B. Reynolds, CFA Chairman of the Board, President and
Trustee of Bartlett Management Trust
Vice President of Bartlett Capital Trust
Lorrence T. Kellar Trustee
Vice President Real Estate Services
Kmart Corp.
Philip J. Ringo Trustee
President/CEO
Chemical Leaman Tanklines
Alan R. Schriber Trustee
President, ARS Broadcasting Corp.
William P. Sheehan Trustee
Member, State of Ohio
Employment Relations Board
Kathi D. Bair Secretary
R. Stuart Crickmer, CFA, CPA Vice President
Brian M. Eakes, CPA Assistant Secretary
Marie K. Karpinski, CPA Treasurer and Vice President
Madelynn M. Matlock, CFA Vice President
James A. Miller, CFA Vice President
Donna M. Prieshoff Vice President
Blanche P. Roche, CPA Assistant Secretary
Thomas A. Steele, CPA Assistant Treasurer and Assistant
Secretary
Woodrow H. Uible, CFA Vice President
================================================================================
Investment Advisor Bartlett & Co.
Cincinnati, Ohio
Custodian State Street Bank & Trust Company
Boston, Massachusetts
Transfer Agent Boston Financial Data Services
Boston, Massachusetts
Auditors Arthur Andersen LLP
Cincinnati, Ohio
================================================================================
Bartlett & Co.
------------------------------
REGISTERED INVESTMENT ADVISORS
36 East Fourth Street, Cincinnati, OH 45202-3896
(bullet) 513-621-4612
(bullet) 800-822-5544
(bullet) FAX 513-621-6462
29
