[BARTLETT & CO. LOGO]
BARTLETT
MUTUAL
FUNDS
ANNUAL
REPORT
FOR THE YEAR ENDED
MARCH 31, 1996
BARTLETT
VALUE INTERNATIONAL FUND
[LOGO]
BARTLETT
BASIC VALUE FUND
[LOGO]
BARTLETT
FIXED INCOME FUND
[LOGO]
BARTLETT
SHORT TERM BOND FUND
[LOGO]
BARTLETT
CASH RESERVES FUND
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BARTLETT & CO.
PROFILE
[LOGO] 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:
[logo] Mutual Funds
[logo] Institutional Client Services
[logo] Private Client Services
[logo] 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.
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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
Results of Special Meeting of Shareholders 10
Portfolios of Investments
Bartlett Value International Fund 11
Bartlett Basic Value Fund 13
Bartlett Fixed Income Fund 15
Bartlett Short Term Bond Fund 16
Bartlett Cash Reserves Fund 17
Statements of Assets and Liabilities 18
Statements of Operations 19
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
Report of Independent Public Accountants 29
Trustees and Officers Back Cover
This report is for the information of shareholders of the Bartlett Mutual
Funds. It may be used as sales literature if preceded or accompanied by a
current prospectus of the Bartlett Mutual Funds.
1
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CHAIRMEN'S LETTER
Dear Fellow Shareholder,
It seems these days that the U.S. stock and bond markets are listening to
different tunes. The stock market seems to be listening to the refrain of a
recent popular tune, "Don't Worry, Be Happy," while the bond market seems to be
listening to the initial verse of "California Dreaming--All the Leaves Are Brown
and the Sky Is Gray." Over the past six months, the stock market has rewarded
investors with annualized returns in excess of twenty percent, while the bond
market, which had been rallying significantly until February, has done an about
face and now is producing negative returns of a magnitude that are reminiscent
of 1994. Perhaps both markets don't have it quite right. That is to say, we
think that there are some valid reasons for equity investors to worry,
particularly when one looks at the lofty valuation level of the U.S. equity
market, the frenetic IPO environment, as well as broad acceptance that the stock
market should continue to rise simply because money will continue to flow into
the market. On the other hand, with respect to the bond market, while there is
some evidence that the economy is rebounding, inflation remains well contained.
The price of gold, which is a good report card for Federal Reserve monetary
policy, is holding steady, and downsizing and consolidation in many industries
seem to be continuing. In any event, with market volatility on the upswing, we
feel that value investing, which is an inherently risk averse investment
approach, will prove its mettle in the months ahead.
As you know, the acquisition of Bartlett & Co. by Legg Mason, Inc. became
effective on January 2. We are confident that this combination will provide
Bartlett & Co. and its clients access to a broader range of investment products
and services. As part of the Legg Mason fund family, we can now offer our
clients over fifteen additional equity, bond, money market, and tax exempt
mutual funds. In addition, our funds are now linked with the services of the
largest transfer agent and custodian in the mutual fund industry, State Street
Bank. As in the past, our shareholders will be serviced by their Bartlett
representative to provide the optimal blend of personalized client service and a
broader range of investment alternatives and systems.
One change that has occurred as part of the move to State Street is a change in
the timing of dividend distributions. Dividends for Bartlett Fixed Income Fund,
Bartlett Short Term Bond Fund and Bartlett Cash Reserves Fund are now paid on
the 15th of each month. The dividends for our equity funds, Bartlett Basic Value
and Bartlett Value International, will be paid quarterly in May, July, October
and December.
In closing, we thank you, our loyal shareholders, for your continuing support
and assure you that we will continue to strive to provide you with attractive
investment returns and convenient service.
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BARTLETT
VALUE INTERNATIONAL
FUND REPORT
[LOGO] Almost all international markets moved higher during the first quarter
of 1996, but the US market remained the performance leader. The Europe,
Australia and Far East Index* (EAFE) increased by 2.9%, including net dividends,
with European markets outpacing the Pacific Rim. Both areas lagged the US
return of over 5%. The Japanese market woke up in March, increasing 3.5% for
the month, after a weak 1995. Over the last twelve months, the EAFE Index has
grown by 12.3%, with Europe more than doubling the Pacific area return. Emerging
markets kept pace with the developed markets in the first quarter, growing by
4.3% overall, but with only a 5.4% return for the last twelve months, they have
not yet made up for earlier weakness. Bartlett Value International Fund's total
return was 3.8% in the quarter, and 12.8% over the last twelve months. (Total
return measures investment performance in terms of appreciation or depreciation
in net asset value per share plus dividends and capital gain distributions.) The
Fund's higher exposure to European stocks and lower investment in weaker
currencies helped improve performance versus the index.
The value of the deutschemark and the yen versus the dollar continued to drop,
subtracting about 3% from EAFE's return, but other currencies like the
Australian dollar and the Italian lira either increased in value or held their
own against the dollar. Over the last year, the yen has been the weakest
currency compared to the dollar, underperforming even the Mexican peso, while
the deutschemark has not been far behind.
Real growth in the G7 developed countries remains slow at about 1.5%, but
seems to be picking up from last year's rate. Emerging country growth overall,
at about 5%, is expected to be a bit higher in 1996. Continuing market reform
across the world, in the form of privatization, fiscal restraint, more open
trade and increased competition, means slow growth combined with low inflation
seems likely to continue. Price increases remain very low in Japan, and are
almost negative in Germany. Although inflation is higher in the faster-growing
emerging markets, consensus forecasts are for lower rates in 1996 compared to
1995, even in trouble spots like Mexico, Venezuela and Turkey.
During the first quarter of 1996, the best performing sectors in overseas
markets were the more cyclical areas, including materials and capital
equipment. Financial and energy issues were the weakest performers, while
consumer and services issues did moderately well after a strong gain over the
last year. Bartlett Value International has more exposure than the market to
capital equipment and services issues, and about equivalent to the market in
materials and finance. Consumer goods and energy exposure is less than that of
the market.
Bartlett Value International's portfolio realized some profits in the first
quarter through outright sales and some position trimming. Soquimich, the
Chilean fertilizer company, was sold after a strong runup in price, as was
Atlas Copco, a Swedish machinery manufacturer. We took some profit in Sandoz
after the Swiss chemical and pharmaceutical maker announced a merger with a
competitor, Ciba Geigy. A new position in Swire Pacific, a Hong Kong
conglomerate, replaced our holding in Hutchison Wampoa, and we added Perlis
Plantations, a Malaysian food producer, to the portfolio. Another new addition
was Cardo, a Swedish manufacturer of pumps, industrial doors and railway braking
equipment.
PORTFOLIO COMPOSITION
Bartlett Value International Fund vs.
Europe, Australia, Far East (EAFE) Index
March 31, 1996
[BAR GRAPH APPEARS HERE -- plot points are listed below]
FUND EAFI INDEX
Americas 11%* 0%
Europe 55% 50%
Pacific 34%** 50%***
* Sublines at 6%, 9%
** Subline at 13%
*** Subline at 40%
/s/ Madelynn M. Matlock
Madelynn M. Matlock, CFA
Portfolio Manager
*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
While common stock prices were propelled by both declining interest
rates and robust corporate profits in 1995, even the most optimistic money
managers and economists believe that 1995 will be a tough act to follow. Of
course, there is a limit to how far interest rates can fall and, in the absence
of declining interest rates, we would need to see a continuation of corporate
profit growth to justify the valuations that have recently been accorded common
stocks.
We are quite pleased with the performance of the Bartlett Basic Value Fund in
recent years, given the conservative investment posture that is the by-product
of our investment methodology.
For the year ended March 31, the Bartlett Basic Value Fund slightly lagged the
market, a situation that was attributable to three factors: 1) technology stocks
were very strong during the period, while value managers, by definition, have an
underexposure to this area; 2) foreign stocks, which occupy fifteen percent of
the portfolio, have lagged their US brethren; and 3) small capitalization
issues, which are also present in the Fund, have, until recently, had a great
deal of catching up to do. It would be quite reasonable to assume that a reduced
reliance on technology stocks, with a continued commitment to soundly
capitalized and competitively situated issues in the mid-capitalization and
small capitalization area, would not only be a less risky posture to have at
this juncture, but also would be a more profitable one.
There have been a few large, attractively priced companies added to the
portfolio during the last year such as Archer Daniels Midland and Toys R Us. By
the same token, we are finding superb small to medium-sized companies that have
leadership positions in their industries and are conservatively financed. Among
these are Fleetwood Enterprises (manufactured housing and mobile homes), York
International (heating, ventilation, and air conditioning equipment), and
Stewart and Stevenson (turbine equipment). Also, there have been
MEASURING BOTH RISK AND RETURN
Bartlett Basic Value Fund vs. Standard & Poor's 500 Index
May 1983 to March 1996
[BAR GRAPH APPEARS HERE -- plot points are listed below]
RETURN RISK
Bartlett Basic Value Fund
Bar 1 11.8% -11.0%
S&P 500 Index
Bar 2 15.1% -14.2%
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 March 31,
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 fluctuate so that upon redemption you may receive
more or less than your original investment.
4
<PAGE>
two technology stocks that have met our stringent value criteria and are new
additions to the portfolio: Pioneer Standard Electronics, a wholesaler of
electronic components and computer products, and Zilog Inc., a designer and
manufacturer of integrated circuits.
Having diversification in the smaller segments of the market and in large
companies that are out of favor would seem to be the best way to perpetuate the
attractive, non-erratic returns that your Fund has enjoyed during the past five
years.
Thank you for your continued support of our investment style and for your
patronage of the Bartlett Basic Value Fund.
/s/ James A. Miller /s/ Woodrow H. Uible
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 March 31, 1996 were 24.1%, 13.1%, 12.7%
and 10.1%, respectively.
LARGEST INDUSTRY ALLOCATIONS
Bartlett Basic Value Fund vs. Standard & Poor's 500 Index
March 31, 1996
[BAR GRAPH APPEARS HERE -- plot points are listed below]
Percent of Total Equity Portfolio
FUND S&P 500
Financial 23% 14%
Consumer Cyclical 18% 9%
Basic Industry 18% 13%
Consumer Staples 9% 21%
Technology/Defense 9% 10%
Energy 8% 8%
5
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BARTLETT
FIXED INCOME
FUND REPORT
[logo] Investor concerns over a resilient economy and rising commodity
prices keyed an increase in intermediate and long-term yields during the first
quarter. Short-term interest rates, on the other hand, remained virtually
unchanged from year end 1995 levels. This type of market behavior (i.e., a bear
market where longer-term yields rise significantly more than short rates) is
referred to as a "steepening selloff" and is somewhat of a rarity in the bond
market. In fact, this marked only the third time (out of 76 calendar quarters)
since 1977 that the yield spread between 30-year bonds and 3-month Treasury
bills widened by more than 40 basis points (100 basis points = 1%).
Much of the concern in the bond market can be attributed to signs of economic
strength, particularly with respect to payroll growth. Historically, however,
payroll growth has been a lagging, not a leading, indicator of overall economic
growth. As such, it may be premature to dismiss the possibility of a recession.
Likewise, the unusual action in the bond market may be signaling a temporarily
heightened level of uncertainty in the bond market and not necessarily the
beginning of another 1994-type, year long bear market in bonds.
For the three-month period ended March 31, your investment in the Bartlett Fixed
Income Fund returned -1.6% versus -0.8% for the Lehman Brothers Intermediate
Government/Corporate Bond Index*. For the trailing 12 months, the Fund rose
8.0%, while the Index returned 9.6%. Fund total returns include transaction
costs and expenses, while the Index returns do not, both assume reinvestment of
dividends.
With respect to portfolio strategy, we continue to favor the mortgage sector of
the market. Mortgage-backed securities, which account for approximately 36% of
the fund, began to show signs of outperforming treasuries during the second half
of the quarter. The yield spread of mortgages to treasuries widened through
mid-February, but, as yields began to rise, fears of overly fast prepayments
subsided in the mortgage market and mortgage spreads to treasuries narrowed over
the balance of the quarter. We believe this marks the beginning of a period
where mortgage-backed securities will outperform treasuries.
In the corporate sector, yield spreads remain narrow relative to historic norms
indicating a lack of value, particularly when compared with mortgages.
Accordingly, we have reduced our exposure to the corporate sector to
approximately 11% of the Fund.
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
March 31, 1996
[PIE CHART APPEARS HERE -- PLOT POINTS ARE LISTED BELOW]
Mortgage-Backed Securities 41%
U.S. Government Obligations 34%
Corporate Bonds 17%
U.S. Government Agencies 4%
Cash Equivalents 4%
PORTFOLIO HIGHLIGHTS
Weighted Average Credit Quality AAA
Weighted Average Portfolio Maturity 4.3 Years
Weighted Average Portfolio Duration 3.7 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
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BARTLETT
SHORT TERM BOND
FUND REPORT
Interest rates on securities with short term maturities increased
during the quarter ended March 31 1996. Consequently, returns for the quarter
were negatively impacted by declining bond values. Results for twelve months
ending March 31, 1996 were favorably affected by interest rates that declined
during calendar year 1995.
For the three-month period ended March 31, 1996, the Fund posted a loss of 0.2%,
versus a total return of 0.3% for the Merrill Lynch 1-3 Year Government Bond
Index*, a representative benchmark for short-term bonds. The Fund's total return
was 6.9% for the year ended March 31, 1996. This compares to the Merrill Lynch
1-3 Year Government Bond Index, which returned +7.80% for the same period. The
underperformance of the Fund relative to the benchmark index is attributed to
the Fund's position in mortgage-backed securities and expenses associated with
managing the Fund. The Index returns do not include transaction costs and
expenses but assume reinvestment of dividends.
At March 31, 1996, the Fund held 41% of its assets in mortgage-backed
securities, down from 47% three months ago. Mortgage-backed bonds began to
outperform comparable treasury securities during the latter part of the quarter,
but not enough to offset relative underperformance over the past year.
Prepayment fears on mortgage-backed securities have subsided and mortgage
spreads relative to treasuries narrowed during the past three months. It is our
belief that mortgages currently offer attractive total return potential and we
maintain an above-average exposure to this sector. The corporate bond sector
remains relatively rich in our opinion. We maintain a slight underweighting in
corporate bonds on that basis.
PORTFOLIO COMPOSITION
BARTLETT SHORT TERM BOND FUND
MARCH 31, 1996
[PIE CHART APPEARS HERE -- PLOT POINTS ARE LISTED BELOW]
Mortgage-Backed Securities 41%
U.S. Government Obligations 34%
Corporate Bonds 17%
U.S. Government Agencies 4%
Cash Equivalents 4%
PORTFOLIO HIGHLIGHTS
Weighted Average Credit Quality AAA
Weighted Average Portfolio Maturity 2.6 Years
Weighted Average Portfolio Duration 2.2 Years
BARTLETT
CASH RESERVES
FUND REPORT
Yields available on short-term money market instruments have inched upward over
the past few months, contrasting with 1995 when rates declined. The Federal
Reserve's last move was to lower the discount rate to 5.00% on January 31, 1996,
from 5.25% where it had been for most of 1995. The move acknowledged relatively
low growth at the time and benign inflation. Inflation fears have increased
recently as the economy appears to be stronger than originally believed. Some
commodity prices are also up sharply, especially gasoline and grain prices.
The direction and timing of the Fed's next move on short rates is less certain.
The most likely scenario is that the Fed will delay acting on short-term rates
until the state of the economy is more clear. This is an election year, which
increases the likelihood that the Fed will remain quiet, barring a significant
change in economic conditions.
The increase in commodity prices that we have seen over the past few months may
be short lived, allowing inflation fears to dissipate. Short-term interest rates
could be expected to decline under that scenario. For that reason, we held the
fund's average weighted maturity to 66 days at March 31, 1996, a level that we
consider neutral and well within the maximum allowable 90 days for money market
funds.
For the twelve months ended March 31, 1996, the Bartlett Cash Reserves Fund paid
income dividends of 5.01 cents per share, which translates into a total return
of 5.1%. The Fund's 7-day compound yield was 4.79% on March 31, 1996, compared
to 5.00% on September 30, 1995.
/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
[LOGO] 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 MARCH 31, 1996
Average Annual Total Returns*
For periods ended March 31, 1996
1 Year 3 Years 5 Years Life of the Fund
(since 10/06/89)
12.8% 11.5% 9.8% 6.8%
Bartlett Value International Fund vs. Europe, Australia, Far East Index
[GRAPH APPEARS HERE--PLOT POINTS ARE LISTED BELOW]
BARTLETT
VALUE
INTERATIONAL
FUND EAFE INDEX
10/31/89 $10,000 $10,000
12/31/89 10,958 10,891
3/31/90 10,796 8,737
6/30/90 11,226 9,572
9/30/90 9,074 7,543
12/31/90 9,367 8,337
3/31/91 10,381 8,958
6/30/91 9,970 8,469
9/30/91 10,372 9,195
12/31/91 11,380 9,350
3/31/92 11,614 8,241
6/30/92 12,351 8,414
9/30/92 11,526 8,641
12/31/92 11,172 8,212
3/31/93 11,929 9,196
6/30/93 12,153 10,121
9/30/93 13,413 10,783
12/31/93 14,874 10,888
3/31/94 14,841 11,266
6/30/94 14,555 11,844
9/30/94 15,331 11,862
12/31/94 14,597 11,741
3/31/95 14,666 11,960
8/30/95 15,271 12,048
9/30/95 15,928 12,558
12/31/95 15,933 13,082
3/31/96 16,537 13,436
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.
GROWTH OF A $10,000 INVESTMENT
BARTLETT BASIC VALUE FUND
MAY 31, 1983 THROUGH MARCH 31, 1996
Average Annual Total Returns*
For periods ended March 31, 1996
1 Year 3 Years 5 Years 10 Years Life of the Fund
(since 05/05/83)
24.1% 13.1% 12.7% 10.1% 11.8%
Bartlett Basic Value Fund vs. Standard and Poor's 500 Index
[GRAPH APPEARS HERE]
BARTLETT
BASIC
VALUE
FUND S&P 500 INDEX
5/31/83 $10,000 $10,000
6/30/83 10,100 10,379
9/30/83 10,250 10,362
12/31/83 10,534 10,407
3/31/84 10,657 10,156
6/30/84 10,836 9,892
9/30/84 11,078 10,847
12/31/84 11,419 11,042
3/31/85 12,189 12,059
6/30/85 12,705 12,935
9/30/85 12,987 12,400
12/31/85 14,304 14,529
3/31/86 18,177 16,572
6/30/86 16,793 17,518
9/30/86 16,259 16,300
12/31/86 16,259 17,178
3/31/87 18,018 20,840
6/30/87 18,811 21,913
9/30/87 19,596 23,360
12/31/87 15,649 18,067
3/31/88 17,795 19,105
6/30/88 18,667 20,355
9/30/88 19,202 20,429
12/31/88 19,761 21,047
3/31/89 20,572 22,524
6/30/89 21,555 24,503
9/30/89 22,680 27,113
12/31/89 22,066 27,656
3/31/90 21,908 26,812
6/30/90 22,707 28,502
9/30/90 18,441 24,568
12/31/90 19,946 26,776
3/31/91 23,286 30,674
6/30/91 22,769 30,610
9/30/91 24,149 32,248
12/31/91 25,126 34,948
3/31/92 26,698 34,056
6/30/92 28,548 34,716
9/30/92 26,912 35,795
12/31/92 27,698 37,624
3/31/93 29,239 39,268
6/30/93 28,882 39,458
9/30/93 29,978 40,476
12/31/93 30,926 41,417
3/31/94 30,237 39,848
6/30/94 30,542 40,016
9/30/94 31,950 41,972
12/31/94 31,051 41,966
3/31/95 34,088 46,052
8/30/95 36,480 50,450
9/30/95 38,838 54,461
12/31/95 40,849 57,740
3/31/96 42,282 60,837
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.
8
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GROWTH OF A $10,000 INVESTMENT
BARTLETT FIXED INCOME FUND
APRIL 22, 1986 THROUGH MARCH 31, 1996
Average Annual Total Returns*
For periods ended March 31, 1996
30-Day Yield 1 Year 3 Years 5 Years Life of the Fund
(Annualized) (since 04/22/86)
5.53% 8.0% 4.0% 6.8% 7.4%
Bartlett Fixed Income Fund vs. Lehman Brothers Intermediate
Government/Corporate Bond Index
[GRAPH APPEARS HERE--plot points are listed below]
BARTLETT
FIXED LEHMAN
INCOME BROTHERS
FUND INDEX
4/22/86 $10,000 $10,000
6/30/86 10,151 10,133
9/30/86 10,473 10,381
12/31/86 10,799 10,652
3/31/87 11,059 10,793
6/30/87 10,949 10,699
9/30/87 10,800 10,557
12/31/87 11,096 11,042
3/31/88 11,546 11,407
6/30/88 11,714 11,518
9/30/88 11,935 11,711
12/31/88 11,962 11,779
3/31/89 12,104 11,904
6/30/89 12,879 12,696
9/30/89 13,024 12,849
12/31/89 13,463 13,283
3/31/90 13,323 13,263
6/30/90 13,711 13,688
9/30/90 13,739 13,928
12/31/90 14,276 14,499
3/31/91 14,636 14,863
6/30/91 14,879 15,128
9/30/91 15,569 15,858
12/31/91 16,325 16,619
3/31/92 16,168 16,468
6/30/92 16,836 17,120
9/30/92 17,520 17,875
12/31/92 17,456 17,811
3/31/93 18,078 18,617
6/30/93 18,362 18,917
9/30/93 18,752 19,343
12/31/93 18,664 19,375
3/31/94 18,386 19,982
6/30/94 18,137 18,868
9/30/94 18,196 19,022
12/31/94 18,130 19,001
3/31/95 18,828 19,832
8/30/95 19,636 20,823
9/30/95 19,981 21,166
12/31/95 20,671 21,909
3/31/96 20,342 21,728
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 SHORT TERM BOND FUND
FEBRUARY 4, 1994 THROUGH MARCH 31, 1996
Average Annual Total Returns*
For periods ended March 31, 1996
30-Day Yield 1 Year Life of the Fund
(Annualized) (since 02/04/94)
5.33% 6.9% 4.4%
[GRAPH APPEARS HERE--plot points are listed below]
BARTLETT
SHORT
TERM
BOND FUND MERRILL
2/4/94 $10,000 $10,000
3/31/94 10,004 9,911
6/30/94 10,028 9,919
9/30/94 10,089 10,017
12/31/94 9,999 10,017
3/31/95 10,262 10,353
8/30/95 10,540 10,685
9/30/95 10,726 10,847
12/31/95 10,986 11,122
3/31/96 10,968 11,181
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
fluctuate and, upon redemption, you may receive more or less than your
original investment.
9
<PAGE>
RESULTS OF SPECIAL MEETING OF SHAREHOLDERS
On December 28, 1995, Special Meetings of the Shareholders of the Trusts were
held to approve new investment advisory agreements with Bartlett & Co., on
substantially the same terms as the then-current agreements. Bartlett & Co. was
acquired by, and is now a fully owned subsidiary of, Legg Mason, Inc.
The results of the voting by each Fund, in shares, were as follows:
For Against
Approval Approval Abstain
Bartlett Value International Fund 3,117,331 4,406 93,293
Bartlett Basic Value Fund 4,093,150 22,066 137,662
Bartlett Fixed Income Fund 4,927,161 27,466 172,021
Bartlett Short Term Bond Fund 1,972,804 -- 3,445
Bartlett Cash Reserves Fund 56,234,944 143,435 1,944,160
10
<PAGE>
PORTFOLIOS OF INVESTMENTS
Bartlett Value International Fund
As of March 31, 1996
Market
Shares Value
Common Stock--93.96%
Argentina--2.31%
YPF Sociedad Anonima SA (ADR)
(Energy, Oil & Gas) 82,600 $ 1,662,325
Australia--6.91%
Brambles Industries Ltd.
(Transport Services) 144,800 1,909,998
Burns Philp & Company Ltd.
(Food, Manufacturing) 732,900 1,563,522
National Australia Bank (ADR)
(Banking) 33,600 1,503,600
4,977,120
Canada--2.72%
Hudson's Bay Co.
(Retailing) 152,800 1,961,130
Finland--2.30%
Metra Oy B Shares
(Engineering/Construction) 42,000 1,654,221
France--10.71%
Alcatel Althsom
(Capital Goods) 6,700 621,124
Alcatel Althsom (ADR)
(Capital Goods) 73,600 1,361,600
Essilor International
(Consumer Goods) 7,400 1,830,752
St. Gobain
(Glass/Building Materials) 16,834 2,185,974
Total Co. Francaise Petrole-B
(Energy) 8,200 553,570
Total SA (ADR)
(Energy) 34,100 1,159,400
7,712,420
Germany--6.39%
Bayer AG
(Chemicals) 5,930 2,020,048
Deutsche Lufthansa AG
(Transportation) 16,300 2,583,621
4,603,669
HongKong--2.45%
Swire Pacific Ltd.-B
(Diversified) 200,000 1,764,934
India--2.86%
Morgan Stanley India Investment
Fund (Closed-End Mutual Fund) 185,200 2,060,350
Ireland--1.87%
Allied Irish Banks PLC (ADR)
(Banking) 43,800 $1,346,850
Italy--7.35%
Istituto Mobiliare SpA (ADR)
(Banking) 108,800 2,257,600
Sasib SpA - Savings Shares
(Capital Goods) 727,000 1,444,509
STET - Savings Shares
(Communications) 800,715 1,590,976
5,293,085
Japan--13.13%
Canon Inc.
(Visual Image Equipment) 86,000 1,640,009
Ito-Yokado (ADR)
(Retailing) 6,700 1,601,300
Fujitsu Ltd.
(Computers) 173,000 1,596,177
Matsushita Electric Industries
(Consumer Electronics Equip.) 87,000 1,415,097
Rohm Company
(Electronics) 32,000 1,824,725
Sumitomo Warehouse
(Storage) 200,000 1,383,501
9,460,809
Korea--1.91%
Korea Fund Inc.
(Closed-End Mutual Fund) 65,000 1,373,125
Malaysia--1.99%
Perlis Plantations Bhd
(Diversified) 390,000 1,433,597
Netherlands--1.15%
Koninklijke Ahold NV (ADR)
(Grocery Retailing) 17,236 827,328
Norway--2.92%
Kvaerner Cl. A Free Shares
(Shipbuilding) 58,200 2,105,440
Portugal--1.93%
Portugal Fund Inc.
(Closed-End Mutual Fund) 112,500 1,392,188
11
<PAGE>
Singapore--3.04%
Dairy Farm International
Holdings Ltd.
(Retail-Grocery) 896,000 $ 846,720
Jurong Shipyard, Ltd.
(Shipbuilding) 227,000 1,346,487
2,193,207
Spain--6.33%
Banco Santander SA Reg
(Banking) 15,856 755,017
Repsol SA (ADR)
(Energy) 49,800 1,861,275
Telefonica de Espana SA(ADR)
(Communications) 40,850 1,940,375
4,556,667
Sweden--4.73%
AGA AB-"B" Free Shares
(Gas Supplier) 124,000 1,838,605
Cardo AB
(Engineering/Construction) 77,000 1,568,416
3,407,021
Switzerland--1.95%
Sandoz AG
(Pharmaceuticals) 1,200 1,407,432
Taiwan--2.02%
Taiwan Fund Inc.
(Closed-End Mutual Fund) 64,125 1,458,844
United Kingdom--6.99%
Cadbury Schweppes PLC (ADR)
(Beverages) 55,000 1,711,875
Grand Metropolitan PLC (ADR)
(Consumer Goods) 64,300 1,687,875
Tomkins PLC (ADR)
(Diversified) 104,600 1,634,375
5,034,125
Total Common Stock $67,685,887
(Cost-$62,044,658)
Face Market
Amount Value
Repurchase Agreement--4.65%
State Street Bank,
4.00% dated 3/29/96, to be
repurchased at $3,351,117 on
4/1/96 (Collateral: $3,325,000
U.S. Treasury Note, 5.75% due
9/30/97, value $3,421,102) $3,350,000 $ 3,350,000
Total Repurchase Agreement $ 3,350,000
(Cost-$3,350,000)
Total Investments
At Value--98.61% $71,035,887
(Cost-$65,394,658)
All Other Assets Less Liabilities--1.39% 1,004,717
Net Assets--100.00% $72,040,604
See accompanying notes to financial statements.
12
<PAGE>
Bartlett Basic Value Fund
As of March 31, 1996
Market
Shares Value
Common Stock--91.34%
Aerospace/Defense -- 5.14%
Lockheed Martin Corp 46,000 $ 3,490,250
Raytheon Co. 58,000 2,972,500
6,462,750
Air Transportation -- 1.93%
AMR Corp.* 27,150 2,429,925
Apparel -- 1.73%
Kellwood Co. 140,000 2,170,000
Automobiles &
Auto Parts -- 6.06%
Ford Motor Co. 35,000 1,203,125
General Motors Corp. 62,275 3,316,144
Stewart & Stevenson
Services, Inc. 110,100 3,096,562
7,615,831
Broadcasting -- 1.89%
Time Warner, Inc. 58,000 2,370,750
Chemicals -- 3.06%
Bayer AG (ADR) 80,500 2,460,281
Ferro Corporation 48,600 1,379,025
3,839,306
Communications -- 1.90%
Telefonica de Espana SA (ADR) 50,200 2,384,500
Diversified -- 7.86%
Canadian Pacific Ltd.(ADR) 107,050 2,141,000
Hanson PLC (ADR) 103,750 1,556,250
ITT Corp. 22,125 564,187
Loews Corp. 41,000 3,100,625
Tenneco, Inc. 45,000 2,514,375
9,876,437
Electronics -- 2.08%
Pioneer Standard
Electronics, Inc. 169,800 2,610,675
Energy -- 6.79%
Cabot Oil & Gas Corp., Class A 140,700 2,004,975
Phillips Petroleum Co. 70,000 2,765,000
Southwestern Energy Co. 140,000 1,680,000
Total SA (ADR) 61,000 2,074,000
8,523,975
Financial Services -- 16.82%
CCB Financial Corp. 47,200 2,371,800
Chase Manhattan Corp. 13,600 999,600
Federal National Mortgage Assn. 100,000 3,187,500
First America Bank Corp. 43,650 2,024,269
First Tennessee National Corp. 60,938 2,010,954
MBIA, Inc. 34,300 2,572,500
Regions Financial Corp. 49,185 2,157,992
Salomon, Inc. 40,000 1,500,000
State Auto Financial Corp. 79,800 1,815,450
Financial Services -- cont'd
U.S. Trust Corp. 20,000 $ 1,055,000
Washington Fed. Svg. & Loan 66,000 1,435,500
21,130,565
Food & Beverage -- 3.50%
Archer-Daniels-Midland 141,015 2,591,151
Guinness PLC (ADR) 50,000 1,800,000
4,391,151
Health Care -- 1.09%
Bristol Myers-Squibb Co. 16,000 1,370,000
Housewares -- 1.91%
National Presto Ind., Inc. 60,000 2,400,000
Insurance -- 0.86%
ITT Hartford Group, Inc. 22,125 1,084,125
Machinery -- 2.79%
Kaydon Corp. 40,000 1,400,000
York International 43,000 2,107,000
3,507,000
Manufactured Housing -- 1.97%
Fleetwood Enterprises, Inc. 100,000 2,475,000
Metals & Mining -- 1.72%
Potash Corp of
Saskatchewan (ADR) 34,600 2,162,500
Miscellaneous - Manufacturing
- - -- 1.04%
Watts Industries, Inc. 66,000 1,311,750
Paper -- 1.41%
Wausau Paper Mills Co. 77,151 1,774,473
Railroad -- 2.26%
Kansas City Southern Inds. 61,000 2,836,500
Retailing -- 1.93%
Federated Dept. Stores* 75,000 2,418,750
Security Services -- 1.54%
ADT, Ltd. (ADR)* 110,000 1,938,750
Technology -- 1.04%
Zilog Inc.* 38,800 1,309,500
Tobacco -- 2.57%
Philip Morris Cos., Inc. 23,000 2,018,250
RJR Nabisco Holdings 40,000 1,210,000
3,228,250
Toys -- 3.44%
Toys `R' Us, Inc.* 159,900 4,317,300
Utilities -- 3.18%
KUEnergy, Inc. 61,300 1,762,375
NIPSCO Ind., Inc. 60,000 2,235,000
3,997,375
13
<PAGE>
Other Common Stock -- 3.83%
ROC Communities (REIT) 65,000 $ 1,527,500
Royce Value Trust, Inc.
(Closed-End Mutual Fund) 268,346 3,287,238
4,814,738
Total Common Stock $114,751,877
(Cost $81,750,073)
Preferred Stock--0.71%
J.P. Morgan Co.
Adj. Rate Pfd. "A" 12,000 $ 891,000
Total Preferred Stock $ 891,000
(Cost $738,250)
Commercial Paper -- 6.36%
Beneficial Corp.
5.35%, 4/3/96 $ 2,000,000 $ 1,999,405
Norwest Financial Inc.
5.39%, 4/9/96 3,000,000 2,996,407
Sears Roebuck Accept. Corp.
5.35%, 4/1/96 3,000,000 3,000,000
Total Commercial Paper $ 7,995,812
(Cost $7,995,812)
Face Market
Amount Value
Repurchase Agreement -- 0.18%
State Street Bank,
4.00%, dated 3/29/96, to be
repurchased at $227,076 on
4/1/96 (Collateral: $230,000
U.S. Treasury Note, 5.75%
due 9/30/97,value $236,575)
$ 227,000 $ 227,000
Total Repurchase Agreement $ 227,000
(Cost $227,000)
Total Investments
At Value-- 98.59% $123,865,689
(Cost $90,711,135)
All Other Assets
Less Liabilities --1.41% 1,770,696
Net Assets-100.00% $125,636,385
*Non-dividend paying investment.
REIT - Real Estate Investment Trust
See accompanying notes to financial statements.
14
<PAGE>
Bartlett Fixed Income Fund
As of March 31, 1996
Face Market
Amount Value
U.S. Government and
Agencies Obligations
- - --86.04%
U.S. Treasury Obligations
- - -- 44.29%
U.S. Treasury Note
6.875%, 08/31/99 $ 1,500,000 $ 1,539,375
U.S. Treasury Note
7.500%, 10/31/99 5,000,000 5,232,800
U.S. Treasury Note
7.125%, 02/28/00 4,000,000 4,146,240
U.S. Treasury Note
6.125%, 09/30/00 4,000,000 4,000,640
U.S. Treasury Note
5.125%, 02/15/04 1,100,000 1,087,284
U.S. Treasury Note
7.250%, 05/15/04 6,500,000 6,854,445
U.S. Treasury Bond Strip
0.000%, 08/15/03 18,000,000 12,292,020
35,152,804
U.S. Government Agency Obligations
- - --5.44%
Federal Home Loan Bank
Inverse French Franc
Pibor-Indexed
Consolidated Bond
6.766%, 06/29/98 $ 4,275,000 $ 4,314,929
Mortgage-Backed Obligations
- - --36.31%
Federal National
Mortgage Assn.
6.500%, 06/29/98 $ 918,363 $ 912,045
Government National
Mortgage Assn.
7.000%, 1/15/09-2/15/26 7,993,119 7,787,459
Government National
Mortgage Assn.
7.500%, 3/15/17-9/15/25 11,957,498 11,942,501
Government National
Mortgage Assn.
8.000%, 1/15/23-7/15/25 8,016,517 8,181,817
28,823,821
Total U.S. Government and
Agencies Obligations $68,291,554
(Cost-$68,680,958)
Corporate Obligations
- - --10.47%
Associates Corp. of N. Amer.
6.750%, 07/15/97 $ 3,000,000 $ 3,028,170
Ford Motor Credit Co.
5.830%, 06/29/98 2,000,000 1,984,900
General Motors Accept. Corp.
7.000%, 08/19/97 3,250,000 3,297,418
Total Corporate Obligations $ 8,310,488
(Cost-$8,259,463)
Repurchase Agreement
- - --0.16%
State Street Bank,
4.00% dated 3/29/96, to be
repurchased at $130,043 on
4/1/96. (Collateral: $130,000
U.S. Treasury Note, 5.75%
due 9/30/97, value $133,716) $ 130,000 $ 130,000
Total Repurchase Agreement $ 130,000
(Cost-$130,000)
Total Investments at Value-- 96.67% $ 76,732,041
(Cost $77,070,421)
All Other Assets Less Liabilities
- - --3.33% 2,645,290
Net Assets--100.00% $ 79,377,331
Inverse French Franc Pibor-Indexed Consolidated Bond-Structured security that
pays interest at a rate that increases (decreases) with a decline (increase) in
the Pibor (Paris InterBank Offered Rate). The interest rate shown is the rate in
effect at March 31, 1996.
See accompanying notes to financial statements.
15
<PAGE>
Bartlett Short Term Bond Fund
As of March 31, 1996
Face Market
Amount Value
U.S. Government and
Agencies Obligations--79.07%
U.S. Treasury Obligations-- 33.61%
U.S. Treasury Note
5.125%, 02/28/98 $ 150,000 $ 148,266
U.S. Treasury Note
6.125%, 05/15/98 1,500,000 1,508,670
U.S. Treasury Note
5.250%, 07/31/98 1,500,000 1,480,305
U.S. Treasury Note
5.875%, 08/15/98 2,000,000 2,000,620
5,137,861
U.S. Government Obligations--4.13%
Federal Home Loan Bank
Inverse French Franc
Pibor-Indexed
Consolidated Bond
6.766%, 06/29/98 $ 625,000 $ 630,838
Mortgage-Backed Obligations--41.33%
Federal National Mortgage
Assn.
7.000%, 03/25/19-10/25/19 $ 1,225,000 $ 1,211,857
Government National
Mortgage Assn.
7.500%, 05/15/24 96,479 96,267
Government National
Mortgage Assn.
8.000%, 01/15/23-02/15/26 4,770,417 4,868,869
Government National
Mortgage Assn.
9.000%, 03/15/20-09/15/22 131,790 140,729
6,317,722
Total U.S. Government and
Agencies Obligations $12,086,421
(Cost-$12,123,627)
Corporate Obligations--16.48%
AT&T Capital Corp.
7.660%, 01/30/97 $ 750,000 $ 762,030
Ford Motor Credit Co.
5.830%, 06/29/98 1,000,000 992,450
General Motors Accept. Corp.
7.20%, 01/29/98 750,000 764,475
Total Corporate Obligations $ 2,518,955
(Cost-$2,511,030)
Repurchase Agreement--3.84%
State Street Bank,
4.00% dated 3/29/96, to be
repurchased at $588,073 on
4/1/96 (Collateral: $585,000
U.S. Treasury Note, 5.75% due
9/30/97, value $601,724.) $ 588,000 $ 588,000
Total Repurchase Agreement $ 588,000
(Cost-$588,000)
Total Investments at Value--99.39% $15,193,376
(Cost-$15,222,657)
All Other Assets Less Liabilities
- - --.61% 92,926
Net Assets--100.00% $15,286,302
Inverse French Franc Pibor-Indexed Consolidated Bond-Structured security that
pays interest at a rate that increases (decreases) with a decline (increase) in
the Pibor (Paris InterBank Offered Rate) The interest rate shown is the rate in
effect at March 31, 1996.
See accompanying notes to financial statements.
16
<PAGE>
Bartlett Cash Reserves Fund
As of March 31, 1996
Face Market
Amount Value
Commercial Paper-- 88.45%
American Express
5.30%, 05/03/96 $1,000,000 $ 995,242
American Gen. Fin. Corp.
5.23%, 04/11/96 1,000,000 998,524
American Corp.
5.21%, 04/18/96 1,000,000 997,466
Ameritech Capital Corp.
5.13%, 04/09/96 3,000,000 2,996,438
Associates Corp. of N. Amer.
5.35%, 05/06/96 1,000,000 994,799
Associates Corp. of N. Amer.
5.28%, 06/20/96 1,000,000 988,335
Bellsouth Cap. Fndg. Corp.
5.25%, 05/23/96 1,000,000 992,267
Beneficial Finance Corp.
5.30%, 05/02/96 2,000,000 1,990,781
CPC International
5.29%, 04/30/96 2,000,000 1,991,374
Deere (John) Cap.Corp.
5.22%, 04/08/96 2,000,000 1,997,930
Deere (John) Cap.Corp.
5.22%, 04/12/96 1,000,000 998,358
Ford Motor Credit Co.
5.19%, 04/04/96 1,000,000 999,552
Ford Motor Credit Co.
5.34%, 05/03/96 1,000,000 995,244
General Electric Capital Corp.
5.23%, 04/11/96 1,000,000 998,524
General Electric Capital Corp.
5.32%, 05/09/96 1,000,000 994,351
General Motors Accept. Corp.
5.42%, 05/08/96 2,000,000 1,989,010
Heinz (H. J.) Co.
5.20%, 04/08/96 2,000,000 1,997,928
Household Financial Corp.
5.20%, 04/03/96 1,500,000 1,499,550
IBM Credit Corp.
5.26%, 05/10/96 1,000,000 994,199
IBM Credit Corp.
5.27%, 04/26/96 1,000,000 996,280
Illinois Tool Works Inc.
5.14%, 05/07/96 2,000,000 1,989,276
Norwest Financial
5.17%, 04/04/96 2,000,000 1,999,102
Pacific Gas and Electric
5.20%, 04/02/96 1,500,000 1,499,771
Penny (J.C.) Fndg. Corp.
5.28%, 05/01/96 1,000,000 995,538
Sears Roebuck Accept. Corp.
5.28%, 06/10/96 1,000,000 989,793
Sears Roebuck Accept. Corp.
5.17%, 04/05/96 $ 1,000,000 $ 999,404
Toys-R-Us
5.20%, 04/04/96 2,000,000 1,999,105
U.S. West Comm. Corp.
5.22%, 04/10/96 3,000,000 2,996,012
Wal-Mart Stores Inc.
5.12%, 04/30/96 2,000,000 1,991,355
Total Commercial Paper $42,865,508
(Cost-$42,867,331)
Medium Term Note--5.18%
AT&T Capital Corp.
6.30%, 07/25/96 $ 2,500,000 $ 2,510,874
Total Medium Term Note $2,510,874
(Cost-$2,503,012)
Repurchase Agreement--3.72%
State Street Bank,
4.00% dated 3/29/96,
to be repurchased at
$1,801,600 on 4/1/96
(Collateral: $1,790,000
U.S. Treasury Note, 5.75%
due 9/30/97,
value $1,853,104) $1,801,000 $1,801,000
Total Repurchase Agreement $1,801,000
(Cost-$1,801,000)
U.S. Government Obligations--6.71%
U.S. Treasury Note
6.125%, 05/31/97 $1,000,000 $1,005,876
U.S. Treasury Note Strip
0.000%, 02/15/98 2,500,000 2,247,178
Total U.S. Government
Obligations $ 3,253,054
(Cost-$3,250,981)
Total Investments
at Value--104.06% $50,430,436
(Cost-$50,422,324)
All Other Assets Less
Liabilities--(4.06%) (1,966,657)
Net Assets--100.00% $48,463,779
See accompanying notes to financial statements.
17
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
As of March 31, 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> <C> <C> <C> <C>
Assets:
Investment securities,
at cost (Note 1) $ 65,394,658 $ 90,711,135 $ 77,070,421 $ 15,222,657 $ 50,422,324
Investment securities,
at value (Note 1) $ 71,035,887 $123,865,689 $ 76,732,041 $ 15,193,376 $ 50,430,436
Dividends and interest
receivable 230,462 210,933 901,529 141,517 41,309
Receivable for securities
sold 742,297 -- 3,113,751 158,373 --
Cash 2,521 821 607 753 19
Shareholder subscriptions
receivable 173,250 1,709,765 4,658 14 6,671
Total Assets 72,184,417 125,787,208 80,752,586 15,494,033 50,478,435
Liabilities:
Shareholder
distributions payable -- -- 183,890 34,456 103,571
Payable for securities
purchased -- -- 1,091,668 148,864 --
Shareholder
redemptions payable 33,993 27,881 31,306 12,758 1,875,436
Management fee payable
(Note 3) 109,820 122,942 68,391 11,653 35,649
Total Liabilities 143,813 150,823 1,375,255 207,731 2,014,656
Net Assets $ 72,040,604 $125,636,385 $ 79,377,331 $ 15,286,302 $ 48,463,779
Net Assets Consist of:
Capital shares $ 63,652,243 $ 88,302,489 $ 81,785,857 $ 15,680,009 $ 48,537,696
Accumulated
undistributed net
investment income -- 489,399 -- -- --
Accumulated net realized
gains (losses) from
security transactions 2,748,689 3,689,948 (2,070,146) (364,426) (82,029)
Net unrealized
appreciation/(depreciation)
on investments and foreign
currency transactions 5,639,672 33,154,549 (338,380) (29,281) 8,112
Net Assets $ 72,040,604 $125,636,385 $ 79,377,331 $ 15,286,302 $ 48,463,779
Shares of beneficial
interest outstanding
(unlimited number
of shares authorized,
no par value) (Note 4) 5,721,825 7,003,457 8,014,911 1,565,124 48,537,696
Net asset value,
offering and redemption
price per share (Note 1) $12.59 $17.94 $9.90 $9.77 $1.00
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
STATEMENTS OF OPERATIONS
For the year ended March 31, 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> <C> <C> <C> <C>
Investment Income:
Interest $ 238,106 $ 861,425 $ 6,032,746 $ 1,464,525 $ 4,840,892
Dividends 1,905,520 2,597,074 -- -- --
Less foreign taxes withheld (222,292) (7,370) -- -- --
Total Investment Income 1,921,334 3,451,129 6,032,746 1,464,525 4,840,892
Expenses:
Management Fee (Note 3) 1,215,664 1,366,123 900,170 197,641 653,617
Total Expenses 1,215,664 1,366,123 900,170 197,641 653,617
Net Investment Income 705,670 2,085,006 5,132,576 1,266,884 4,187,275
Realized and Unrealized Gains
on Investments:
Net realized gains from
security transactions 5,091,672 7,904,641 1,977,601 145,949 14,493
Net change in net unrealized
appreciation (depreciation)
of investments and foreign
currency transactions 1,971,930 14,980,193 205,780 205,670 8,717
Net Realized and Unrealized
Gains on Investments 7,063,602 22,884,834 2,183,381 351,619 23,210
Net Increase in Net Assets
from Operations $7,769,272 $24,969,840 $7,315,957 $1,618,503 $4,210,485
</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
Year Year Year Year
Ended Ended Ended Ended
3/31/96 3/31/95 3/31/96 3/31/95
<S> <C> <C> <C> <C>
From Operations:
Net investment income $ 705,670 $ 449,472 $ 2,085,006 $ 1,768,170
Net realized gains (losses) from
security transactions 5,091,672 2,425,836 7,904,641 4,359,075
Net change in net unrealized
appreciation (depreciation)
on investments 1,971,930 (3,917,520) 14,980,193 5,759,310
Net increase (decrease) in net assets
from operations 7,769,272 (1,042,212) 24,969,840 11,886,555
Distributions to Shareholders:
From net investment income (709,685) (438,346) (1,617,770) (1,765,417)
In excess of net investment income (56,680) -- -- --
From net realized gains from
security transactions (2,033,031) (2,727,131) (5,714,691) (6,700,292)
Decrease in net assets from
distributions to shareholders (2,799,396) (3,165,477) (7,332,461) (8,465,709)
From Fund Share Transactions (Note 4):
Proceeds from shares sold 24,745,866 41,462,779 111,024,402 88,106,512
Net asset value of shares issued
in reinvestment of shareholder
distributions 2,116,443 2,650,327 7,149,025 8,073,721
Payment for shares redeemed (17,455,294) (31,848,784) (112,895,339) (91,168,817)
Net increase (decrease) from Fund
share transactions 9,407,015 12,264,322 5,278,088 5,011,416
Net Increase (Decrease) in Net Assets 14,376,891 8,056,633 22,915,467 8,432,262
Net Assets:
Beginning of year 57,663,713 49,607,080 102,720,918 94,288,656
End of year $ 72,040,604 $57,663,713 $125,636,385 $102,720,918
Accumulated undistributed
net investment income $ -- $ 11,126 $ 489,399 $ 22,163
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
Bartlett
Bartlett Short Term Bartlett
Fixed Income Fund Bond Fund Cash Reserves Fund
Year Year Year Period Year Year
Ended Ended Ended Ended Ended Ended
3/31/96 3/31/95 3/31/96 3/31/95 3/31/96 3/31/95
<C> <C> <C> <C> <C> <C>
$ 5,132,576 $ 5,591,914 $ 1,266,884 $ 1,193,289 $ 4,187,275 $ 3,276,229
1,977,601 (3,280,414) 145,949 (497,579) 14,493 (81,479)
205,780 (407,515) 205,670 (127,141) 8,717 13,459
7,315,957 1,903,985 1,618,503 568,569 4,210,485 3,208,209
(5,132,576) (5,591,914) (1,266,884) (1,193,289) (4,187,275) (3,276,229)
-- -- -- -- -- --
-- -- -- -- -- --
(5,132,576) (5,591,914) (1,266,884) (1,193,289) (4,187,275) (3,276,229)
20,748,841 32,641,620 27,069,933 34,220,058 341,933,423 367,680,400
4,218,946 4,778,669 886,040 838,351 3,737,122 3,115,274
(39,123,295) (53,796,673) (32,769,391) (36,973,689) (387,402,262) (358,112,926)
(14,155,508) (16,376,384) (4,813,418) (1,915,280) (41,731,717) 12,682,748
(11,972,127) (20,064,313) (4,461,799) (2,540,000) (41,708,507) 12,614,728
91,349,458 111,413,771 19,748,101 22,288,101 90,172,286 77,557,558
$ 79,377,331 $ 91,349,458 $ 15,286,302 $ 19,748,101 $ 48,463,779 $ 90,172,286
$-- $-- $-- $-- $-- $--
</TABLE>
21
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Bartlett Value International Fund
For a Share Outstanding Throughout Each Year Ended March 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $11.64 $12.46 $10.08 $9.93 $9.09
Income From Investment Operations:
Net Investment Income .13 .09 .07 .12 .18
Net Realized and Unrealized Gains
(Losses) on Securities 1.33 (.21) 2.38 .15 .88
Total From Investment Operations 1.46 (.12) 2.45 .27 1.06
Less Distributions:
Dividends From Net Investment
Income (.13) (.09) (.07) (.10) (.22)
In Excess of Net Investment Income (.01) -- -- -- --
Distributions From Realized Gains (.37) (.61) -- (.02) --
Total Distributions (.51) (.70) (.07) (.12) (.22)
Net Asset Value, End of Year $12.59 $11.64 $12.46 $10.08 $9.93
Total Return 12.76% (1.18%) 24.42% 2.71% 11.88%
Ratios / Supplemental Data:
Net Assets, End of Year (000's) $72,041 $57,664 $49,607 $29,572 $22,042
Ratio of Net Expenses to Average
Net Assets (a) 1.83% 1.83% 1.88% 2.00% 2.00%
Ratio of Net Investment Income
to Average Net Assets (a) 1.06% .80% .55% 1.13% 1.79%
Portfolio Turnover Rate 38% 24% 19% 19% 27%
Bartlett Basic Value Fund
Net Asset Value, Beginning of Year $15.39 $14.89 $14.76 $13.47 $12.60
Income From Investment Operations:
Net Investment Income .30 .27 .22 .30 .36
Net Realized and Unrealized Gains
on Securities 3.32 1.53 .28 1.57 .87
Total From Investment Operations 3.62 1.80 .50 1.87 1.23
Less Distributions:
Dividends From Net Investment
Income (.24) (.27) (.23) (.30) (.36)
Distributions From Realized Gains (.83) (1.03) (.14) (.28) --
Total Distributions (1.07) (1.30) (.37) (.58) (.36)
Net Asset Value, End of Year $17.94 $15.39 $14.89 $14.76 $13.47
Total Return 24.05% 12.67% 3.42% 14.22% 9.91%
Ratios / Supplemental Data:
Net Assets, End of Year (000's) $125,636 $102,721 $94,289 $103,507 $88,536
Ratio of Expenses to Average
Net Assets 1.17% 1.20% 1.20% 1.21% 1.22%
Ratio of Net Investment Income
to Average Net Assets 1.79% 1.81% 1.48% 2.14% 2.77%
Portfolio Turnover Rate 25% 26% 33% 43% 49%
</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.
See accompanying notes to financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
Bartlett Fixed Income Fund
For a Share Outstanding Throughout Each Year Ended March 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $9.70 $10.02 $10.48 $9.93 $9.63
Income From Investment Operations:
Net Investment Income .57 .54 .48 .59 .67
Net Realized and Unrealized Gains
(Losses) on Securities .20 (.32) (.30) .55 .31
Total From Investment Operations .77 .22 .18 1.14 .98
Less Distributions:
Dividends From Net Investment
Income (.57) (.54) (.48) (.59) (.68)
Distributions From Realized Gains -- -- (.16) -- --
Total Distributions (.57) (.54) (.64) (.59) (.68)
Net Asset Value, End of Year $9.90 $9.70 $10.02 $10.48 $9.93
Total Return 8.04% 2.41% 1.70% 11.81% 10.46%
Ratios / Supplemental Data:
Net Assets, End of Year (000's) $79,377 $91,349 $111,414 $135,487 $147,992
Ratio of Expenses to Average
Net Assets (a) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income
to Average Net Assets (a) 5.74% 5.60% 4.58% 5.81% 6.85%
Portfolio Turnover Rate 131% 118% 163% 175% 126%
Amount of Debt Outstanding
at End of Year $ -- $ -- $ -- $ -- $ --
Average Amount of Debt
Outstanding During the
Year (b) (000's) $ -- $ 255 $ 2,550 $ 12,627 $ 6,601
Average Number of Shares
Outstanding During the
Year (c) (000's) 8,954 10,270 12,095 13,689 15,577
Average Amount of Debt Per
Share During the Year $ -- $ 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.
See accompanying notes to financial statements.
23
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Bartlett Short Term Bond Fund
For a Share Outstanding Throughout Each Year Ended March 31,
1996 1995 1994(a) 1993 1992
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $9.66 $9.94 $10.00
Income From Investment Operations:
Net Investment Income .54 .53 .06
Net Realized and Unrealized Gains
(Losses) on Securities .11 (.28) (.06)
Total From Investment Operations .65 .25 .00
Less Distributions:
Dividends From Net Investment
Income (.54) (.53) (.06)
Total Distributions (.54) (.53) (.06)
Net Asset Value, End of Year $9.77 $9.66 $9.94
Total Return 6.87% 2.58% .04%(b)
Ratios / Supplemental Data:
Net Assets, End of Year (000's) $15,286 $19,748 $22,288
Ratio of Expenses to Average
Net Assets .85% .85% .85%(d)
Ratio of Net Investment Income
to Average Net Assets 5.70% 5.38% 4.55%(d)
Portfolio Turnover Rate 145% 158% 202%(d)
Bartlett Cash Reserves Fund
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
Income From Investment Operations:
Net Investment Income .05 .04 .03 .03 .05
Total From Investment Operations .05 .04 .03 .03 .05
Less Distributions:
Dividends From Net Investment
Income (.05) (.04) (.03) (.03) (.05)
Total Distributions (.05) (.04) (.03) (.03) (.05)
Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00 $1.00
Total Return 5.13% 4.22% 2.69% 3.26% 5.07%
Ratios / Supplemental Data:
Net Assets, End of Year (000's) $48,464 $90,172 $77,558 $65,962 $75,867
Ratio of Net Expenses
to Average Net Assets (c) .78% .78% .77% .72% .67%
Ratio of Net Investment Income
to Average Net Assets (c) 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.
See accompanying notes to financial statements.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
As of March 31, 1996
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 ask prices quoted by brokers or dealers that
make markets in the securities. Portfolio securities which are traded both in
the over-the-counter market and on an exchange are valued according to the
broadest and most representative market.
Fixed income securities generally are valued by using market quotations, or
independent pricing services which use prices provided by market makers or
estimates of market values. However, if 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 March 31, 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 March 31, 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> <C> <C> <C> <C>
Unrealized
appreciation $9,072,115 $34,695,212 $442,786 $26,746 $11,604
Unrealized
depreciation (3,430,887) (1,540,658) (781,166) (56,027) (3,492)
Net unrealized
appreciation
(depreciation) $5,641,228 $33,154,554 ($338,380) ($29,281) $8,112
Federal income
tax cost of
investments $65,394,658 $90,711,135 $77,070,421 $15,222,657 $50,422,324
</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 year ended March 31, 1996:
<TABLE>
<CAPTION>
Bartlett
Bartlett Bartlett Bartlett Short
Value Basic Fixed Term
International Value Income Bond
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Purchases of
investment
securities $29,532,007 $26,732,358 $114,525,655 $29,766,853
Proceeds
from sales
and maturities
of investment
securities $23,657,386 $25,559,659 $126,651,975 $32,632,271
</TABLE>
27
<PAGE>
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
Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended
3/31/96 3/31/95 3/31/96 3/31/95 3/31/96 3/31/95 3/31/96 3/31/95
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 2,030,782 3,417,760 6,663,901 5,942,584 2,078,188 3,365,364 2,759,057 3,502,434
Shares issued in
reinvestment of
distributions 173,445 217,711 424,930 552,366 421,555 492,992 90,267 85,957
2,204,227 3,635,471 7,088,831 6,494,950 2,499,743 3,858,356 2,849,324 3,588,391
Less shares
redeemed (1,434,766) (2,663,521) (6,758,445) (6,153,807) (3,903,266) (5,556,676) (3,327,470) (3,787,573)
Net increase
(decrease)
in shares
outstanding 769,461 971,950 330,386 341,143 (1,403,523) (1,698,320) (478,146) (199,182)
</TABLE>
<TABLE>
<CAPTION>
Bartlett
Cash
Reserves
Fund
Year Year
Ended Ended
3/31/96 3/31/95
<S> <C> <C>
Shares sold 341,933,423 367,680,400
Shares issued in
reinvestment of
distributions 3,737,122 3,115,274
345,670,545 370,795,674
Less shares
redeemed (387,402,262) (358,112,926)
Net increase
(decrease)
in shares
outstanding (41,731,717) 12,682,748
</TABLE>
28
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Boards of Trustees of the Bartlett Capital Trust and
the Bartlett Management Trust:
We have audited the accompanying statements of assets and liabilities of the
Bartlett Value International Fund, Bartlett Basic Value Fund, Bartlett Fixed
Income Fund and Bartlett Short Term Bond Fund of the Bartlett Capital Trust (a
Massachusetts business trust) and the Bartlett Cash Reserves Fund of the
Bartlett Management Trust (an Ohio business trust), including the portfolios of
investments, as of March 31, 1996, and the related statements of operations, the
statements of changes in net assets, and the financial highlights for the
periods indicated thereon. These financial statements and financial highlights
are the responsibility of the Trusts' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Bartlett Value International Fund, Bartlett Basic Value Fund, Bartlett Fixed
Income Fund and Bartlett Short Term Bond Fund of the Bartlett Capital Trust and
the Bartlett Cash Reserves Fund of the Bartlett Management Trust as of March 31,
1996, the results of their operations, the changes in their net assets, and the
financial highlights for the periods indicated thereon in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
May 3, 1996
29
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
K Mart 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) 513-345-6212 (bullet) 800-800-3609 (bullet) FAX 513-621-6462
